Toronto needs to demand more
With heads hanging through much of Atlanta's 21-point steamroll, the Raptors are beginning to look overmatched
Saturday, January 17, 2015 – Print Edition, Page S3


They rolled Muggsy Bogues out before Friday night's game against Atlanta.

Why? No clue. By the end of this endless 20th-anniversary celebration, the Toronto Raptors have celebrated every parking-lot attendant in team history.

Bogues played 83 games in Toronto while being impressively short. Like, really, really short.

The man is a tiny rebuke to all the rest of us. Clearly, we all should have played in the NBA, but were either too tall or too lazy. Or something like that.

These days Bogues is a travelling NBA ambassador - India, the Philippines, China. He's just come back from Russia. But he knows what time it is.

"[The Raptors] shocked a lot of folks," he said. "And the East is not really that good."

That's the going wisdom, but the East looks pretty damn good from the Atlanta perspective.

The Hawks should be in disarray. Their off-season was roiled by a racial row involving GM Danny Ferry. The club's up for sale.

Instead, they are a multilayered behemoth. Al Horford is such a nightmare around the basket, Jonas Valanciunas essentially gave up trying to guard him five minutes in. Then Toronto coach Dwane Casey gave up on him.

Shootist Kyle Korver could throw a ball from the International Space Station and it would land in a cup on top of the Empire State Building two days later. As you roll down their bench, it just gets deeper and deeper. Casey suggested as many as four Hawks could be all-stars.

By the half, they'd run Toronto ragged with their relentless commitment to passing the ball no fewer than ten thousand times between shots.

The East may not be any good, but the Hawks are very, very good. Toronto caught them napping early in the year, as Horford worked himself back into game shape after a season lost to injury. They don't want to see them too many more times. Or at all.

This isn't a fair fight.

What the East is right now is a five-team race to get into the top four. Two of Atlanta, Toronto, Chicago, Washington and Cleveland are going to have to play each other in April's first postseason round. The Raptors' primary current mission is making sure they aren't one of them.

It's only January, but the Raptors are essentially guaranteed another division title. How bad is the Atlantic right now? Recently, Toronto went 4-6, and gained ground on their rivals. It is exceedingly difficult to imagine them surrendering their current double-digit lead.

What's required now is a clearly defined goal that isn't "Get to the playoffs."

The Atlantic title means they can finish no worse than fourth.

Toronto's mission right now - finish no worse than third.

As of right now, the comically dysfunctional Cavaliers are in danger of mucking up that plan.

It would be just Toronto's luck to finish third, and then have to face an irritated LeBron James in the first round of the playoffs.

"The Eastern Conference ... is wide open, for the taking," Casey said before Friday's game. "That's what I keep telling our guys. The hardest thing right now is practice time. Practice versus rest."

That right there - that may be becoming a problem. Everyone around the club has already shifted into postseason mode. Recently, the Raptors stopped doing morning shootarounds on game days so that the players could get more sleep. Instead, they do walkthroughs in the late afternoon.

It's great that we're going to get to the postseason well rested, but you seriously fear for this team if they run into one of the East's better clubs.

The Raptors deserve to feel good about itself, but it's time to stop riding the city's good vibe through poor performances.

Whatever Bogues thinks, nobody is "shocked" by the Raptors any more. They're a good team.

That's about it - "good."

They've done absolutely nothing to suggest they are giant killers. Everyone in the league now respects them, but no one fears them. What they've done is win winnable games, and not embarrass themselves when they're overmatched.

Increasingly these days, they look overmatched.

Now that DeMar DeRozan is back, there aren't any more excuses. This is a fragile time. If Toronto can't start beating big teams with their full roster, the incredible self-belief that's animated them for nearly a year now will begin to bleed away.

You could see that for long stretches in Friday's game. Down 20 for much of the second half, heads were dropping on the court. Even Kyle Lowry looked deflated.

After spending the first half of the season without any measurable goals aside from "Keep being good," the Raptors have to find ways to demand more of themselves.

A decent first step might be publicly embracing the idea that they can win this conference.

Enough with the old Raptors poor mouth. Great teams aren't afraid to speak their targets out loud, and especially the ones they aren't sure they can meet.

If this club has a signature moment, it's GM Masai Ujiri very publicly throwing shade at Brooklyn. Maybe Toronto could use another carefully orchestrated Ujiri meltdown right about now?

Or they could just start winning the unwinnable games.

If the East really is as bad as everyone likes to say it is, it's time for the Raptors to prove they are capable of wringing all the necks in it, not just the weaklings.

Follow me on Twitter:@CathalKelly

Associated Graphic

Hawks' Dennis Schroder (17) drives through Raptors' Louis Williams (23) and Greivis Vasquez (21) during the first half of Atlanta's crushing victory in Toronto on Friday.


The loonie's free fall is bad news for NHL
A low Canadian dollar hurts the league in many ways, and not just because it's reminiscent of the lean days of the early 1990s
Saturday, January 24, 2015 – Print Edition, Page S6

It was a tumultuous, uncertain time that every Canadian hockey fan remembers well.

In the early 1990s, the dollar sunk sharply, taking with it the finances of many of the NHL teams based in this country. With American teams dealing with a currency worth 30 to 40 cents more for nearly a decade, they had an advantage.

Some teams such as Quebec and Winnipeg relocated south. Others simply struggled. Those remaining also petitioned the government to step in, including one famous series of impassioned speeches at the House of Commons in the spring of 1998. In his speech, then-Montreal Canadiens president Ronald Corey noted that "it costs us $300,000 more every time the dollar loses one cent."

Today, almost 17 years later, with player salaries more than double what they were, those drops are even more costly. And there are concerns teams could wind up in uneasy territory again.

On Wednesday, the Canadian dollar plummeted dramatically, initially falling 2.2 cents against the U.S. dollar in less than four hours after the announcement that the Bank of Canada was cutting interest rates. The dollar closed at 80.50 cents on Friday afternoon - a more than five-cent drop in the past month and down 13 cents since late June when the NHL's current $69-million (U.S.) cap was established.

Because of energy prices and other factors related to the economy, that free fall may not be over.

No one's quite sure. What they do know is the dollar's decline has already outpaced economists' downward projections for the year in the first 23 days of 2015.

That uncertainty? It's back.

A low Canadian dollar hurts the NHL in a multitude of ways, and both the league and the seven Canadian teams keep an eye on its fluctuations daily. They engage in what's known as currency hedging to protect themselves from drops, but dramatic falls such as those of late are difficult to protect against. Because player salaries are paid in U.S. dollars, every currency drop hurts those teams' bottom line.

The dollar's shift is only one factor, but there's evidence its movement translates to success on the ice. Between 1994 and 2000, the dollar sat around 70 cents and Canadian teams had an average of only 75 points a season - nearly 10 below U.S.-based ones. Meanwhile, Canadian teams' most successful season, points-wise, came in 2005-06, when the dollar began to shoot back up to close to 90 cents.

But the impact goes beyond only the Canadian teams. Another big casualty of a lower dollar is the salary cap, which is tied directly to the league's annual revenues. Because Canadian franchises pull in a disproportionate amount of hockey-related revenue - estimated between 30 and 35 per cent - the dollar shifting can have a big impact on the total.

In mid-December, NHL commissioner Gary Bettman told the board of governors that the league projected a $4-million rise to a $73-million cap based on the dollar averaging 88 cents for the year, something that is now completely unlikely.

The NHL uses the average exchange rate from throughout the season (October to June) to calculate its revenues, meaning Canadian funds collected last summer as part of season-ticket packages will be treated the same way as what's brought in during the playoffs. If that season-end average is 84 cents instead of 88, that alone could mean a loss of up to $60-million in revenue.

Bettman's $73-million cap was based on revenue of approximately $3.85-billion; if it's $60million lower, the cap projection will fall by somewhere in the neighbourhood of $1.2-million. If the dollar falls further, there would be more pain than that.

"Still projecting a decent cap increase," was deputy commissioner Bill Daly's only comment on the subject this week.

The biggest doomsday scenario for the cap would be if players themselves decide they don't want it to rise. Every June, the NHL Players' Association has to greenlight a 5-per-cent cap inflator that helps drive the league's ceiling higher in anticipation of revenue growth.

With players currently paying 14 per cent of their salaries into escrow, they may not want the cap to rise.

A low or no-growth cap would create massive pain for successful-but-capped out franchises such as the Chicago Blackhawks, who have been signing players under the assumption the NHL's ceiling will continue to rise. Already, some teams around the league are considering a "vulture" strategy, where they'll purposely head into the summer with a lot of cap room in order to take advantage of distressed teams.

The New York Islanders pulled this off last fall in landing two of their top defencemen - Johnny Boychuk and Nick Leddy - from Boston and Chicago and now have one of the best records in the league.

In that sense, a low cap can hurt big market teams and benefit those resting closer to the salary floor.

That may be a long shot, but the fact that such extreme scenarios are even on the table shows how vital a stable currency is to the NHL.

"The league is obviously healthier when the dollars are closer to par," Daly told The New York Times recently. "But I think the business success of the league and the clubs over the last several years stands on its own."

Follow me on Twitter:@mirtle

Can the Leafs get McDavid?
A recent change in draft policy means Toronto has a (long) shot at the Ontario Hockey League star
Wednesday, January 21, 2015 – Print Edition, Page S3

There comes a point for fans of any losing hockey team when they stop looking up at the standings to see what it will take to make the playoffs.

And they start looking down. These are the sort of dark thoughts percolating in Toronto these days.

As has been well documented, the Maple Leafs can't buy a win.

Or even a goal. After getting only six of a possible 32 points out of their past 16 games, they have fallen from the NHL's top 10 to the bottom 10 in just five weeks.

In a year when not one but two generational talents are available in the draft, that invites questions. Questions such as: "Can the Toronto Maple Leafs really enter the Connor McDavid sweepstakes in a serious fashion?" The answer is yes.

The NHL changed its draft lottery system recently. In the past, non-playoff teams could only move up a maximum of four spots, meaning only the worst five finishers had a chance at the first overall pick. Now, any team that misses the postseason has a chance, and their odds have been improved from last season.

Where that puts the Leafs in the race for McDavid, the Ontario Hockey League star, or American wunderkind Jack Eichel is a moving target as they continue to lose games.

Entering Tuesday night's action, Toronto sat in 21st in the NHL, which would give the Leafs the 10th-best position in the lottery at season's end. The Leafs, however, are also on pace for only 82 points, tied with Minnesota and Ottawa. Columbus and Philadelphia aren't far behind, either.

If the tailspin continues another week or two, the Leafs could have the sixth- or seventh-worst record in the league with 30-some games to "improve" their standing.

As has been the case since the lottery was introduced, the worst teams have the best odds. Finish dead last and there's a 20-percent shot you'll get the No. 1 pick, and an 80-per-cent one you'll be No. 2. If you're 29th, those odds are much worse, at 13.5 per cent for No. 1 and 20 per cent for No. 2.

As of Tuesday afternoon, the Leafs had only a 3.5-per-cent chance of winning the lottery and getting McDavid, but that can still theoretically increase into the 10per-cent range.

Two things are working against the Leafs getting a better draft position than that, even in a worstcase scenario.

First, the bad teams this season are really, really bad. Buffalo and Edmonton are on pace for 54 and 55 points, respectively, two of the three worst seasons in the past decade. They are overwhelming favourites to finish in the bottom two.

The 28th and 27th place teams aren't a lot better. Carolina and Arizona are on pace for 66 and 67 points, which would be two of the very worst finishes at those spots in recent memory.

Second, the Leafs currently have a big lead on those teams, and there's only 40 per cent of the season left. In order to finish with 65 points and be the third-worst team, for example, Toronto would have to go something like 9-26-0 the rest of the way. Combined with recent losses, that would mean the Leafs won only 12 of their final 51 games, one of the worst stretches in league history.

Whatever your thoughts on the Leafs and their talent level, they're not that bad. Their goalscoring problems appear temporary, based on all the underlying numbers, and there's no indication that a huge selloff is coming from the front office before the trade deadline.

The Leafs' most realistic hope for McDavid would be to finish a little under 80 points, and for teams such as the Flyers and Devils to pick up their pace the rest of the way. That could put Toronto 26th come mid-April, which would mean an 8.5-per-cent chance at the first pick and 63per-cent chance at the fifth pick.

It's a long shot at McDavid, but one worth keeping in mind the rest of the way.

Follow me on Twitter:@mirtle

Associated Graphic

If the Leafs manage to win the draft lottery, Connor McDavid of the Erie Otters could be a possibility for the team.


Bouchard advances and dances Down Under
The Associated Press
Thursday, January 22, 2015 – Print Edition, Page S3

MELBOURNE -- Eugenie Bouchard's jaw dropped a little and her eyes went wide when the male presenter conducting her on-court interview at the Australian Open made an unusual request: "Can you give us a twirl?" "A twirl?" the 20-year-old Montreal native asked.

"A twirl, like a pirouette, here you go," coaxed her white-haired interviewer on Margaret Court Arena, urging the Wimbledon runner-up to show the crowd her outfit, a pink skirt and top with bright yellow straps.

Somewhat uncomfortably, the No. 7-ranked player twirled. She then laughed and buried her face in her hands.

During her post-match news conference, Bouchard spoke first about her dominating 6-0, 6-3 win over Kiki Bertens of the Netherlands in just 54 minutes.

Then she addressed the twirl.

"It was very unexpected," said Bouchard, who is known for a steely determination, drive and ambition that propelled her from relative obscurity to stardom last year.

She reached the semi-finals at last year's Australian and French Opens and the final at Wimbledon, becoming the first Canadian to appear in a Grand Slam singles final.

"I don't know, an old guy asking you to twirl. It was funny," she said.

The 5-foot-10 Bouchard is considered by many to be the next big star of the women's game.

She broke into the top 10 for the first time last year after her success at Wimbledon, where she lost in the final to Petra Kvitova.

Her current ranking is the highest a Canadian singles player has ever been.

"I try to get into an aggressive position as much as possible," she told a television interviewer after her match. Asked to reflect on her breakthroughs last year and her goals, Bouchard replied, "I don't think I've achieved that much.

"I'm proud, of course, of what I did last year," she said, but added, "I want to win a Grand Slam. I want to get to No. 1 in the world. I did good last year but I want to do so much better."

Bouchard is one of several players sporting this season's colour theme of neon pink and yellow tennis outfits.

No. 1 Serena Williams is wearing a somewhat similar dress, in yellow with pink straps but with a large chunk cut out of the back that she says is meant to draw attention to "the beauty and the shape of the back."

After Williams's first-round win Tuesday on Margaret Court Arena, the Australian Open's second show court, the same presenter asked her to twirl for the crowd, which she often does anyway to thank the crowd after winning.

"Serena is good at her twirl. She does them all the time," Bouchard told the presenter after her awkward twirl and then added: "Maybe I should cut a hole in my top tonight and show off my back like Serena."

Associated Graphic

Eugenie Bouchard takes a selfie after defeating Kiki Bertens of the Netherlands at the Australian Open on Wednesday.


Pairs skating is often a chemistry experiment gone oh-so-right
The Canadian Press
Friday, January 23, 2015 – Print Edition, Page S6

KINGSTON -- The hurtful words used to slice deep, but Meagan Duhamel and Eric Radford are learning to laugh them off and let their skating answer for them.

And the fact they're winning says plenty.

Canada's top figure-skating pair has had its share of critics since teaming up four years ago.

There's too big a size difference - she's 4-foot-8, he's 6-2. Their styles are too different - she skates with the power and force of an athlete, he carries himself with the grace and artistry of a dancer.

"There was one comment when Dylan [Moscovitch] and Kirsten [Moore-Towers] broke up [last summer], it was 'Ah, I just wish it was Meagan and Eric that broke up.' "

Duhamel, from Lively, Ont., and Radford, from Balmertown, Ont., are writing their own success story with a season that has thus far seen them win both their Grand Prix events and then the Grand Prix Final in December in Barcelona. They're in the hunt for their fourth consecutive national title at the Canadian championships this week.

They possess one element - a side-by-side triple Lutz - that no other team in the world has. And their quad throw Salchow, added this season, is only attempted in competition by one other team.

Partnering in figure skating is a tricky business at the best of times. Houston native Kaitlyn Weaver became a Canadian citizen in order to compete with Andrew Poje. The ice dancers are also enjoying a wildly successful season, with two Grand Prix victories and gold from the Grand Prix Final.

Weaver drove to Waterloo, Ont., in 2006 for a tryout with Poje and wound up staying. They were a perfect fit, something as rare and lucky, she said, as finding one's "soul mate."

"I remember the tryout, and I remember thinking to myself, 'Okay, this is the real deal. This could be something really good.' "I feel like I was so young, I was 17 ... but I just remembered thinking, 'This could be the opportunity I've been waiting for.' "Why are you laughing?" Weaver said, turning to Poje.

"My first thought was, 'Wow, this girl's quiet,' " Poje said.

This week's championships decides the team that will represent Canada at the world championships in Shanghai.

Canada can send three teams in both pairs and ice dance, and two skaters each in men's and women's singles.

While Duhamel and Radford and Weaver and Poje are the class of their respective fields, Skate Canada high performance director Mike Slipchuk expects a dogfight for the remaining spots.

After Moore-Towers, from St. Catharines, Ont., and Toronto's Moscovitch split a few months ago, he teamed up with Russian Lubov Ilyushechkina, while she joined forces with Michael Marinaro of Waterloo, Ont.

Ilyushechkina is eligible to compete for Canada at the world championships, but needs Canadian citizenship to compete at the Olympics.

Backcourt stars help Raptors offset slow start
Associated Press
Wednesday, January 28, 2015 – Print Edition, Page S2

INDIANAPOLIS -- DeMar DeRozan scored 24 points and Kyle Lowry added 19 on Tuesday, leading Toronto to a 104-91 victory at Indiana.

The Atlantic Division-leading Raptors (30-15) overcame a sluggish first quarter to pick up their third straight win. The victory also gave Toronto a franchise record for most wins before the All-Star break.

Rodney Stuckey scored 22 points and Solomon Hill finished with 15 to lead Indiana (16-31), which has lost eight of nine.

Toronto took control in the second quarter with a 20-0 run, which turned a 32-21 deficit into a 41-32 lead. Indiana spent the rest of the game playing catch-up.

The Pacers tied the score once, at 43-43, and got as close as 58-53 midway through the third quarter, but never regained the lead.

After Toronto pushed the lead to 73-57 in the third quarter, Indiana never got closer than eight.

For Toronto, it was a familiar script. Five players scored in double figures and the NBA's fifthhighest-scoring team dismantled the league's fourth-best scoring defence after starting the game in a 9-0 hole. And, of course, it was the Raptors' strong backcourt of Lowry, an All-Star starter, and DeRozan that helped the Raptors right themselves in a topsy-turvy first half.

Beeston will remain Jays president through 2015
Tuesday, January 27, 2015 – Print Edition, Page S2

Paul Beeston has been telling people privately for weeks that he would remain as the president and chief executive officer of the Toronto Blue Jays through the 2015 season. The team's owner, Rogers Communications Inc., finally made it official Monday, announcing that one of the baseball club's original employees was coming back for one more year.

"We have been in discussions with Paul about his future with the team since his contract expired in October," Edward Rogers, the Jays' chairman, said in a news release. "There were many rumours flying about, but it would have been inappropriate to comment on such matters publicly."

