Larry Tanenbaum

Can Larry Tanenbaum transform his losing legacy?

In his 11 years as MLSE chairman, Larry Tanenbaum, co-owner of the Leafs, Raptors and TFC, has won zero championships. Now, he begins his latest effort to transform a losing legacy

By Michael Posner| Illustration by Jesse Lenz
| November 12, 2015

In his 11 years as MLSE chairman, Larry Tanenbaum, the 70-year-old co-owner of the Leafs, Raptors and TFC, has won zero championships. This month, he begins his latest effort to transform a losing legacy. The clock is ticking

One morning last May, Larry Tanenbaum ushered Brendan Shanahan into his office, a capacious aerie on the 27th floor of Scotia Plaza. Tanenbaum is the long-reigning chairman of Maple Leafs Sports and Entertainment, the consortium that owns the Leafs, Raptors, Major League Soccer’s Toronto FC and the AHL’s Marlies. As of January 1, he will also own, along with BCE, the Argos, the oldest sports franchise in North America. By some light years, Tanenbaum is the most powerful sports figure in the country.

Shanahan, an eight-time NHL all-star and a Hall of Fame inductee, is president of the Leafs. Hired in 2014, he arrived with a conviction—endorsed by Tanenbaum and the MLSE board—that the team needed a complete makeover. He spent much of his first year observing, assessing, planning. Then, starting last January, with the team in free fall, he pounced, firing roughly 24 front-office, scouting and coaching incumbents, including the head coach and the general manager. The Leafs limped through the remaining schedule, finishing with their worst record in 18 years.

When he entered Tanenbaum’s office, Shanahan was still in search of a new head coach, but he had a candidate in mind: Mike Babcock. With a Stanley Cup, a world championship, two Olympic gold medals and 527 NHL victories on his resumé, Babcock was indisputably the best coach on the market. His contract with the Detroit Red Wings was up, and he was considering offers. Several teams were interested, and Shanahan wanted the Leafs to be among them. But winning the Babcock auction, he knew, would be absurdly expensive, and he wasn’t sure the MLSE board would approve. The key vote, as always, would be Tanenbaum’s. MLSE’s other owners, Rogers (represented on the board principally by president and CEO Guy Laurence) and Bell (represented principally by president and CEO George Cope), each owns 37.5 per cent of shares to Tanenbaum’s 25 per cent, and most major board decisions are reached by consensus. But Tanenbaum, the longest-tenured owner of the three, is the fulcrum, the driver, the centre of gravity. Nothing of any consequence happens without his consent.

Snaring Babcock, Shanahan told Tanenbaum, would mean a long-term contract somewhere in the neighbourhood of $50 million, by far the most ever paid for an NHL coach anywhere. Tanenbaum needed no convincing—he gave him the green light. “Larry understood what someone like Mike could do for us,” says Shanahan.

A few days later, Tanenbaum dispatched his private jet to Detroit to bring Babcock to Toronto. Shanahan met him at the airport and gave him a tour of the Leafs’ training and game facilities. Among the first questions Babcock asked was: “Why do you want me?” In other words, if the Leafs’ plan was a rebuild requiring years of futility at the bottom of the rankings (a requirement for landing top draft picks), why not hire the worst coach you can find? Shanahan’s response: because the rebuild means nothing without the proper foundation. “You don’t take up golf and then, a few years later, go for lessons.”

Shanahan and Babcock drove to Tanenbaum’s Forest Hill home for dinner. No other board members were present.

“Mike was very impressed with Larry, and with Larry’s passion,” recalls Shanahan. “Players can sniff out people who aren’t genuine. All you have to do is talk to Larry for five minutes about any of his teams. It’s not some rehearsed speech.”

