Despite losing support of a key Canadian politician, developer Graeme Roustan is moving forward with plans to build a second arena outside of Toronto — with or without a hockey team.
On Wednesday, Sept. 18, the Greater Toronto Area (GTA) Sports and Entertainment group announced a new proposal that will shift financing for the facility to the private sector. The new deal proposes that the 20,000-seat GTA Centre will be responsible for funding all costs toward construction of the GTA Centre up to a maximum amount of $162.5 million. With a price tag of $325 million, the remainder of funding will be covered by yet-to-be reached private sector deals created by the City of Markham, a suburb of Toronto with about 350,000 residents.
Orginally the Markham officials had agreed to borrow the entire amount on behalf of the developers — typically municipal bonds offer better interest rates than most commercial banks. But public outcry over the loan led Jack Heath, the deputy mayor of Markham, to scuttle the deal in August.
That forced Roustan to look to the investment banking community and, on Wednesday, he announced deals with Wall Street firm Jeffries LLC and Bay Street firm Canaccord Genuity. Philadelphia-based Global Spectrum has agreed to manage the new arena, further expanding its growing portfolio of venues, stretching from Windsor in the east to Abbottsford, B.C., in the west. Roustan will anchor the facility with a mixed-use development, similar to L.A. Live and Xfinity Live! in Philadelphia.
The project has already received its permits and approval for the site plan — Heath said the only reason the city is pulling its financial support from the project is because he doesn’t think National Hockey League Commissioner Gary Bettman will approve a second team in Toronto. To Heath, there’s a three-way race for two new NHL franchises now that Bettman has restructured the league and opened the possibility for expansion.
“If you look at past statements the Commissioner has made, it’s clear to me that Seattle and Quebec City are the most likely candidates for a new NHL team — and not Markham,” said Heath. “This has always been about getting a hockey team — we didn’t get into this so that we could host tractor pulls and monster trucks.”
Heath said he’s not eager to compete with groups like Maple Leaf Sports and Entertainment for concerts. For his part, Rouston said his development team and Global Spectrum are not concerned about a lack of NHL participation.
“Working with Peter Luukko at Comcast-Spectacor (parent company of Global Spectrum), we’ve been able to clearly make the case that this building can not only thrive, but survive without a hockey team,” he said. “Right now the GTA only has one building supporting six to seven million people. There’s room for more participants.”
Rouston said he thinks Markham makes sense for a new arena because of the community’s affluence and its reputation as the corporate home to over 400 companies — many of which are American firms with their Canadian operations located in Markham.
“It’s a very wealthy, affluent community — it’s like the Irvine of Ontario,” said Rouston, referencing the wealthy southern California city that’s considered a bedroom community of Los Angeles.
For his part, Heath said he remains unsure whether Markham can survive on its own as a concert market, although he has no doubt that an NHL franchise will thrive in the suburbs.
“Could it be viable in Markham? Absolutely, without a doubt,” he said. “If there was a signal from the NHL that the GTA was a finalist for a hockey team, I think we could turn things around and a second team in Toronto would be very profitable. But nevertheless, the municipality can’t be involved in borrowing hundreds of millions of dollars on an unsure bet.”
Interviewed for this article: Jack Heath, (708) 331-4905; Graeme Roustan, (416) 566-4502