Gian-Luca Posted October 13, 2005 Share Posted October 13, 2005 quote:Originally posted by Gordon If this is the case, then why would MLSE & MLS feel the need to kick T.O. City Council in the ass as some suggest is the case? Because time is running out if we want to get this thing done in time, and while people can agree that there is a need for a stadium, a NIMBY-like debate that we've seen in the past few months could still forestall things without a kick in the ass to get it done already. I'd like to be able to count on the vote of the Councillor from Downsview who was threatening to sue for having some free development done in her area (as crazy as that sounds) to vote in favour of the Ex. location, but you never know with these people. Link to comment Share on other sites More sharing options...
Gordon Posted October 13, 2005 Share Posted October 13, 2005 quote:Originally posted by Jeremy Loome Having covered municipal politics for a lot of years for various newspapers, I'd suggest this deadline is about one thing and one thing only: getting the greenlight from TO council at the next meeting. Most large urban centres do not have 44 councillors. That many potential votes awry makes it much harder to get a deal done. So they're trying to line up the fence sitters quickly by saying "now or never." Municipal government is always -- ALWAYS -- the biggest impediment to urban development, not the other levels of government (even when it's using legislation from other levels of government, such as enviro impact study necessity, to cause the delays). As someone else here has noted, the feds and province have already committed their money, so there's only one thing left that this could be aimed at, and that's kicking TO council into line. The trouble with that is they'll probably follow through on it if this gets held up Oct. 26. But there's no reason, given the pitifully small amount of metro investment required, to think that's going to happen. I think it's just a safety valve, that's all. My experience in municipal government is that Mayors and Aldermanic Committee heads don't announce cash contributions w/o taking a lay of the land first. And given that this was done in order to change a location away from the desired location of the primary funder and a key Toronto cabinet minister, I have to think that homework was done. While it is not unheard off for council to not follow through on those pledges, that usually occurs only in the face of a big public outcry. What I am hearing from the Toronto posters, is that no large scale opposition is forming. So why play the brinkmanship game? Link to comment Share on other sites More sharing options...
RealGooner Posted October 13, 2005 Share Posted October 13, 2005 quote:Originally posted by Gordon If this is the case, then why would MLSE & MLS feel the need to kick T.O. City Council in the ass as some suggest is the case? I think you are right that the debate has moved past whether to build one onto where to build one however, hence my earlier post on the motives of MLS. Because the time has run out, and here is a huge bureaucracy in Toronto. The politicians, if left to their own devices, will continue to squabble about this in order to get some personal political mileage out of it. They will bicker until the project is dead in the water. Then they will bicker over who was responsible for the project falling through. That is one of the main reasons why the Provincial government is negotiating with the city to install a new city governance regime in 2006. The present council/mayoral system is unwieldy, outdated and prone to politically driven stalemates. Decisions that need to be made get bogged down in council politics for years, or don't get made at all. So a sense of urgency is needed to ensure that this matter doesn't get bogged down too. Link to comment Share on other sites More sharing options...
DJT Posted October 13, 2005 Share Posted October 13, 2005 Well, I don't like Perkins' snide attitude toward soccer, but put me down as another person who agrees with much of what he says. He echoes some of the things I've already believed. In particular, I absolutely agree with this paragraph: quote:But what MLSE wants, of course, is control of yet another publicly financed playpen — having already swiped main tenancy of the Ricoh Coliseum, for which the city remains on the hook for millions. If it needs to waste at least $10 million (U.S.) on a soccer franchise, plus a couple of years of operating losses until the team folds to get it, then no matter. It's a nice tax write-off against the huge profits generated by the hockey and basketball teams.Some people have been saying for a long time now that if MLSE are investing in MLS then they must see value in doing so. True, but that doesn't mean the value is in the soccer team itself (seriously, in a league that has lost something like US$100 million over its entire existence, how could there be value in the team?). As Perkins points out, their initial investment in soccer (to which there is no longer-term commitment), may be a write-off they don't care about in the long run. This is half of my opposition to MLSE as MLS owners (the other half is that while they are owners they will not make decisions based on what is best for Canadian soccer (we're seeing it already: only 11 Canadians?)). It's not just a matter of "who cares what MLSE's motives are, soccer will reap the benefits either way". As long as their motives are not in line with soccer then the benefits will be greatly lessened and only short-term (which, given the state of Canadian soccer, really counts for nothing). I think we need people who are genuinely interested in Canadian soccer like Kerfoot and Saputo. Link to comment Share on other sites More sharing options...
