Oh Canada: NBA Looks Toward the Great White North, 1994

[In the 1960s, NBA Commissioner Walter Kennedy often floated the idea that the NBA would go international, likely during his tenure. Reporters scribbled down the mostly European cities on his wish list and promptly boggled over how the NBA, the third pro league, could possibly pull  off such a monumental undertaking. 

Kennedy sometimes included Toronto on his wish list for pragmatic reasons. He actually had groups from Toronto lobbying him for an NBA team. In fact, Toronto came close to landing an NBA expansion franchise in the early 1970s. But the forever-bickering members of the league’s Board of Governors were divided on further NBA expansion. So, they tabled the bid for another year, and the Toronto group, not real rock-solid financially anyway, drifted out of NBA sight and mind. 

Around this time, Buffalo Braves owner Paul Snyder played several of his team’s home games in Toronto’s creaking Maple Leaf Gardens. The turnout was poor to moderate. Snyder toyed with moving the Braves from small-market Buffalo to big-city Toronto. The Braves were fun to watch, maybe he could excite Toronto on pro basketball? But, in the end, Snyder opted to cut his losses and sold the team, leading to the certifiably bizarre swap of the Buffalo and Boston franchises. 

In this article from Hubie Brown’s 1993-1994 Pro Basketball Yearbook, the Toronto Sun’s Ken Fidlin picks up the NBA’s Canadian narrative. The NBA’s renewed interest in Canada would lead in 1995 to the historic approval of two Canadian expansion teams: the Toronto Raptors and the Vancouver Grizzlies. Vancouver actually almost got in a little earlier. A prominent NBA official reportedly discussed an expansion franchise with a mega-wealthy individual in Vancouver and shared the good news with David Stern, then trying to build a new NBA wave of billionaire owners. Upon a closer financial review, however, this individual wasn’t nearly as amazing as believed, putting a big dent in the prominent NBA official’s reputation with Stern and the Board of Governors. But the NBA, hoping to get it right a second time, cycled back to Vancouver—and today the rest is history for the Memphis Grizzlies!

But a year before the NBA finally made the long-departed Walter Kennedy’s international dream come true, Fidlin laid out the issues, pro and con, of placing an NBA team or teams in the Great White North. Give it a read.]

The NBA debuts in 1940s Toronto.

The NBA is coming to Canada, but the question still hangs high in the air like a John Paxson three-pointer: Will Canada come to the NBA?

The league will be ready by the end of October to award a 28th franchise. It will go north of the border, probably to Toronto, which was a charter member of the NBA 47 years ago. In fact, the very first game in NBA history was played in Toronto on November 1, 1946, between the New York Knicks and the Toronto Huskies.

Starting with the opening game, the Huskies failed miserably, as has every other attempt to bring pro basketball back to Toronto. Critics, most of them Canadians skeptics, say it’s a high-stakes gamble: the start-up costs preclude any possibility of financial success. Proponents, including former Los Angeles Lakers star Magic Johnson, who is among the would-be owners, say it’s an automatic slam-dunk. Chief among the backers is the NBA itself, and, under David Stern’s leadership, the league has seldom guessed wrong. 

Much has changed in Toronto over the past several decades. It has come of age not only as a world-class city but as a sports town, ready to spend its money on the games men play for pay. The Maple Leafs, an NHL doormat for 25 seasons, have defied logic, continuing to play before packed houses, even while producing some pitiful teams. The Blue Jays have been supported like no team in baseball history, beginning with an expansion attendance record back in 1977 and leading up to three consecutive seasons of 4 million fans at SkyDome. 

Stern’s long-range vision of the NBA involves a grand global plan. Expansion in Toronto and Vancouver, or both, represents the league’s first small steps toward fulfilling that goal. 

Nearly 50 years ago, a 10-man consortium blew $90,000 on the failed Toronto Huskies. Today, their loss wouldn’t cover the deposit for an expansion team. Four Canadian groups of investors have each given the NBA a non-refundable $100,000 deposit for the right to take the plunge. Three of them are in Toronto, one in Vancouver. Unless something extraordinary comes out of the league’s investigations, it is expected that only one bidder will be successful. 

The price for the team is expected to be in the $100-million range, more than triple the $32 .5 million Charlotte, Miami, Minnesota, and Orlando each paid in the last wave of expansion. The franchise fee seems to be the only roadblock standing in the way of a Canadian team. All four groups have solid credentials but a franchise-fee auction that sends the price sky-rocketing could knock any or all of them out of the bidding. Each group has pledged to build a state-of-the-art arena to house the team. 