"I love this ball club and the fans," Beeston, 69, is quoted as saying. "I'm excited for the season ahead - we've got a great group of guys who are fiercely competitive and hope to be playing ball in October."

The announcement ends an unseemly period in which ownership was actively seeking Beeston's successor even as he continued on the job.

A report on Sunday said Dan Duquette was out of the running after the Jays determined the compensation the Baltimore Orioles were asking in order to free him from his contract was too high. The next day, Rogers announced Beeston will be back.

Canadian men sweep dual moguls podium
The Canadian Press
Tuesday, January 20, 2015 – Print Edition, Page S5

KREISCHBERG, AUSTRIA -- The Alex Bilodeau era is over, but a sweep of a world championship podium led by Mikaël Kingsbury shows that Canada has not lost a step in freestyle skiing.

Kingsbury, of Deux-Montagnes, Que., won the dual moguls competition with a victory over Philippe Marquis of Quebec City on Monday while Marc-Antoine Gagnon of Terrebonne, Que., took the bronze medal.

Bilodeau, the gold medalist at the 2010 Olympics in Vancouver and the 2014 Winter Games in Sochi, Russia, has retired to pursue a career in accounting.

In women's dual moguls, Justine Dufour-Lapointe of Montreal took silver after losing 29-6 in the final to American Hannah Kearney. Her older sister, Chloé Dufour-Lapointe, was fourth.

For the men, it was the first medals sweep by one country since Finland did it in individual moguls in 1999.

"The three of us were very hungry for a medal," said Kingsbury.

"There's a bit of luck in that, in duals, you never know who you're going to go against. I could have got Marc or Phil in the first round. But we had a good qualification round and we skied well.

... The sweep was very close and we did it. It was pretty crazy."

The Associated Press
Monday, January 26, 2015 – Print Edition, Page S2

Moscow -- The Kontinental Hockey League's president says he wants to slash its salary cap as clubs struggle financially in Russia's economic crisis.

Dmitry Chernyshenko told Russian media Saturday he wants to cut the 1.1-billion ruble ($21-million) salary cap by 50-million rubles a year each season until 2017-18.

At current exchange rates, that would result in a cap that is a fifth of the NHL's current $69-million (U.S.) level.

The plans likely spell an end to the KHL's plans to rival the NHL's popularity and attract big-name players from North America.

Almost all of the KHL's 28 clubs rely heavily on Russian state-owned companies and regional governments for their revenue.

With Russian government finances under pressure from low oil prices, several clubs are reportedly struggling to pay players.

Monday, January 19, 2015 – Print Edition, Page S2

10 Number of years since a defending champion has returned to the Super Bowl.

22 Number of years since a Canadian (Mark Rypien) threw a touchdown in the NFL. Seattle punter Jon Ryan's third-quarter pass to tackle Garry Gilliam on a fake field goal was the first TD pass by a kicker in NFL postseason history.

44 Number of seconds, late in the fourth quarter that it took the Seahawks to score 15 points after trailing 19-7.

157 Number of rushing yards for Seattle's Marshawn Lynch on 25 carries.

68,538 Sunday's attendance at Seattle's CenturyLink Field, the largest announced crowd in its history. The atmosphere was described as 'funereal' until late in the fourth quarter.

Central banks lose their superhero status
Saturday, January 17, 2015 – Print Edition, Page B2

ROME -- Since the start of the financial crisis in 2008, the world has relied on central banks to prevent the world from following a script inspired by a Hollywood disaster flick. Banks everywhere were saved, at the cost of trillions of dollars, to prevent global financial collapse, and quantitative easing was launched to prop up economies, inflate asset values and create jobs.

It worked, more or less, in the sense that outright depression was avoided (although not in Greece and a couple of other lost economic causes). Confidence in central banks rose. They would protect us from the consequences of our worst sins.

That confidence might be on the verge of evaporating, especially in Europe, where it is dawning on families and investors that the central banks' ability to control broad economic events can be severely limited or virtually non-existent.

Worse, central banks are capable of missteps, in spite of their best intentions, that can compound the very damage they sought to prevent. That became abundantly apparent in a flash, on Thursday, when the Swiss National Bank (SNB) ended its three-year currency peg against the euro. The move, entirely unexpected, was a shocker, sending the Swiss franc soaring as much as 39 per cent while the Swiss stock market galloped off in the opposite direction. Currency traders around the world got walloped. Alpari, a retail currency broker in Britain, declared insolvency after the losses in clients' accounts exceeded their equity.

The shock was compounded by an untimely comment from SNB vice-chairman Jean-Pierre Danthine. He declared only three days before the franc melt-up that "the minimum exchange rate must remain the cornerstone of our monetary policy."

All in all, the SNB's performance this week was a confidence buster. Its long and expensive campaign to push the franc down to keep the Swiss economy competitive failed spectacularly as euro zone deflation took hold and the European Central Bank (ECB) moved toward full-blown quantitative easing, putting downward pressure on the euro and making the franc more attractive. The assurance from Mr. Danthine that the peg would remain in place could not have come at worse time.

Central banks have every right to change course when a cherished strategy is unsustainable or in danger of backfiring. But it seems doubtful that the debate, however informal, within the SNB to kill the peg started only after Mr. Danthine made his assurances on the status quo. If there was even the slightest doubt that the peg would endure, saying nothing would have been the sensible ploy.

The ECB has its own credibility problems, for entirely different reasons. Its effort to prevent potentially damaging deflation from gripping the euro zone and stalling the recovery does not appear to be working. But it's not entirely the ECB's fault, for it, reluctantly, is proving to be a political as well as a monetary beast. Since Mario Draghi became the ECB's president in late 2011, he has been fighting powerful forces, largely from the German camp, who dislike bond buying and quantitative easing and like austerity.

Mr. Draghi started his job with a bang. Only a few months before he took the job, the crisis (then called the debt crisis) threatened to eject Greece from the euro zone. In the summer of 2012, he swung into action, pledging that the ECB would do "whatever it takes" to keep the euro zone intact. In came a bond-buying program, called outright monetary transactions (OMT), that would see the ECB buy the sovereign bonds, in unlimited quantities, of any country in danger of getting shut out of the debt markets. It worked brilliantly, even though the ECB spent not one euro on OMT. Its mere presence was enough to send bonds plummeting.

Too bad the effort to prevent falling inflation from transforming itself into deflation has been less successful. Euro zone inflation went below 1 per cent - half the target rate of 2 per cent or close to it - more than a year ago. As inflation went from a shallow to a steep decline last autumn, Mr. Draghi hinted that full-blown quantitative easing was coming. The teasing continued even though consumer prices, year on year, in the euro zone turned negative in December. Why has he not pulled the trigger?

Maybe because the ECB is less independent than advertised. If you doubt that, note that the German Constitutional Court asked the European Court of Justice to rule on the legality of the untapped OMT program. An interim opinion from the ECJ came this week and, in essence, said the ECB has the restricted and conditional right to buy bonds.

While the ruling was unrelated to quantitative easing itself, it was seen as opening the legal door to quantitative easing, which may come as early as next week. It is possible that Mr. Draghi was waiting for that opinion before working out the details of any quantitative easing program.

An ECB that is constrained by legal and political pressures is an ECB that either cannot move quickly or, in some cases, may not be able to move at all to fight a crisis. With deflation a clear and present danger, and the prospect of Greece's exit from the euro zone suddenly back in the news, the ECB will need all the firepower it can muster in 2015.

The SNB's abrupt U-turn on currency policy, and the ECB's slow-motion response to the deflation threat, show that central banks are fallible, can make mistakes and can have their legal wings clipped. Investors, finance ministers and families might want to put less faith in central banks' vaunted fix-it abilities.

Will oil's slump mean a delay in rate hikes?
Wednesday's announcement will shed light on the Bank of Canada's long-term outlook in light of lower commodity prices
Monday, January 19, 2015 – Print Edition, Page B2

As oil's tailspin raises increasingly difficult questions for policy-makers, Canadians will expect some answers when the Bank of Canada steps into the breach this week with what should be a very oil-stained update of its monetary policy stand and economic outlook.

The central bank releases its latest interest rate announcement, together with its quarterly Monetary Policy Report, on Wednesday at 10 a.m. (ET), followed by a news conference with Governor Stephen Poloz. The day should shed much-needed light, for Canadians and financial markets, on how the central bank is prepared to deal with the startling downfall of Canada's biggest export commodity, which has lost nearly half its value since the bank last updated its outlook just three months ago.

The big news will be whether the slump in oil - which plays a key role in everything from Canadian consumer prices and employment to Canada's currency, trade balance, business investment and national income - will prompt Mr. Poloz to significantly push back expectations for an increase to the bank's key interest rate in the next year, or even to put the possibility of a rate cut on the table.

"Don't be surprised if the next policy statement opens up just a crack in the door towards a rate cut," Canadian Imperial Bank of Commerce chief economist Avery Shenfeld wrote in a research report.

The Bank of Canada's key updates come just days after the federal government delayed the release of its budget until April, citing the difficulty in calculating oil's rapidly evolving impact on government finances and the national economy.

The central bank signalled last week that oil would be front and centre in its discussion, when one of Mr. Poloz's most trusted deputies, Timothy Lane, dedicated a speech to the topic. While he didn't disclose any details of the bank's analysis, he indicated that oil has been a key preoccupation of bank officials as they prepare this week's Monetary Policy Report, which will include new forecasts on economic growth and inflation.

In October's report, the central bank pegged inflation at about 1.8 per cent throughout 2015, close to the bank's 2-per-cent target that is its primary guide for setting interest rates. But given oil's impact on gasoline and other consumer costs, private sector forecasters have recently been talking about inflation falling to near zero, or perhaps even below that, around the middle of the year, pushing it below 1 per cent for the year as a whole - which would be less than the bank's target range of 1 to 3 per cent. Meanwhile, economic growth, which the Bank of Canada forecast at 2.4 per cent for the year, could well be below 2 per cent.

As a result, a Bank of Canada rate hike in the second half of 2015, once considered a given, looks increasingly unlikely. CIBC now believes the central bank won't raise its policy rate from its current 1 per cent until the first quarter of 2016; Bank of Nova Scotia doesn't foresee the first hike until the second quarter of 2016. And a growing number of pundits believe a rate cut may be more likely, and prudent, than a rate increase this year.

"The Bank of Canada needs to pay full attention to defending its inflation target and supporting inflation expectations around 2 per cent," veteran Canadian economist Ted Carmichael said in a blog post this week. "The most effective way to do this in the near term is to provide guidance, in the Jan. 21 policy rate announcement and the Monetary Policy Report, that the BoC stands ready to cut the policy rate if inflation moves persistently below the 1- to 3-per-cent target band."

But Mr. Lane indicated in his speech that the Bank of Canada is inclined to dismiss the oil decline as a temporary and isolated factor in inflation - just as it did last year when rising energy prices quickly accelerated the inflation rate. CIBC's report argued that oil's slump is unlikely to have a substantial spillover effect on non-energy consumer goods. It concluded that socalled "core" inflation - the Bank of Canada's favoured measure, which excludes gasoline and other highly volatile components - won't slip enough to justify rate cuts to defend the central bank's inflation target.

Nevertheless, a rate cut may still enter the central bank's discussions on other grounds, CIBC said.

"It's not deflation, but the negative growth impacts for Canada from sharply lower crude prices, that will keep the Bank of Canada dovish," Mr. Shenfeld said.

While the Bank of Canada's ruminations will certainly gain international attention, they will serve merely as a warm-up act for the European Central Bank's meeting Thursday.

With Europe teetering dangerously close to deflation, the ECB is widely expected to finally (and in many minds, belatedly) announce a large-scale assetbuying program aimed at reinflating the euro zone's economy. This so-called quantitative easing will be a major event for global financial markets, and could spark a new wave of trading volatility, especially if the moves don't live up to the market's expectations for a shockand-awe scale of stimulus.

Associated Graphic

When the Bank of Canada releases its latest interest rate announcement, all eyes will be on Governor Stephen Poloz, to see whether oil's tailspin will put the possibility of a rate cut on the table.


Bad neighbour policy could leave U.S. and Canada behind as global economy evolves
Tuesday, January 27, 2015 – Print Edition, Page B2

Among Canada-U.S. watchers, I have been one of the slowest to admit that we are at a low ebb in bilateral economic relations.

Presidential permit for the Keystone XL pipeline? I argued that it's not about Canada, it's a U.S.

domestic squabble. Country-oforigin labelling that excludes Canadian meat exports? I rationalized that Americans are concerned the safety of food products from China and Canada got caught in the crossfire. No money for a bridge across the Detroit River but tens of millions of dollars to upgrade crossings to Mexico? Sure, I said, it makes sense to focus on security and immigration, and we'll get it next time around. Buy America restrictions on goods and services for a port terminal on Canadian soil? Okay, I give up.

There is nothing left but to admit that the White House is behaving with callous disregard for the relationship with Canada.

Once in a while, you've got to do the right thing for your neighbours, even if doing so fails to score political points at home.

This argument is lost on the current President.

And it's not just the United States. When faced with the opportunity to sit down and talk about North American priorities with President Barack Obama and President Enrique Pena Nieto of Mexico, Prime Minister Stephen Harper decided to cancel a long-planned leaders' summit proposed for early this year. The reasons he cancelled are not clear. Some speculate that pique over Obama's recent salvo against Keystone and Canada's unwillingness to give Mexico any comfort on visa reforms led the Prime Minister to avoid engaging with the North American freetrade agreement neighbours entirely.

As any marriage counsellor (or playground monitor) will tell you, you can't solve a problem if you don't talk about it. The silent treatment achieves precisely nothing and it leaves the shunner feeling even worse if the shunned go off and talk to each other.

It seems as though Mr. Obama and Mr. Harper are thinking more about the elections taking place over the next couple of years than they are about the economic challenges facing North America.

The U.S. President, who cannot be re-elected, is attempting to carve out a legacy as an ecowarrior and an idealist. He will not yield to reason or concede to Republican wishes, even if it denies opportunities to Americans.

The Prime Minister, who wants to be re-elected, seeks to stop the clocks in order to better construct a campaign that claims credit for the positive elements of the Canada-U.S. relationship (primarily found in the Beyond the Border and Regulatory Co-operation Council initiatives) while heaping shame on U.S. bullies for pipelines, pork and ports.

But locking in the status quo and eschewing progress in favour of legacies and campaign promises serves the public very poorly.

Change is the only constant in the global economy. Through investments in technology and reshoring, manufacturing in North America may be wobbling back to life even as the carbon fuels cash cow is faltering. To manage this paradox and widen the window of opportunity, what we needis leadership, vision and big ideas.

Do you remember the role of big ideas in the North American relationship? They are now the stuff of history books, but they gave us the confidence to build great trade routes such as the St.

Lawrence Seaway and cross-border stewardship plans such as the Boundary Waters Treaty and the acid rain agreement. They gave us bold trade agreements, such as the auto pact, the Canada-U.S. free-trade agreement and NAFTA.

Today, the relationship is characterized by churlish griping with very little forward motion. Big ideas require sustained co-operation, dialogue and a willingness to do the right thing.

The world is changing around us. North America's relative economic strength in the world is plummeting. Citibank and PricewaterhouseCoopers predict that by 2030, Asia will be the centre of most global trade and by 2050 even Africa will leave North American trade in the dust. We can't afford to sit around and watch an election clock before taking action.

Canada and Mexico are the largest U.S. trading partners. The United States gets away with shoddy treatment of its best customers because the partners pose no credible threat of retaliation.

We're not going anywhere. We're not going to stop selling them goods and services. Similarly, U.S. companies invested in Canada are tuned into long-term economic signals, they're not going to leave as a result of short-term political melodrama.

But succumbing to petty squabbles misses the larger point. Canada and the United States are not going anywhere in the global economy if we don't do it together. Mexico offers us a lifeline into emerging markets and we mostly ignore it. Meanwhile, China has eclipsed us in basic manufacturing and development of new markets.

North America can strike back with rapid, focused investment in human capital, technologies, infrastructure and red-tape reduction to make the border less important. But a counterstrike requires big thinking and big cooperation, not the bad-neighbour policy. As long as we are held captive by small mindedness, we are going nowhere.

Laura Dawson, PhD, is president of Dawson Strategic and an expert in international trade and cross-border issues.

Wednesday, January 28, 2015

More high-skilled jobs or low-wage work? Either way, there will be losers
Special to The Globe and Mail
Thursday, January 22, 2015 – Print Edition, Page B2

LONDON -- More than a million Britons, mostly of the male gender, tune in weekly to watch Ice Road Truckers, a soporific reality TV series about trucks delivering winter supplies to mining and oil camps in Canada and Alaska. The appeal for the couch-potato viewers, one imagines, is the fantasy of being a real tough guy (sometimes tough gal) doing a real job for real money rather than being stuck in a suburban shed picking parcels for Amazon, earning minimum wage.

While brawny Canadians are digging their trailers out of snow drifts, on the other side of the world their sun-burnt Australian cousins are being ejected from the driving seats. Rio Tinto is using robotic trucks to shift iron ore in the Pilbara and back in Canada, Suncor is reported to be recruiting the giant-wheeled cyborgs for bitumen mining in Alberta.

The collapse of oil and metal prices is a spur that will accelerate investment in robotics, automation and any technology that removes expensive, unreliable and accident-prone human beings. This will not be good for employment levels in a highwage sector of the Canadian economy, but it is a global phenomenon and the latest chapter in a long story.

High-skilled, blue-collar manufacturing jobs are disappearing everywhere and the question is what will replace them. Just as weavers and spinners in the 18th century became machine minders in Victorian mills, the truckers and bulldozer operators will retreat to a cozy control room where they watch screens and drink cappucinos. But for every employment upgrade, there will also be those who shift down into lower-skilled retail and service sector jobs. If you plot employment distribution in mature economies, such as Canada, you are typically looking at an hourglass shape with a bump at the top of higher-paid managerial, scientific and professional jobs and a bigger bump at the bottom of retail and lower-skilled service sector employment. Squeezed in the middle is the manufacturing sector. Ideally, we want to see employment skills and opportunities migrating upward rather than downward.

Unfortunately, it's not plain sailing and in Britain, there is some disturbing evidence that employment expansion is creating jobs mainly at the bottom of the heap.

Britain is the poster child of the global economic recovery, lauded by the International Monetary Fund, and the December unemployment rate dropped pleasingly for the Tories as they launch their election campaign. Unemployment fell from 6 per cent to 5.8 per cent and the overall working population employed is steady at 73 per cent. More encouraging still is a sign that people are a little better off: average wages are up 1.8 per cent compared to an inflation rate of just 1 per cent.

However, researchers at Oxford University compared the distribution of employment creation between low- and high-skilled jobs in 11 European countries. Britain comes out poorly with a tendency to create more lower-skilled than higher-skilled jobs than EU rivals, including France and Italy. Despite its much better record at creating jobs over all, Britain seems to have a problem pushing the skills envelope.

The reasons are not entirely clear, but the researchers speculate that more powerful unions and more protective employment law may indirectly incentivize investment in new technology and fewer but higher-skilled jobs.

Britain is one of the EU's more open employment markets; you can hire and fire almost at will and the freedom attracts much investment as well as wave after wave of desperate young people seeking casual labour in London's expanding service sector. However, the corollary has also been low and stagnant productivity.