Gordon Posted October 13, 2005 Share Posted October 13, 2005 quote:Originally posted by RealGooner Because the time has run out, and here is a huge beaurocracy in Toronto. The politicians, if left to their own devices will continue to try squabble about this in order to get some personal political mileage out of it. they will bicker until the project is dead in the water. Then they will bicker over who was responsible for the project falling through...So a sense of urgency is needed to ensure that this matter doesn't get bogged down too. I don't find that very convincing truthfully. The City of Toronto has never been a lynchpin in this deal, and the intial projections for their contribution was $5-7 million. They've upped that ante, but now all of a sudden their money is the problem? Not at all convincing. Compare to MLSE, who have been reluctant to commit to anything in this, and the amounts they are now bandying about leaves the project $10 million short. The only way this deal gets done by the deadline, even if Toronto green lights it in late October, is if the private financing is fully in place. If it is fully in place as Gian-luca speculates, then why not announce that and put all the pressure on Toronto City council. Because right now, the loophole for the NIMBY or "Butter not Stadium" types on council - or anywhere else for that matter - is to say, "hey, the financing is not in place, even if we contribute and we don't like MLS putting a gun to our head". To meet this deadline, there will be five days to confirm all of the financing, which includes signing the naming rights deal (in a manner that secures a loan for the balance of the capital costs or covers the capital cost if it is up front {doubtful}), securing all other private financing and having all parties sign off committing the funds to the development. Even if everything else is in fact in place, we are looking at a very short timeframe to accomplish a lot. And only 3 of those are working days which, like it or not, will be a factor in dealing with the 3 levels of government. But, time will tell. I hope that you and the others are able to do the "told ya so" dance on "all hallows eve". This is one time when I'd be thrilled to be wrong (we need the stadium). Link to comment Share on other sites More sharing options...
RealGooner Posted October 13, 2005 Share Posted October 13, 2005 quote: I think we need people who are genuinely interested in Canadian soccer like Kerfoot and Saputo. We already have them so whats the problem? Link to comment Share on other sites More sharing options...
Gian-Luca Posted October 13, 2005 Share Posted October 13, 2005 quote:Originally posted by Gordon I don't find that very convincing truthfully. The City of Toronto has never been a lynchpin in this deal, and the intial projections for their contribution was $5-7 million. They've upped that ante, but now all of a sudden their money is the problem? Not at all convincing. No, but since they've "hijacked" the location back to City-owned land, its their approval to build (and demolish) on their land that has to be confirmed in time by the City Council, along with sorting out the operating details with MLSE. So they had better bloody vote in favour, as they are the ones that has swung the pendulum back to City owned land instead of Federal-owned land. As soon as they did that (and with even the MLS & MLSE now saying only Ex. place is their choice), they became the lynchpin in the deal. I expect their financial contribution means that somebody else is putting in less cash, with is either going to be naming rights or MLSE (or both). Link to comment Share on other sites More sharing options...
DJT Posted October 18, 2005 Share Posted October 18, 2005 I'm surprised this wasn't posted already? It's from Monday's Toronto Star. Oct. 17, 2005. 01:00 AM Crunch time for stadium deal JIM BYERS SPORTS REPORTER Talks to approve a new $60 million soccer stadium at Exhibition Place are going down to the wire. And one high-ranking official says he's concerned the deal could still crumble. "It's right down to the crunch," Maple Leaf Sports and Entertainment president Richard Peddie said yesterday. "Am I worried? Yeah, I am. It hasn't got done yet. We want this but it has to be the right deal." Major League Soccer officials last week said they need the proposed 20,000-seat stadium to be approved by Oct. 31 if Toronto is to get an MLS expansion team in 2007. The federal and provincial governments have offered a combined $35 million for a stadium that would be used for the FIFA youth championships in 2007. The city has said it will provide $9.5 million if the stadium is built at the Ex, while MLSE is believed to be offering about $8 million. The rest would come from private sources. Link to comment Share on other sites More sharing options...
DoyleG Posted October 18, 2005 Share Posted October 18, 2005 Did he say that before or after the Raptors got be by Maccabi Tel-Aviv? Link to comment Share on other sites More sharing options...
RealGooner Posted October 18, 2005 Share Posted October 18, 2005 quote:Originally posted by DoyleG Did he say that before or after the Raptors got be by Maccabi Tel-Aviv? LOL Link to comment Share on other sites More sharing options...
Gordon Posted October 18, 2005 Share Posted October 18, 2005 quote:Originally posted by DJT ...while MLSE is believed to be offering about $8 million. The rest would come from private sources. Yes, this is what I was worried about. Link to comment Share on other sites More sharing options...
