CANUCKS' OWNERSHIP QUIETLY CHANGES HANDS

CANUCKS' OWNERSHIP QUIETLY CHANGES HANDS
by Carol Schram, Vancouver Correspondent

On Tuesday, Nov. 12, Orca Bay Sports and Entertainment held a press conference to announce that longtime Canuck head Arthur Griffiths had sold his remaining shares in the organization to his business partner, John McCaw of Seattle. The McCaw family now has complete control over GM Place and the NBA Vancouver Grizzlies, as well as owning 86 percent of Northwest Sports Enterprises, which owns the NHL Vancouver Canucks and Winning Spirit sports clothing and accessory stores. The other 14 percent of Northwest is publicly held stock. Suddenly, for the first time in more than 20 years, the Griffiths family does not control NHL hockey in Vancouver.
It is unclear at this time how the ownership change will affect Vancouver's sports franchises in the future, but this latest transaction isn't nearly as dramatic as the Griffiths' acquisition of the Canucks in 1974. A Minnesota company called Medical Investments Corporation (Medicor) owned 60.1 percent of Northwest Sports when the Canucks entered the NHL in 1970 after a long struggle for recognition by the league. The Canucks had enjoyed many years of success in the Western Hockey League when Toronto Maple Leafs' head Stafford Smythe showed up in 1964 with a promise to bring big-league hockey to Vancouver -- if the city would just give him a prime parcel of downtown land on which they could build a state-of-the-art arena. City council laughed him all the way back to Toronto, but Smythe had planted a seed in the minds of Vancouverites: NHL hockey could be theirs, if only they had the right facilities.
Endless debates ensued over the best location for a new arena and how to finance it. In 1965, former Vancouver mayor Fred Hume finally got the deal done to build the $6 million Pacific Coliseum on the Pacific National Exhibition grounds in East Vancouver. Captain Harry Terry, President of the PNE, managed to wangle $2 million each in financing from the federal and provincial governments. The city offered an additional million, and the PNE and City of Vancouver agreed to jointly raise another million dollars. The building was completed in January of 1968 -- after Vancouver had been denied a franchise in the 1967 expansion. The Western League Canucks continued to fill the needs of hockey-hungry Vancouver fans, and in February of 1968, the Pacific Coliseum played host to the largest hockey crowd ever assembled in Canada when 16,511 gathered to watch the Montreal Canadiens Old-Timers beat the Western All-Stars 3-1.
After being rebuffed in their first bid for a franchise, in 1969 Vancouver was then denied the opportunity to take over the faltering Oakland Seals organization, which was drawing crowds of around 4,000 to home games. The Seals finally moved to Cleveland in 1976, but by then their fate was sealed. In September of 1969, it was finally announced that Vancouver and Buffalo would be the next NHL expansion cities -- after paying the then-exorbitant franchise fee of $6 million. This marked a significant increase over the fees paid in 1967 and put a big wrench into the grand plans of Vancouver's local ownership group. The league wasn't sympathetic and announced that if the group couldn't raise the money themselves, they would find someone who could handle the financial burden. At a Board of Governors meeting, David Molson of Montreal, Walter Bush of the Minnesota North Stars and Bill Jennings of the New York Rangers decided the perfect candidate was Thomas Scallen of Medicor in Minneapolis. A medical leasing company formed in 1960, Medicor had diversified into entertainment-related businesses, an ad agency, and the Ice Follies skating show. The deal was done by December of 1969, when Scallen and his vice-president, Lyman Walters, spent $2.85 million to acquire the minor league Vancouver Canucks franchise, Rochester of the American Hockey League, 51 players, and the services of then-Canuck coach and general manager Joe Crozier. The team's Canadian directors were minority shareholders Cyrus McLean, Coley Hall, Frank McMahon, and Max Bell. Six weeks later, Vancouver was officially awarded its NHL franchise. The team played its first NHL game on Oct. 9, 1970.
