If a new home for the Toronto Blue Jays is to be built downtown, it would mean ripping up a lease for the Rogers Centre, which isn’t set to expire until 2088.
That lease, with Canada Lands Company (CLC), a crown corporation that controls most of the land the stadium is built on, was originally signed in 1989, and called for rent of at least $ 330,000 a year. Rogers Communications, which now owns the team and the stadium, likely pays more today, according to industry sources.
While building a new stadium on land they don’t own when there’s a long-term lease might seem like a long shot, real estate and sports business experts say there’s plenty of motivation for CLC, Rogers and development partners to strike a deal.
For the Blue Jays and Rogers, tearing down the stadium, which was built in 1989 at an estimated cost of $ 570 million, could mean replacing it with a smaller, more modern stadium with more lucrative corporate suites. It could also mean seeing the team and company get new revenue streams from a multi-use development built on the site, with condos, office space, retail and some park land.
That’s money that wouldn’t go into Major League Baseball’s revenue-sharing program to be split with other teams. Nor would it count toward baseball-related revenue that would mean a boost in team salary caps, pointed out David Carter, executive director of the Sports Business Institute at the University of Southern California.
“That kind of revenue, a team doesn’t have to share with the league or players. It’s their own. It can make a huge difference to a team’s income, and add to their franchise value,” said Carter, who noted a similar project just a few kilometres away from the Rogers Centre: the Maple Leaf Square development put together by Maple Leaf Sports and Entertainment, Cadillac Fairview and Lanterra Developments.
According to the most recent estimate from Forbes magazine, the Blue Jays are worth $ 1.625 billion (U.S.)
While the SkyDome, as it was known when it opened in 1989, was a modern marvel at first, it quickly became clear almost from the start that it was obsolete, said Richard Peddie, who ran the stadium during its earliest years. The contrast between the concrete-heavy Toronto stadium and a retro-look, single-sport stadium built in Baltimore shortly afterwards couldn’t have been more stark.
“I walked into Camden Yards for the first time and went ‘oh, sh-.’ SkyDome was really the last of the big multipurpose stadiums that were built,” said Peddie. The stadium is already the seventh-oldest ballpark in Major League Baseball. In 1994, the Ontario government paid the stadium’s debt, which had ballooned to $ 400 million, then sold it to a consortium including then Jays’ owner Labatt Breweries for $ 151 million. The stadium filed for bankruptcy protection in 1998, and was purchased by another company called Stadco for $ 80 million. Eventually, Rogers bought it in 2004 for $ 25 million.
Sources say Rogers has put together a plan with Brookfield Asset Management that would see a new, smaller stadium built on the site, along with condos, office space and park land. The plan doesn’t include any public funding, unlike construction of the Rogers Centre.
“Prior to the pandemic, we were exploring options for the stadium but through this year our primary focus has been keeping our customers connected and keeping our employees safe, so there is no update on Rogers Centre to share at this time,” said Rogers spokesperson Andrew Garas.
Brookfield declined to comment for this article.
While some published articles had suggested Rogers was considering the Quayside area as an alternative site, a spokesperson for Waterfront Toronto, which owns the area, said that plan was news to them.
“The media reports were the first Waterfront Toronto heard of any interest in the Quayside site as a potential new home for the Blue Jays. Quayside straddles two council-approved precinct plan areas: the East Bayfront Precinct and the Keating Channel Precinct. … Neither of the two plans contemplate the location of a multi-purpose stadium such as the Rogers Centre,” said spokesperson Andrew Tumilty.
A source familiar with Rogers’ plans who isn’t authorized to discuss them publicly said Quayside isn’t an option being considered.
The company has already approached both the federal government, which via CLC owns the bulk of the land, and the City of Toronto, which owns a small parcel of the land and would need to sign off on zoning changes.
CLC acknowledged in an email that it owns most of the land and that the Rogers Centre is on a lease which expires in 2088, but referred further questions to Rogers.
Among the people with whom Rogers has met, according to the federal lobbyists’ registry, are local MP Adam Vaughan, P.E.I. MP Steven MacKinnon and Taras Zalusky, acting chief of staff of Public Services and Procurement Canada.
Vaughan, Liberal MP for Spadina-Fort York, where the stadium is located, acknowledged being in a meeting with Rogers last July, and said he had a simple message for the communications giant after they shared details of their plan.
“The advice I gave to Rogers was to get in touch with Canada Lands, sooner rather than later,” Vaughan said.
For CLC, there’s also plenty of motivation to play nice with Rogers, said John Andrew, a real estate professor at Queen’s University’s Smith School of Business.
“The stadium is getting in the way of a bigger development. Having that lease definitely gives Rogers some leverage, because a sports stadium is far from the most lucrative use of that property,” said Andrew, who estimated it could be five years or more until a new stadium even begins construction.
Even if CLC doesn’t sell the land, rent from a new development including office towers, retail and condos would be worth millions of dollars more a year for the crown corporation that it’s getting from a stadium lease, Andrew said.
CLC could decide to sell the land, or trade it for a part ownership stake in the development, said Andrew, who wouldn’t be surprised if the project eventually expands to include a redevelopment of the nearby Metro Toronto Convention Centre.
While the Convention Centre is owned by another developer, Oxford Properties, Andrew said large developers will often work together to spread the financial risk on megaprojects.
“A partnership between Brookfield and Oxford would be very easy to do. They have worked together on other deals and those guys all know each other very well. It’s a small club. Pension plans like to share the risk with others, so you often see deals between two or three of them, even when any one of them could afford to do it on their own,” Andrew said.
While CLC and Rogers both have their motivations for wanting a new development, so, too, does Brookfield, and any other developer that might join the project later, said Andrew. Thanks to COVID-19, the downtown office towers that once provided a steady stream of revenue to big developers have become far less lucrative a business, likely permanently.
“I think when all is said and done, maybe 30 to 50 per cent of people will be back working in those office towers. That’s why we’re seeing big developers pushing more condos rather than office towers. It’s pretty straightforward,” Andrew said.