Glenn Posted October 19, 2005 Share Posted October 19, 2005 October 18, 7:55pm (Toronto Star web site): T.O. soccer stadium getting closer CANADIAN PRESS Plans for a soccer-specific stadium in Toronto moved one step closer Tuesday when the major players in the plan struck a deal to manage the proposed facility. The Canadian Soccer Association, City of Toronto and Maple Leafs & Sports Entertainment concluded an agreement on how to run the stadium. There are still several more hurdles still to cross before the 20,000-seat venue becomes a reality but the management deal is important. The stadium will become the property of the City, which owns the land, and Toronto officials were unlikely to approve $9.5 million of city funding unless they were happy with the plan to run the venue. Maple Leaf Sports & Entertainment, which needs the stadium for its bid for a Major League Soccer expansion franchise, is expected to run the venue at Exhibition Place near the waterfront. As such, it had its own expectations for a management deal. And the Canadian Soccer Association, as the go-between and deal-broker, needed both sides to be happy. Those goals seemingly accomplished, the stadium project now goes before several key groups. First up is the Exhibition Place board of governors, which meets Wednesday on the issue. It has to approve the project. The stadium also has to get the green light from city council's policy and finance committee on Oct. 20 and then from the full council (44 councillors and the mayor) on Oct. 26. Major League Soccer gave MLSE and the City until Oct. 31 to sort out the stadium issue, threatening to look elsewhere for an expansion home unless the issue was settled. The federal government has pledged $27 million with another $8 million from the provincial government. If the city provides its $9.65 million, that leaves a little more than $17 million needed for the $62-million project. Naming rights and a contribution from MLSE are expected to make up that shortfall. The 12-team MLS added two new franchises this season: Real Salt Lake and FC Chivas, which plays out of Carson, Calif. Those expansion franchises cost $10 million US apiece. MLS says the expansion price tag this time will be "slightly higher." The league is looking for a second expansion team in 2007, with the leading candidates Cleveland, Philadelphia, Houston, Milwaukee and St. Louis, Garber said. Exhibition Place is located opposite Ontario Place on the lakefront. It used to be home to the Toronto Argos and Blue Jays at Exhibition Stadium, and currently houses the American Hockey League's Marlies at the Ricoh Coliseum. Link to comment Share on other sites More sharing options...
RealGooner Posted October 19, 2005 Share Posted October 19, 2005 Looking good....... Link to comment Share on other sites More sharing options...
Free kick Posted October 19, 2005 Share Posted October 19, 2005 quote:Originally posted by DJT It's not just a matter of "who cares what MLSE's motives are, soccer will reap the benefits either way". As long as their motives are not in line with soccer then the benefits will be greatly lessened and only short-term (which, given the state of Canadian soccer, really counts for nothing). I think we need people who are genuinely interested in Canadian soccer like Kerfoot and Saputo. No, we don't need people who are genuinely interested in soccer. Its a bonus if they are but not necessary. Do you know how much Kerfoot knows about the game? I don't. We had CSL briefly which was run and owns by people who genuinely loved soccer and look where it went. If your criteria for ownership were true then you would seldom if ever see a US based NHL team winning the stanley Cup. I am curious to know what the guys who owns the TB lightning know about hockey. Conversely I don't have any doubt that Harrold Ballard loved the game. The teleacsts always showed him at his seat in the box but was he a model owner?. What you need is people who can sell the game. Regarding your comments: " As Perkins points out, their initial investment in soccer (to which there is no longer-term commitment), may be a write-off they don't care about in the long run." Sorry to say but I hear this talk often and it makes me roll my eyes since it it very much symtomatic of financial neophytes. Yes, there are large holding companies whereby not all their operations are profitable and losses in one do reduce the tax burden on the holding co. I am not a CA but I know that no business exists to lose money. Nor would any capitalist enter into a venture if he or she didn't believe that it could add value or be a successfull operation. There are plenty of investment vehicles out there that serve to reduce a tax burden such as Limited partnerships and other flow through entities that can achieve that objective. The teachers pension fund is not interested in losing money to save taxes, thats not how pension funds or any other investment funds work. Perkins obviously knows nothing and shows zero financial and business acumen for suggesting that. If MLSE is accountable to shareholder and shareholders want to see a return on investment. Not to lose money. If MLse is committed to investing 10 mill$ and operating the stadium, then it will be Peddie's ass that is on the line if the investment doesn't add value to the portfolio. And even if the investment if solely for acquiring undervalued/depressed assets such a stadiums, then what would happen to the value of that asset if the team goes belly up and you no longer have a tenant for yourself. Link to comment Share on other sites More sharing options...