Babcock had prepared a mental checklist of key issues. High on the list was the attitude of ownership. How committed were they? In the case of the Leafs, would they stick to Shanahan’s rebuilding plan, however painful the short-term results? Sometime over dinner with Tanenbaum, Babcock checked that box. The next morning, Shanahan called Babcock and made the formal offer—$50 million over eight years. Other offers were on the table, and the Red Wings, Babcock’s employer for the past 10 years, had also re-entered the bidding. Hedging his bets, Shanahan prepared to interview another candidate. But almost every day for the next two weeks, he conferred with Tanenbaum on the Babcock file, sharing intelligence about which way the decision might go.

For a few days, it seemed that Babcock was leaning toward staying with the Wings. “When your situation is as good as it is in Detroit,” he said during an interview at the world championships in Prague on May 15, “there’s not a better job, there’s a different job.” But four days later, Babcock asked Shanahan to set up a conference call with Tanenbaum, Cope and Laurence. It seemed that he wanted to confirm that the other owners shared Tanenbaum’s commitment to winning. Remarkably, apart from some fine tuning on details, there was no real negotiation of terms—the first offer was the last. On the afternoon of May 20, Babcock called Shanahan and accepted Toronto’s offer. Elated, Shanahan dialled Tanenbaum.

“We got him,” Shanahan said.

Later, Shanahan would learn that Babcock’s other offers had pretty much matched Toronto’s. Why, then, had he accepted Tanenbaum’s offer? “I think ultimately it wasn’t about the money,” says Shanahan. “It was Toronto and the Maple Leafs, and the allure of one of the original six NHL teams.”

For Shanahan, it was an important achievement—his first major hire as president. For Tanenbaum, it meant much more.

Larry Tanenbaum, Vince Carter, Wayne Gretzky, Brendan Shanahan
From left: Tanenbaum with business partner Joel Rose in September 1993; with Vince Carter in May 2004; with Wayne Gretzky in September 2004; with Leafs president Brendan Shanahan in April 2014
Power Player. From left: Tanenbaum with business partner Joel Rose in September 1993; with Vince Carter in May 2004; with Wayne Gretzky in September 2004; with Leafs president Brendan Shanahan in April 2014. (Images: Rose, Gretzky by Getty Images; Carter by GetStock; Shanahan by CP Images)

For most of the hockey-mad world, the opening of any new NHL season is the start of a marathon—a vertiginous roller coaster ride, commingling joy and fear, elation and nausea. This season, that’s especially true for Tanenbaum. In every arena outside of sports, Tanenbaum has been a consummate success. As an entrepreneur, he leveraged a modest, family-owned paving company into a construction and real estate behemoth, diversifying into a dozen other businesses and making billions in the process. As a philanthropist, he has given time and many millions of dollars to hospitals, schools and other worthy causes. His marriage to Judy, his wife of more than 40 years, is sturdy, and he has strong relationships with his son, two daughters and 10 grandchildren. At the Tanenbaum household, Friday nights are reserved for family. Nothing interferes—not even a playoff game at the ACC—however rare that may be.

The galling exception to this record of achievement has been the performances of his teams. Not long after becoming chair of MLSE, in February 2004, he granted a rare interview. “If I can’t work this out in a period of time that makes us a winning, championship team,” he told the Globe and Mail, “then I’m not going to be around.” What did he deem a reasonable period? Five years.

In the 11 years since, the sad-sack Leafs have been trapped in a revolving door of general managers: John Ferguson, Cliff Fletcher, Bryan Burke and now Lou Lamoriello. The Leafs are the most profitable team in the league—worth an estimated $1.3 billion—but their last Stanley Cup victory came in 1967, the longest championship drought in hockey. Last year, they finished dead last—122nd—in an ESPN ranking of every professional sports franchise in North America, based on affordability, fan relations, owners’ loyalty, and players’ efforts and likability, measured against fans’ money, emotion and time.

The Raptors aren’t much better. Since the team’s founding in 1995, five GMs—Isiah Thomas, Glen Grunwald, Rob Babcock, Bryan Colangelo and now Masai Ujiri—have conjured no trophies, no champagne, no victory parades. The team has only once made it past the first round. Last year, the Raptors showed flashes of brilliance, only to be eliminated in the first round in four straight games. Toronto FC? Almost a decade in, and only this year did the club contend for the postseason.

