McNall to Sell CFL’s Argonauts
King owner Bruce McNall’s sports empire continues to shrink with an agreement to sell the Toronto Argonauts of the Canadian Football League to Toronto-based The Sports Network for about $4.5 million (U.S.), sources said.
The sale, expected to be announced today in Toronto, has been in the works for weeks, but was delayed by the March death of comic actor John Candy, one of McNall’s partners in the team. TSN is the Canadian equivalent of ESPN and is a subsidiary of Labatt’s Breweries, whose sports investments include the Toronto Blue Jays.
McNall has been shopping the team around for about one year. The franchise has been a major liability for McNall, posting significant losses since he bought the team in 1991 with partners Candy and Wayne Gretzky from Beverly Hills sports investor Harry Ornest.
“As time passed, the difficulties of running a business 3,000 miles away took its toll on the ownership group,” McNall said in confirming the sale. “We would have liked to dedicate more time to the development of the CFL in Toronto, but after an exhilarating, yet exhausting first year, the realization of full hands-on ownership became more complex with everyone’s schedule.”
One source familiar with the team’s finances estimated the overall loss on the Argonauts will eventually range from $10 million to $15 million. A spokesman for McNall declined comment on the prospective sale.
The sale comes as McNall is trying to sell a 72% stake in the Kings for $60 million to telecommunications executive Jeffrey P. Sudikoff and entertainment executive Joseph M. Cohen as part of a plan in which McNall is trying to shed a $92-million debt to Bank of America.
Sources also said that proceeds from the Argonauts sale are expected to go to Ornest and Bank of America.
In other McNall developments Wednesday:
--Efforts continue to placate angered creditors, who could derail the Kings sale by trying to force McNall’s operations into involuntary bankruptcy proceedings.
At least three lenders are known to have complained about changes in the Kings sale made over the weekend that would cut the amount of cash that would flow to McNall creditors. Sources identified the three creditors as the French bank Credit Lyonnais, Dutch-owned European American Bank and IBJ Schroder Bank & Trust, a unit of the Industrial Bank of Japan.
--A federal grand jury looking into whether McNall has falsified loan documents has been seated and is beginning to hear testimony, sources said. In addition, they said, the FBI has been interviewing executives surrounding McNall. Lawyers for McNall have confirmed the investigation, but add that they believe no action will be taken when it concludes.
--Only a skeleton crew remains at McNall’s business operations in Century City. A lawyer for real estate firm JMB, which owns the building where McNall kept his offices and which is suing a McNall-affiliated company for back rent, confirmed that the offices will be vacated voluntarily soon and that it is already being shown to prospective tenants.
The Argonauts were a high profile investment in 1991 when McNall bought the team from Ornest, who is vice chairman of Hollywood Park. The team won Canada’s Grey Cup championship in the first year the McNall group owned the club. Its biggest deal was signing Notre Dame’s Rocket Ismail to a four-year, $18 million contract, the majority of which was a personal services contract with McNall.
Ismail, who now plays for the Raiders, claims he is still owed the final two years of that contract of about $9 million. McNall has disputed the claim, saying that Ismail did not live up to the requirements of the contract that he promote both the team and the league.
Times staff writer Steve Springer contributed to this story.