With the passing of this weekend came what many deemed to be the passing of an historic opportunity for U of T. On the morning of Saturday, March 13, Richard Peddie, president and chief executive officer of Maple Leaf Sports & Entertainment (MLSE), announced that his organization would be pulling out of the highly publicized Varsity deal, in which his company would have contributed approximately $35 million to revitalize the current Varsity site.
“There was no one dealbreaker,” said Peddie. “We were prepared to take a lower return because it did wonderful things for U of T, the Argos, soccer, and the City of Toronto. This was a project that seemed to fit our strategic plan, [however] all of the revenue, operation expenses, capital expenses…they just would not deliver the return on investment we wanted.”
“You can look at projects like this from either your heart or your head,” commented U of T’s Jon Dellandrea, vp of development. “From your heart we all wanted this to happen. From your head, this project fell under the financial parameters desired by MLSE. At the end of the day, the numbers just didn’t work.”
Despite the departure of MLSE, Dellandrea remains optimistic about the deal. The university continues to negotiate with the Toronto Argonauts and the Canadian Soccer Association, and is intending to present a revised version of their initial proposal to both the provincial and federal government within two weeks.
This modified proposal would still include a 25,000 seat stadium, a renovated Varsity Arena, and some retail units on Bloor Street. The projected cost of this plan is estimated to be around $90 million – $10 million less than the previous deal. However, without MLSE, more of the financial burden will now fall upon both levels of government. When asked if securing government funding would be easier without MLSE, Dellandrea said “probably. It was a consistent view expressed by the federal government that this had to be seen as support for U of T, not a financial subsidy for professional sports.”
Any future government support would be provided to U of T by one of two methods-the first of being a straightforward grant. Conversely, the government could sign on to a contingent cash flow guarantee, under which Ottawa would annually help with the debt and income shortfalls of the project. “There [is] a real sense of time urgency,” said Dellandrea, “given the uncertainty of the federal election. There’s a collective desire to put together a deal…while we still have the federal government’s attention.”
Time is certainly of the essence. While negotiations continue with U of T, the Argos have openly acknowledged that they are also considering York University and the CNE as possible locations for their new home. From the beginning, Howard Sokolowski and Dave Cynamon, co-owners of the team, have maintained their desire to have a new stadium up and running for the 2006 season.
“Each site has a lot of positives,” explained Keith Pelley, president and ceo of the Argonauts. “There’s been a lot of talk about parking, access by public transit, and location [in general]. We have the luxury of having three great locations, [and] all three are being equally considered. In terms of the Varsity site, we would love to be part of rekindling that whole area.”
He went on to comment that “MLSE would have been an excellent partner. They’re a powerful brand, and have access to excellent resources. But there was no agreement in place [between us]. We’re currently still weighing our options. This is a city of five million. We’re just looking for 25,000.”
While meetings between the three parties will undoubtedly continue throughout the course of the next few weeks, it seems all involved remain confident that a revised deal can be effectively negotiated-even MLSE. Asked if his organization would ever reconsider, Peddie said “there are no absolutes. It’s always possible. We explored it for three months and we pulled the plug reluctantly. [This deal] could still live, just not with us involved.”