“Obviously, we want to get what we think the franchise is worth,” says Jerry Colangelo, owner of the Phoenix Suns and chairman of the NBA expansion committee, “but it’s not in our best interests to undermine the financial resources of a new partner. The only way we can stay strong as a league is to keep all our members financially strong. We bend over backward to see to it that our new members are successful.”

“If we felt that we were going to somehow cheapen our product, we wouldn’t even think about expanding,” said Stern. “The fact is, if you go back to the days before the NBA-ABA merger, we’re just now back to the same number of professional teams. We don’t feel the talent is diluted at all, considering that there are so many more young kids playing the game now.”

Unlike major league baseball, where the game is significantly diminished each time expansion occurs, the NBA’s talent pool is such that the league could probably continue to expand well beyond 28 before any watering-down effect is detected. 

For most of the past 20 years, would-be Toronto franchise owners have been forced to the perimeter, watching their low-percentage, long-range shots clank off the rim. The Canada-United States border may be the longest undefended frontier in the world, but for those who have tried previously to bring the NBA into the Great White North, it might as well have been the Iron Curtain.  

No fewer than a dozen separate forays have been made, each ending in rejection. Most involved attempts to move existing, struggling franchises to Toronto. Twice, expansion bids failed. 

But, largely because of the success of the Blue Jays over the past 10 years, the world of pro sports now looks at Toronto through more respectable eyes. Any city that can pull 4 million fans, year after year, for major league baseball gets the attention of sports accountants. 

“The fact that the Blue Jays also won the World Series last year helped measurably,” says Larry Tanenbaum, the driving force behind The Palestra Group, one of three consortiums vying for the NBA rights in Toronto.

“When our bid landed in the NBA’s hands last October, it was right in the middle of the Series. Every morning (the NBA owners) were opening their newspapers to headlines about Toronto.”

In the past, one strike against Toronto involved television revenue. Since there are no American network affiliates in Canada, the impact of advertising was impossible to measure. But a huge local TV deal is almost assured by the fact that there are 2 million cable-TV subscribers in metro Toronto and another 5 million nationwide. 

Toronto would immediately become the NBA’s eighth-largest TV market, but the experience of baseball is that non-American teams fail miserably in the network rating wars. That has not deterred the NBA. “We’re looking at Canada as a new marketplace for all our products, including televised games,” Colangelo says. “Toronto is an exciting city that brings a lot to the table. It opens up a whole new frontier for our league and fits with the NBA’s future.”

The league has been careful not to exclude Vancouver in any discussion about Canadian expansion. But officials have left the door open to accept franchises in both cities, if their investigations convince them it’s warranted. 

“We don’t have any fixed limit on what we will or won’t do,” says Russ Granik, the NBA’s chief operating officer. “The last time (1987) around, we had seven applications. We quickly cut down to four. They were perceived to be competing for two or three spots, but eventually they all got in.” 

While a one-team expansion would even out the league at 28 teams, it would create an alignment problem, with the Eastern Conference having two more teams than the Western Conference. A Vancouver franchise would erase that obstacle, while also creating an East-West rivalry in Canada. “That would be one factor we’ll look at,” says Granik of the alignment issue, “but it’s hardly a basis for acceptance or rejection of a bid.”

Toronto was one of the three cities eliminated from the 1987 expansion push. Some of the key players in that failed bid are back this time as part of one of the three Toronto hopefuls. Cold, hard cash may ultimately determine who gets the franchise. Franchise-fee estimates range from $80 million to well over $100 million. Translated into Canadian dollars, that’s anywhere from $100 million to $125 million. Add to that the cost of building a new arena—a must for anyone expecting to get the NBA’s attention—and the new owners are looking at upwards of $300 million in start-up cost. “It is not in the NBA’s best interest to fleece people it expects to have as members for a long time,” says Granik.

Not everyone in Toronto thinks the NBA is a can’t-miss proposition. There are those who believe basketball is a risky venture in a city that has never seriously embraced the sport. Canadian college basketball, while competitive and entertaining, lacks the quality and hype of the U.S. college game. Few people off-campus follow the fortunes of the University of Toronto Blues or the York University Yeomen. In recent years, Toronto’s high school basketball program has improved in both quality and popularity, but it’s difficult to tell if that will translate into NBA season tickets. 

There are more than enough moneyed men who believe it will:

The Palestra Group

Some of the power players in The Palestra Group (l-r): Larry Tanenbaum, Herb England, and Joel Rose.