DoyleG Posted October 19, 2005 Share Posted October 19, 2005 quote:Originally posted by Free kick No, we don't need people who are genuinely interested in soccer. Its a bonus if they are but not necessary. Do you know how much Kerfoot knows about the game? I don't. We had CSL briefly which was run and owns by people who genuinely loved soccer and look where it went. If your criteria for ownership were true then you would seldom if ever see a US based NHL team winning the stanley Cup. I am curious to know what the guys who owns the TB lightning know about hockey. Conversely I don't have any doubt that Harrold Ballard loved the game. The teleacsts always showed him at his seat in the box but was he a model owner?. What you need is people who can sell the game. William Davidson would know a lot about hockey. He owned the Detroit Vipers which became one of the leaders of the IHL almost up to it's demise. You seem to forget that the times have changed and you need owners that know the sport you will invest in. This is why Uncle Phil and Uncle Lamar are still big players in MLS. If you don't have a soccer knowledge than you better bring in people who have a pronounced knowledge of the sport. Kerfoot certainly has a soccer knowledge since he's going this far with the Whitecaps in building them a stadium. MLSE has no knowlegde of soccer at all and don't seem to have anybody that has knowledge of sport. MLSE isn't going to give up control of a team to knowlegable people either. quote:Originally posted by Free kick Regarding your comments: " As Perkins points out, their initial investment in soccer (to which there is no longer-term commitment), may be a write-off they don't care about in the long run." Sorry to say but I hear this talk often and it makes me roll my eyes since it it very much symtomatic of financial neophytes. Yes, there are large holding companies whereby not all their operations are profitable and losses in one do reduce the tax burden on the holding co. I am not a CA but I know that no business exists to lose money. Nor would any capitalist enter into a venture if he or she didn't believe that it could add value or be a successfull operation. There are plenty of investment vehicles out there that serve to reduce a tax burden such as Limited partnerships and other flow through entities that can achieve that objective. The teachers pension fund is not interested in losing money to save taxes, thats not how pension funds or any other investment funds work. Perkins obviously knows nothing and shows zero financial and business acumen for suggesting that. The teachers pension fund isn't about just making a profit. It's about reaching a profit goal that would justify continued investment. They don't get the return they have, they will pull the plug. Profit or not. quote:Originally posted by Free kick If MLSE is accountable to shareholder and shareholders want to see a return on investment. Not to lose money. If MLse is committed to investing 10 mill$ and operating the stadium, then it will be Peddie's ass that is on the line if the investment doesn't add value to the portfolio. And even if the investment if solely for acquiring undervalued/depressed assets such a stadiums, then what would happen to the value of that asset if the team goes belly up and you no longer have a tenant for yourself. Let's see Money put towards the stadium: At least $8 Million not counting any shortfall that they would have to carry. Any project in which gov't funding is the major player is going to go over budget. Expansion fee: At least $15 Million. So at least $23 Million is spent by MLSE before a ball even hits the turf. Add on $8 Million/year at least for running a franchise for at the first 3 years. That's $47 Million dollars that would have to be recovered with no guarentee of additional reveue streams compared to other SS Stadiums in MLS. There's a reason why pension funds are considered to be the new pyramid scheme. Link to comment Share on other sites More sharing options...
Gian-Luca Posted October 19, 2005 Share Posted October 19, 2005 Jim Byers of the Star had an even more positive article than the one that Neil Davidson wrote, with some quotes from Pipe about this being a huge day for Canadian soccer. Here it is: Stadium deal nearly done Financing in place for facility at Ex Ball now in court of key city groups JIM BYERS SPORTS REPORTER After almost three years of false starts, Kevan Pipe says it's finally about to happen. A deal to build a 20,000-seat, $63 million soccer stadium at Exhibition Place will go to public officials today for the first of a series of votes after representatives from the city of Toronto, Maple Leaf Sports and Entertainment and the Canadian Soccer Association yesterday hammered out an agreement. "We had marathon sessions and it was intense but in the end we got it done," said Pipe, the CSA's chief operating officer. "We have all the financing in place with three levels of government, MLSE and the private sector. To say this is a significant day for soccer is an understatement." Deputy mayor Joe Pantalone said the deal will go to the board of governors of Exhibition Place for a vote today and to the city's policy and finance committee tomorrow. The full Toronto city council is slated to vote on the deal some time next week. "I'm sure some people will ask questions but at the end of the day I think they'll raise their hands" in favour, Pantalone told the Star. Major League Soccer officials last week said they want a team in Toronto in 2007 but that council has to agree by Oct. 31 in order to make it happen. Pantalone said the city agreed to kick in another $300,000 to make the deal work, bringing Toronto's contribution to $9.8 million. The federal government long ago agreed to pay $27 million for a stadium in Toronto to host games as part of the 2007 FIFA world youth soccer championships, while the province said it would kick in $8 million. MLSE will contribute about $8 million towards the stadium, which it will operate. Link to comment Share on other sites More sharing options...
