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A hockey player is seen in this file photo. (Jeff Vinnick For The Globe and Mail)
A hockey player is seen in this file photo. (Jeff Vinnick For The Globe and Mail)

White-elephant alert to Markham and arena developers Add to ...

There has long been a Field of Dreams quality to the NHL expansion discussion – the notion that if you build it, they will come. It was a sentiment articulated by Paul Kelly, the former executive director of the NHL Players’ Association, in front of the city council of Markham Ont., during a stormy debate Wednesday morning about the viability of a proposed $325-million arena project.

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As much as the NHL tried to distance itself from Kelly’s assertions that a 32-team league was its ultimate end game, Kelly correctly identified the two elements the NHL requires before it will even consider an expansion or relocation scenario – a modern building filled with the necessary bells and whistles to extract every possible dollar from the paying customer, and a deep-pockets’ ownership group able to swallow hard when they hear what the cost of an expansion franchise in the metropolitan Toronto area will be.

Just because the expansion plan to Toronto isn’t official yet doesn’t mean it won’t happen, however. NHL owners are not stupid when it comes to seeing windfall profits in the making. Internally, they have long viewed a second team in Toronto as “low-hanging fruit” – easy money in their pockets, in other words. That’s why there has always been something of a disconnect between what they say in public about expansion (no plans beyond considering the idea “conceptually”) and what some owners really believe (what are we waiting for!).

The serious chatter about a second team in Toronto began when Kelly was running the NHLPA (2007-09), and came in the wake of Jim Balsillie’s wish to relocate the Phoenix Coyotes to Hamilton. The league was so vehemently opposed to the plan that it seemed almost personal between commissioner Gary Bettman and the then co-chief executive officer of Research In Motion.

The mercenary reality was far simpler.

The league wanted to preserve the second team in Toronto for a possible expansion franchise, so that it, not Balsillie, could reap the rewards. Balsillie stood to make a fortune overnight if he could have pulled the deal off. Estimates put the cost of a single, stand-alone expansion franchise in Toronto at anywhere from $450-million to $600-million, which would likely include a payoff to the Toronto Maple Leafs, even though officially the league’s position is it doesn’t need the Leafs’ approval to drop a second team in their market.

Whatever the number eventually is, it will be one price for Toronto and a second, lower price for an expansion franchise in, say, Quebec, where the projected revenues for a new Nordiques team couldn’t come close to what they’d be for a new team in the Greater Toronto Area.

If the metropolitan New York area can support three NHL teams and the metropolitan Los Angeles area support two, then Toronto – and its massive, growing suburbs – can easily do the same.

The ultimate vision for the NHL is to move slowly toward a 32-team entity, which would consist of four eight-team conferences and create a nice symmetry. But that isn’t going to happen until some of the perennial trouble spots – Phoenix and beyond – are stabilized, which is going to take some time, perhaps as much as five years.

The problem with the proposed arena plan in Markham is what happens in the interim. Ultimately, developers could gamble and move forward without any direct assurances from the NHL that they will necessarily be first in line for an expansion franchise, even if they had an appropriate facility to house it.

It may well be that the NHL will want the team to play downtown as a tenant in the Air Canada Centre. There is a precedent for that in the NBA, where three teams play out of the Staples Center in Los Angeles, two basketball (Lakers and Clippers) and one hockey (Kings).

So from Markham’s perspective, building a new arena is not the same thing as automatically getting the NHL nod of approval, when it is finally ready to grant Toronto a second team.

Just in case anyone hasn’t been paying attention, Bettman can be stubborn when it comes to people telling him what he should do, and when he should do it.

Balsillie learned that the hard way, and every new attempt to preserve Phoenix in the Arizona desert proves it. So the caveat needs to be expressed: For Markham, it’s not buyer beware necessarily, but builder beware.

Right now, the financing plan for the $325-million project, backed by developer Rudy Bratty, survived by a thread, a 7-6 margin voted on by Markham City Council in the wee hours of Wednesday morning. The financial plan would have Markham borrow the $325-million cost of the arena, with the private partners covering half of that. The city would then pay back its $162.5-million share through a “voluntary” levy on developers’ new housing projects, parking revenue and surcharges on event tickets. But the city could be on the hook for any losses, which, absent an NHL team, could be a reality taxpayers don’t want to face. It’s why council needs to tread carefully.

New arena or not, if the NHL doesn’t like the look of your balance sheet – or if an ownership group more to its liking happens to come along when the expansion dream gets closer to reality – then Markham could be left with a white elephant on its hands.

Predicting that a second NHL team will eventually land in Toronto is the easy part. Predicting where it lands, and who gets to own it? Far more complex.

With a report from David Shoalts

Follow on Twitter: @eduhatschek

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