TORONTO - It may look like the gloves have been dropped over a hockey rink in a renovated Maple Leaf Gardens. And there’s nothing like a fight over Toronto’s Holy Grail to get people on their feet waiting for some teeth to go flying.
Of course the focus was on a civil action filed by Maple Leaf Sports and Entertainment against Loblaw Properties Ltd. and Ryerson University over the development of an up to 3,000-seat arena above a new grocery store and part of the university’s new recreation centre.
It was pitted as big and mean corporate monster MLSE trying to block the kids at Ryerson from having their new sports facility.
But the truth is there is no real battle between a Goliath in Maple Leaf Sports and Entertainment and David in Ryerson as has been presented.
In fact this time Goliath in my view is not the bad guy. In fact, if there is a penalty handed out, I would have Loblaws sitting in the box for five.
It all comes down to this: Section 1.3 of the sale of Maple Leaf Gardens to Loblaws in 2004.
In the “restrictive covenant regarding use of property” that expires in 2050 it clearly states in section (a) “Loblaw acknowledges, covenants and agrees with MLSE, its successors and assigns, that the purchaser will not use or permit ... the use of the property for any of the following businesses or activities: (i) any adult entertainment parlour, body rub parlour, strip tease club. (ii) A stadium, arena, sports facility and/or entertainment facility containing uses similar to those conducted on the date hereof within the Air Canada Centre.”
MLSE president and CEO Richard Peddie told me that he and Ken Dryden chose Loblaws because of the “excellent work” they did in renovating iconic buildings. But now, he admits, MLSE is “very upset with Loblaws for ignoring our restrictive covenant.”
In fact “we didn’t know until the night before the announcement that Ryerson was going to be part of the Loblaws and that there would be an arena but since it seemed to be an enhancement of the use of the building we were supportive.”
The problem was as the project developed “we were hearing stories” of the seating increasing from 2,000 seats to 3,000 and they were also seeing their Maple Leaf brand being used on websites and in promotional material. But the hiring of well-regarded entertainment facility management group Global Spectrum to run the new facility had the hair on the back of MLSE’s collective necks standing up.
“This group runs NHL arenas and London’s John Labatt Centre. You don’t hire Global Spectrum to operate a university athletic centre,” said MLSE general counsel Robin Brudner, who said the fear is sporting empire would then have to compete for smaller shows and other professional leagues even though they had a non-compete agreement.
“The thing is the Maple Leafs, Raptors and concerts take up 150 nights of the year and the smaller, less known shows make up a lot of our business,” said Brudner. “And as for using the name it has to be remembered it’s our multi-million-dollar brand. It would be the same as if someone wanted to use Coke or Nike.”
There was “hesitation” over the lawsuit but Brudner said, “we were just not getting Loblaws attention.”
Loblaw spokesman Julija Hunter stated in an e-mail, “the Loblaw grocery store at the Gardens remains on track to open in fall 2011 and we look forward to serving customers and the community at this exciting new location. Suggest that you follow up with Maple Leaf Sports and Entertainment for information on their filing and with Ryerson for their position concerning their part of the project. We will respond accordingly to the injunction request if it goes before the court.”
If this arena issue is not worked out soon that is where it will be going.
But Ryerson’s acting president Julia Hanigsberg assured me last night that their intention is to operate university athletics and that “we will sit down and work something out”
And Peddie was optimistic, too: “For legal reasons I must say ‘without prejudice’ but I have to say I like what Ryerson is doing there as long as it does not use our brand without permission and the restrictive covenant agreed upon is not breached.”
Is this is little dust up or is it about to become a bench clearing brawl?
Stay tuned.
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