Gian-Luca Posted October 19, 2005 Share Posted October 19, 2005 Here's the Globe's latest article: By JENNIFER LEWINGTON Wednesday, October 19, 2005 Page A14 CITY HALL BUREAU CHIEF A new $62-million soccer stadium -- the key to Toronto hosting a world championship in 2007 -- will move a big step closer to reality if the board of Exhibition Place gives its approval today. "We have the financial terms of an agreement," said Toronto deputy mayor Joe Pantalone, the chairman of Exhibition Place. Richard Peddie, the president of Maple Leaf Sports and Entertainment Ltd., was more guarded in his comments, since any deal must clear several more political hurdles, including a vote tomorrow by the city's policy and finance committee and by full council later this month. "We are getting closer," said Mr. Peddie, confirming that his company will meet the board today. Canadian Soccer Association president Kevan Pipe, who will also attend the meeting, said last night that the parties came to terms yesterday after days of negotiations. "This is a huge day for us," he said, not least because the proposed facility would be the first soccer-specific stadium in Canada for amateur and professional games. Time was running out to make a deal, with an end-of-month deadline looming to get a final sign-off. "We should have started construction yesterday," Mr. Peddie said.In 2003, the CSA was granted the right to play host to the 2007 world youth soccer championship in Toronto and other Canadian cities. However, the location of a new stadium for the Toronto event has bounced around like a Ping-Pong ball. Initial discussions focused on Varsity Stadium, then at York University, before turning into a competition between the federal government's Downsview Park and city-owned Exhibition Place. Earlier this month, Maple Leaf Sports won the rights to a Major League Soccer expansion team that would begin play in 2007. GlobeExStadOct19 Link to comment Share on other sites More sharing options...
Gordon Posted October 19, 2005 Share Posted October 19, 2005 quote:Originally posted by Free kick No, we don't need people who are genuinely interested in soccer. Its a bonus if they are but not necessary. Do you know how much Kerfoot knows about the game? I don't. We had CSL briefly which was run and owns by people who genuinely loved soccer and look where it went. I am not so that is entirely true at this point in time. The profit making factor in soccer is not so definite that a busines or owner whose sole desire is to make money is the ideal investor. If soccer were a certainty to make money, I'd be in full agreement with you. But right now the only difference between Toronto as a market for domestic soccer and, Say Edmonton, is the willingness of the owners to lose money because of their interest inthe game. If T.O follows the course of every other MLS team and ranges from a money loser to a mildly profitable venture (of which I beleive there is only one) then interest in soccer may be the only thing that keeps the venture going. quote:Originally posted by Free kick Regarding your comments: " As Perkins points out, their initial investment in soccer (to which there is no longer-term commitment), may be a write-off they don't care about in the long run." Sorry to say but I hear this talk often and it makes me roll my eyes since it it very much symtomatic of financial neophytes. Yes, there are large holding companies whereby not all their operations are profitable and losses in one do reduce the tax burden on the holding co. I am not a CA but I know that no business exists to lose money. Nor would any capitalist enter into a venture if he or she didn't believe that it could add value or be a successfull operation. There are plenty of investment vehicles out there that serve to reduce a tax burden such as Limited partnerships and other flow through entities that can achieve that objective. The teachers pension fund is not interested in losing money to save taxes, thats not how pension funds or any other investment funds work. Perkins obviously knows nothing and shows zero financial and business acumen for suggesting that. No shareholder wants to lose money with their investments, but shareholders have only a certain say. Unless the Teacher's pension fund controls the board of MLSE what they do and don't want is completely irrelevant beyond the Board's desire to keep them on ship. Your point about wanting to make money, while true, is too limited in its scope. If MLSE figures they can make a profit through control of the stadium and that $25 million, more or less for that right is a good bargain, then the profit making capacity of MLS Toronto becomes a secondary consideration, and the tax benefits of an operating loss, or even abandonment of the venture, become an important conideration. Remember that MLSE is not only operating a soccer team. It wanted a management deal as part of the equation. The history of MLS, and the uncertainty of the Toronto market makes the soccer side of this deal questionable financially. Most business ventures are expected to make a profit of approximately 15% before any money that knows what it is doing will be invested. What part of MLS - or the Lynx, Blizzard or Metro-Croatia - would lead any investor to think that $3 million annually in profit is likely? I think if the fans turn out, and MLS Toronto is profitable, MLSE will be delighted, but I doubt very much doubt that their investment in MLS hinges on that. I'd say Perkins is right about the stadium being the primary objective. That is not to say that they won't run their soccer team with the goal of a profit, but I don't expect that MLSE will keep running it at a loss. ANd running at a loss is the history of MLS. quote:Originally posted by Free kick If MLSE is accountable to shareholder and shareholders want to see a return on investment. Not to lose money. If MLse is committed to investing 10 mill$ and operating the stadium, then it will be Peddie's ass that is on the line if the investment doesn't add value to the portfolio. And even if the investment if solely for acquiring undervalued/depressed assets such a stadiums, then what would happen to the value of that asset if the team goes belly up and you no longer have a tenant for yourself. 