Possible Blow to Toronto MLS bid

[An Observer]

Wonder what happens if Peddie gets the sack...

from the Globe and Mail

Growing dissatisfaction in the boardroom with the abysmal performance of the Toronto Raptors appears to be leading toward another front-office overhaul after the end of the National Basketball Association season.

The two people in the crosshairs are Richard Peddie, the president and chief executive officer of Maple Leaf Sports and Entertainment, the company that owns the Raptors and the National Hockey League's Toronto Maple Leafs, and Rob Babcock, the embattled first-year general manager Peddie hired to help guide the club's fortunes this season.

According to multiple sources with close ties to the MLSE board, the job performance of both men are under review as another disappointing Raptors season is about to draw to a close with a whimper.

After a dismal 104-74 loss to the Memphis Grizzlies at the Air Canada Centre on Wednesday, in which the home team was booed throughout the game, Toronto's record on the season dipped to 30-44. The Raptors, barring a minor miracle with eight games remaining in the season, will miss the NBA playoffs for the third consecutive year.

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While the job security of rookie head coach Sam Mitchell is also said to be in question, the primary concerns of the board appear to be more on Peddie and Babcock. One board source, who did not want to be named, described the two as “dead men walking.”

“There is discussion at the board,” another source said. “There is terrible dissatisfaction with the combination of Babcock and Peddie.”

According to MLSE insiders, the Ontario Teachers Pension Plan, the majority owner of MLSE, is exerting pressure to lower the boom on Peddie and Babcock.

At least one other source says there is friction between Peddie and Larry Tanenbaum, the MLSE chairman and a minority owner. When contacted yesterday, Peddie and Tanenbaum gave no indication yesterday of divisions within the board.

MLSE is also the owner of the Maple Leafs, whose 2004-05 season was wiped out by the NHL player lockout.

Robert Bertram, one of the Teachers representatives on the MLSE board, acknowledged that MLSE's revenue is decreasing.

“The hockey league is in a lockout situation, so the financial condition [at MLSE] is going to have deteriorated,” said Bertram, who is the executive vice-president of investments at Teachers. “You don't need to use your imagination to figure that one out.”

As for the Raptors, he acknowledged that the team is not likely to make the playoffs, which will add to the financial hurt. “If we don't make the playoffs, we don't get any playoff revenue,” he said. “That's obvious as well.”

He declined to comment further on the company's financial situation or suggestions that Peddie and others may be let go.

“I don't know where you get those kinds of rumours, and I have no comment on them,” he said.

Peddie said he believes his relationship with the MSLE board is “outstanding.”

“When I look at everything we've done here, I feel very good about what we've accomplished and I have great optimism for what we're doing going forward,” Peddie said. “Admittedly, I feel the Raptors is the one area where we are underperforming.

“But the Leafs have a very good strategy, the Marlies [the Leafs' American Hockey League farm team] are in town, we've got a lockout, but we're one of 30 teams involved in that. The building is one of the top couple of buildings in the world, and our business results are in the top of both leagues.”

Sources with close ties to both the Teachers and MSLE boards claim Teachers is livid that MSLE is nowhere close to meeting its budgetary expectations. The shortfall, according to one source, has been estimated as being in the “tens of millions” as MSLE continues to reel from the effects of the NHL lockout, which has caused the cancellation of the 2004-05 NHL season.

The poor performance by the Raptors before dwindling audiences this season at the Air Canada Centre is only compounding the problem and making life difficult for Tanenbaum, the chairman of the board at MLSE and a 13-per-cent minority shareholder in the company.

“Larry's aware of all this, he's in the middle of it,” one source said. “It's killing him, absolutely killing him. He wants something done.”

Teachers, which has $84.3-billion in assets, owns 58 per cent of MLSE. The pension fund last valued the company at about $1.4-billion.

Tanenbaum was reticent to discuss the internal workings of the MLSE board and the company's financial status in light of the hockey lockout and the basketball failures of the Raptors. He said, however, there have been no surprises with the budget this year.

“Am I happy?” he said. “I'm not happy that we're not in the playoffs, so the answer is, no, I'm not happy. We had every intention of being a playoff team. Our championship vision is one where we get to that NBA championship during my watch. We're going to do what we have to do to make sure we get there.”

Tanenbaum was asked whether that could include another front-office overhaul.

“I actually don't know,” he said. “There's a full assessment that our management people all go through at the end of the season that's presented to our board. We will await that.”

As a result of a 33-49 season a year ago, the Raptors cleaned out their front office, firing senior vice-president and general manager Glen Grunwald and first-year head coach Kevin O'Neill.

After a controversy-filled two-month search that included the alienation of former Raptors star Vince Carter after his endorsement of former NBA star Julius Erving was largely ignored by Peddie, the Raptors decided to hire Babcock to a four-year contract as the new general manager.

The rookie GM has come under repeated fire, particularly on two fronts. He drafted Brazilian rookie Rafael Araujo with the team's No. 8 pick, a move that surprised many observers in the league. Araujo's play has been mostly a disappointment.

And then there was the trade that sent disgruntled Carter to the New Jersey Nets in December, bringing Toronto a couple of benchwarmers in Eric Williams and Aaron Williams, Alonzo Mourning as salary-cap ballast and two first-round draft picks.