Britain creates lots of jobs, but lags France in output per manhour and there has been little recent improvement. If weak employment protection is a factor in the profusion of low-paid jobs it would be a disturbing trade-off for governments: Free up the right to work, disempower unions and you build a high employment but low-wage economy. Alternatively, protect and promote high-paid jobs with "social contracts" and you end up with a vast army of angry, unemployed and disillusioned young people.

If the former is worrying, the latter is disastrous. If you are now indulging in the fantasy of a future high-tech Canada led by a pampered elite whose brilliant manipulation of technology allows a partially employed proletariat to live in enforced leisure, cushioned by a generous state, look at France and think again. Manuel Valls, the French Prime Minister, gave a frantic warning this week. He reminded France of the terrible legacy of inequality in the French state's hidden policy of discarding the underskilled and unwanted into rotten suburbs on the edge of its great cities. In the wake of the recent massacres by homegrown Islamist terrorists, he spoke of the need to combat "territorial, social and ethnic apartheid."

As we move into our brave new world, we need to remember that there are people in it.

Balancing the budget would be bad timing by Ottawa
Tuesday, January 27, 2015 – Print Edition, Page B2

Massive declines in the world oil price are unambiguously bad for the Canadian economy.

Such large shocks usually merit policy responses. While the Bank of Canada acted boldly last week to cut its benchmark interest rate, the federal Finance Department hesitates, apparently unsure of both its economic and political calculations.

The 55-per-cent decline in oil prices since last summer creates both losers and winners in Canada. Oil companies reduce their production, lay off workers and scale back their investment plans.

This negative impact quickly spreads to the many industries supplying Canada's oil patch.

In contrast, consumers and businesses that use oil receive a financial windfall. Consumers find that filling their gas tanks is now cheaper, and more money is available to spend on other things. Firms that use oil-based inputs find their competitive positions improved.

Since Canada is a net exporter of oil, the economic costs from the price collapse outweigh the economic benefits. The Bank of Canada's most recent Monetary Policy Report presents modelling results showing that the decline in the per-barrel oil price from $110 (U.S.) to $50, if it persisted throughout this year without a policy response, would reduce Canadian gross domestic product by 1.3 per cent below the level that would otherwise be observed.

So the Bank of Canada acted. In fact, it shocked financial markets when it reduced its target for the overnight interest rate to 0.75 per cent. In normal times, such a policy move would not be surprising.

But after four years of stability in the overnight rate, most economists (including me) had become complacent. We expected the oil price decline to simply delay the bank's inevitable rate increase, not to lead to an actual rate cut.

Governor Stephen Poloz knew this complacency was out there, and also knew that the surprise would only increase the effect of his policy action. Financial markets responded swiftly, with the Canadian dollar falling by 2 cents and the S&P/TSX index rising by 3.5 per cent. The bank's actions will dampen the inevitable slowing of the economy; it now forecasts Canadian GDP will grow by 2.1 per cent this year, down from the 2.4 per cent predicted last October.

Meanwhile, just down the street in Ottawa, the federal Department of Finance is unsure what to do. The first hesitation was when Finance Minister Joe Oliver delayed the budget until April, a month or more later than usual.

His political opponents accused him of incompetence, but that is totally unfair.

The federal budget is a very complex document, and is based on many difficult economic and fiscal projections. Given the rapid decline in the oil price, combined with the considerable uncertainty regarding its near-term future, it is entirely sensible to delay the budget, take the time necessary to work through the forecasting details and improve the accuracy of the subsequent budget plan.

What is more worrying is the possibility that the federal government, faced with a slowing economy and thus a slowing tax base, may nonetheless decide to cut its spending in an attempt to honour its promise of balancing its budget by the 2015-16 fiscal year.

There is a tension here between political and economic calculations. Some hard-core fiscal conservatives clearly believe in the importance of a budget that is exactly balanced, and these people will presumably favour spending cuts in order to hit the government's objective. Such cutting would likely be seen as sound fiscal management.

But the economics on this issue is crystal clear. In terms of the government's debt-to-GDP ratio, which is now just over 30 per cent, it hardly matters whether there is a deficit of $3-billion or a surplus of $3-billion this fiscal year. The difference between these two numbers is less than one-third of 1 per cent of GDP.

And faced with the further slowing of an already slow-growing economy, cuts to federal spending will only make things worse, and will even work against the stimulus provided by the bank's actions.

The Bank of Canada's current policy position couldn't be any clearer. As for fiscal policy, however, we'll have to wait and see. If the government's thinking is dominated by political calculations, we can expect spending cuts, an even slower recovery, and a balanced budget by next spring.

But if the government really cares about the economy, it will avoid any spending cuts, delay its target for budget balance and maybe even announce some modest spending increases.

Christopher Ragan is an associate professor of economics at McGill University in Montreal and a research fellow at the C.D. Howe Institute in Toronto.

Associated Graphic

The federal government may decide to cut its spending in an attempt to honour its promise of balancing its budget.


Oil patch turns into the survival of the fittest
Wednesday, January 21, 2015 – Print Edition, Page B2


Investing in energy stocks these days is a bit like betting on TV's Survivor, and yes, apparently some people do that.

It's a matter of trying to determine which player is best suited to toughing it out through hard times, rather than expecting the majority to prosper, offering steady stock gains and rising dividends.

The market's gauged the prospects for the next while, seen a longer spell of oil-price doldrums ahead and moved on.

The S&P/TSX energy group is down 40 per cent since June, having dropped another 2.4 per cent on Tuesday as crude fell again.

So why buy oil stocks at all?

Yes, the sector is a big part of the national economy, so it's difficult to invest in Canada without having some exposure. But the past month and a half has been marked by an industrywide stampede to slash spending on projects and payouts to shareholders. The portion of the economy's looking downright shaky.

The too-easy answer is that this is a buying opportunity. The complicated one is that it's a buying opportunity - if you buy the right one at the right time and can hang on for an unspecified period, realizing that there's no guarantee that the right one won't become the wrong one before the downturn is over.

Adding to pessimism that has enveloped the sector, some investors bought into various companies in recent weeks, in the hopes that values could not get much lower, and they have.

"You don't get a calendar item advising you of the bottom. It's only known after the fact," says Les Stelmach, Calgary-based portfolio manager with Franklin Bissett Investment Management.

In a year or two, given the amount by which the industry is pulling back on capital spending, oil production growth will fall around the world, even in Canada, where forecasts for national output are about to get scaled back.

It's a good bet, then, that there will be recovery in oil prices, albeit not quickly, back to the $100-a-barrel (U.S.) mark, Mr. Stelmach says.

"But you'll see companies a lot more profitable at $80 oil than they were going into this downturn because they've already started to make the hard decisions about compensation and staffing. The oil service companies are doing the same thing in revising their costs downward," he says. "Companies that do come out of this will be leaner and meaner."

To predict an $80-a-barrel annual average in the next two years would make any analyst a wild-eyed optimist today. A recent call by FirstEnergy Capital, for instance, pegs U.S. benchmark West Texas intermediate at $54.50 in 2015 and $67.25 in $2016.

Take some heart - the cutbacks are starting to become meaningfully large, Mr. Stelmach reckons. Suncor Energy Inc. has reduced its 2015 budget by $1-billion, Canadian Natural Resources Ltd. pulled $2.4-billion from its initial plan and MEG Energy Corp. chopped spending by $895-million.

Some of the smaller players have given up on trying to guess where commodity prices may be through the year and set a budget for just the first part.

"It's forcing these companies to think more rationally about the economics of drilling that next well. It's bizarre to me why a company would want to deliver more barrels into this market," he says.

Indeed, many are still projecting little reduction in 2015 output targets, despite taking in a lot less money for each barrel, basically producing out reserves at bargain-basement prices.

Meanwhile, longer-term projects are getting pushed back.

None of this points to an easy call for an investor. Mr. Stelmach suggests companies relying on selling assets to repair their balancing sheets will struggle to find buyers until the market improves.

One strategy, if one has the courage, is to make gradual purchases without trying to time the bottom, seeking the ones that are prudently protecting their finances.

"They all look like geniuses at $100 oil, or most of them do.

But you really test the commitment of the management team to stay lean, cut costs and make prudent capital allocation decisions in a really tough environment," he says.

"So you can narrow down which companies you want to hold for the long term after going through an experience like this."

Associated Graphic

The energy sector presents a good buying opportunity, but there's no guarantee your chosen stock will hang on until oil prices recover.


Microsoft leads the pack as tech giants unveil earnings
Monday, January 26, 2015 – Print Edition, Page B2

People love to bash Microsoft. It's too big and stodgy; its Windows operating system always seems to have issues; the company lacks the cool factor of Apple and Google.

But you won't hear any complaints from investors.

Since the start of 2013, shares of the software giant that everyone loves to hate have posted a sizzling total return of 86 per cent, assuming all dividends were reinvested. That's nearly double the total return of the S&P 500 over the same period, also including dividends.

With earnings season under way, investors are hoping Microsoft's fiscal second-quarter results - to be released after the close of trade on Monday - will give the stock another leg up.

The Redmond, Wash., company kicks off a busy week for technology company earnings, with Apple, Facebook Inc. and Google following on Tuesday, Wednesday and Thursday, respectively.

For investors such as Anil Tahiliani, portfolio manager with McLean & Partners Wealth Management in Calgary, Microsoft has several things going for it.

Chief among them is a wide economic moat. Products such as Microsoft Office, Windows and Exchange are "well-entrenched in companies around the world," and business customers are reluctant to switch, he says.

Enterprise sales account for about 57 per cent of Microsoft's revenue and are more profitable than consumer sales, he adds.

Cloud-based services are another avenue of growth. By moving away from one-time software sales to a subscription-based model for its core products, the company generates recurring revenue, Mr. Tahiliani says.

Perhaps most important, the departure last February of controversial chief executive Steve Ballmer - under whose leadership Microsoft's share price stagnated - has led to a new spirit of optimism and innovation at the company.

"The new CEO [Satya Nadella] is well-respected within the company and has the vision to leverage existing relationships into new product markets," Mr. Tahiliani says. "He is also focused on improving operating margins through expense reduction and will continue returning cash to shareholders."

Josh Olson, an analyst with Edward Jones, agrees that Mr. Nadella is moving Microsoft in the right direction.

He has "outlined his vision for a bold and ambitious new era at Microsoft, with a focus on productivity, cloud computing and mobile devices," Mr. Olson said in a recent note. Mr. Nadella's July, 2014, announcement of 18,000 job cuts "is a testament to his commitment to reshaping Microsoft."

The second-quarter earnings report will provide an update on Mr. Nadella's progress.

For the quarter ended Dec. 31, the company is expected to post adjusted earnings per share of 75 cents (U.S.), down 4 per cent from 78 cents a year earlier, according to analysts surveyed by Bloomberg. Revenue is expected to climb more than 7 per cent to $26.3-billion from $24.5-billion.

However, Microsoft has been known to deliver positive earnings surprises. In six of the past eight quarters, its adjusted earnings have topped estimates, with the stock often rallying on the news.

The company will almost certainly continue to reward shareholders over the long run with regular dividend increases and share buybacks.

Over the past five years, it has raised its dividend at an annualized rate of 17 per cent. While Mr. Olson expects that growth rate to moderate, he still sees the dividend rising at about 12 per cent annually over the next five years, reflecting Microsoft's strong free cash flow generation, solid balance sheet and conservative payout ratio of about 44 per cent of earnings.

Citing the stock's 2.6-per-cent yield and "attractive" multiple of about 16.5 times estimated earnings, he has a "buy" rating on the shares. Wall Street is generally positive on the company: Of the 47 analysts surveyed by Bloomberg, there are 24 "buys," 19 "holds" and four "sells."

The doubters have been wrong about Microsoft for the past few years, and the company may well prove them wrong again.

"With a refresh of nearly all of its flagship products, we expect Microsoft's core businesses to continue to show solid growth and provide a catalyst for the shares," Mr. Olson said.

"In addition, Microsoft's innovative new offerings and solid positioning in cloud computing show promise of new growth."

Associated Graphic



Resource takeovers no cause for national angst
Tuesday, January 20, 2015 – Print Edition, Page B2

What a difference a few years makes. Recall the bygone days when there was a fuss about foreigners wanting to buy our miners and oil companies. Sure, Spain's Repsol played vulture when it scooped up Talisman last month, but it was welcomed rather than turned into a federal case.

The national harrumphing that went on back in 2006 and 2007 when Inco, Falconbridge and Alcan were sold to outsiders is amazing in retrospect. But who would want to be stuck with a fistful of those shares in their portfolios right now, given where commodities are? Back then, not only commentators, but also Bay Streeters and big shot executives were critical of the CEOs of those companies, railing about how they were selling out Canada's birthright to rapacious buyers from abroad. Or worse, that they were not willing to step up and pay up to be acquirers rather than sellers.

If only the country had such problems today. The truth is, Inco's CEO at the time, Scott Hand, and Dick Evans, the CEO of Alcan, got absolutely brilliant prices for their shareholders when they sold their respective companies.

Wouldn't it be something to hear complaints today about selling resource companies at the top of the market?

A few years ago, remember all the whining that went on about CNOOC, one of China's national oil companies, making a $15-billion bid for Nexen? Even though many oil industry types were dissing Nexen as second rate, the prospect of moneybags arriving from China got a lot of them worried. Looking back, chump may be too harsh a word to describe CNOOC, but good for Nexen shareholders for scoring that one.

When the deal was approved, however, the Prime Minister announced new protections applying to state-owned investments in the oil sands.

If you're holding a bunch of wobbly oil stocks today, maybe you wish the Chinese had been allowed to come in and buy everything in the patch. And not just energy stocks - it might have been nice for Barrick shareholders if three years ago a big sovereign wealth fund had come galumphing into Canada and bid for the gold miner when it was over $50 a share. Given that Barrick shares are in the low teens, it could have spared a lot of stockholders a lot of grief.

In a category all on its own, however, is Potash Corp. Remember the national drama over that?

The fertilizer phenom of Saskatchewan hasn't come anywhere close to the highs of 2010 or 2011 when BHP Billiton was in passionate pursuit of it.

Marius Kloppers of BHP was ready to spend $40-billion plus for Potash but shareholders have Canada's supposed free-market supporting federal government to thank for deep-sixing that one, ultimately costing them billions that could have been realized before the global potash market went south.

Sure, certain industries arguably require and do get protection such as those that involve national security or the financial system. But with commodities - particularly with commodities - if someone comes a knockin' and wants to buy at a market peak, isn't there a strong argument to take their money? The next time the issue arises perhaps we should refrain from having a national protective spasm and remember that these companies frequently decimate peoples' portfolios because they sell products whose prices can - and do - gyrate wildly.

The kicker is that if one of these companies - and many of them are great companies, run and staffed by great people - were bought out, maybe all you have to do is wait a few years for the cycle to reverse and then buy it back on the cheap. Some think that might be now, for instance.

Even some resource company executives will admit it in private. They love telling shareholders to think of their companies as longterm investments. They have to because of the capital required. The truth is, the smart ones know they're just a trade.

Howard Green is a broadcaster and author of Banking on America: How TD Bank Rose To the Top and Took On the U.S.A.

An unwanted passenger on Rogers' private jet: The tax man
Friday, January 23, 2015 – Print Edition, Page B1

When Rogers Communications Inc. bought a $24-million (U.S.) private jet eight years ago, the company must have seen the plane as a convenient way to get executives from point to point. But the purchase has also become a legal headache for the telecom giant, which has been locked in a four-year battle with Ontario tax officials over a $2-million tax bill.

Toronto-based Rogers bought the Challenger 604 from Bombardier Inc. in 2006 for $23.82-million. The aircraft - which can carry nine to 19 passengers depending on the seating configuration and features ample standing room and a limousine-like interior - is part of the line of Challenger jets also used by the federal government to shuttle the prime minister, governor-general and other high-ranking politicians across the country.

Four years later, the Ontario Ministry of Finance told the company it owed $2.17-million (Canadian) in retail sales tax on the purchase, plus $665,198 in interest.

The company has paid the bill but launched an appeal at the Ontario Superior Court of Justice last year, challenging the ministry's tax assessment, which came after an audit of Rogers's books in 2010.

The dispute, detailed in court documents, is over whether Rogers acquired the jet for resale purposes, in which case the company says retail sales taxes should not be imposed.

When the company took possession of the aircraft in December, 2006, it immediately signed a lease agreement with Skyservice Aviation Inc., which brought the plane from Dorval, Que., to its new home base at the Toronto Pearson International Airport.

(The ministry notes in its court filing that retail sales tax applies to tangible personal property purchased outside Ontario at the time the property is brought into Ontario.)

Rogers committed to pay Skyservice for a minimum of 300 flight hours a year, or 25 hours a month, at a cost of $5,700 an hour. The aircraft typically flew 400 hours a year and Rogers also had a right of first refusal on the 100 hours that exceeded the 300hour minimum.

Rogers states in its appeal that while it was the "primary charterer" of the aircraft, it was not the sole user of the plane for private charters and, "it was always intended that that the aircraft would also be chartered and available for charter by Skyservice to the general public."

The company further notes that Skyservice was required for all costs related to the maintenance, repair and use of the airplane and was also responsible for carrying insurance on the jet.

"Rogers acquired the aircraft for resale purposes (i.e., to lease it to Skyservice), therefore, there is no basis to impose [retail sales tax] on Rogers and the [tax] assessment should be vacated," the company states.

However, the ministry argues that the lease agreement shows Rogers intended to be the primary user of the plane since it committed to pay for a minimum of 75 per cent of the annual flight hours and its right of first refusal on the remaining 25 per cent gave it final control over whether the plane was used by a third party.

"The Minister submits that the aircraft was not acquired for resale, but rather acquired by Rogers for its own use," the ministry states, adding that Rogers was a "consumer and purchaser" of the aircraft, making retail sales tax applicable.

The ministry filed its reply to Rogers's appeal on June 26, 2014 and the case is listed as "active" in the court filing system.

Patricia Trott, spokeswoman for Rogers, said Thursday the company cannot comment in detail on the case as it is before the courts, but noted that while Rogers is challenging the assessment, it has paid the bill.

It isn't clear if Rogers still owns the jet.

Ad agencies set their sights on the Quebec market
Saturday, January 24, 2015 – Print Edition, Page B2

A number of advertising agencies based in English Canada are making a move into Quebec, as they look to serve clients on a nationwide basis - and bet that more marketers will want to tailor their ads to the country's biggest francophone market.

This week, Toronto-based John St. became the fourth agency in less than two months to announce the opening of an office in La Belle Province. It joins Union, DDB Canada and Rethink, which are setting up in Montreal at the same time.

For some, the explanation for all this activity is simple: Agencies have won big new clients, and need to have a national presence.

Rethink, which works on a number of brands for Molson Coors Brewing Co., recently won its Coors Light business.

It also works with the A&W burger chain, which has been expanding rapidly in Quebec.

DDB in recent months has begun working with Volkswagen Canada Inc., which has a welldeveloped brand in Quebec; and Investors Group Inc., which wants to expand its presence there. Union recently won the advertising account for Infiniti Canada, which gave it the financial strength to invest in the new office.

Ad agencies build a national presence in order to keep those bigger clients, and to win more of their business - which otherwise might be served by regional agencies or freelancers hired by their lead agencies.

That has driven some movement in the other direction: Quebec agency LG2 opened an office in Toronto late last year, for example.

But agency leaders also see another trend at play in the mass expansion: a desire among some companies to improve the marketing that is targeted to Quebeckers.

