Globe Claims CFL Owners Pursuing NFL Franchise

The Globe and Mail created a stir today with a report claiming Toronto Argonaut owners David Cynamon and Howard Sokolowski were preparing to purchase any NFL franchise that became available with the intent to move it to Toronto. The story claims that the Argo owners have outlined their strategy to CFL commissioner Mark Cohon and the CFL governors and quotes an anoynmous CFL source.

The story is based mainly on the premise that discussions were had within the CFL about being involved in an NFL move to Canada instead of watching from the sidelines as other parties with no interests but their own obtain a franchise. Besides quoting the anonymous source that this is “the single biggest issue the CFL is facing,” very little information as to the CFL plan is revealed or speculated on, such as how CFL owners (three, soon to be two franchises are community owned) would propose to meet the NFL ownership restrictions and franchise cost. The information provided on the issues in bringing an NFL franchise to Toronto is at best based on little fact and much speculation and at worst wishful thinking.

With this latest rise of Toronto NFL franchise speculation there is at least clarity on the fact that Rogers Centre does not meet the minimum seating requirements of the NFL and a new stadium would have to be built in Toronto to house an NFL team. The idea that seat licenses could fund stadium construction is again floated since any public funding for a stadium is very unlikely. No reporter cares to put the numbers required to accomplish such funding, however. Looking at recent new NFL stadium projects I expect a 70,000 seat stadium to cost from $700 million to $1 billion. This would place seat licenses ranging from anywhere from $7,500 to $15,000 per seat on average. Perhaps there is demand in Toronto for ticket prices to be inflated, but is there enough demand to sell seat licenses for every seat? If you say, yes, the corporate community is starving for this and will shell out those costs and more, then you end up with a stadium full of corporate seats. Maybe that is fine in Toronto, and Torontonians will be happy to have a franchise whose seat licenses and ticket prices are only in the reach of the corporate wealthy.

Later, the spin started with claims the report is speculation and claims from two CFL governors that it was a “crazy concept” just being thrown around. Paul Godfrey took the story as an opportunity to spin it in his Rogers-Tanenbaum group’s favour, stating they are willing to work with the CFL to bring the NFL to Toronto and commit to doing everything in their power to “ensure that the CFL is stronger and healthier.”

It is hard to figure out what side the CFL party who created the story is on. They could either be for or against the idea, and leaking it helped sabatage it, or just someone who wanted to make a name for themselves with some juicy information. It is possible the CFL wanted it leaked to measure public support for the idea, however I see this as unlikely since there are so few details how this could be possible with the CFL owner’s financial strength, so why leak to gauge support when you cannot afford the $1 billion franchise cost. The spin from the CFL also makes it seem like they did not want this to get out.

If I can speculate for a moment, I would wonder if this idea is related to the Ottawa ownership hopefuls. They may have inquired what protection they would have if the NFL came to Toronto and killed the CFL after they ponied up a $5 to $10 million franchise fee. The Argo owners, developers along with the Ottawa franchise candidates with fairly deep pockets, may have been brainstorming on how they can protect themselves. Certainly one way would be for the these owners to band together to acquire an NFL franchise. Toronto owners Cynamon and Sokolowski, Hamilton owner Bob Young, B.C. owner David Braley, and Montreal owner Robert Wetenhall are certainly candidates to contribute to an ownership group with incoming Winnipeg owner David Asper and the potential Ottawa group also appear to have the means. Who could commit what will likely be around $300 million to become a 30% stakeholder is unknown to me. However, these candidates plus a few others in the Canadian business community would have the resources for an NFL franchise purchase price if someone could become the 30% stakeholder. It doesn’t appear any business person would consider this a bad investment either and hesitate to buy in like they might with a CFL franchise if they had the means. It begs the question, though, is this a private enterprise outside of their CFL interests or a holding of the NFL franchise for the CFL and all member clubs to benefit equally? Likely not.

This is important because as I understand it, community owned franchises in Edmonton and Saskatchewan would not be able to hold an ownership stake in an NFL team (and at least Saskatchewan’s financial situation would not allow them to contribute much). In addition, the group that controls the Calgary Stampeders may not have the resources to make meaningful contributions to an NFL ownership group. So it appears that a Canadian NFL franchise would not be able to fund the CFL directly, but only the owners who are able to contribute. Besides having control of the franchise so it does not squash your team by requiring combined season ticket purchases or other tie-ins, it does nothing to help the CFL from being overshadowed. Even though a Toronto CFL franchise may survive on increased ticket sales, if people in the seats is down, what does that do to the league? What about Hamilton? Do you tie NFL season tickets to Tiger-Cat tickets as well? What of television viewers? The two leagues season’s still overlap and a CFL absent or overshadowed on television will lead to league-wide attendance reductions, not just in southern Ontario. I think the real threat to CFL franchises comes not from the loss of fans, but sponsor and television revenue as the new kid on the block gets all the attention.

I agree with Stephen Brunt that this appears to be a way for Toronto’s CFL guardians to protect what they have built with the Argos, but I do not feel there are enough facts showing this is possible to believe it is a serious possibility that is being pursued. Brunt seems to believe the CFL would be the owner, but that is impossible based on an NFL corporate ownership ban and private/public CFL franchise owner disparities unless the NFL changed its constitution. I do not think any individual or small group of CFL owners have the resources to buy a franchise themselves and run it in trust for the league, nor would they be willing to turn their capital over to work for the CFL. Also, with the league as an owner (sayed shared evenly by all franchises), CFL expansion becomes much more complicated. Does a prospective franchisee need to buy in to the NFL franchise with entry into the CFL? Does that mean franchise fees jump to $100 million or more? Certainly owning an NFL franchise would help the CFL attract qualified owners who may want to build stadiums and put CFL franchises in cities if they received a share of the NFL team. Fees of $100 million though might just restrict the number of Canadians capable of doing so. While a CFL run franchise does help the NFL if they want to have a presence in Canada, it ignores the current rules for franchise ownership. For these reasons I do not believe the CFL is to be the holder of the NFL franchise.

I was interested in the report for the fact that the CFL is taking a lead with this issue and not sitting passively waiting for the move to happen one day. However, the more information that is reported about Toronto’s NFL aspirations, the more questions without answers that appear. Where do you stand with this issue? Am I off base believing there is way too much hype out of Toronto and reporters and fans put the blinders on to ignore all the obstacles facing them?

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