MLSE Territorial Veto

One of the biggest areas of confusion in the Coyotes case is the alleged MLSE veto over a second NHL franchise coming to Southern Ontario. This veto is seen as something MLSE will use out of fear of competition to protect their Toronto area monopoly at all costs. The possibility of MLSE suing the NHL to protect this veto power will likely be central to a Balsillie anti-trust action against the NHL if they purse that route.

The reality is that MLSE does not fear competition from a second NHL team in its area. The Leafs are the Leafs and their legion of fans has supported them when all rational people would have abandoned the team. A Hamilton Blackberry franchise would have little effect on Leaf fans and would not put a dent in MLSE revenue.

A larger fear for MLSE is what effect a second team would have on the Raptors, on arena bookings and on television rights. The Raptors could feel some effect in terms of fan support and corporate marketing dollars, but the basketball fan base is quite separate from hockey fans. Likewise marketing dollars exist for both in the region.

A bigger concern is the possibility of a second arena drawing concerts and events away from the Air Canada Center. To this end the Hamilton franchise would not be a bad thing for MLSE since the arena already exists and no new competition is added. The television pie is already split with numerous Canadian franchises and it is not likely that a new team would take away from the mystique of the Leafs. By and large the Toronto market will not be clamoring for more Hamilton hockey games. If a second NHL team in the area forces more Leaf games off network television, MLSE will be more than happy to accommodate those games on Leaf TV.

From all these perspectives a Hamilton franchise may well be the best possible scenario for a second NHL team from MLSE’s point of view. So, why are they threatening to play the veto card and why are they not in favor of the Hamilton franchise?

The reason is that MLSE is not a defensive organization, they are an offensive one. They view this alleged veto as an asset. They are not willing to give that asset away, nor are they willing to sell it for some $25 – 50 million in indemnification fees.

They realize that a second team will eventually come to the GTA and they realize that their veto is likely not enforceable in court. What they want to do is maximize this veto asset and they will only give it up for a lucrative business opportunity.

What they likely want to do is forge a business partnership with the second GTA team and leverage that into a massive development. They envision a second arena with a surrounding development of condos, restaurants, stores, etc. with the new hockey team being the core tenant in the arena that MLSE will own. That type of project will generate the type of revenue that they will demand for agreeing to a second GTA hockey team. At that point you will see them welcome a second team for Southern Ontario hockey fans and join that team in its submission to the NHL.

The only problem for MLSE with Balsillie or Hamilton is that it doesn’t satisfy the one question that we hear all too often today. “What’s in it for me?”