"I'm seeing clients asking more fundamental questions about Quebec," said John St. partner and president Arthur Fleischmann.

That's different from the common approach, which is to create work for the Canadian market and use the same campaign there, just translated into French.

"You've still got a lot of laggards out there that have said adaptation is good enough," said David Leonard, president of DDB Canada. "It's a question of clients demanding that that market be taken seriously. I wish more clients would."

The idea that marketers need to treat Quebec as distinct is nothing new.

Big brands such as Pepsi-Cola Co. and Molson Canadian have been lauded for a smart approach to that market in the past.

For those lagging behind, ironically, the rising trend of adapting global ideas for the Canadian market could be a factor. Marketing budgets were slashed during the global economic downturn, and the prevailing wisdom is that they will never rebound to their 2007 levels.

That pressure to do more with less has led some marketers to create global brand campaigns that can work (with small adaptations) in many countries.

"It seems to have shifted from more national campaign platforms to even more global platforms," said Mathieu Roy, partner at LG2.

In that context, Quebec's distinctiveness can stand out even more.

"The Quebec market is pretty savvy when it comes to seeing stuff from other markets," said Aaron Starkman, partner and creative director at Rethink.

"They know when there's a fast one being pulled."

Toronto needs to demand more
With heads hanging through much of Atlanta's 21-point pancaking, the Raptors are beginning to look overmatched
Saturday, January 17, 2015 – Print Edition, Page S3


Before they were pancaked by the Atlanta Hawks on Friday night, the Raptors rolled Muggsy Bogues out to talk.

Why? No clue. By the end of this endless 20th-anniversary celebration, the Raptors have celebrated every parking-lot attendant in team history.

Bogues played 83 games in Toronto while being impressively short. Like, really, really short.

The man is a tiny rebuke to all the rest of us. Clearly, we all should have played in the NBA, but were either too tall or too lazy. Or something like that.

These days Bogues is a travelling NBA ambassador - India, the Philippines, China. He's just come back from Russia. But he knows what time it is.

"[The Raptors] shocked a lot of folks," he said. "And the East is not really that good."

That's the prevailing wisdom, but the East looks pretty damn good from the Atlanta perspective.

The Hawks should be in disarray. Their off-season was roiled by a racial row involving GM Danny Ferry. The club's up for sale.

Instead, they are a multilayered behemoth. Al Horford is such a nightmare around the basket, Jonas Valanciunas essentially gave up trying to guard him five minutes in. Then Toronto coach Dwane Casey gave up on Valanciunas. It didn't get any beter.

Shootist Kyle Korver could throw a ball from the International Space Station and it would land in a cup on top of the Empire State Building two days later. As you roll down their bench, it just gets deeper and deeper. Casey suggested as many as four Hawks could be all-stars.

By the half, they'd run Toronto ragged with their relentless commitment to passing the ball no fewer than ten thousand times between shots.

The Raptors did not lead at any point in the game, and were hammered 110-89.

The East may not be any good, but the Hawks are very, very good. Toronto caught them napping early in the year, as Horford worked himself back into game shape following a season lost to injury. They don't want to see the Hawks too many more times. Or at all. This isn't a fair fight.

What the East is right now is five-team race to get into the top four. Two of Atlanta, Toronto, Chicago, Washington and Cleveland are going to have to play each other in April's first postseason round. The Raptors primary current mission is making sure they aren't one of them.

It's only January, but the Raptors are essentially guaranteed another division title. How bad is the Atlantic right now? Recently, Toronto went 4-6, and gained ground on their rivals.

What's required now is a clearly defined goal that isn't "Get to the playoffs."

The Atlantic title means they can finish no worse than fourth. Toronto's most crucial mission - finish no worse than third.

As of right now, the comically dysfunctional Cavaliers are in danger of mucking up that plan.

It would be just Toronto's luck to finish third, and then have to face an irritated LeBron James in the first round of the playoffs.

"The Eastern Conference ... is wide open, for the taking," Casey said before Friday's game. "That's what I keep telling our guys. The hardest thing right now is practice time. Practice versus rest."

That right there - that may be becoming a problem. Everyone around the club has already shifted into post-season mode.

Recently, the Raptors stopped doing morning shootarounds on game days so that the players could get more sleep. Instead, they do walkthroughs in the late afternoon.

It's great that we're going to get to the post-season well rested, but you seriously fear for this team if they run into one of the East's better clubs.

The Raptors deserve to feel good about itself, but it's time to stop riding the city's good vibe through poor performances.

Whatever Bogues thinks, nobody is "shocked" by the Raptors any more. They're a good team.

That's about it - "good."

They've done nothing to suggest they are giant killers. Everyone in the league now respects them, but no one fears them.

They've won winnable games, and not embarrassed themselves when they're overmatched.

Increasingly these days, they look overmatched. And occasionally embarrassed.

Now that DeMar DeRozan is back, there aren't any more excuses. This is a fragile time. If Toronto can't start beating big teams with their full roster, the incredible self-belief that's animated them for nearly a year now will begin to bleed away.

You could see that for long stretches in Friday's game. Down 20 for most of the second half, heads were dropping on the court. Even Kyle Lowry looked deflated.

After spending the first half of the season without any measurable objectives aside from "Keep being good," the Raptors have to find ways to demand more of themselves.

A decent first step might be publicly embracing the idea that they can win this conference.

Enough with the old Raptors poor mouth. Great teams aren't afraid to speak their targets out loud, especially the ones they aren't sure they can meet.

If this club has a signature moment, it's GM Masai Ujiri very publicly throwing shade at Brooklyn last spring. Maybe Toronto could use another carefully orchestrated Ujiri meltdown right about now?

Or they could just start winning the unwinnable ones.

If the East really is as bad as everyone likes to say it is, it's time for the Raptors to prove they are capable of wringing all the necks in it, not just the weaklings'.

Follow me on Twitter:@CathalKelly

Associated Graphic

Dennis Schroder of the Hawks drives through Raptors' Greivis Vasquez and Louis Williams during the first half of Atlanta's crushing victory in Toronto on Friday.


Price deserves Hart considerations, too
Wednesday, January 21, 2015 – Print Edition, Page S2

MONTREAL -- It seems a reasonable question to ask at this point: Where would the Montreal Canadiens be without Carey Price?

The correct answer is nowhere that's charted on any known map or GPS. The judges will also accept "out of the playoffs and in line for a lottery pick at the draft."

The sexy choice for the Vezina Trophy at the mid-season All-Star break is Nashville Predators netminder Pekka Rinne, who led regular starters in save percentage and basically everything else before going down to a minor knee injury last week.

Fair enough, the brain is with the Finn, but the guts say Price should be leading the race, not just for the Vezina but perhaps also for the Hart Trophy as league MVP.

Under normal circumstances it's dangerously simplistic to pin credit or blame on the guy in the pads. These are not normal circumstances.

Consider this: The Rinne-less Preds, second in the NHL's overall standings, were at the Bell Centre on Tuesday and dominated Montreal, which has the fourth-most wins in the league, to the tune of 24 shots to four over the first period-and-a-half.

Read that number again.

The home team, fresh off a morale-boosting win over those Eastern Conference monsters, the New York Islanders, on the weekend - Price missed the game with an unspecified upper-body injury - went nearly a full period between shots on goal at one point (18:28).

And yet there was Price, calmly repelling shot after shot, 36 in total. (Montreal would eventually win 2-1 in overtime on a P.K. Subban power-play goal.)

His first test came within the opening two minutes when Nashville's Mike Fisher bulled around and through Montreal defender Nathan Beaulieu and tried to stuff the puck into the net; Price shot out his right leg, pinball paddle-style, to stop it.

High blood pressure surely isn't a problem the 27-year-old native of Anahim Lake, B.C., needs to worry about. A few moments later he laconically gathered a puck beside his net as a pair of Predators zoned in and batted it over to a defenceman.

It's become a habit for Canadiens players to say it's unfair for them to expect their goalie to save their bacon night after night, sometimes there are glimpses that they actually mean it.

Tuesday's example was 20-yearold forward Alex Galchenyuk roaring back from two zones away to thwart an incipient fouron-one.

The Predators are the league's stingiest defensive team this season - they had allowed an NHLbest 99 goals going into the game - and the magnificent Rinne gets his share of the credit for that.

On the strength of this showing, however, Nashville is far from a one-man outfit.

Coach Peter Laviolette has them playing a stifling, pressing system - they had the Habs, who typically hold their own at evenstrength, thoroughly befuddled - and the club has an abundant supply of character and grit, as measured by their 13-0-0 record this season after losses.

It was the Habs' hard luck that Nashville had lost its last game, Saturday in Detroit.

While Price is a hard puzzle to solve, he could do little to stop the Preds' 26th shot of the game, a sizzling Seth Jones point shot that caromed off Mike Ribeiro's stick. The Habs will find it galling the Montreal-born alumnus found the score-sheet, although moments earlier he had bunted a puck past an open net, and Price lost his stick in the subsequent chaos.

In fairness, the score should have been much more lopsided by then.

Having a world-beating hole card like Price creates the space for the Habs to gain points from games they have no business being in, there was a sense of inevitability when defenceman P.K.

Subban, great this night, drew a penalty in the opening minute of the third.

On the ensuing power play, Subban's blast from the point was tipped past Nashville goalie Carter Hutton by Galchenyuk.

Price's mantra is that all he wants is to give his team a shot at winning. That he does.

He is known to care not a jot about personal honours - his mind is on the trophy awarded in June - but if he continues playing like this, there could be one in his future. Perhaps even two.

Associated Graphic

Montreal forward Brandon Prust gets the best of this encounter with Nashville defenceman Victor Bartley along the boards, but the game was won by Habs goalie Carey Price.


Players drop legal fight over turf
Tournament will be played on artificial surface this summer, but will switch to grass for 2019 competition
Thursday, January 22, 2015 – Print Edition, Page S3

A group of elite female soccer players ended the artificial turf war around the 2015 Women's World Cup, but their lawyer went out with all guns blazing.

Hampton Dellinger, a Washington, lawyer who represented the players pro bono along with other lawyers, blasted both FIFA and the Canadian Soccer Association, which will play host to the tournament this summer.

He said they tried to bully the women after they filed a complaint over the use of artificial turf with the Human Rights Tribunal of Ontario.

In a statement issued Wednesday, Dellinger accused FIFA and the CSA of "threatening protesting players with suspension, doing everything possible to delay a final court ruling despite the players' need to know what surface the tournament will be held on so they can train accordingly, suggesting they would either defy an adverse court ruling or cancel the tournament and, most recently, rejecting the players' undeniably fair settlement offer. In the face of such irresponsible actions by FIFA and CSA, the players have elected to end their legal fight.

The players are doing what FIFA and CSA have proven incapable of: putting the sport of soccer first."

The complaint was filed with the Human Rights Tribunal because this year's Women's World Cup, which will be played from June 6 to July 5 in Moncton, Montreal, Ottawa, Winnipeg, Edmonton and Vancouver, will feature games played on artificial turf. The women argued this was discriminatory because the men's World Cup is always played on grass.

Dellinger implied in his statement that the complaint was dropped because the field that most concerned the players, at Vancouver's BC Place - where the championship game will be played - will be replaced with new artificial turf.

Also, "goal-line technology will be used for the first time in a Women's World Cup and we know that the 2019 World Cup will be held on grass. Moreover, the players and their supporters have highlighted continuing gender inequity in sports and lessened the chance that such wrongdoing will occur in the future."

Turf will not be an issue at the 2019 World Cup because both bidders, France and South Korea, say it will be played on grass.

In an e-mail to The Globe and Mail, Dellinger said, "While the lawsuit did not end with the grass fields the players deserve, I think it was a success in many ways including highlighting how unacceptable it would be to play a World Cup final on the existing BC Place carpet.

"I have no doubt that the sex discrimination suit played a part in the recent announcement that BC Place will get new artificial turf. But more importantly, the legal protest showed FIFA and other sports organizations that female athletes will not passively and silently accept continuing gender discrimination in sports."

FIFA has denied threatening any of the players as a result of the complaint, and the CSA remained silent save for a statement issued by association president Victor Montagliani.

"Our goal is, and has always been, to deliver a world-class competition that leaves a lasting legacy for sport, for women and for Canada that reaches far beyond the competition," Montagliani said.

"We are pleased to be moving beyond this discussion, so we can continue to focus on delivering the best FIFA Women's World Cup ever in partnership with our FIFA colleagues and stakeholders from coast to coast."

U.S. star Abby Wambach, who served as the face of the players' complaint, said in a statement she hopes their action inspires all female athletes to challenge discrimination.

"Our legal action has ended," Wambach said. "But I am hopeful that the players' willingness to contest the unequal playing fields - and the tremendous public support we received during the effort - marks the start of even greater activism to ensure fair treatment when it comes to women's sports."

Dellinger finished his statement with a direct challenge to the leadership of FIFA and the CSA: "They have embarrassed themselves and provided further grounds for reformers to challenge their current leadership.

In the end, despite the challenges created by the sexism, greed and stubbornness endemic to FIFA and CSA, the players will make the 2015 Women's World Cup a success."

High-flying Jets aim for the playoffs
Winnipeg has taken a firm grip on the first wild-card spot in the Western Conference and sits fourth in the Central Division
The Associated Press
Tuesday, January 27, 2015 – Print Edition, Page S3

The Winnipeg Jets have taken off and are on course to land in the playoffs, an experience their passionate fans haven't enjoyed in nearly 20 years.

"At this point in the season, obviously it becomes a little bit more realistic," left wing Evander Kane said. "But we don't pay too much attention to that. We're just focused on the 20-some-odd guys we have in the room and the job we need to do ourselves."

They've been doing that job well.

The Jets went 6-0-1 in their last seven games before the all-star break to take a firm grip on the first wild-card spot in the Western Conference heading into the final stretch. They're in fourth place in the daunting Central Division, five points behind leader Nashville.

"I love our room. We've stuck together all year. We had a tough start to the season," right wing Blake Wheeler said. "We've made a commitment to each other to just do the right things and stick with what works. I think we've put a lot of individual stuff behind us and just rallied around our team and our group and what we're good at. I think that makes playing this game with these guys a lot of fun."

The old Jets went one-anddone in the 1996 playoffs, their last year in Winnipeg before moving to Arizona to become the Coyotes. The NHL returned to Manitoba in 2011, but the franchise that floundered in Atlanta as the Thrashers has qualified for the postseason only once in 15 years (in 2007). The new Jets have been competitive most of the time, but this season the breakthrough has been obvious.

"They've been unbelievable this year. They're a big, fast, strong team. They play a good team game," Chicago Blackhawks defenceman Brent Seabrook said. "We played them three times now and lost to them all three times. They're tough games every time we play them. They're going to be a team to beat."

The professorial conductor of the success this season is coach Paul Maurice, who was hired a little more than a year ago after the firing of Claude Noël. He has injected some liveliness into his relatively young team, pushing a punishing style with backchecking forwards yet enough speed and skill to play a puck-possession game.

All-star Dustin Byfuglien, now a permanent presence on the first blueline pairing where he's most comfortable after spending some time on the wing, is 10th in the league with 144 hits. The Jets lead the NHL in penalty minutes. They're in the middle of the pack in scoring, with wellbalanced production along the top two lines.

"They have a lot of meat on that team. They play hard. They play fast, and they come after you. It reminds me a lot of our team," said centre Anze Kopitar of the defending Stanley Cup champion Los Angeles Kings.

Maurice reflected last week on the progress from those pressure-filled early days of his tenure. Even this season, the Jets have overcome a rash of injuries on defence and a four-game October losing streak when they were outscored 13-2 after winning their opener.

"There was a lot of frustration.

They were playing hard. They wanted to play better," Maurice said. "And now, I think the general feel in there is that we've been pretty good. We're on the right path. When you stand behind the bench, the players call the game, too. They know what's going on."

Goaltending has been perhaps the biggest strength, with rookie Michael Hutchinson taking more and more turns from Ondrej Pavelec, who has been vastly improved himself from a year ago.

Hutchinson is second in the NHL with a 1.90 goals-against average.

Associated Graphic

The Jets' Mark Scheifele, Evander Kane and Michael Frolik celebrate a goal against Arizona on Jan. 18. The Jets have not made the playoffs since returning to Winnipeg.


Former Cy Young winner Scherzer signs record $210-million deal with Nationals
The Associated Press
Tuesday, January 20, 2015 – Print Edition, Page S3

WASHINGTON -- Sure seems as if Max Scherzer and his wife now will be able to afford to buy themselves at least one of those non-stick baking sheets they were hoping to receive as a wedding gift.

Or even a few million of 'em.

The 2013 AL Cy Young Award winner will become the highestpaid right-handed pitcher in major league history after agreeing to a seven-year, $210-million (U.S.) contract with the Washington Nationals that includes a record $50-million signing bonus.

A person familiar with the negotiations outlined the terms to The Associated Press on Monday, speaking on condition of anonymity because the deal hadn't been announced. It creates a formidable rotation for the Nationals - who could try to boost the rest of their roster by trading one of their other starters.

Washington is now the 4-1 favourite to win the World Series, down from 6-1 odds when the offseason started.

Scherzer's signing bonus tops the previous high of $30-million for any player, given by the Cubs to pitcher Jon Lester this off-season. Scherzer plans to establish residency in Florida, which would shield his signing bonus from D.C.

income tax, the person familiar with the negotiations said.

The person said the pitcher is scheduled to take a physical Tuesday, one of the steps needed for the deal to be finalized.

Scherzer, who spent the past five seasons with the Detroit Tigers before becoming a free agent, will receive the money from the Nationals spread out over 14 years, which lowers its present-day value.

Still, Scherzer did quite well for himself. Indeed, he and his bride - they were married in November, 2013 - won't have to depend on their friends to finish filling the requests on their bridal registry at Crate & Barrel, including the pair of $19.95 baking sheets that no one gave them.

The 30-year-old right-hander's contract is the second-largest for a pitcher, behind only Los Angeles Dodgers lefty Clayton Kershaw's $215-million, sevenyear deal that runs from 2014-20.

The previous high for a righty was the $180-million, seven-year contract from 2013-19 signed by Justin Verlander, another Cy Young Award winner for the Tigers.

Scherzer turned down an offer from Detroit last March that would have paid him $144-million from 2015-20, an average of $24-million a year.

The Nationals will lose what would have been the 27th pick in June's amateur draft, while the Tigers will gain an extra pick after the first round.

All in all, for the Nationals, it's a surprising move to upgrade an already imposing rotation after a relatively quiet off-season for the NL East champions.

Scherzer was 18-5 with a 3.15 ERA in 2014, a year after going 21-3 with a 2.90 ERA and being voted the best pitcher in the American League. He now joins a club whose starting staff in 2014 included Stephen Strasburg, Jordan Zimmermann, Doug Fister - Scherzer's former teammate with the Tigers - Gio Gonzalez and Tanner Roark.

That group already was considered among the best - if not the best - rotation in the majors. The question now is what move could come next for the Nationals, who might pursue a trade.

Zimmermann went 14-5 with a 2.66 ERA and 182 strikeouts in 199 2-3 innings in 2014, and he threw the first no-hitter in Nationals history on the last day of the regular season. But he can enter free agency after next season.

Last season, Strasburg was 14-11 with a 3.14 ERA and 242 strikeouts in 215 innings; Fister was 16-6 with a 2.41 ERA; Gonzalez went 10-10 with a 3.57 ERA, and Roark went 15-10 with a 2.85 ERA in 198 2-3 innings.