15-18 dates may be easily made up. You assume that they are not, but if MLSE's market research suggest that those lost MLS dates can be made up, then it won't be a factor. Indeed, the need for the team to have a decent pitch may inhibit the ability to hold rock concerts as often as they want, and the actual operation of the team may in fact act as a detriment to the profitbility of the stadium. The notion that MLSE may be in this only for control if the stadium is not far fetched. It is by no means certain, but I have to think it is the prime motivator given the option for MLSE to invest their money into ventures with a more certain return than MLS soccer. Maybe their analysis is that the successful operation of both gets them their return...maybe they genuinely believe that they can operate profitablly and that is part of their number crunching. But it is quite possible that the overall proftiability of this includes operating MLS soccer at a loss in exchange for control of a stadium and the tax write off. Link to comment Share on other sites More sharing options...
Free kick Posted October 19, 2005 Share Posted October 19, 2005 Gordon quote: "I am not so that is entirely true at this point in time. The profit making factor in soccer is not so definite that a busines or owner whose sole desire is to make money is the ideal investor. If soccer were a certainty to make money, I'd be in full agreement with you. But right now the only difference between Toronto as a market for domestic soccer and, Say Edmonton, is the willingness of the owners to lose money because of their interest inthe game. If T.O follows the course of every other MLS team and ranges from a money loser to a mildly profitable venture (of which I beleive there is only one) then interest in soccer may be the only thing that keeps the venture going." My response: But I chose my words very carefully in my original post. I did not say "Profitable" (as you alluded to) but rather " adding value" or " successfull operation". That could mean many things, the soccer operation could contribute to value and profitability of an other operation within the group. Cross promotion is one example others include asdvertise, rights fees etc etc. Don't forget that MLSE now ( with the soccer team) has sport operations that run 12 months a year. That in itself is very significant and something that Rogers cannot boast. Gordon quote: "No shareholder wants to lose money with their investments, but shareholders have only a certain say. Unless the Teacher's pension fund controls the board of MLSE what they do and don't want is completely irrelevant beyond the Board's desire to keep them on ship. Your point about wanting to make money, while true, is too limited in its scope. If MLSE figures they can make a profit through control of the stadium and that $25 million, more or less for that right is a good bargain, then the profit making capacity of MLS Toronto becomes a secondary consideration, and the tax benefits of an operating loss, or even abandonment of the venture, become an important conideration. Remember that MLSE is not only operating a soccer team. It wanted a management deal as part of the equation. The history of MLS, and the uncertainty of the Toronto market makes the soccer side of this deal questionable financially. Most business ventures are expected to make a profit of approximately 15% before any money that knows what it is doing will be invested. What part of MLS - or the Lynx, Blizzard or Metro-Croatia - would lead any investor to think that $3 million annually in profit is likely? I think if the fans turn out, and MLS Toronto is profitable, MLSE will be delighted, but I doubt very much doubt that their investment in MLS hinges on that. I'd say Perkins is right about the stadium being the primary objective. That is not to say that they won't run their soccer team with the goal of a profit, but I don't expect that MLSE will keep running it at a loss. ANd running at a loss is the history of MLS." My response: Again, see my point above... Plus, the 15% ROE doesn't apply here. If it did, there would be hardly any pro sports team left. Sorry, have more to say but i am pressed for time right now... will add more 2nite. Any business has to be a going concern. Gordon quote: "The notion that MLSE may be in this only for control if the stadium is not far fetched. It is by no means certain, but I have to think it is the prime motivator given the option for MLSE to invest their money into ventures with a more certain return than MLS soccer. Maybe their analysis is that the successful operation of both gets them their return...maybe they genuinely believe that they can operate profitablly and that is part of their number crunching. But it is quite possible that the overall proftiability of this includes operating MLS soccer at a loss in exchange for control of a stadium and the tax write off." My response: Well, regarding the controll of the stadium issue, I have to admit that I am inclined to concure with you and the other sceptics. But as I said, you have to put somthing in the stadium. An assets has to contribute to earnings, otherwise you be come ineffiecent. Link to comment Share on other sites More sharing options...