The Canucks were brutal on the ice those first few seasons, but fans flocked to see the stars they had heard so much about with legendary teams of the day like the Montreal Canadiens and the Boston Bruins. The franchise was a gold mine as the club played to 97.5 percent of capacity its first season and enjoyed a huge season ticket base in its second year. But this was not enough to satisfy Thomas Scallen and Medicor. As early as June of 1971, the BC Superintendent of Brokers began an investigation into the financial affairs of Northwest Sports, based on an anonymous tip he had received from Minneapolis. By the middle of the Canucks' second season, their American Fairy God-Owners had been charged with the theft of $3 million in club funds and with issuing a false prospectus with the intent to induce the public to buy shares in Northwest Sports. Medicor's majority stake in the Canucks was temporarily placed in escrow, and in June of 1972, local businessman Herb Capozzi lent Medicor $3.65 million to redeem its shares and, in effect, take control of the team. In April of 1973, Scallen was found guilty on both counts and sentenced to four years on each, to be served concurrently. Off to the big house for the wunderkind.
The Griffiths family finally purchased Northwest Sports in 1974, at the then-bargain-basement price of $8.5 million. Patriarch Frank Griffiths was an accountant by trade who specialized in receiverships. After Griffiths started to build his empire in broadcasting in the late 1950s, radio station CKNW General Manager Bill Hughes pointed out the attractiveness of the Canucks' franchise to the Griffiths family in the 70s by underscoring the advertising revenues being generated by the radio station's hockey broadcasts. At first, Frank wasn't interested, but his wife, Emily, was keen on the acquisition and the team was a steal, so eventually Frank relented and the deal was done.
Over the next decade, the Griffiths family concentrated on building up its broadcasting. By 1977, the family owned six radio and TV stations and annual broadcast revenues totaled $17 million. Frank played the role of chairman of the Canucks, but the hockey team was a bit of a vanity asset until his 24-year-old son Arthur graduated from the British Columbia Institute of Technology in 1980 with a diploma in Financial Management. Out of all the family businesses, Arthur chose to focus on the hockey team and was originally brought in to work in the front office as Frank's assistant.
In 1982, the Canucks made their first trip to the Stanley Cup finals and Arthur began to gather his own power within the organization. He assumed more and more responsibility over the years, particularly as his father's health started to decline in the early 1990s. One of Arthur's jobs was to negotiate the team's lease with their landlords at the PNE, and while the Canucks had nowhere else to play, Arthur constantly threatened to pack up and build his own downtown arena as a negotiating ploy.
In 1992, Frank Griffiths suffered a stroke and was placed on life support for ten days. Around the same time, Northwest Sports purchased five acres of land on the old Expo 86 site downtown for $14 million. The next month, they announced that they'd build a 20,000 seat arena for $100 million, including land costs. They started construction in 1993 without having secured all necessary financing, wanting to be ready to go for the start of the 1995 season. Cost estimates ballooned as construction took place, and the crafty conservative accountant Frank Griffiths watched in horror from his sickbed as his son overextended the family empire. In April of 1994, as the Canucks were about to embark on their second thrilling ride to the finals, Frank Griffiths passed away on the same day that he was inducted into the Hockey Hall of Fame in the Builders Category. His team was about to reach their greatest moment of glory, but his family fortune was on the brink of collapse.
The McCaw family was originally invited into the fold to invest in the new Vancouver Grizzlies organization. Arthur figured an NBA franchise would make an excellent second tenant for his new arena, but the $100 million expansion fee was a bit daunting on top of the arena construction costs. In 1994, John and Bruce McCaw had sold their cellular phone business to AT&T for a whopping $11.5 billion (U.S.), so they were flush with cash and looking for something to do. Nevertheless, the brothers' reclusive tendencies led Arthur to believe that he had found the perfect silent partners' to invest in his business. The McCaws said they weren't interested in the Grizzlies unless they could also have a stake in the arena, so that meant involving the hockey club, too. Orca Bay was founded to satisfy those terms, and the Griffiths were originally supposed to maintain 70 percent of the stock, with 30 percent falling to the McCaws.