Associated Graphic

Max Scherzer's new deal includes a $50-million signing bonus, but the entire contract will be paid out over 14 years.


Patriots shut down Luck, Colts
Brady throws three touchdowns as New England crushes Indy for the second most lopsided win in AFC championship history
The Associated Press
Monday, January 19, 2015 – Print Edition, Page S3

FOXBOROUGH, MASS. -- Bill Belichick and Tom Brady are headed to a special place where no coach or player has gone more - the Super Bowl.

They earned their trip with the second most lopsided AFC championship victory ever.

The New England Patriots dominant duo earned a sixth trip to the Super Bowl with a 45-7 wipeout of the Indianapolis Colts in the AFC championship game before a raucous, rain-soaked crowd Sunday night.

The Patriots tied Dallas and Pittsburgh for most appearances in the big game with eight.

Scoring touchdowns on their first four second-half possessions, the Patriots (14-4) moved on to face defending champion Seattle (14-4) for the NFL title on Feb. 1 in Glendale, Ariz. Belichick will face Pete Carroll, whom he replaced as Patriots coach in 2000. The Seahawks beat the Green Bay Packers 28-22 in overtime in the NFC title game.

In his first year as a starter, Brady led the Patriots to a Super Bowl win in the 2001 season, starting a run of three championships in four years. Now he and Belichick have a chance for their first in 10 years.

Brady threw three touchdown passes, LeGarrette Blount ran 30 times for 148 yards and three scores and the Patriots charged away after leading just 17-7 at half-time.

With his sixth Super Bowl berth, Brady surpassed John Elway for the most by a quarterback and tied defensive lineman Mike Lodish for most by any player. Belichick's sixth visit tied him with Don Shula's for most by a coach.

Brady completed 23 of 35 passes for 226 yards before being replaced by Jimmy Garoppolo with 3:20 left. Brady went to the sideline, where he was embraced by Belichick. Moments earlier, while sitting on the bench, Brady was shown on the video board with soaked hair. He pumped his fist in the air 12 times then slapped hands with teammates.

The biggest blowout in AFC title history was Buffalo's 51-3 win over the Los Angeles Raiders in the 1990 season.

For Colts quarterback Andrew Luck, it was the worst game of his three-year career and the fourth rout in his four career games against the Patriots, all by at least three touchdowns. He completed 12 of 33 passes for 126 yards, no touchdowns and two interceptions.

He lost 43-22 in last season's divisional playoff, with Blount rushing for 166 yards and four touchdowns. And on Nov. 16, he lost 43-22 as Jonas Gray rushed for 201 yards and four touchdowns.

The Indianapolis defence was porous against the run again Sunday night. They weren't much better against the pass.

And when Luck threw an interception that Darrelle Revis late in the third quarter, Blount ran 13 yards for the touchdown that made it 38-7.

One fan held up a sign: "No Luck In Our House."

But there was plenty of skill - and a touch of surprise - from the Patriots.

Eight days after baffling Baltimore with a four-man offensive linemen formation that drew a loud protest from Ravens coach John Harbaugh in the Patriots' 35-31 divisional win, Belichick called a pass to left tackle Nate Solder, who was eligible, that resulted in a 16-yard touchdown that made it 24-7 with just under five minutes gone in the third quarter. The Patriots kept rolling with touchdowns on each of their next three series - a five-yard pass from Brady to Rob Gronkowski, and Blount's runs of 13 and two yards. The Las Vegas oddsmakers are leaning toward the Seahawks as the early favourite. The game is listed as a pick em to Seattle by 21/2 points.

Associated Graphic

Indianapolis QB Andrew Luck, left, completed just 12 of his 33 passes for 126 yards and two interceptions.


Rising stars to carry Canadian torch amid 'transition'
Despite absence of former world champions, Duhamel, Radford, Weaver and Poje 'have a great shot a gold' after breakthrough year
The Canadian Press
Monday, January 26, 2015 – Print Edition, Page S4

KINGSTON, ONT. -- Missing some of its biggest stars, the Canadian figure skating team will still head to the world championships with the podium in its sights.

Meagan Duhamel and Eric Radford in pairs and Kaitlyn Weaver and Andrew Poje in ice dance headline the world championship team named Sunday at the end of the Canadian championships.

Both the pairs and ice dance teams are enjoying breakthrough seasons, sweeping gold in every competition in which they've competed, including the Grand Prix Final in December.

"Given what we had coming out of the final, definitely with Meagan and Eric and Kaitlyn and Andrew, [the goal is] podium," said Mike Slipchuk, Skate Canada's high performance director.

"And both have a great shot at gold. Those are two realistic entries.

"And we have a lot of unknowns."

Missing in action this weekend were three-time world champion Patrick Chan and Olympic and world ice dance champions Tessa Virtue and Scott Moir. All three, who were at the Rogers K-Rock Centre to watch the competition, are taking this season off to contemplate their futures.

"In a transition year, we've created depth," Slipchuk said.

When and if Chan and the ice dancers return, he said "it will only make us stronger.

"Spots that were available this year might not be there next year.

That changed the landscape. And I think it makes everyone hungrier ... We're starting to see the potential of our younger skaters.

They were thrust in the spotlight this year and they totally handled it fine."

Nam Nguyen, a 16-year-old from Toronto, won the men's title in dominant fashion, giving a glimpse of a bright future in men's skating.

"Nam, he just lit it up," Slipchuk said.

Nguyen is improving at breakneck pace, finishing 23rd in a junior Grand Prix last season, months before winning the world junior championships. He captured a bronze and a fourth-place finish in his two senior Grand Prix events this season, and then had the performance of his career at the K-Rock Centre, opening Saturday night's free program with a huge quad Salchow on his way to a clean program.

"The thing with Nam is he is just so calm, cool and collected, and consistent," Slipchuk said.

"He has a good sense of humour, he's fun to be around, but when he's on the ice, it's all business.

With the way the field is now, and everyone is so technically efficient, you've got to be efficient."

Following in Chan's footsteps, Slipchuk said, has helped Nguyen's development.

"We've always had someone everyone could develop underneath. Jeff [Buttle] was there so Patrick had a year or two to build up. Then Patrick carried that group of men underneath him, so they could develop under him.

And now this is the result of that.

"And I think it's that leadership, we have a great group of skaters, they're great role models, they want to see all Canadians succeed, and you saw that with Patrick being here [in Kingston] and Tessa and Scott being here, they all came back."

Jeremy Ten of Vancouver is the other men's entry for the world championships. Gabrielle Daleman of Newmarket, Ont., won the women's title in a field that was missing defending champion Kaetlyn Osmond due to injury.

Alaine Chartrand of Prescott, Ont., finished second to also make the world team.

Canada's other two world entries in pairs are Lubov Ilyushechkina and Dylan Moscovitch of Toronto, and Julianne Séguin of Longueuil, Que., and Charlie Bilodeau of Notre-Dame-du-Portage, Que. Séguin and Bilodeau are still juniors, and are aiming for gold at the world junior championships.

The world championships are March 23-29.

Kraft demands apology if NFL absolves Pats in 'Deflategate'
The Associated Press
Wednesday, January 28, 2015 – Print Edition, Page S3

PHOENIX -- Patriots owner Robert Kraft's pre-emptive strike the previous night took the issue of air pressure in footballs on Super Bowl media day and, well, deflated it.

Not only was the topic rarely raised in questioning of players from both sides Tuesday, but Kraft's protesting how his franchise is being portrayed seemed to provide the last word on the issue - for now.

In a short appearance at media day, Kraft assessed the impact of his strong statement delivered when New England arrived Monday. During that statement, he said he expects an apology from the NFL when its investigation determines the Patriots did nothing wrong.

"To be honest, I think by and large except for our quarterback they don't pay much attention to it," Kraft said of the Patriots' reaction to the underinflated footballs controversy. "I think they think it's a bunch of hogwash. Bill [Belichick] does a good job of making them understand what they have to focus on.

"I've gotten a lot of positive comments from them. I just said what I believed."

Beyond that, the NFL's investigation of deflated footballs used by New England in the AFC championship victory over Indianapolis gave way to questions about players' favourite musicians, movies and clothing.

The always dashing Belichick, wearing a hoodie - of course - with jeans and flip-flops on the podium, deflected any and all references to the subject.

Quarterback Tom Brady, clearly at ease and having fun with the varied topics, barely was approached about the issue.

Same thing for the rest of the Patriots, who figure the investigation, led by NFL executive vice-president Jeff Pash and Ted Wells of the law firm of Paul Weiss, will stretch well beyond Sunday's title game.

For All-Pro tight end Rob Gronkowski, there was an entirely different line of questioning he was thrilled to avoid.

"It feels good not to get any questions asked about my health, no doubt," said Gronkowski, who was hobbled for the 2012 Super Bowl loss to the Giants. "It feels good to be 100 per cent healthy and 100 per cent ready to roll for this game and not get a million questions like last time about my ankle."

For their part, the Seahawks seemed nothing more than amused about the probe into underinflated footballs.

All-Pro cornerback Richard Sherman, who on Sunday said he didn't expect the Patriots to get punished even if found guilty because of Kraft's close ties to Commissioner Roger Goodell, chuckled when asked if he could tell when a football didn't have enough air.

"When I get my hands on them I'm trying to return them, not check the pressure," Sherman said.

Nor is Seahawks centre Max Unger, who merely has his hands on the football on every offensive snap.

"People keep asking me if I can feel the difference between pressure of the ball," Unger said, a touch of wonderment in his eyes.

"I'm the centre, I touch it every single play. I can't, if I'm being honest with you. I don't think it really even matters that much."

Canadians marching in Melbourne
The Canadian Press
Friday, January 23, 2015 – Print Edition, Page S2

MELBOURNE, AUSTRALIA -- Canadian seventh seed Eugenie Bouchard advanced to the fourth round of the Australian Open on Friday after a testing straight-sets win over Caroline Garcia of France.

Bouchard, a semi-finalist at Melbourne Park last year, had her service game put under pressure in a 56-minute first set before she ran away with the match 7-5, 6-0.

The 20-year-old will face either Irina-Camelia Begu of Romania or Carina Witthoeft of Germany in the fourth round, with a potential quarter-final against second seed Maria Sharapova looming.

Vasek Pospisil struggled at times in draining humidity while Milos Raonic played in cooler conditions as the Canadians won their second-round matches Thursday. Pospisil had to deal with the heat and some niggling injuries on the way to a 6-7 (3), 7-6 (4), 6-3, 6-4 win over Italy's Paolo Lorenzi to reach the third round in Melbourne for a second consecutive year.

Pospisil, from Vancouver, faces Spain's Guillermo Garcia-Lopez.

The eighth-seeded Raonic, meanwhile, looked strong in a 6-4, 7-6 (3), 6-3 victory over American Donald Young. Raonic, from Thornhill, Ont., fired 17 aces and had 44 winners. He next faces German Benjamin Becker, who came from two sets down to defeat Australia's Lleyton Hewitt 2-6, 1-6, 6-3, 6-4, 6-2.

The Associated Press
Saturday, January 24, 2015 – Print Edition, Page S2

Foxborough, Mass. -- The NFL says it is still investigating how the New England Patriots used underinflated balls in their last game but has no conclusions yet and no timetable for resolving the cheating accusations with the Super Bowl nine days away.

The league said Friday that evidence shows the Patriots used underinflated footballs during the first half of the AFC championship game Sunday night against the Indianapolis Colts. It issued a statement that the Patriots have pledged full co-operation.

The NFL said it began its investigation Sunday night. It has hired an investigatory company to help in reviewing electronic and video information.

"Over the past several days, nearly 40 interviews have been conducted, including of Patriots personnel, game officials and third parties with relevant information and expertise," the statement said.

Brady and coach Bill Belichick said Thursday they had no explanations for how the footballs were underinflated.

"I didn't alter the ball in any way," Brady said Belichick said that before this week, he didn't give air pressure in footballs much thought.

"I've learned a lot more about this process in the last three days than I knew or have talked about it in the last 40 years that I've coached in this league," he said.

Softer balls are generally considered easier to throw and catch.

Wealthy Barber, frugal Dragon
Saturday, January 24, 2015 – Print Edition, Page B3

TORONTO -- The Wealthy Barber and I are debating whether there is such a thing as a free lunch.

No, this is not some elaborate economic metaphor. The Wealthy Barber is, of course, David Chilton, author of the classic book on personal finance and a star of Dragons' Den on CBC TV. The lunch in question is spread out before us at Epic Restaurant in Toronto: salmon for me, a healthy-looking buffet mix of turkey and vegetables for him. Diet Cokes all round.

The burning issue is who will pay. The tab comes to $99.44, an amount that surely would have appalled Roy, the frugal smalltown barber of Mr. Chilton's landmark book. But, against all odds, the appearance of the bill on our table results in a spectacle of man-bites-dog rarity - two personal-finance advocates vying to actually pick up the check.

Let me pay, Mr. Chilton says, reaching across the table. No, I explain, the tab is mine because I asked him to lunch. He objects. I insist.

Bottom line: I pay, but Mr. Chilton's image as Canada's leading frugalista suffers a serious ding.

To be sure, at 53, the Wealthy Barber doesn't have the same motivation to pinch pennies as he did when he was an unknown 27year-old author. But while it's widely known that Mr. Chilton has done well in the quarter century since his book was published in 1989, his transformation from small-town stockbroker into nationally recognized brand still manages to be stunning.

His initial move after The Wealthy Barber was into other selfpublishing projects, notably the Looneyspoons cookbooks written by Janet and Greta Podleski, which went on to become a Canadian publishing phenomenon.

Since an amicable parting with the sisters in 2007, he has branched out into a number of other private businesses, most recently as a result of his involvement in Dragons' Den. Over the past three seasons of the show, he has invested in 22 enterprises that were pitched to the dragons, ranging from an ergonomic attachment for snow shovels to a loose-leaf tea company. He typically spends more than 100 days a year on the road, taping TV shows, making personal appearances and speaking to groups about personal finance. All of that has resulted in a net worth that he declines to reveal, but is obviously considerable.

"My big break was the money I made when I was young," he says. "I had more income then than I do now. For a few years, after The Wealthy Barber hit, I did, um, strangely well. When that happens, when you get a lot of money when you're still in your early 30s, you can invest your money for the long haul, and thankfully, I've done quite well."

When he's not on the road, or ensconced in the Fairmont Royal York hotel while taping Dragons' Den, he lives in a 1,300-squarefoot house near Waterloo, Ont.

Granted, there's also a small cottage near his hometown of Sarnia, Ont., as well as a villa in Costa Rica, but don't call him a hypocrite: He studiously avoids debt, lives simply and took three years off to home-school his son and daughter. His indulgences are books (he reads three to four a week) and attending sports events, especially ones where a Detroit-based team is playing.

In person, he comes across as the same endlessly affable, selfdeprecating guy that he appears to be on stage or before a TV camera. He praises his parents, his Dragons' Den co-stars, his kids (now in their 20s and entrepreneurs themselves). Even his exwife - they have been split for nearly 20 years - comes in for kind words. "She's the nicest person," he says, and tells the story of how they worked together after their divorce.

According to Mr. Chilton, his success was largely a matter of good fortune. "Speaking is my only natural skill," he says. "I'm not a great athlete, I stink at music, I'm one of the least accomplished artists you'll ever see. But if you say, 'Go up there and talk about [anything] for half an hour,' I think I could do it in a way that would hold the audience."

He is being modest, of course. As he recounts his success story, it's clear Mr. Chilton is not simply a regular guy who struck it lucky.

He's also a driven entrepreneur who has a keen eye for products that appeal to regular Canadians.

If anyone knows what will sell on Main Street, it's the Wealthy Barber. After all, he's been studying that market his entire life.

A lucky break

As a boy, Mr. Chilton used to hunt for used golf balls and then resell them. In Grade 11, he moved up to selling car detailing door to door. "It was an education," he recalls. "It taught me about how to present a product, about accepting rejection, about staying positive."

For a teenager who always wanted to be an entrepreneur, it was also a tutorial on what Canadians will buy.

His parents - a high school principal and a homemaker - didn't always understand their son's passion for business, but they taught him a lesson he says was vital. "My dad's big thing was to be nice," he recalls. "You would think, being a principal, that he would emphasize doing well in school, but beyond a certain point, he didn't really care about that. He always stressed that it's how you treat people that really matters."

Mr. Chilton took that insight with him when he enrolled in the economics program at Wilfrid Laurier University in Waterloo. As a co-op project, he and a friend started a business peddling GICs to savers eager to cash in on the high interest rates of the early 1980s. It was so successful that he and his partner turned it into a full-time occupation.

The business was a natural fit for Mr. Chilton's growing fascination with personal finance. "I was a normal kid and played sports and did all those things," he says.

"But around the age of 16, I started reading about personal finance and investing, almost obsessively. By the time I got to university, I had read dozens and dozens of books on economics and personal finance. For some reason it stuck with me" - so much so that when he wrote the Canadian Securities Course financial exam in 1985, he didn't study but still scored the highest mark in the country.

He tried becoming a stock broker but found it unsatisfying and accepted an offer to teach financial planning to teachers. That, he says, was his lucky break. He found that stories and humour worked far better than graphs and equations to communicate key notions of investing and wealth accumulation. He conceived the idea of writing a fictional tale that would use the same approach to explore personal finance.

His first attempt was set in a tavern where a wealthy bartender dispensed financial wisdom to patrons, but that didn't work out so well - "my characters kept getting drunk" - so he switched the locale to a barbershop. A year of writing and fine-tuning later, The Wealthy Barber was ready to meet the world.

Unlike most first-time authors, Mr. Chilton approached his book as a business. A publishing company offered to bring the book to market, but when it wouldn't allow him to keep control of bulk orders, he decided to take matters into his own hands. He bought three books on self-publishing and taught himself the business.

The book had a slow launch and sold only about 12,000 copies in the first nine months. But Mr. Chilton says it had the great advantage of facing next to no competition. "The entire Canadian personal finance and investing arena back then consisted of four people - Brian Costello, Gordon Pape, Chris Snyder and me.

So getting media interviews was easy. And I found that using a bit of humour in interviews went over very well."

Once sales began to pick up speed, in the RRSP season of 1990, The Wealthy Barber just kept on clipping faster and faster. It went on to sell two million copies in Canada and the United States.

Oddly enough, though, its creator seems nearly embarrassed by its success. When I mention to Mr. Chilton that some people find the book a bit simplistic, he nods enthusiastically. "I didn't particularly like The Wealthy Barber," he agrees. "Personally, I prefer getting information in more of a math-based way. But, then, I didn't write it for myself."

Simplicity rules

He wrote it for ordinary Canadians confused by the deliberately opaque jargon of the financial world. Unlike most people who develop an interest in money, he's always been less intrigued by high finance and more interested in personal finance. "Why do people simultaneously have big creditcard debt and $25,000 in their bank account? That kind of stuff fascinated me even at the age of 19 or 20."

It can be a challenge to explain such things in plain English. Despite his casual demeanour, he's a perfectionist when it comes to finding just the way to express concepts. For his second book, The Wealthy Barber Returns, published in 2011, he asked 50 to 60 people to read each chapter, monitored their reactions and revised constantly, a process that took a year and a half. That painstaking approach paid off: The book has gone on to sell 400,000 copies.