Andrew W Posted October 19, 2005 Share Posted October 19, 2005 One additional factor for MLSE wanting into MLS with control of a facility is the contact it provides with AEG, still the major investor in MLS. AEG is a huge force in major concert and entertainment promotions, thus the stages being built in some of the new and proposed SS stadiums. There are a lot of good business reasons for MLSE to have an interest in MLS and the stadium. Few of them really have to do with soccer. However, fielding a team in the league offers them potential ancillary revenues simply based on who some of the other investors in the league are. Cross promotions with AEG must be part of the reason MLSE are pursing this fairly vigorously. Link to comment Share on other sites More sharing options...
DoyleG Posted October 20, 2005 Share Posted October 20, 2005 quote:Originally posted by Andrew W One additional factor for MLSE wanting into MLS with control of a facility is the contact it provides with AEG, still the major investor in MLS. AEG is a huge force in major concert and entertainment promotions, thus the stages being built in some of the new and proposed SS stadiums. There are a lot of good business reasons for MLSE to have an interest in MLS and the stadium. Few of them really have to do with soccer. However, fielding a team in the league offers them potential ancillary revenues simply based on who some of the other investors in the league are. Cross promotions with AEG must be part of the reason MLSE are pursing this fairly vigorously. How does this fit in when MLSE and AEG have different goals. AEG would see MLSE as more of a threat to it's business than as a potential partner. Link to comment Share on other sites More sharing options...
Canuck Oranje Posted October 20, 2005 Share Posted October 20, 2005 As a finance guy in my day job, this isn't about immediate profitability. Also the 15% ROE hurdle doesn't apply in this case. Why? Because this is all about market-value added over the long term. In fact, for a long term project that doesn't pay out until near the end, pension funds are great partners because they work in the long-term on both sides of their business. It's all about matching cash coming in and to cash going out on their portfolio. Pension funds manage a portfolio. The ROE requirements a different on each segment (asset class) depending on the risk. For example, if a pension fund was to buy an existing building like say, the TD Centre in Toronto, the ROE requirement would be lower because cash is already flowing and the risk is lower. In the case of their MLSE investment (that's who they invest in, not MLS), it's partly about current profitability; but much more about the overall market value of that asset (MLSE). I would argue too that their required rate of return (combined profit and market value added)would be much higher than 15% because of the risk. However, Teacher's have invested in the business with the current management team and will have confidence in their ability to provide the required level of return. And Teacher's requirement for higher returns is precisely why MLSE is considering the MLS investment. It is high risk and high potential return (according to their analysis). Also, I do know for sure but I would expect that Teacher's would not directly invest amounts less than an amount like $50 million per investment and likely higher. How many good investments of that magnitude actually exist in Canada (why pension funds are now allowed to invest outside of Canada)? A good comparison would be to a construction project like Canary Warf. That project bankrupted a few companies and yielded very little cash for a number of years. But now, it is starting to generate cash for its owners and its market value is much higher than ever before. In the case of MLSE, Teacher's will hope that a "Roman Abramovich - like investor" with step up with a few bucks to buy them out at the higher market-value somewhere down the road (5 to 20 years depending on their time horizon for this investment). When you think of this investment by MLSE, there is a bit of ruthlessness to it. They let the Ansheutz, Kraft and the Hunts make the seed investments and do the early very high risk market development and then when the picture begins to clear a little, MLSE jumps in with their hands on the ultimate "me too" market, Toronto, in North America (like a Canary Warf strategy). If you look at the history of the Raptors and the ACC, it is different but a similar approach. As for their support for the MNT, I never heard of the Leafs not allowing their players to not represent their countries in hockey. The NHL makes the international agreements as far as I know. If you look at this as a long-term market development project, why wouldn't they support the national team? Finally throwing a little oil on the rumour fire, consider this. Teacher's owns a substantial portion of Maple Leaf Foods and has financed Parmalat Canada recently. Richard Peddie is an ex-food industry marketing executive and Larry Tannenbaum has personal investments in a food service business. Steve Stavros is a former grocer. If you are looking for business activity outside of soccer, I smell cheese (Saputo????). And MLSE has MLS rights for Canada. Just a guess but interesting to consider. Link to comment Share on other sites More sharing options...