It’s an epic feat of futility, considering that as an organization, MLSE is deep in cash, brains, fans and facilities. Strategically, it lives in the media sweet spot, controlling both the content (the teams) and its distribution (TV and digital platforms). So what precisely has allowed Toronto’s sports teams to be so very bad for so very long? There is really only one guy to ask. Because through the blizzard of ownership, management and personnel changes, Tanenbaum has been the sole constant.

“I have a lot of respect for Larry, and I’m not sure who to blame, but something has gone wrong there,” says former Rogers vice chairman Phil Lind.

“He’s guilty,” says another old friend. “There’s no doubt, he’s guilty. He hired these guys.” Such is the way many of Toronto’s millions of sports fanatics see it, too. During the season, their wrath is directed at the players—lately, Phil Kessel (now a Pittsburgh Penguin) and Leafs captain Dion Phaneuf—but players come and go. The fans’ more enduring, existential rage is for ownership—something Tanenbaum is keenly aware of—and that’s not how he wants to go out. He is 70 and, at some point, will cede decision-making authority to his heir apparent, his 48-year-old son, Kenneth, vice-chairman at Tanenbaum’s investment firm, the Kilmer Group. Before he does, he desperately wants to win.

A major step in that direction came in April 2013, when MLSE hired Tim Leiweke as its new CEO. Leiweke is a 58-year-old turbo-charged American with impeccable pedigree: he spent 15 years at the helm of the Anschutz Entertainment Group, an owner of the NHL’s Los Angeles Kings, Major League Soccer’s Galaxy, the Staples Centre, the $2.5-billion L.A. Live entertainment centre and the NBA’s L.A. Lakers. His appointment was a major coup, one widely read as a sign that Tanenbaum and the board were fed up. They wanted more dynamism, ambition and victories. Leiweke had it all: vision, savvy and track record, winning championships with the Kings, Galaxy and Lakers. Moving quickly, he committed more than $220 million in new MLSE expenditures: renovating BMO Field for $90 million, stickhandling approval for a $30-million, 64,000-square-foot, state-of-the-art Raptors training centre and importing $100 million in soccer talent for the long-ailing Toronto FC.

Then, in August 2014, only one year and four months into his tenure, Leiweke announced his intention to leave, claiming he wanted to form his own company. There were likely other motivating factors as well. In L.A., Leiweke had overseen a multibillion-dollar empire in AEG, largely without interference. He arrived in Toronto on the rebound from AEG owner Philip Anschutz and found himself on a much smaller playing field, facing keenly involved owners.

It’s also possible that Leiweke pushed the board beyond its comfort zone. MLSE was less interested in some of his notions, such as international rugby and franchising its sports-themed restaurant, E11even, than in focusing solely on creating championship teams.

Leiweke insists there was no friction with the board. Nevertheless, the public perception was damning: even when MLSE does something right, it finds a way to screw it up. Weirdly, in late summer, Leiweke decided that he’d stay another year, or until a replacement could be found. The 14-month search finally ended in October, with the appointment of former Air Canada executive Michael Friisdahl. Other candidates—including, it is said, veteran broadcaster John Cassaday—may well have balked at the prospect of a reduced salary and a restricted mandate. But Tanenbaum was unlikely to yield on the numbers or control. Capitulation is not in his DNA.

Larry’s grandfather, Abraham, a veteran of the 1905 Russo-Japanese War, spent six years saving for the boat fare that would take him out of Parczew, Poland. Leaving a wife and three children behind, he decamped to Toronto’s Junction in August 1911 with $8 in his pocket. Within days he was buying and selling rags, bones and scrap metal from a pushcart. It was the humble genesis of an enterprise that would one day build airports, highways and subways around the world.