For the most part, the substance of what he says hasn't changed in a quarter century. One shift is notable, however: He is now a big fan of low-cost index funds that passively track market benchmarks rather than the actively managed mutual funds he recommended in his first book. He says he has come to appreciate just how difficult it is for anyone, no matter how smart, to outguess a business world that is growing more and more complicated.

"Look at a bank annual report now," he says. "I could spend weeks studying it and trying to figure out what's going on. This is complex stuff: international subsidiaries, exposure to derivatives and so on. It's rather ridiculous to think that an average person can come to a judgment about what's going on. And I would argue even analysts can't do it very well."

That is one reason why Mr. Chilton's own attention is now focused on smaller, private companies, where he can directly affect results. He sees a regular stream of them on Dragons' Den and his growing portfolio of investments in those startups is now devouring much of his time.

Finding the right businesses isn't easy, he says. Many of the deals concluded on air fall apart when the dragons actually inspect the books. Others don't work out because the entrepreneurs turn out to be more interested in raising their profile than in welcoming an outside investor.

Before putting his money down, Mr. Chilton performs extensive due diligence, talking to rivals, suppliers and customers, and drawing up his own projections.

He wants to find situations where he can add value, by opening doors, offering advice and helping to devise marketing plans.

Helping nearly two-dozen companies grow is time-consuming work and Mr. Chilton says one more season of Dragons' Den is probably his limit.

What comes then? He would like to run one more business himself, without a lot of partners.

He's also received TV offers from the United States. But before he does anything, the man who turned the dry topic of personal finance into a bestseller has one more ambition to fulfill. "I've always wanted to write a play," he says. "I'm contemplating taking a year to do that."


David Chilton, author of The Wealthy Barber opines.

On luck: "I've been incredibly lucky in life, and my health is my greatest gift. I don't work out much, I love Nibs and Diet Pepsi, but I'm never sick a day, I never get a cold, I hardly ever sleep, and it's all from my mom and dad. They're in their early 80s and still have crazy energy."

On the economy: "I try to be optimistic but you have to be concerned about debt levels just about anywhere in the developed world. I think governments are making promises they may not be able to keep. It would not shock me to see another financial crisis at some point over the next three to five years."

On investing: "It's shocking how badly many people manage their own investments. Mutual fund fees and expenses are part of that, but we also appear to have mastered the art of buying mutual funds that are just about to underperform."

On mutual funds: "Paying 2 per cent [in mutual fund fees] doesn't sound like much, because we still relate things to our high school marks. Losing 2 per cent off a mark of, say, 70 per cent is no big deal. But with mutual funds, you're talking about losing two percentage points of an estimated 8 per cent or so return. That's a quarter of your expected gain."

On alternative investing: "If you're going to get involved with hedge funds, don't invest in them, run them."

On entrepreneurship: "A lot of the people we see on Dragons' Den have the naive idea that the biggest challenge in business is getting their product on the shelves. It's not - it's getting it off the shelves. Once it's in the store, how do you create demand, how do you make it stand out among the competition?"

On perseverance: "No author in history did more interviews about a single book than I did about The Wealthy Barber. I did hundreds of interviews a year. For years and years and years."

Associated Graphic

David Chilton, bestselling author, personal finance expert


Calling the shots at a dairy powerhouse
Saturday, January 17, 2015 – Print Edition, Page B3

MONTREAL -- Lino Saputo Jr. is in his element patrolling the crease. The 48-year-old delights in his position as goaltender, stopping pucks on a garage-league team at his family's luxury sports complex that rents the ice for $300 an hour in prime time. Not too far from the arena is the head office of Saputo Inc., the family controlled milk-and-cheese titan where the chief executive officer switches from defence to offence, orchestrating a strategy of growth by acquisition that has vaulted the company into the global big leagues.

The company's roots reach back 60 years to the days when grandfather Giuseppe, an immigrant cheese maker from Sicily, sold batches of bicycle-delivered mozzarella to customers in Montreal's Italian community. These days, it ranks as one of the world's top-10 dairy processors, with 12,700 employees and operations in four countries.

Mr. Saputo has been calling the shots at the family business for 10 years now. He greets me for lunch in December at the sleek secondfloor eatery - Bistro 54 - overlooking the rink at Hockey Etcetera, on an industrial strip in the Montreal suburb of Mount Royal. It's a "hobby business" for Mr. Saputo, who helps his wife Amelia and 20year-old son Emanuele run it.

His face beams as he talks about the joy of watching his two sons - Giordano, 18, is the other one - grow up. He exudes pride as he introduces me to Emanuele, who is lunching with a group of friends and co-workers at a nearby counter in the bistro.

"He's my ally," Mr. Saputo says, grinning in the direction of Emanuele, who plays defence on his team, the Quadriam. The executive and his boys play in Hockey Etcetera's house league at least twice a week. "Those of us who didn't make the NHL, we feel when we play in the league here that we're as close as we can get to it," says Mr. Saputo, fashionably dressed in a navy jacket with polka-dot kerchief, open-neck shirt and monogrammed cuffs.

Though his record as a goalie at the time of our meeting is six wins in seven games, he doesn't brag about his hockey prowess.

"Usually when I speak, I don't like to speak about myself," says the CEO, who rarely grants interviews. "I like to speak about the achievements that the company has had and how important it is for our employees to be in an environment where they feel like they can contribute to the success of the organization.

"There's something to be said for being understated," he adds later. "I think it's really about what you can achieve, and not so much about the ivory tower that you operate from."

Raised in the family business, one of Mr. Saputo's first jobs - part-time, at the age of 13 - was wrapping specialty cheeses in cellophane and parchment paper.

He eventually graduated to cleaning out the giant stainless-steel vats, and later drove a truck delivering cheese to restaurants and other buyers in the food-service trade in Old Montreal, the downtown core and the boroughs of Verdun and LaSalle.

He studied political science at Concordia University, but says he got all his business smarts from his father and through hands-on work in operations.

"It is my character, but I think it also is the character of our company," Mr. Saputo says of his modest manner as we settle in for lunch. "We don't have people with a very big ego and this goes back to the days when my grandfather and my father [Lino Saputo Sr.] were involved in the start of the business. It was never about them. It was about doing the right thing for the right reason and surrounding yourself with the right people." (Lino Saputo Sr., who was CEO from 1998 to 2004, is now chairman of the company. Mr. Saputo's grandfather Giuseppe died in 1981.)

Mr. Saputo, who joined the family enterprise full time in 1988 at the age of 22, says he never had "the pretension to think that the CEO role" was owed to him. He would have been quite content to remain as head of U.S. operations, he says, where much of the action and deal-making at Saputo was taking place.

His first big challenge was managing dramatic cheese-price volatility in the United States in 2005 and 2006. "That was my baptism.

It allowed me to take the right decisions and build the right platforms that would allow us to mitigate some of the future commodity-price fluctuations," he says, winking or proffering a quick wave to acquaintances strolling by in the bistro.

There was a steep learning curve when Saputo expanded into the U.S., he says. Compared with Canada, where the supplymanagement system means the price of milk typically changes once a year, south of the border it used to change once a week and now changes daily. "It's taught us quite a bit about being versatile and flexible."

Saputo has grown to become a dairy powerhouse, boasting annual sales of about $9-billion, thanks to a carefully plotted series of acquisitions since going public in 1997. Much of the takeover activity has been focused on the United States, but Mr. Saputo believes growth will now come from expansion outside North America's mature markets and into emerging regions, where dairy consumption has plenty of room to grow.

At home, however, the soaring popularity of pizza in North America has provided a major boost to the mozzarella-maker's sales.

"I think our shareholders are very happy," he says of his time in the corner office. "There is still quite a bit of work to achieve but the company is much larger, the balance sheet is clean and profitability is up."

Mr. Saputo's latest coup is the purchase of Australia's oldest dairy, 126-year-old Warrnambool Cheese & Butter Factory Co. Holdings Ltd., a $475-million (U.S.) deal clinched in January, 2014, after a dramatic, drawn-out, three-way bidding war. Australia is the ideal base from which to sell into Asian markets - notably China, Japan and South Korea - where demand for milk and milk products is surging.

"We've been talking about an Australian platform for the better part of 12 years," Mr. Saputo says over his Romaine salad with balsamic vinaigrette and chicken, no cheese.

The folks at Warrnambool got to know him over the course of his regular visits every two or three years since 2002, but they turned down his overtures, saying they weren't ready to do a deal. When a bidding war erupted last year, Mr. Saputo figured he had the inside track. "We had good strategic, detailed discussions about what our intentions were even before the merger," he says. "Finally, we had the opportunity to be a helpful ally in the process. We were thankfully the white knight in the process. I think what we brought to the table was our financial strength."

The news media played up Warrnambool as a big deal for Saputo - indeed some analysts thought the company overpaid - but it isn't the largest transaction in the company's history of 23 acquisitions worth $4.7-billion (Canadian). That honour goes to its 1997 takeover of U.S.-based Stella Foods Inc.

Saputo's annual sales of $450million were about half of Stella's $800-million (U.S.) in 1997. "It was quite a challenge, quite a bite for us. That was a big, big risk for us at the time," Mr. Saputo recalls.

In comparison, Warrnambool revenue, before the takeover, was in the $460-million range.

The energy-and-time-sapping Stella acquisition was a turning point in the way Mr. Saputo and his small mergers-and-acquisitions team handled takeovers. They realized they needed a more formal structure.

"Although we were proud to be mean and lean as a management team, we felt we needed to take on more resources in the planning and execution and integration," he says. Management developed a new framework called the ambassador system, identifying people within the company "that ultimately could be the ambassadors and the integrators of the business."

After the 2003 acquisition of Argentina's Molfino Hermanos SA, for example, Saputo identified a half-dozen key new positions needed to successfully fold in the company, and told employees they could apply.

"We had 120 applicants for six positions," Mr. Saputo marvels. The winning candidates went over to Argentina for two years to spread the Saputo culture, values and business approach, as well as select promising Molfino staff who would continue as full-time ambassadors of "the Saputo way" once the visitors left.

"My father's always been talking about ambassadors," he says, explaining that a team approach that truly engages employees at all levels is in the company's DNA.

"The employees we have, we always say they are an extension of our family members. My father always said that as we move along, the older folks become ambassadors to the younger folks coming in the system."

Saputo is now a pure-play dairy producer after the recent sale of the company's Vachon snackcake division to Mexico's Grupo Bimbo SAB for $120-million. Fifteen years ago, Saputo was hailed as the saviour of legendary Vachon and its iconic Jos. Louis and May West sugar-laced cakes when it outbid a U.S. bakery giant, keeping it in Quebec hands. But the unit has struggled with dwindling sales amid a more healthconscious consumer climate, one with which Mr. Saputo is personally familiar.

"More often than not, I'm eating salad at lunch," he says. "People say I'm extremely disciplined in my eating habits." That means no desserts during the week and maybe the occasional sharing of a slice of cake with his wife at a weekend outing to a restaurant.

He loves cheese but avoids bread and crackers.

Besides hockey, Mr. Saputo performs a strenuous 45-minute workout every day: cardio, treadmill, spin bike. When he's on the road, he uses something called the "Insanity Program," maximum interval training that involves going full out in three-tofive-minute bursts; he wears running shoes and trains in his underwear in his hotel room.

For relaxation, working on his car collection - he has "several" vehicles - does the trick.

"When my water's boiling too much at the company, I'll tell my assistant, 'You know what, I'm going to go play with the cars for a couple of hours. I'll be back.' And it kind of decompresses all of a sudden." He caught the auto bug from his father, a long-time collector of vintage Cadillacs and other models. Limited-edition 1980s Porsches are among his favourites. "I'm always looking for a good deal. I'm very patient and I wait for the good opportunity to buy a vehicle," he says. "The hunt, I'd say, is part of the hobby."

Indeed, for Saputo, there are more acquisitions to come. But it's not about size, Mr. Saputo insists. Cracking the top five - in the select company of dairy leaders Nestlé SA, Groupe Danone and others - isn't the goal, he says. (The company is now ranked eighth or ninth.)

"Being in the top five is not as important as being best in class," he says. "We never want to be the biggest. We certainly want to be the best."



Youth: Grew up in Montreal, the middle child in a family of five. Older brother Joey runs the family's sports interests, including Major League Soccer's Montreal Impact team and the Stade Saputo where they play.

The brass ring: Became CEO of Saputo in 2004. He is also president and vice-chairman.

Favourite cheese: Fresh ricotta. He loves to spread it on toast and top it with cocoa powder.

On cars: "Just hunting them is part of the fun of being a car guy."


On trying to boost sales in a declining North American consumer market for milk: One approach is to take an acquired product and improve on it. For example, the Dairyland unit's Milk2Go line was extended with a variety of more exotic flavours like orange and banana in single-serving round bottles that fit into auto cup holders; there is a sports protein-drink knockoff as well.

A key advantage of buying assets in Oceania: Milk prices - which account for 85 per cent of Saputo's raw material costs - are set at low international levels, unlike the higher prices for fluid milk in Canada under the supply-management system. The closed structure is opening up a crack as the new trade treaty with Europe allows for an additional 18,500 tonnes of cheese to be exported into Canada.

On Canada's protectionist milk supply management: It's not ideal, he says, but believes there's no point in trying to fight it. "We work within it."

On whether he thinks the decades-old system dampened the development of a more entrepreneurial mindset among Canadian processors: "I think the protectionist system, just by the way it is set up, perhaps could allow people to be less entrepreneurial because there's less volatility" in prices.

Associated Graphic

Lino Saputo Jr., president, CEO and vice-chairman of Saputo Inc.


Canada leads in the race to create Quantum Valley
Wednesday, January 21, 2015 – Print Edition, Page B2

My grandfather was born in 1906. It was the year that Romanian inventor Traian Vuia flew a heavier-than-air monoplane with unassisted takeoff for the first time at Montesson in France.

As a child, I remember how my grandfather would sometimes look up at the sky, spotting a plane in flight, and tell me about times that people would flock into the streets to marvel at the first passenger flights.

I would roll my eyes. Quebec City's airport had been ferrying passengers in and out well before I was born in that city. Planes were, and still are, just part of my world. Something I take for granted.

I'd be willing to bet that Mr. Vuia and other aviation pioneers never - even in their wildest dreams - imagined that air travel would become so normal. In far less than a century, a completely new technology enabling the movement of huge numbers of people around our world went from unimaginable to indispensable.

There are a handful of technological innovations that irreversibly changed our world in the 20th century. Children today cannot imagine a world without a smartphone in their hands or a computer in our cars. The information age has transformed how we live, work and play.

Today, we're faced with another technology that has unimaginable potential. Just as siliconbased technologies brought us the information age, so, too, will quantum technologies bring us into the quantum age.

Canada largely missed out on the opportunities of the previous information-technology revolution. Only a handful of companies were created, grown and thrived here. Canada watched while our neighbours led this worldwide revolution. Research powerhouses such as Bell Labs in New Jersey drove the innovation agenda across the United States, spurring remarkable technologies that went on to build Silicon Valley, where billions of dollars of wealth were created for the entrepreneurs, investors and the country.

Yet in 2000, a bold vision was set out for Canada; a vision to position our country as a leader in this next great technological revolution. Learning from the Bell Labs experience, Mike Lazaridis set out to ensure Canada is playing a leading role in the quantum age. Over the past 14 years, he has provided more than $300-million to create two research powerhouses: the Perimeter Institute for Theoretical Physics and the Institute for Quantum Computing (IQC) at the University of Waterloo. These institutes are now home to more than 300 researchers and students all focused on understanding our world and creating technologies that harness the power of quantum mechanics.

The problem is, we are not alone in what is rapidly becoming a quantum race.

Countries around the world are now waking up to the unimaginable opportunities of quantum technologies. Britain recently committed more than $480-million to create four research hubs for quantum technologies across the country. Kai Bongs from the University of Birmingham has said that within five years, it will establish the Quantum Valley in Britain.

What's more, the European Union reiterated its commitment to quantum technologies at the Innovation Summit 2014 just last week. Lieven Vandersypen of the Delft University of Technology told that conference that "more Nobel Prizes are coming in this field and they are going to go to Europeans." Singapore, China, Australia, Japan and, without question, the United States, are all investing heavily in quantum technologies.

But here's some really good news for Canada. We fired the starting gun in this race 14 years ago. Thanks to visionary investing and strong political commitment, we already have the infrastructure - the IQC is headquartered in a 285,000-square-foot facility with state-of-the-art labs and equipment at the University of Waterloo - not only to compete in the race, but to lead and win.

The governments of Canada and Ontario have ensured our country can lead and win the race through strategic investments in Perimeter and the IQC. Our private-public partnership attracts the best and the brightest to Waterloo. Last week, the federal government announced its new Science, Technology and Innovation Strategy and the Canada First Research Excellence Fund. These bold initiatives will allow science and technology to thrive in Canada. They will allow Canada to continue to lead the quantum race and take advantage of all the unimaginable opportunities that quantum technologies will provide.

We are already seeing the fruits of early investments. IQC has four spinoff companies. Mr. Lazaridis's Quantum Valley Investments is already investing in some of them. These aren't dreams of the future. They are realities now - Canada is emerging as the quantum nation.

Britain and the EU want to have a Quantum Valley in five, 10, 15 years. I'm proud to tell my children that Canada is already home to the Quantum Valley, right here in Waterloo, Ont.

When I speak to people around the world about IQC, I show them a chip. It looks like an ordinary computer chip, but it is something quite different. Perhaps they, too, will look back on the moment they held one of the first quantum microchips and remember the same feelings of excitement and wonder my grandfather had as he looked up to the sky so many years ago.

Raymond Laflamme is a professor at the University of Waterloo and executive director of the Institute for Quantum Computing.

Thursday, January 22, 2015

Shale producers can play Saudis' game
Tuesday, January 20, 2015 – Print Edition, Page B2

By now, it should be obvious that the Saudis and their Gulf allies are playing the long game when it comes to the current oil situation, and that means keeping the taps flowing in the midst of a global glut no matter how low prices go.

The strategy is designed to drive out higher-cost producers of heavy oil and shale, whose rapid development is squeezing Middle East crude out of the huge U.S. market and threatens to eat into its share of other lucrative growth markets. There are other compelling, though unstated, reasons for the Saudi stance, including a desire to make life miserable for feared arch-foe Iran and give the West a helping hand in reining in Russia's geopolitical ambitions.

The Saudis have been eager to stick it to the Kremlin for years over its cozy dealings with Tehran and its decision to renege on a deal to match OPEC production cuts in 2009.

The damage from the oil plunge is already hitting producers of more expensive crude in various outposts from Alberta to the North Sea to the fracking fields of Texas and North Dakota. But when it comes to sidelining the hydraulic-fracturing outfits for any length of time, it may be a tougher proposition than the Saudis think.

Still, anyone who doubts the Saudi resolve to stick it out even if oil tanks to $20 (U.S.) a barrel hasn't been listening to what the architects of this policy have been saying - or else mistakenly believes the Saudi royals will cave because they face a yawning budget deficit and potentially dangerous social unrest if they make deep cuts in social spending.

"It is not in the interest of OPEC producers to cut their production, whatever the price is. Whether it goes down to $20, $40, $50, $60; it is irrelevant," Saudi Petroleum and Mineral Resources Minister Ali al-Naimi declared last month.

He has subsequently stated this is not merely a policy for 2015 but "forever."