About two years ago, Toronto lawyer Joel Rose received a call from an American lawyer asking him to help find a buyer for an NBA team that was in financial trouble. Rose won’t say which team it was, but it’s believed to be the Denver Nuggets. 

Rose approached his wife’s cousin Larry Tanenbaum, whose father, Max, built a half-billion-dollar empire in the scrap-metal business. Tanenbaum has become a major force in Canada’s construction industry. He owns Warren Paving and Materials Group, Ltd., the country’s largest road builder. 

Together, they formed The Palestra Group and, though the franchise transfer failed to materialize, decided to move forward toward an expansion bid. They had already spent upwards of $1 million before the NBA even hinted publicly it might be interested in another expansion. 

It was, in fact, Palestra’s unsolicited application last fall did awake the NBA’s expansion committee from what the league thought would be a long, deep sleep. From that point on, as many as six groups on both sides of the border have made applications and several others have made serious inquiries. 

This spring, Tanenbaum introduced two huge and influential partners: Labatt Brewery and the Canadian Imperial Bank of Commerce, co-owners of the Blue Jays. Labatt owns 90 percent of the baseball team; the bank owns 10 percent. 

Though the bank, the brewer, and the builder are expected to be equal financial partners, Tanenbaum would be the managing partner. Tanenbaum’s plans include a 22,000-seat downtown arena. He says shovels will be in the ground as soon as his group gets the go-ahead from the NBA. He would retain ownership rights to the arena, but has already entered into a co-tenancy agreement with the NHL Maple Leafs. It’s believed that both the hockey and basketball teams would play the 1995-96 seasons at the ancient Maple Leaf Gardens before making the move to the new facility. 

If Tanenbaum wins the franchise and gets to build his arena, it will be the culmination of more than 20 years effort. Back in the early 1970s, he was part of a group that sought to bring an NFL team to Toronto and build a domed stadium. A few years later, when Toronto decided to build the stadium now known as SkyDome, Tanenbaum was one of the bidders for the construction job. He finished second. 

He doesn’t intend to finish second again. “That was extremely disappointing,” he said recently. “But we’re not going to be disappointed this time.”

“We know all the key owners, we’ve done all the right homework,” said Rose. “This time, we’re going to get it.”

Professional Basketball Franchise (Canada) Inc. 

From the time he was a teenager, John Bitove, Jr. has been scheming to bring the NBA to Toronto. “It’s been a dream of mine since I was 15. I never understood why we didn’t have a permanent NBA team in Toronto and was always intending on bringing the NBA here.”

Bitove’s father built a thriving concessions business into Canada’s fastest-growing food in hospitality company, which operates all the food outlets, except McDonald’s, at SkyDome. 

For years, Bitove has been quietly making friends in NBA boardrooms. When it became apparent the NBA was serious about expansion to Canada, Bitove moved quickly to put a strong bid in place. His partners include Slaight Communications, one of Canada’s largest proprietors of media outlets, with radio and TV stations from coast to coast; the Bank of Nova Scotia, Canada’s fourth largest bank; and former Ontario premier David Peterson as syndicate president and front man. 

Toronto Basketball Associates

Robert Foster, an investment banker, is the front man for a consortium of 10 well-heeled local businessmen, including Michael Cohl and Bill Ballard, associates in a failed 1987 bid to lure an NBA expansion team to Toronto. Cohl and Ballard are planning a 23,000-seat sports and entertainment facility on the shores of Lake Ontario. 

Magic in Toronto?

Magic Johnson is one of the consortium members, and his presence adds an interesting dynamic to the expansion committee’s deliberations. He has long expressed a wish to be part of an ownership group in the NBA, and his desire provides an opportunity for the league to finally blaze a trail for Black ownership. “I’ve wanted this for a long, long time,” says Johnson. “To be able to participate at the ownership level would mean a great deal to me.”

This consortium is generally considered to be the weakest of the three Toronto bidders, but Johnson’s presence suddenly levels the playing field. After all, Magic and Larry Bird led the revival of the NBA during the 1980s, under the stewardship of David Stern. Many of the current owners saw their NBA investments increase as much as 10-fold, partly because of people like Magic. How much of a debt do they feel they owe?

If successful, Toronto Basketball Associates would make Magic the team’s president and general manager to go along with his piece of the action. 

Northwest Arena Corp.

The group bidding to bring an expansion team to Vancouver is headed by Arthur Griffiths, chairman of the NHL’s Vancouver Canucks. Perhaps the most compelling aspect of this bid is that the Canucks already have a new arena under construction, scheduled for completion prior to the 1995-96 season.

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