Three years after Abraham’s arrival, just as the First World War began, his wife, Chipa Sura, and two young sons, Joe and Max, joined him (the eldest had died of diphtheria). By Grade 8, both boys were working for their father. Max was assigned the role of negotiating with the banks and preparing the balance sheets. He would go on to marry at age 21 and have seven kids: Harold, Joey, Howard, Minda, Larry, Tauba and Carol. According to Joey, the foundation for what became an industrial leviathan was a single, defective steel beam. Abe bought it one day for $2, had it repaired and painted, and resold it for $16. The math was compelling. Any business that could deliver an 800 per cent return was where he wanted to be.

During the Second World War, with steel in demand, the Tanenbaums’ Runnymede Iron and Steel Co. grew seriously rich. The two brothers bought their father out in the late 1940s for $150,000 and split the company in 1951, after a dispute about succession. Joe kept Runnymede. Max started York Steel. All through the post-war building boom they prospered, eventually expanding into land development, hotels and cable television.

Max was as tough as he was shrewd. At one point, Joey—hired for the summer in the factory for 10 cents an hour—learned he was earning considerably less than his co-workers. Over Friday night dinner, he summoned the courage to ask his dad for a raise. Max rose from the table, hauled his son into the kitchen and hung him from a hook on the icebox. “You’re being paid twice as much as you’re worth,” he snarled. “Don’t you ever ask me for a raise again.”

Larry was Max’s youngest son. Never a great athlete, he was nonetheless an avid fan, tracking pro football, hockey, basketball and tennis. With his eldest brother, Harold, he regularly attended Argos and Leafs games. He earned a bachelor of science at Cornell University, majoring in economics. He was the student manager of the school’s Big Red Hockey Club, picking up sweaty equipment and organizing logistics. The coach, Ned Harkness, led the team to the 1967 NCAA championship. “He set a great example with his leadership, dedication, hard work and good sportsmanship,” Larry said in another interview. “My successes were all rooted in examples set for me by people who were and are very important to me, and Ned Harkness was one of those people.”

Graduating the following year, Larry joined Kilmer Van Nostrand—a civil contractor his father had rescued from bankruptcy in the late 1950s—as general manager. He was a clone of Max—tough, capable of anger and very smart—but socially far more polished. And he was a risk-taker. A decade later, by then KVN’s president, he paid $70 million to buy 23 aggregate operations and 55 asphalt plants owned by Kaiser Resources. Out of that deal emerged the Warren Paving and Materials Group. In a single stroke, Tanenbaum had created Canada’s largest private aggregate producer and one of its largest paving contractors.

Then, in December 1980, Max, the Tanenbaum patriarch, suffered a debilitating stroke. An old-school entrepreneur, he had kept most of the numbers in his head. No succession plan had been put in place. The family could only guess at his vision for what by then was a $200-million business. The court empowered a committee—Max’s wife, Anne; Larry; his brother Howard; and a Bank of Nova Scotia official—to run the show. Faced with a staggering debt load, soaring interest rates and a plunging stock market, they sold off stocks. That reduced the debt burden but left the companies starved for income.

Challenging the wisdom of some of these transactions, two of Larry’s sisters, Carol Tanenbaum and Tauba Spiro, and Harold’s heirs, demanded and won a court-appointed audit of the books. Later, they challenged changes that had been made to Max’s will the same month as his stroke; Joey, who had offended his father by buying another steel company, had been removed as an executor of Max’s will.

Eventually, a settlement was reached—its terms were never disclosed and the court records were sealed—but to this day, the emotional wounds remain. Attempts at rapprochement have been made, and the extended family occasionally convenes for weddings, and bar and bat mitzvahs, but Larry and Joey have not spoken in years. No one will talk about the feud, at least on the record. “I can say this,” says Joey, ruefully. “Unfortunately, when you have a lot of money, you get a lot of problems.”