Forever might be a bit of an overstatement. But among them, the Saudis and smaller Gulf states have more than enough cash stashed in reserves, as well as sovereign wealth funds - at least $3-trillion in various funds they can tap - to wage this price war for years.

"They can hold out at $20 [a barrel] for a decade if they have to," says Peter Zeihan, a geopolitical adviser and author of The Accidental Superpower. "They're not under short-term financial pressure like other [producing] countries. But I'm not sure shale is either."

True, many shale projects become economically dicey when prices fall much below $80 a barrel. But costs vary from deposit to deposit, and some can still break even at levels closer to $50. And even though drilling has dropped off sharply in the major Bakken field in North Dakota and other fracking plays, it is remarkably inexpensive to restart once prices rebound.

"You're looking at full-cycle costs in places like Bakken being well below $50 already," Mr. Zeihan says. "I don't mean to suggest that protracted low oil prices aren't going to put a crimp in shale. But I don't think it's going to hurt it nearly as much as a lot of people are fearing. The real damage is going to be to those projects that are very high-dollar and take a decade to bring on line."

And that's where shale producers can gain even more traction over heavy oil and offshore rivals, not to mention the Saudis.

"If you have a two-year delay in starting the next oil project, you're going to see output declines three to five years from now," Mr. Zeihan notes. "It's a hiccup that shale can fill, because a really expensive, really complex shale well takes five weeks to drill and costs $20-million. While you might not get the return per barrel, that's such a lower investment risk that as soon as you have any sort of bubble-up in prices, the shale drillers will go in and take the market share."

So ultimately, the Saudi gambit will only strengthen shale's hand.

Associated Graphic

Even though drilling has dropped off sharply in U.S. fracking plays, it is inexpensive to restart once prices rebound.


Move for a national regulator sets Ottawa up for a nasty fight
Monday, January 19, 2015 – Print Edition, Page B1


A long list of financial industry groups, law firms and academics have had something to say about draft federal legislation to create a new Canadian capital markets regulator.

By the time the comment period closed in December, the federal Finance department had logged roughly 70 responses, many of them critical.

Curiously, there was silence from Quebec and Alberta, two provinces that vigorously oppose the creation of a national securities regulator.

And yet Ottawa's plan to regulate "systemic risk" may have sweeping implications right across the country, reaching deep into activities, investments, trading platforms and a myriad of financial institutions. Even provinces and territories who aren't joining the national securities regulator could feel the long arm of the new regulator's powers.

This sets up potential conflicts between jurisdictions and raises the prospect of another constitutional showdown.

In 2011, the Supreme Court of Canada ruled that Ottawa had overstepped its bounds by trying to force a national securities regulator on the provinces. At the same time, the court recognized the federal government's key role in protecting against threats to financial stability - so-called systemic risks.

And that is precisely what Ottawa is aiming to do with its Capital Markets Stability Act and the companion legislation, the Provincial Capital Markets Act.

A key problem is that only five provinces are on board - Ontario, B.C., Saskatchewan, New Brunswick and tiny Prince Edward Island. If it's poorly managed, the new regime may create overlap, or worse, regulatory gaps.

And no one, it seems, knows precisely where the power of the existing regime ends and where systemic risk regulation begins.

"The concept of systemic risk is a broad power, not a narrow power," explained Anita Anand, a University of Toronto law professor and an expert in capital markets regulation.

"Once you start walking down the road of regulating in this area, there are any number of issues that can be put on the table at any time. It's very difficult to know what they are before they arise."

Would Ottawa's power to regulate systemic risk, for example, extend to some of the activities of iconic Quebec and Alberta institutions, such as the Caisse de dépôt, the Desjardins Group or Alberta Treasury Branches? Quebec and Alberta would almost certainly object.

Caisse spokesman Maxime Chagnon said the pension fund manager is "following the matter closely."

The federal government has no business looking into the activities of these organizations because they are not a source of systemic risk, according to Yvan Allaire, executive chairman of the Montreal-based Institute for Governance of Private and Public Organizations.

"What they are proposing is crazy," Mr. Allaire said. "The law is not required because what is vulnerable is being tightly regulated now at the federal level already."

One could make a strong case that the opposite is also true. If Ottawa can't regulate the activities of these organizations, it could severely impair its ability to fully protect against systemic risk.

The Canadian Bankers Association has warned that its members fear the work of the newly created Capital Markets Regulatory Authority may create potential conflicts with "non-participating provinces" and get in the way of existing oversight by the Bank of Canada and the federal Office of the Superintendent of Financial Institutions.

Likewise, three of Canada's largest pension fund managers - the Ontario Teachers' Pension Plan Board, Ontario Municipal Employees Retirement System and Healthcare of Ontario Pension Plan - are protesting the legislation as a needless and inappropriate intrusion into their operations.

Perhaps foreshadowing a potential showdown with Quebec, a blog post by law firm Blake Cassels & Graydon LLP characterized Ottawa's efforts to regulate systemic risk a "War Measures Act for Canada's Financial System."

Finance Minister Joe Oliver is pushing ahead. The government plans to issue regulations by the spring, enact legislation by the end of June and put the whole regime in place by the fall.

The government is an awkward spot. The 2008 financial crisis showed that risks to the system can be found in the most unexpected places. Mitigating those risks requires broad national powers.

But a chunk of the country isn't co-operating, setting the stage for either ineffective regulation, a fed-prov fight, or both.

Follow me on Twitter:@barriemckenna

Ottawa weighs changes to anti-corruption regime
Wednesday, January 28, 2015 – Print Edition, Page B1

OTTAWA -- The federal government is quietly preparing to amend its tough anti-corruption regime as it grapples with the possible loss of a number of key suppliers.

Under current rules, a clutch of companies, including Siemens AG and Hewlett-Packard Inc., could be banned from selling to the government for up to 10 years because of crimes they committed overseas.

An effort to modify those rules and placate critics is now under way, with proposed changes expected to be ready to take to the Conservative cabinet as early as next month, according to several industry sources.

Amber Irwin, communications director for Public Works and Government Services Minister Diane Finley, declined to discuss "cabinet confidences."

"The government is working on next steps, but I wouldn't say there is a plan that's already decided on," Ms. Irwin explained.

The Canadian rules are much more rigid than those in the United States, Britain, much of Europe and at the World Bank.

It is not clear what changes Ottawa is considering. But Ms. Irwin acknowledged Public Works is in the process of setting up a special committee to review its integrity rules.

Ms. Irwin said the department is working with the help of a number of industry groups as well as an independent procurement ethics expert. She added that the government has developed various options to "strengthen" its regime, while ensuring that it buys from companies that "undertake ethical business practices at home and abroad."

Industry sources said the government has completed a review of systems in other countries and is aiming to make changes here by the end of March.

Canada has one of the strictest and broadest regimes of any industrialized country - the result of a new Integrity Framework put in place last spring. Under the rules, companies seeking to bid on federal contracts must certify that neither they nor their affiliates have been convicted anywhere in the world with a long list of criminal offences, including bribery, fraud and money-laundering.

Siemens paid a $1.6-billion (U.S.) fine after pleading guilty in 2008 to corruption-related offences in the United States and Germany. Public Works recently notified the company that it is offside of the Canadian rules.

Hewlett-Packard was fined $58.7-million in the U.S. last year after a subsidiary was convicted of bribing Russian officials. Public Works is currently reviewing its status as an eligible supplier.

Neither company has been barred from selling to the U.S. or German governments.

A senior Canadian official insisted last year that the government had no plans to allow disbarred companies to win reinstatement for good behaviour. "There are not plans in place to add a discretionary regime," the official said last October.

The Canadian government is facing a backlash from affected companies, as well as a number of industry associations, including the Canadian Manufacturers and Exporters, the Canadian Council of Chief Executives and the Canadian Chamber of Commerce. They argue that the rules are too inflexible and don't allow a means for convicted companies to get back on side.

Many legal experts, including proponents of tough anti-corruption rules, say the federal government's regime is too harsh and arbitrary compared to what exists in other countries.

Ottawa could also face potentially costly trade lawsuits, significant layoffs and hundreds of millions in economic losses if it goes ahead and bans major suppliers, according to a recent study commissioned by the Canadian Council of Chief Executives.

SNC-Lavalin Group Inc. chief executive Robert Card has complained that the rules are like a "meat cleaver" that risks destroying the engineering firm if it's convicted in an ongoing international corruption probe.

Acquisitions vital for survival, Goldcorp's Telfer says
Monday, January 26, 2015 – Print Edition, Page B1

Goldcorp Inc.'s quest for new mines is a matter of survival, according to the company's chairman.

"The only way mining companies can grow is through acquisitions and the only way they can survive is through acquisitions.

Sometimes, I'm not sure people outside the mining business appreciate that," Ian Telfer said in a recent interview.

"You have to keep buying stuff or you shrink ... When you get to the size that we are, you have to buy things that are considerable sized and the opportunities are limited," he said.

Last week, the Vancouver-based company made a half-a-billion dollar all-stock offer for Probe Mines Ltd. for its gold property in Ontario. The site is near Goldcorp's mine in Timmins, Ont., which will allow the company to use its existing operations to develop the mine. Finding cheaper ways to dig up metal has become every miner's mission amid persistently weak commodity prices.

Goldcorp enjoys the status of being the biggest gold miner by market capitalization, while producing less than the world's two biggest producers, Barrick Gold Corp. and Newmont Mining Corp.

It has a healthy balance sheet and is one of the few gold miners that can use its shares for acquisitions.

Last year, the company tried to buy Osisko for its mine in Quebec, but threw in the towel after two rivals mounted a higher offer of $3.9-billion.

"Could we have outbid anybody? Uh, yes. But we didn't," said Mr. Telfer. "Sometimes there are people who are more desperate than you, and they will pay a higher price."

One of Goldcorp's advantages was the potential cost saving from combining Osisko with Goldcorp's project in Quebec.

The Canadian miner owns 13 mines in North and South America, including four in Canada.

"Up to now we have restricted ourselves to North and South America," said Mr. Telfer. "But because of our size and the type of opportunities that we would be interested in, we are open to looking beyond the Americas.

Mr. Telfer, who was recently inducted into the Canadian Mining Hall of Fame, said Goldcorp has no plans to diversify into other metals as Barrick did with copper.

"You've got to understand, copper shares are bought by optimists, gold shares are bought by pessimists, and if you mix those two up, neither one of them is going to buy it," said Mr. Telfer.

Barrick's stock was pummelled when it bought a copper miner in 2011. Other base-metal miners, such as BHP Billiton and Anglo American, have recently sold their gold properties.

The Battle of Ontario is just a scuffle now
Thursday, January 22, 2015 – Print Edition, Page S2


There being no longer an appropriate catch phrase for meetings between the two Ontario NHL teams, applications are invited for a suitable replacement for "Battle."

Just keep it clean.

Wednesday night at Canadian Tire Centre, 18,894 fans watched a wild, often-chaotic scuffle take place between the Toronto Maple Leafs and the Ottawa Senators, the Senators hanging on to a 4-3 victory largely on the play of their year-long most valuable player, goaltender Craig Anderson.

"We were like the Marines," Ottawa head coach Dave Cameron said. "It was an adventure."

The Ottawa win left the two provincial rivals tied at 47 points, with fans who dreamed of playoffs as recently as the fall now talking potential draft picks rather than potential opponents.

The playoffs are still a possibility, but close to a technicality.

Both teams recently replaced their coaches in the hopes of changing their fortunes, but they might as well have changed their underwear for all the good it has done.

Both Toronto's Randy Carlyle and Ottawa's Paul MacLean were replaced by their understudies, Peter Horachek now leading his Leafs to a dismal 1-7-0 record while Cameron sports a more reasonable, if unimproved, 8-7-4 record.

In Toronto, the fans throw their jerseys on the ice in disgust. In Ottawa, where fans are reluctant to part with caps for a rare hat trick, they merely throw up their hands - the despair level in the nation's capital significantly lower than in the provincial capital.

Besides, a victory - any victory - over the Maple Leafs is treated roughly like a civic holiday.

Toronto, after all, had won 10 of its past 12 games against the Senators and eight of the past 11 in the Senators' home rink.

Horachek's understudy, assistant coach Steve Spott, had said earlier in the day that the first goal would be important for the Leafs, in that it might "create some positive emotion" at such a dismal time.

That seemed a distinct possibility in the opening moments as Toronto's best scorer, Phil Kessel, was sent in on a clear breakaway, only to miss the net.

Seconds later, Ottawa's Mike Hoffman came up over the Toronto blueline and, using defenceman Roman Polak as a screen, blew a wrist shot past goaltender James Reimer for the 16th goal of his rookie season.

Ten minutes later, the Senators went ahead 2-0 on a gorgeous passing play that saw captain Erik Karlsson carry into the Toronto zone and feed the puck over to Hoffman, who one-timed a pass back, leaving Karlsson with the empty side of Reimer's net.

Ottawa scored again in the dying seconds of the first when they gained a man advantage on a delayed penalty call. With Anderson racing to the bench for an extra attacker, Bobby Ryan fed a perfect cross-ice pass to Mika Zibanejad for his 11th of the year.

So dominant was Ottawa in that opening period that Horachek might have wished he could go all the way back to the origins of the "Battle of Ontario." In a Stanley Cup game played in Ottawa 111 years ago, the Toronto players became convinced Ottawa had "salted the ice" during the break, allowing them to slow down the speedy Toronto team and get Ottawa back in the match, which they won on five straight goals scored on the slushy ice.

There was no evidence of trickery, but the Leafs did play much better in the second period, yet could manage only the one goal.

The Senators failed to clear their zone and the puck came bouncing back to David Clarkson, who clipped it out of the air and over Anderson's blocker.

"It doesn't matter who you're playing," Ottawa alternate captain Chris Neil had said earlier in the day. "You want to get on any team. For us, it's being consistent.

Whether we have a good first period and let up in the second, the other team is going to have a push back."

But that "push back" was a long time coming for Ottawa. The Leafs continued to mount their comeback in the third. On a Toronto power play, it was again the much-maligned Clarkson tipping a point shot between Anderson's pads to bring Toronto to within a goal.

With less than five minutes to go, Karlsson seemed to settle the issue with a hard blast from the right boards that beat Reimer to the short side.

"He's on top of his game," Cameron said of his star defenceman earlier in the day. In the evening, Karlsson proved it.

Toronto struck again in the dying minutes when James van Riemsdyk scored but, despite pulling Reimer, they could not tie the game. The victory, for whatever it might mean in the end, was Ottawa's.

Anderson's value to his team was evident in the shots, 40-26 in favour of Toronto. He was, as always, his team's best player.

For each team, it was the last match before the all-star break.

The Senators head into the weekend with a welcome win, the Leafs with their sixth loss in a row.

One obvious word that comes to mind when redefining the old "Battle of Ontario" is "tragedy" - but that word was reserved this night for a moving moment of silence for the two RCMP officers who were shot this week in Alberta, Constable David Matthew Wynn dying earlier in the day from his wounds.

This was no tragedy. This was merely a hockey game.

Associated Graphic

The Ottawa Senators' Erik Karlsson, centre back, celebrates a first-period goal with teammates as Toronto Maple Leafs captain Dion Phaneuf skates away in Ottawa on Wednesday.


Leafs blown away by Staal, 'Canes
Trade target Eric Staal scores two goals, but Toronto's troubles will not be fixed by acquiring a player on the wrong side of 30
Tuesday, January 20, 2015 – Print Edition, Page S2

TORONTO -- There he was, in the flesh, skating and scoring and leading the Carolina Hurricanes to another win: Eric Staal, the coveted captain, a big, veteran centre who could well have a new home in the near future.

Which obviously will pique the interests of Toronto Maple Leafs fans. (Those not sleeping in their Air Canada Centre seats, anyway.)

The Leafs lost again on Monday.

This - a 4-1 defeat as listless as they come - was their 13th regulation loss in their past 16 games, equalling the level of futility they achieved at the end of last season when they crashed out of the playoffs so dramatically.

The difference this time? There are 35 games of this to go.

The Leafs look like a defeated group - frustrated, fatalistic and finished. If there hadn't been a coach fired two weeks ago, you might expect another one would be, based on the mood, except that wouldn't exactly fix the problem, would it?

This is a franchise with a multitude of issues, not the least of which is a growing history of these implosions, which have now happened in one form or another in four consecutive seasons.

With the coach gone, the roster has understandably come under fire. And everyone wants a solution.

Some want an easy one. Some feel it could be Eric Staal.

It's tempting to point at someone such as Staal - or Mike Richards in Los Angeles - or any of the other names out there that fill a position the Leafs desperately need. They obviously have to get a lot better on the blueline and at centre to have a hope of being more than a mediocre mess in this league, and those are two of the names on the market.

But they're hardly the solutions.

Staal has had a good career and remains a good player. His first of two goals on Monday - a nice play after taking a pass from brother Jordan to give the Hurricanes a three-goal lead only 48 seconds into the second period - was his 304th in 810 games, giving him 19 more goals than any other player taken in that ridiculously deep 2003 draft.

That's not easy to do.

But he's also getting old. Staal will turn 31 this fall, and with the NHL increasingly becoming a young man's league, that's a problem.

He will slow down. He has already battled injuries and his scoring rate has been declining for three consecutive years, to the point he's on a 54-point pace with the admittedly weak Hurricanes.

The Leafs, meanwhile, are the Leafs. They're miles away from contention. It's going to take at least a couple years of painstaking building through smart decisions to get there, and by the time they do, Staal won't be 31 anymore.

He - like Dion Phaneuf and others already in Toronto's lineup - will be firmly into retirement age.

Only 25 per cent of the current forwards in the NHL are 31 or older for a reason: It's the wrong side of the curve, by a fair margin. Fans don't need to look further than David Clarkson for a view of what a player can look like on the wrong side of 30, and he's one of dozens of examples among players expected to produce points.

Dany Heatley, whose draft position (second overall) and career numbers mirror Staal's, is another, and at 33, he's toiling in the minors with three points in 10 games.

Staal doesn't necessarily have to fall that far to be a bad bet at $8.25-million (U.S.) on the cap, and who knows what futures might be given up in a trade.

The reality is there's no quick fix for the Leafs. As terrific talk radio fodder as it is, one or two trades for "name" players on the downside of their careers isn't a solution: It's a continuation of a problem that has plagued the organization for ages.

No foresight. No anticipation. No vision, other than trying to sell magic beans (like Dave Bolland's third-line grit) as the cureall.

If they go that route, they're doomed to keep repeating the same tortured path again and again.

The Leafs don't necessarily need a complete and total gut job to move forward, but what they absolutely cannot do is bring in more bandages and try to improve by inches.

Not with how far they have to go.

Follow me on Twitter:@mirtle

Associated Graphic

Hurricanes forward Elias Lindholm scores on Leafs goalie Jonathan Bernier on Monday.


Canucks avoid past mistakes by looking to the future
Friday, January 23, 2015 – Print Edition, Page S3

VANCOUVER -- In the middle of the hockey season, the general manager of the Vancouver Canucks has embarked on a long scouting trip of draft prospects.

The past couple of nights, Jim Benning was in St. Catharines, Ont., watching top major junior prospects at an all-star gathering of teenagers. On Saturday, he's in Mississauga to see Canucks prospect Jared McCann, drafted late in the first round last June, a pick acquired as part of the trade of Ryan Kesler. It's all part of a trip of several weeks for Benning, a rookie general manager whose foundation in the game is on the road, in cabs and hotels and small rinks, scouting.