DoyleG Posted October 20, 2005 Share Posted October 20, 2005 Sun Media Artcle.... ----------- Not everyone happy with Toronto stadium deal. By DEAN MCNULTY, SUN MEDIA TORONTO -- No matter how you do the math, a proposed 20,000-seat soccer stadium to be built on the Canadian National Exhibition grounds still is nearly $2 million shy of its estimated $64-million construction cost. And the starting price of stadiums, no matter how small, rarely bears any resemblance to its final tally. The City of Toronto and Maple Leaf Sports and Entertainment Ltd. - owners of the Maple Leafs and the Raptors - have agreed in principle to build the facility that will house an expansion Major League Soccer team owned by MLSEL and be home to the 2007 FIFA under-17 world championship and possibly affect Edmonton's hopes to host the final of the tournament at Commonwealth Stadium. $27M FROM FEDS City council approved a scheme this week that would see MLSEL ante up $18 million, the city $9.8 million, the province $8 million and the feds $27 million for the project. According to the deal, the city would be the owner and landlord of the stadium, with MLSEL signing a long-term contract for its proposed soccer squad. Construction of the stadium on the site of the Canadian Autosports Hall of Fame in the lakeshore CNE grounds is scheduled to start in January, just enough time for completion by the 2007 season. MLSEL has an Oct. 31 deadline to get approval for the stadium in order to get an MLS franchise. But not everybody is happy that local taxpayers will have to bear the the brunt for almost $10 million of the stadium's building costs, plus a continuing contribution in annual operating costs. MLS FRANCHISE At a meeting yesterday of the Canadian National Exhibition board of governors, Toronto resident Alan Kasperski spoke against the plan. "This is plain and simple an example of taxpayers subsidizing professional sports," Kasperski said. "MLSEL built the Air Canada Centre at a cost of $250 million using all private money," he said. "So why can't those same people pay for their own soccer stadium?" Kasperski said there appears to be a rush to okay this deal so that MLSEL can get its MSL franchise in time for the 2007 season. "Why can't they play in the Rogers Centre?" he said. "There are a number of MLS teams that currently share National Football League stadiums in their cities." MLSEL president Richard Peddie said the negotiations were difficult and he's not calling it done until it has full council approval, but he's convinced this stadium can make money for both sides. "We're a business and we look for a rate of return," Peddie said. Council's finance committee meets today to give its seal of approval to the deal. http://www.edmontonsun.com/Sports/Soccer/2005/10/20/1270753-sun.html Link to comment Share on other sites More sharing options...
DoyleG Posted October 20, 2005 Share Posted October 20, 2005 .... and a TorStar article. ------------ Taxpayers to help cover soccer stadium costs JIM BYERS SPORTS REPORTER Toronto taxpayers would be responsible for half of the operating or annual shortfalls in capital spending at a proposed soccer stadium at Exhibition Place, according to a city report. Terms and conditions of an agreement between the city, the Canadian Soccer Association and Maple Leaf Sports and Entertainment state that MLSE is responsible for construction cost overruns at the 20,000-seat, $62.8 million stadium. MLSE also would pay the first $250,000 of any operating shortfalls. But after that, the report says, the city/Exhibition Place board and MLSE would "share equally in funding any annual operating shortfalls or annual shortfalls in capital expenditures." Soccer isn't known as a money-maker in Toronto. But Exhibition Place chief and Deputy Mayor Joe Pantalone said he's not worried. "MLSE is a very successful organization," he said. "They don't seem to know how to lose money." The proposed stadium was unanimously approved by the Exhibition Place board yesterday. The deal calls for the city to spend $9.8 million, the federal government $27 million and the province $8 million. MLSE will pay $8 million and advance another $10 million from the sale of naming rights. The city-owned stadium would host 2007 world youth soccer championships games and house a proposed Major League Soccer franchise owned and operated by MLSE. with files from Paul Moloney http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1129758433469&call_pageid=1044529386722&col=1044529386490 Link to comment Share on other sites More sharing options...
Gian-Luca Posted October 20, 2005 Share Posted October 20, 2005 I think that complainer the Sun devoted an entire article about is the same guy that wrote a letter to the Toronto Star about it. So by "not everybody" happy what they really mean is "One person in a city of millions is not happy, so lets go write an article about him and stir up more un-rest". Too bad the article didn't mention that the Ex board of Governors unanimously ignored him with their vote! But it was obviously a one-sided piece. Guess the author of which wasn't listening to the FAN590 yesterday either since he doesn't seem to have all the facts at his disposal. Including the name of the tournament to be held in Canada in 2007, apparently! Link to comment Share on other sites More sharing options...
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