Through the ’90s, Warren Paving expanded, buying up at least eight rival firms, introducing new products and services, and gaining a reputation for cutting-edge research and technology. In 2000, Larry folded Warren—2,500 employees, 55 plants and annual revenues of $600 million—into Lafarge North America, a $425-million deal. As part of the agreement, Larry bought warrants, convertible into shares. He cashed out six years later, when Lafarge’s international parent bought the North American subsidiary, selling some 17.6 million shares with an exercise price of $29 for $85.50 each—a gain of close to $1 billion.

Today, through the family holding company, Kilmer Van Nostrand, Tanenbaum sits astride a sprawling empire that embraces land development, private equity, broadcasting, environmental cleanup, construction, electronics, gaming, even Ontario’s highway service centres. Politically, he’s connected to senior decision-makers at every level of government and once served as chief fundraiser for the federal Liberals, under then–prime minister Paul Martin. There is scarcely anyone of consequence Larry doesn’t know or can’t win an audience with. And there is scarcely anyone with a deal or an angle who doesn’t want to pitch it to him. As his old friend Postmedia czar Paul Godfrey once said, “Larry’s footprint is everywhere in this city.” The most recent example? The Pan Am Games, for which Kilmer Van Nostrand partnered with Dundee Realty (now Dream Unlimited) to build the athletes’ village. With the Games complete, the 14-hectare site is being repurposed as the Canary District, a mixed-use neighbourhood by the lake. Larry delegated the oversight of that development to his son, Ken.

The Tanenbaums, not surprisingly, live well. There’s the palatial Forest Hill home with an elevator, tennis court and indoor swimming pool; a family summer compound on Lake Simcoe; a pied-à-terre in Manhattan; and an oceanfront estate in Palm Beach, Florida. Still, like his parents and grandparents before him, he has not strayed from his roots. Larry’s personal donation ledger includes $35 million to endow the Lunenfeld-Tanenbaum Research Institute at Mount Sinai Hospital, $25 million to the Jewish Foundation of Greater Toronto, $5 million to the Anne Tanenbaum Centre for Jewish Studies at the University of Toronto, $2 million to the Tanenbaum Centre for Pharmacogenetics at CAMH, $1 million to the Canadian Museum for Human Rights in Winnipeg, $1 million to Baycrest for brain research, $1 million to Right to Play, $1 million to the University of Toronto for athletic scholarships, $1 million to Birthright Taglit, $1 million to the Martin Aboriginal Institute, $1 million to St. Francis Xavier University for a Canada-Israel student exchange program, and $1 million to a character development program at Upper Canada College and seed funding for a similar program at Bishop Strachan School. He also underwrites the cost of taking a group of Canadian Rhodes Scholars to Israel.

Larry Tanenbaum, Paul Martin, Stephen Harper, Bon Jovi, TFC
From left: Larry Tanenbaum with former prime minister Paul Martin in 2006; with Stephen and Ben Harper at a Leafs game in October 2006; in October 2013, with Jon Bon Jovi, his partner in a failed bid to acquire the Buffalo Bills; with outgoing MLSE president Tim Leiweke, and TFC acquisitions Michael Bradley and Jermain Defoe, in January 2014
Best Seats in the House. From left: Larry Tanenbaum with former prime minister Paul Martin in 2006; with Stephen and Ben Harper at a Leafs game in October 2006; in October 2013, with Jon Bon Jovi, his partner in a failed bid to acquire the Buffalo Bills; with outgoing MLSE president Tim Leiweke, and TFC acquisitions Michael Bradley and Jermain Defoe, in January 2014. (Images: Martin, Bon Jovi by Getty Images; Harpers by Reuters)