Naturally, with uncertain financing and NBA franchise payments due on top of ballooning arena construction costs and revenue lost during the 1994 NHL lockout, the Griffiths' soon found themselves short of cash. The McCaws were quick to step up and offer all the money they needed. So while Arthur and his sister Emily had contributed $44 million in equity to Orca Bay by February of 1995, that was good for only a 20 percent interest in the company. It may be great to have a partner with deep pockets when you need his money, but that partner's investment can only come to mean ultimate control in the end.
As Arthur started to lose his power base in the organization, the McCaws began to bring in more and more of their own people to run Orca Bay's front office business. Griffiths was eventually demoted from Chairman of Orca Bay to Co-Chair, then Vice Chair. He lost his title of CEO of Northwest Sports and fell to the position of Alternate Governor. The reclusive John McCaw took over as Chairman of Orca Bay and brought in his long-time right-hand man, Stanley McCammon to work alongside him.
At the same time as the Griffiths' began to feel the pinch on the sports side of their empire, the situation also began to tense up in the broadcasting arm. Their broadcast conglomerate, Western International Communications, bought out another family empire, Allarco of Edmonton in 1991. Allarco's founder, Dr. Charles Allard, died less than six months later, and his offspring began the fight to wrest control of their business back from the Griffiths. Arthur's brother Frank Jr. was appointed Co-Chair of WIC when Frank Sr. became ill, and endless court battles and takeover attempts have marred the two families' business efforts over the past five years. While the Griffiths' have rebuffed all threats thus far, the senior Emily Griffiths was forced to fire her son this summer after WIC President Doug Holtby resigned, admitting that Holtby could not be replaced as long as her obstinate son was in a position of such power. The latest battle between the families is now in the BC Court of Appeals. At present, the Griffiths' family share in WIC is valued at about $45 million, while the Allards control about $65 million worth of stock. Good sized numbers in Canadian business, but certainly small potatoes compared to the McCaws.
This past summer, Arthur's sister Emily decided to sell her 10 percent interest in Orca Bay. Because Arthur didn't have the cash to buy her out, she sold to the McCaws. With only his 10 percent stake remaining, Arthur saw the writing on the wall. On Nov. 12, he too sold out to McCaw, becoming nothing more than another salaried employee at Orca Bay Sports and Entertainment. He may have aimed too high in the end, but Arthur succeeded in realizing his dreams of building a beautiful downtown arena, bringing the NBA to Vancouver, and turning the Canucks into perpetual contenders. He is still just 39 years old, and while the family obviously misses Frank Sr.'s shrewd business dealings, for now their fortune remains relatively intact. Arthur will continue working in the industry that he loves, but from here on out, as a sports executive, he is at the mercy of his so-called silent partners', the McCaws.
Here in Vancouver, the McCaw family remains shrouded in mystery. The brothers are notoriously media-shy and do not grant interviews. There has been little public indication of their plans for Orca Bay or their teams. Local sports fans take solace in the knowledge that the family also owns the arena, so they would gain nothing by moving their two prime tenants out of Vancouver. There's also some reassurance in the success that the McCaws had in building, then selling, their cellular phone business. But that's about all that anybody knows so far. When Orca Bay held the press conference to announce the change in Arthur's ownership status, John McCaw agreed to talk to the media afterwards only on the condition that no cameras or tape recorders be present in the room. Even then, he offered little in the way of a vision of the future of Orca Bay.
Arthur Griffiths' departure from Orca Bay marks the end of an era. Canucks fans watched him mature from a wet-behind-the-ears son-of-the-owner to a shrewd and daring entrepreneur. Ultimately, Arthur's master plan did not turn out quite the way he wanted, but he and his family have definitely left an indelible mark on Vancouver sports history.