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As Bay Street reels from the financial meltdown, it's business as usual at the Air Canada Centre. Hundreds stream between under-construction condos to get inside the arena an hour before the puck is to be dropped, ticket scalpers flick bills off wads of cash, dads pull excited sons by the hand through the masses, and once inside, fans draped in blue fork over $12 for draft without a squawk. General manager Cliff Fletcher has warned repeatedly since last spring that the Toronto Maple Leafs are unlikely to make the playoffs, again. No matter. Tampa Bay is in town on a Tuesday night, and the game is sold out.

The Maple Leafs haven't played a postseason game at the Air Canada Centre since May 4, 2004 and as every one of their fans is painfully aware, 41 years have passed since they won the Stanley Cup.

Yet all that losing works in disproportion to the bottom line. The longer they fail, the more valuable they become. In the most populated region of Canada, love for the Maple Leafs is an itch that cannot be scratched, no matter how many indignities the team visits upon its fans.

"Hockey is a big thing in Toronto and the Leafs, whether you like it or not, have been around longer than all these fans," said Buffalo Sabres broadcaster Harry Neale, who grew up in Toronto and broadcast Leafs games for years. "You would think poor performance would lead to a drop in revenue but it hasn't happened. If I had a clue why, I would open a similar business. I guess that's lucky for the Leafs."

In Forbes Magazine's annual valuation of the NHL's 30 franchises, the Leafs are ranked No. 1 for the third successive year, with a value of $448-million (U.S.). "Everyone believes we have nothing to worry about," says Richard Peddie, the president of the Leafs' parent company, Maple Leaf Sports and Entertainment.

"We're recession-resistant, not recession-proof."

More like bullet-proof.

Forbes estimated the Maple Leafs' operating income (earnings before interest, taxes, depreciation and amortization) at $66.4-million (U.S.) for the 2007-08 season. Peddie insisted, as he does every year, that Forbes "does not have our numbers" but he does not offer alternatives.

MLSE, a private company, also includes the Raptors of the NBA, a Major League Soccer team, two television networks, the Air Canada Centre (second-busiest concert venue in North America), and interests in the two condominium projects adjacent to the arena. The company does not disclose its financials or break out revenues from its various holdings. According to a banking source, MLSE generated an estimated net profit of $80-million (U.S.) in the last fiscal year and is now worth $1.6-billion (U.S.).

But the hockey club drives the revenues. The club reaped $78-million (U.S.) in ticket revenue alone last season, according to figures obtained by The Globe and Mail. That covered the two largest expenses — player salaries ($50.7-million U.S.) and revenue-sharing ($12-million U.S.) — with $15-million (U.S.) to spare. The club generated another $35-million (U.S.) from television, radio and merchandise sales, plus undetermined millions from concessions and luxury suites.

POT OF GOLD

Imagine if the team became a Stanley Cup contender.

"It would be staggering," the banking source said. "Look at the playoff money they have been leaving on the table every year. Then look at the television money, the radio money, everything else. Who knows how much more they could make?"

As is, consider the bill for one season-ticket holder in the platinum section, site of the premium seats in the lower bowl. A seat licence costs $34,500, up from the $15,000 fee when the ACC opened in 1999. The licence merely gives the customer the right to buy a ticket. Each ticket is $209.18 for 41 regular-season and four exhibition games.

Platinum seat-holders must also join the Platinum Club, for access to exclusive lounges and restaurants. The multiyear contract requires first-and-last-year membership dues of $3,565 a year.

WHY BOTHER?

Fans have long complained the MLSE bosses do not care about winning because the money rolls in either way.

"[Peddie] always says that winning is good business and the hot dogs taste better if you win," MLSE chairman Larry Tanenbaum said. "At the end of the day, if you have a winning team, year-in and year-out, it does mean good bottom-line results.

"More people will buy your merchandise. More people will watch the games on television. So winning does translate into good business."

Just when the winning might start is not clear. The search for a new permanent general manager to replace the fired John Ferguson is on hold until next spring. The contracts of several top candidates will expire by July 1, notably that of Brian Burke of the Anaheim Ducks, who is perceived to be on top of the Leafs' wish list.

Meantime, there are indications change is in the air for more than just the hockey department.

There is a new director on the board, a fourth representative from the Ontario Teachers' Pension Plan, which holds the majority 58-per-cent share of MLSE. Erol Uzumeri is head of Teachers' Private Capital, the pension plan's $18-billion portfolio of private equity and venture capital investments.

Curiously, Uzumeri was quickly made an alternate NHL governor, joining Peddie and Dale Lastman, Tanenbaum's close friend. Uzumeri, as with all the Teachers functionaries, keeps a low public profile and did not respond to requests for an interview.

He "is smart as a whip," Peddie said. "He is challenging us."

The addition of Uzumeri increased the number of MLSE directors to nine. Teachers controls four of the nine seats and Peddie is supported by Teachers. Tanenbaum, who owns 13 per cent of MLSE, makes up another faction of the board with Lastman. Also on the board are Ivan Fecan, president and CEO of CTVglobemedia, which owns The Globe and Mail, Robert Bertram, James Leetch and Dean Metcalf from Teachers and Robert MacLellan from TD Capital.

"There's tension sometimes between a management team and a board," Peddie said. "But I have a very supportive board. The board relationship is solid."

Peddie and Tanenbaum clashed over the firing of Ferguson, who was endorsed by both men when hired as a 36-year-old rookie GM in August 2003. But Tanenbaum grew disillusioned with Ferguson long before Peddie and wanted to fire him by the end of the 2006-07 season.

"There were differing opinions on that issue," is all Tanenbaum will say about any conflict between him and Peddie. Now, both men say they are on the same page.

When former majority owner Steve Stavro was bought out in February 2003, Tanenbaum was elected chairman with a five-year term. With the term having expired, he now serves at the board's pleasure.

Tanenbaum is the owner of the Kilmer Group, a private equity investment company, through which he holds his MLSE interest.

Despite the hiccups with their sports hirings, both Tanenbaum and Peddie can point to much growth under their reign. The only sports entity losing money is the farm team, the Toronto Marlies. Having been relocated from St. John's, Nfld., the team loses several million dollars a year.

Just outside Peddie's office window at the Air Canada Centre, the construction cranes symbolize the profits that dwarf any Marlie losses. An addition is in progress on the front of the arena, which will house a 2,000-square-foot broadcast studio for Leafs TV, Raptors TV and more food and beverage stations. Also in the works is an outdoor plaza with a huge video screen that will be the scene of parties and concerts.

On the other side of the plaza are two high-rises that will have 872 condos, a hotel and retail and office space. The condos were sold out two years ago for an average of $450 a square foot. The whole project is worth $500-million and is expected to be finished in late 2010.

"If we could sell today, we'd probably get another $100 a square foot," Peddie laments.

Recession? What recession?