Tanenbaum’s quest for a championship stretches back to the early ’70s, when he and then–North York alderman Paul Godfrey—hoping to lure the NFL—proposed building a stadium at highways 400 and 7. That project went nowhere, so Tanenbaum turned to basketball, three times vying to bring franchises (the Denver Nuggets, San Antonio Spurs and New Jersey Nets) to Toronto. When commissioner David Stern finally greenlit NBA expansion in 1993, Tanenbaum slapped down a $100,000 good faith deposit and prepared a formal bid. But there was keen competition—one group (the eventual winners) led by food services kingpin John Bitove, another fronted by concert promoters Bill Ballard and Michael Cohl. On the night of the league’s decision, Godfrey drove to Tanenbaum’s house to await the verdict. When Tanenbaum learned that he’d lost, he went pale. “It was like sitting shiva that night,” says Godfrey. There are conflicting accounts of what went wrong. According to Godfrey, Tanenbaum’s aggressive lobbying of other owners was outmatched by Bitove’s wooing of the commissioner. Or, as Phil Lind wryly notes, “some votes are more equal than others.” Some say Tanenbaum tried to negotiate the NBA’s $125-million expansion fee, whereas Bitove, backed by Standard Broadcasting’s Allan Slaight and the Bank of Nova Scotia, readily agreed to pay the full amount. Shut out of basketball, Tanenbaum turned his attention to Maple Leaf Gardens Ltd., owners of the Leafs. It had been mired in lawsuits after the 1990 death of long-time owner Harold Ballard. When the litigation cleared, grocery store magnate Steve Stavro emerged with control but, in need of capital, sold off equity blocs to the Ontario Teachers’ Pension Fund and Tanenbaum—for $21 million and 25 per cent. By then, Raptors co-owner Allan Slaight had triggered a shotgun clause in his ownership agreement and bought out John Bitove. Slaight also had let it be known that he would sell the team. Tanenbaum dispatched his lawyer, Dale Lastman, the affable, brilliant son of Mel, former mayor of Toronto, and chair of the law firm Goodmans LLP. To call him Tanenbaum’s lawyer doesn’t do their relationship justice. Lastman is more like the consigliere. Outside of his wife, Judy, there is no one whose judgment Tanenbaum relies on more. It is one mind—at least to the outside world. In the inner sanctum, Lastman is unafraid to challenge Tanenbaum and often does. A conciliator at heart, he hears “maybe” when everyone is saying “no.” In 1998, Lastman, despite a chorus of “nos,” convinced his then-client, Maple Leaf Gardens Ltd., and Allan Slaight to merge the organizations and operate from a shared facility, the Air Canada Centre, instead of building two nearly adjacent arenas.

Later, coincident with Stavro selling his stake to Bell Globemedia, a new entity—MLSE—was formed. Although Tanenbaum’s ownership dropped to 13 per cent, he emerged as non-executive chairman. And when in 2011, Ontario Teachers’ decided to sell its 66 per cent stake, it was again Lastman who coaxed seemingly irreconcilable rivals, BCE and Rogers, to become partners—though their self-interest, as always, played a central role. In the process, Tanenbaum boosted his stake another 12 per cent.

So why don’t Tanenbaum’s teams ever win? There are more theories than athletes. One is that the endless shuffling of the ownership and management deck, and the consequent power plays, creates a climate of uncertainty and erodes confidence among players. That seems plausible. Another is that the owners don’t really care about winning, which is absurd. Never mind all the normal psychological drivers—pride, ego, bragging rights, competitive spirit. The truth is that a playoff or championship team adds tens of millions—in gate receipts, merchandise sales, advertising dollars—to the revenue stream. So if MLSE’s motive is strictly money, it has enormous incentive to win—it just hasn’t figured out how. A third explanation is that the organization has too often opted for the quick fix instead of building from the ground up. That one seems most likely—the owners want to win so badly, so urgently, that they keep dooming the mission. Realistically, what ails MLSE is probably an unsightly stew of bad luck, poor chemistry, insufficient talent, mediocre coaching, fickle front-office managers, meddling owners, and more.

With a bit of luck, that will change. Eight years—the length of the Babcock contract—is a very long leash, but if the grand rebuild fails to produce a Stanley Cup championship and an insane celebration in Nathan Phillips Square, there’s going to be a lot more pain at MLSE. And no one will feel it more than Larry Tanenbaum.


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