Babcock said he is not aware of any misgivings by the board about his performance.

“There's some areas on our team that we need a lot of improvement,” he said. “There's no doubt. I think that we've done everything that we can possibly do at this point. We still have a long ways to go, have a lot more to do.

“But I think we've addressed every issue that came up, dealt with it and dealt with it in the right way. I feel confident in what we've done.”

[Elias]

quote:Originally posted by An Observer

Wonder what happens if Peddie gets the sack...

Doesn't make a difference. He's just an other employee.

quote:Originally posted by An Observer

from the Globe and Mail

Teachers, which has $84.3-billion in assets, owns 58 per cent of MLSE. The pension fund last valued the company at about $1.4-billion.

Sources with close ties to both the Teachers and MSLE boards claim Teachers is livid that MSLE is nowhere close to meeting its budgetary expectations.

Here is the key to MLS in Toronto. "Teachers is livid MSLE is not meeting it's budgetary expectations". They are not livid they are not making the playoffs, they are not livid about Carter leaving, they are not livid about wasting draft picks, they are livid at not meeting budgetary expectations.

It's real simple, if they think MLS can make money, they'll bring a team to town, if they don't, they aren't coming. And it's not as simple as ticket sales. Obviously MLSE is making money this year, even without the Leafs, because I believe they have not laid off or even cut anybody's wages, as opposed to most NHL teams. They still make money from the ACC, the Raptors, and everything else.

The number 1 reason the Leafs want the MLS team is so they can control the new stadium. They would be the number 1 tenant since they would want about 20 dates for soccer, as opposed to the Argos 10. And there's other ways they can make it financially work, where an other owner would not be able to.

[Chet]

I don't understand your logic. How does renting a facility for 20 days a year give you "control" of the stadium? MLSE won't own the stadium. They won't even get first choice of dates. The Argos and the university teams will. What kind of "control" are you talking about and how does it benefit the Teachers Pension Plan?

[Elias]

quote:Originally posted by Chet

I don't understand your logic. How does renting a facility for 20 days a year give you "control" of the stadium? MLSE won't own the stadium. They won't even get first choice of dates. The Argos and the university teams will. What kind of "control" are you talking about and how does it benefit the Teachers Pension Plan?

By having double the Argo dates, that means they are roughly going to bring in double the Argo revenue for the stadium. The university teams won't bring in much, if anything. So it would be in York's best interest to make sure the Leafs are happy.

The Leafs are not going to go into a situation where they are the number 2 tenant. What I mean by "control" is that they will operate the stadium, have concerts, other events, etc.

It's like the city owned Ricoh Center where the AHL club is going to play next season. The team itself might lose money, but the Leafs will run the arena so at the end of the day, they will make money from everything put together (concerts, trade shows, etc.).

Plus, the Leafs are in a much better position than the Argos to sell corporate sponsorships for the stadium and even for the Argos. So it would make sense for the Argos to work with the Leafs.

Just to be clear, there is a huge difference between the Leafs owning the MLS team and any other potential owner(s).

The thing is, I don't think people outside this area realize how much power the Leafs have. Not only with fans, but within the corporate community. The Leafs are a very slick $500-million a year operation. Basically, they are not the Lynx, or the CSA.

Most people in the area would do anything for Leaf tickets. The AHL Hamilton Bulldogs in their first couple years were getting something like 15 000 for St. Johns Maple Leafs games vs. like 5 000 avg. for the rest. Even today the Baby Leafs avg. about 8-9 000 compared to about 5 000 for the rest of the Bulldogs games.

The Roadrunners averaged from reports about 1 000 tickets actually sold and maybe 3 000 that showed up. The Baby Leafs next year will play in the same arena, the same oposition, the same ticket prices (which are almost double AHL prices), and they will sell out the 9 000 or whatever Ricoh Center.

[jaydog2006]

The leafs have said season ticket for the new ahl team are going slower then expected is that a sign.

[Richard]

Elias, how refreshing to see somebody else taking a broad business view of the pro sports scene and MLS in Toronto.

[DoyleG]

quote:Originally posted by jaydog2006

The leafs have said season ticket for the new ahl team are going slower then expected is that a sign.

How slow?

[DoyleG]

quote:Originally posted by Elias

Here is the key to MLS in Toronto. "Teachers is livid MSLE is not meeting it's budgetary expectations". They are not livid they are not making the playoffs, they are not livid about Carter leaving, they are not livid about wasting draft picks, they are livid at not meeting budgetary expectations.

It's real simple, if they think MLS can make money, they'll bring a team to town, if they don't, they aren't coming. And it's not as simple as ticket sales. Obviously MLSE is making money this year, even without the Leafs, because I believe they have not laid off or even cut anybody's wages, as opposed to most NHL teams. They still make money from the ACC, the Raptors, and everything else.

The number 1 reason the Leafs want the MLS team is so they can control the new stadium. They would be the number 1 tenant since they would want about 20 dates for soccer, as opposed to the Argos 10. And there's other ways they can make it financially work, where an other owner would not be able to.

OTTP isn't just interested in just making a profit. They want a profit from MLSE that would satisfy their pension holders. This puts them in a different league compared to the other that are involved in MLS.

The number of dates doesn't hold water if they can't produce the revenue that needed from those dates.