The reason the current Argo ownership is seeking between $10 million to $15 million to sell the team relates to the 2012 Grey Cup, sportsnet.ca has learned.
The game will be played in Toronto, although the Canadian Football League has yet to announce that, to tie in with the anniversary of the 100th Grey Cup. Because the majority of the Cups were played in Toronto before it started to move around to allow other franchises to host the game, the intention is to bring it back to its roots as part of a grand celebration.
Any franchise wanting to host the game pays $3 million to $3.5 million to the CFL. In turn, that franchise has the potential to double its investment on revenues through ticket sales and various entertainment and related activities.
But given the hype that will surely surround the 2012 Grey Cup because of the anniversary, there is a belief – and it may be overly optimistic – that the game could possibly generate a $10 million profit, hence the lofty figures sought by the current ownership of David Cynamon and Howard Sokolowski. They bought the franchise at the end of the 2003 season from the CFL for a reported $2 million, half of which was quietly fronted by B.C. Lions’ owner David Braley.
Cynamon and Sokolowski knew various owners of the Argos annually lost between $2 million to $4 million (and in some cases more), namely because they rented the building in which they played and had little opportunity to cash in on concessions and parking revenue. Braley, who has been a benevolent supporter of the CFL and has quietly helped out other owners, helped to underwrite the purchase price and annual operating costs, though this was never publicized. When that became known, it caused a maelstrom of controversy that forced the CFL, in particular commissioner Mark Cohon, into damage control and a statement that any transactions between two franchises would have to go through him in the future as a matter of transparency.
Cynamon and Sokolowski agreed to pay back Braley some of the outstanding loan from money generated from the 2007 Grey Cup. It’s believed the Argos made a profit of between $4 million to $5 million from that game. However – and this is a key issue to the current stalemate between the Argo owners and Braley, who is the only person actively seeking to buy the team – it’s believed Cynamon and Sokolowski still owe Braley some money. It’s been suggested that figure could be at least $6 million.
If Cynamon and Sokolowski are able to sell the franchise for the figure they are seeking, they could effectively pay the money owed to Braley. Moreover, it would be seen as a tremendous success story, certainly from a business and optics perspective for Cynamon and Sokolowski.
Cynamon said on Thursday in an interview on Toronto radio station The Fan 590 that he expected the ownership situation to be resolved by the end of this weekend.
It’s believed that Cynamon and Sokolowski are playing hardball, and unless they receive the money they are seeking they will continue to operate the team. That would mean incurring more financial losses in hopes of recouping some of that back from the 2012 Grey Cup, but they’d still owe Braley money. Moreover, there is a thought that Braley might stop paying for half of the annual operating costs, which would really add up to significant losses between now and the end of the 2012 season for Cynamon and Sokolowski. There are rumours that Sokolowski is no longer paying for operating costs anyway.
So, now it comes down to the next 48 hours or so, and how successful Cynamon and Sokolowski will be able to leverage the 2012 Grey Cup, and whether Braley is willing to pay the price for taking over the team.
An eight-team league that has one operator owning two franchises is not seen as good, but there is nothing in the constitution to prevent that. Braley is trying to help an ailing franchise, in particular one he has been partnering with for six years.
In the meantime, the Argos are in limbo. They are without a head coach after firing their last one, who had a 3-15 record last year, and have gone through three in the last two years in which the franchise has won only seven of 36 games.
Whoever owns the team going forward has a difficult task, even with the prospect of hosting the 2012 Grey Cup.