Benning is made for today's NHL, where teams are built through the draft, with few outstanding players ever available by trade, or free agency. What the Canucks do in late June at the draft table in south Florida will mean a lot more, in the long term, than whether the team manages to hold on to its playoff spot.

The Canucks of the present, like a year ago, are only so-so. Under John Tortorella, the team had a roster of leading players in their 30s, and a strong goalie. Before it imploded, things went relatively well, and at the 45-game mark of last season, the Canucks had 55 points, and were seventh in the Western Conference. This season, the players are one year older, and there's a strong goalie. It's the same result: 45 games, 55 points, seventh place in the West.

One can presume the Canucks do not implode this winter . But it's hard to see the team drumming up much more than it has.

Since a late-November peak, the Canucks have slumped, as puck possession and scoring chances have worsened.

So the focus, for Benning, is prospects. His career in hockey management began in Anaheim and was forged in Buffalo. When he joined the Boston Bruins in 2006, the Bruins had missed the playoffs, and did so once more. It took several years to build what became the current Boston Bruins, with their Stanley Cup in 2011 and reaching the final again in 2013. Benning was a central factor, and the reason Trevor Linden, the Canucks rookie president, staked everything last spring to hire him here.

For years, as the Canucks chased the Cup under former GM Mike Gillis, the team moved draft choices at the trade deadline, something Gillis regretted by the end. This year, Benning approaches the trade deadline open to deals but "with an eye on the future, too," he said on Wednesday on Vancouver's TSN 1040 radio.

"We don't want to give up any of those assets," he said of the young players the Canucks have assembled.

Even having young prospects to talk about is a reversal of recent years. The Canucks this season have their first teenager in the lineup, Bo Horvat, since Kesler a decade ago. The organization has hope that last June's No. 6 pick, Jake Virtanen, could crack the team next fall. He was the reward of last season's awful finish, and the highest the team has picked since it got the Sedins in 1999.

Unlike last year, Vancouver won't be in contention for such a high pick - but Benning sees depth in this year's draft.

If he has something on his wish list for immediate help this winter, it's a scorer. Weak puck possession and scoring chances have led to a paucity of goals, and the Canucks aren't converting, either.

Last year's team shooting percentage at five-on-five, when games were within a goal, was bad, 7.1 per cent, ranked 24th in the league. This year, it's still bad, 7.3 per cent for 23rd in the league, and since late November, the number is an ugly 6.8 per cent, 26th in the league.

"We work every night every night and sometimes it seems like to me we have a hard time finishing off our chances," Benning said.

The problem, of course, is scorers are not readily available, and do not come cheap. Benning, instead, pointed to Nick Jensen, a 21-year-old Dane drafted by Gillis No. 29 in 2011 who is playing well in the American Hockey League.

Jensen is not the answer today, but in the longer-term plan staked out in the offices of Canucks management, the likes of Jensen are Vancouver's best chance to once again become a true contender.

Senators unable to tap into NHL's credit facility
Wednesday, January 21, 2015 – Print Edition, Page S1

A boo-boo by the NHL and its lawyers is keeping Ottawa Senators owner Eugene Melnyk in a financial squeeze.

The NHL's legal team, which is based in the United States, failed to ensure that the league's now-$2-billion (U.S.) line of credit complied with Canadian government regulations when it was launched in October, 2014.

As a result, none of the seven Canadian-based NHL teams can take advantage of the low-interest credit facility, which is managed by Citi, the vast New York-based financial services company.

This is not a huge blow for six of the Canadian teams, which are owned by individuals or corporations wealthy enough to borrow from alternative sources at favourable interest rates. But Melnyk has suffered financial reverses in recent years in his pharmaceutical businesses, and the Senators have carried significant debt ever since he bought the team in August, 2003.

The Ottawa Citizen reported Melnyk reworked the Senators' debt in April, 2013, by lining up $150-million of new financing from two U.S. specialty funds. These loans typically come at high interest rates, often at more than 10 per cent.

That is at least 8 per cent higher than teams such as the Arizona Coyotes are paying for their loans through the NHL's line of credit.

But even though the NHL's line of credit is secured by its national media contracts, including the 12-year, $5.2-billion Canadian broadcast deal with Rogers Communications Inc., Melnyk cannot lower his debt payments the way the Coyotes are doing.

Once new Coyotes majority owner Andrew Barroway gets under the league's line of credit, it is estimated the team's annual debt payments will be reduced to less than $10-million (U.S.) from about $17-million.

No one from the NHL is willing to divulge the details, but it appears the Canada Revenue Agency ruled that the line of credit is offside, perhaps because of how interest payments to a U.S. entity are handled.

Deputy commissioner Bill Daly declined to comment, as did Melnyk.

A CRA spokesperson did not confirm or deny a ruling, noting that "the confidentiality provisions of Section 241 of the Income Tax Act would prevent the Canada Revenue Agency from commenting."

The league and its lawyers have been working to get the credit facility to comply with Canadian regulations, but that may take another three months to achieve. While NHL sources say it could take less time, it still means Melnyk has been left with much higher interest payments for most of this NHL season.

Melnyk's financial troubles have been reflected in the Senators' budget in recent years. At the start of this season, with the salary cap at $69-million (U.S.) and the floor at $51-million, the Senators' player payroll was $54.35-million, the third lowest among the NHL's 30 teams.

The Senators may earn enough revenue to keep up the payments on their high-interest debt, thanks mostly to proceeds from the Rogers television deal and the sale of the team's regional broadcast rights to Rogers' rival Bell Media for $400million over 12 years.

But with the benefit of the NHL's lower interest rates, the Senators could free up enough cash to spend on players - if Melnyk chose to do so.

NHL insiders say the league's credit facility is not drawing full participation even from teams that have access to it. The wealthier teams do not need it because they have their own sources of money at equally low interest rates.

Indeed, some with knowledge of the banking situation regard the line of credit as a honey trap.

While there are limits to how much a team can borrow (generally around 50 per cent of a franchise's assets), even financially strapped teams such as the Coyotes can draw more than $100-million.

This can place a team with low revenues in perpetual debt, as it is common practice for such teams to simply turn over their annual television or other shared revenues from the NHL to their lenders as payment.

If their other revenues remain low, as has been the case for years for the Coyotes and the Florida Panthers, for example, then these teams may never make a serious dent in their debt payments.

Follow me on Twitter:@dshoalts

Raptors pull one out against the Pistons
DeRozan and Valanciunas lead a balanced Toronto attack - with six players scoring double-digits - to shut down surging Detroit
Monday, January 26, 2015 – Print Edition, Page S3

TORONTO -- Two nights after doing just enough to beat the lowly Philadelphia 76ers, the Toronto Raptors battled tooth-and-nail with a Detroit Pistons squad that had just lost their best player for the season, but managed to squeak out a 114-110 victory.

DeMar DeRozan led the way with 25 points, while Jonas Valanciunas elbowed his way to 20 points and 11 rebounds in the post, as the Raptors put together a second-straight victory. In doing so Toronto improved to 2915 and held off a Detroit squad driving hard after one of the Eastern Conference's playoff spots.

The Raptors opened up an early 11-2 lead, only to then turn around and let Detroit do the same thing to keep it a one-point game for Toronto to end the first quarter. There would be 11 lead changes in the first half before the Raptors took a 58-53 hold into half-time.

The hot-rolling Pistons were without Brandon Jennings, the point guard who torched Toronto for 34 points when Detroit last visited two week ago and stole a 114-111 comeback win. News broke Sunday that Jennings will miss the rest of the season with a torn left Achilles tendon, an injury he suffered the night before in a loss to the Milwaukee Bucks.

Jennings had been the catalyst behind the one of the pluckiest teams in the NBA, winning 12 of their past 16 games and barrelling in the direction of the franchise's first playoff spot since 2009.

"He had the most outward, visible confidence, both in himself and in the team," said Detroit coach Stan Van Gundy. "He genuinely thought we would go out and kick everybody's butt every night and it gave his teammates belief. ... now that will have to come from someone else."

On this particular night in Toronto, that someone else stepping up for Detroit was former Raptor reserve point guard D.J.

Augustin. The youngster who rode the pine for 10-game stint in Toronto last year zigged around Raptor defenders for 31 points Sunday night, including five three-pointers.

The Raptors were also tested by the NBA's top-rebounding duo of Detroit big men Andre Drummond and Greg Monroe. The two combined for 23 boards, as Detroit out-rebounded Toronto 43-36.

Terrence Ross, removed from the starting lineup last week to try and ignite his performance, spent the entire first quarter on the bench while Greivis Vasquez started in his place. Ross showed glimmers of the old confidence at times. Starting the second quarter, he came out quickly for a dunk, followed immediately by a three-pointer. He also sped through defenders and delivered a beautiful assist to Amir Johnson with the game hanging in the balance in the fourth quarter. He was 2-of-6 over 22 minutes and in for his defence in the closing minutes.

The Raptors had hit just 11 of the 52 three-pointers they attempted over the past two games in Memphis and Philadelphia - a big area of concern. On Sunday, they were 5 of 15 from three-point land, or 33.3 per cent.

Toronto gave up just eight turnovers on the night.

Four more Raptors scored in double digits: Amir Johnson with 17, Vasquez with 13, Lou Wililams with 12 and Kyle Lowry with 11 on a night the star point guard took the microphone and humbly thanked fans for voting him into the NBA all-star game.

Toronto struggled to decisively put Detroit away in the closing minutes. Up by as much as eight inside the final two minutes, they allowed the Pistons to surge back within two inside the last 12 seconds.

The Raptors head to Indiana to face the Pacers on Tuesday, before returning home to meet Rudy Gay and the Sacramento Kings on Wednesday. Toronto has the next seven of 10 at home.

Associated Graphic

Kyle Lowry, centre, reaches for the ball ahead of Detroit's D.J. Augustin on Sunday. Augustin scored 31 points while filling in for injured Pistons star Brandon Jennings, who's out for the season.


Late collapse leaves Green Bay reeling
The Associated Press
Monday, January 19, 2015 – Print Edition, Page S2

SEATTLE -- For the first three quarters, the Packers took advantage of Seattle's mistakes before crumbling after several missed opportunities in the fourth.

Green Bay built a 19-7 lead early in the fourth against the defending champion Seahawks in Sunday's NFC championship game before letting it slip away in a 28-22 loss in overtime. Russell Wilson's 35-yard touchdown pass to Jermaine Kearse 3 minutes 19 seconds into the extra period won it.

The Packers' defence intercepted the Seahawks' Russell Wilson four times and forced five Seattle turnovers. Wilson was sacked five times. But it all fell apart for Green Bay at the end.

"Losses are bad either way," Packers quarterback Aaron Rodgers said. "But the way we lost, up two scores, late in the game, with the ball, you expect to put that game away."

Packers linebacker Sam Barrington was stunned. "We were so close and we let it go," he said. "Let it be understood that team is not better than we are, we gave them what they are out there celebrating right now.

That's what hurt the most."

Rodgers and his sore left calf were the focus going into the game. Injured against Tampa Bay in Week 16, Rodgers was limited in practice before Green Bay's 26-21 victory over the Dallas Cowboys last weekend.

Throwing mostly out of shotgun formation, he finished with 313 yards passing and three touchdowns. He was limited in practice again this week as the team prepared for the Seahawks.

Rodgers finished with 178 yards passing with a touchdown and two interceptions against the Seahawks.

Even though Rodgers was intercepted on Green Bay's first drive, the Packers returned the favour on Seattle's subsequent drive, when Ha Ha Clinton-Dix intercepted Wilson.

The Seahawks defence held Green Bay out of the end zone, and Mason Crosby capped the drive with an 18-yard field goal.

Seattle's next drive ended when receiver Doug Baldwin fumbled and Packers safety Morgan Burnett recovered at the Seahawks 23. But the Packers settled again for a 19-yard field goal from Crosby.

Rodgers hit Randall Cobb with a 13-yard scoring pass, his lone TD pass of the game. Crosby's 40-yard field goal made it 16-0 and Sam Shields intercepted Wilson's attempt to Kearse in the end zone with 1:55 to go in the half.

The Seahawks narrowed it to 16-7 on a fake field goal with 4:44 left in the third quarter.

But Green Bay added Crosby's 48-yard field goal with 10:53 left in the game to extend the lead to 19-7.

That's when it all fell apart for the Packers. Andrew Quarless missed a third-and-4 pass from Rodgers at the Green Bay 19.

Green Bay intercepted Wilson on his first throw from scrimmage, but Green Bay again went three and out.

Wilson scored on a one-yard keeper with 2:09 left, and then the Seahawks recovered the onside kick when the ball landed in Chris Matthews's hands after it was bobbled by Green Bay's Brandon Bostick.

That led to Marshawn Lynch's 24-yard touchdown run and a two-point conversion put Seattle in front 22-19.

Rodgers was steady, leading a drive to the Seattle 36, but his third-down pass to Jordy Nelson fell short and Green Bay settled for Crosby's 48-yard field goal to tie it and send the game to overtime.

Seattle won the toss, and the crowd at CenturyLink Field roared.

"It's tough," Rodgers said. "We had a good drive there, Mason made a great kick to put us into overtime. You lose the toss and next thing you know we're out of it."

But he admitted the Packers were already reeling before that.

"You can't let them complete a pass for a touchdown on a fake field goal, you can't give up an onside kick, and you can't not get any first downs in the fourth quarter and expect to win," Rodgers said.

Nguyen overcomes pressure to top men's field
The Canadian Press
Saturday, January 24, 2015 – Print Edition, Page S4

KINGSTON -- The infectious smile was missing from Nam Nguyen last week. A favourite to win the Canadian men's title for the first time, the 16-year-old from Toronto was feeling the pressure.

So his coach, Brian Orser, told him: "Skate like you own the place."

And Nguyen did.

Nguyen, who won fans and melted hearts when he participated in the skating gala of the 2010 Vancouver Winter Olympics, as a precocious, bespectacled 10year-old, scored 81.78 points to top a field that was missing three-time world champion Patrick Chan.

Orser admitted Nguyen had a mini-meltdown last week. The young skater, who's fuelled by a sheer love of performing, wasn't loving anything.

"We've done the junior worlds and senior worlds and it's always been sort of in the hunt, and this time, there's been a lot of talk about him, a chance he could win, all that stuff, and he's starting to feel the pressure," Orser said.

"But that's life; that's the way it is. So we just had to put it into perspective, but I know exactly the feeling that he was going through.

"So I think just that discussion helped. His shoulders dropped a little bit."

Nguyen admitted to nerves when he took the ice, but he hid them well, landing a beautiful triple Axel, then a triple Lutz-triple toe loop combination and triple flip for virtually the only clean program in an event riddled with spills.

Jeremy Ten of Vancouver scored 77.80 points to stand second, while Roman Sadovsky, a 15year-old from Vaughan, Ont., goes into Saturday's long program in third after scoring 73.46.

Gabrielle Daleman of Newmarket, Ont., shrugged off an illness to finish first in the women's short program.

Kevin Reynolds of Coquitlam, B.C., a three-time national silver medalist and member of Canada's team that won silver at last year's Olympics in Sochi, Russia, fell on all three of his jumps to finish a disappointing 12th.

Nguyen has risen swiftly through the ranks, winning the world junior championships last spring, and then finishing third and fourth in his two senior Grand Prix events this season - Canada's top performance in men's singles.

"He has a really big season from last year to live up to," Orser said.

The absence of Chan added to the pressure this season. Suddenly, the title was anyone's for the taking.

Chan, who'd won the seven previous titles - including 2012, when he scored a whopping 101.33 points in the short program - is taking the season off to contemplate his future.

Nguyen said the key to his success was "stay normal, don't change anything, treat everything like it's a practice at the [Toronto] Cricket Club."

Nguyen, who was the youngest skater to win Canadian titles at the juvenile, pre-novice-novice and junior levels, has finally settled into his 5-foot-8 frame, as well, after growing more than a half a foot in a year.

It was a disastrous afternoon for Reynolds, who has had problems with ill-fitting skates for the better part of two seasons, and had just a month of solid training before arriving here.

The 17-year-old Daleman, who has been battling strep throat, scored 62.91 points to top a field missing reigning Canadian champion Kaetlyn Osmond.

Daleman fell hard on her triple Lutz but skated an otherwise strong program.

Veronik Mallet of Sept-Îles, Que., was second with 61.19, while Alaine Chartrand scored 60.25 for third.

Osmond, a two-time national champion and Olympic team silver medalist, is sidelined for the season after she fractured her right fibula in the fall.

Friday's short program set up a tight race for the two spots in women's singles on the Canadian team for the world championships in March.

The Canadian championships determine Canada's squad.

Short programs in pairs and ice dance were scheduled for later Friday.

NFL stages its annual theatre of the absurd
Are you ready to talk about some football? Too bad - Media Day is about anything but the game
The Associated Press
Wednesday, January 28, 2015 – Print Edition, Page S3

PHOENIX -- Seahawks running back Marshawn Lynch knew he had to talk. It didn't mean he had to say anything.

So, in essence, he didn't. And now, onto our regularly scheduled Super Bowl Media Day, where the players and coaches are window dressing, and it's really more about who's asking the questions.

There was Barrel Boy. A pair of buck-toothed sock puppets. A guy sporting a purple shirt, a bicycle helmet and seven Go Pro cameras, "so I can catch all the angles, precisely."

These characters are the sort that have helped turn an event that began as a convenient place to fill up the notebook in advance of the NFL title game into the full-fledged theatre of the absurd it has become.

On Tuesday, about 2,000 reporters - make that people with credentials - filed into the U.S. Airways Center, worked their way past a marching band playing a version of Blondie's 1980 hit, Call Me, and got down to business.

The New England Patriots filed in and the clock started ticking down from 60:00.

As the reporters, cameramen and Nickelodeon superhero Pick Boy elbowed for position, the questions began.

As expected, New England coach Bill Belichick wasn't forthcoming about much. But now, thanks to a question asked by a kid, we know his favourite stuffed animals are those cute little monkeys you put your fingers in to make them talk.

Looking for a Joe Namath-like guarantee at Media Day? "The game will be on Sunday," tight end Rob Gronkowski promised.

About a half-hour before the Seahawks took to the floor , a crowd started gathering around Podium No. 6. Lynch's name was up there.

An hour with "The Beast?" Seemed promising.

Then, he climbed the stairs, set his timer, said he was doing this so he wouldn't get fined and pronounced he would answer every question the same way until his time was up. That ended with about 57:30 remaining on the clock, and it's not a sure thing he was right about the fine thing.

The Pro Football Writers Association is talking to the league and Lynch has been told he could, indeed, have to pay up .

Once he left, his teammates fielded a number of questions about why Lynch doesn't like to talk, and why fans seem so obsessed with hearing him talk.

"The way the NFL sells everything all the time, fans want to, like, be inside our minds," defensive lineman Michael Bennett said. "The fact they don't get to do it all the time with Marshawn, it just makes them mad."

Okay, back to the important stuff: The white, brimmed hat Bennett was wearing was made of horse tweed and cost $800 (U.S.), "for those of you who know about hats," he said.

As Seattle's 60 minutes were wrapping up, a group of practice squad players were showing off their best dance moves while being surrounded by scantily clad ladies in cheerleading gear.

A few steps away, a man wearing clown's makeup and a rubber-ribbon wig was carrying a microphone and following a reporter with a low-cut neckline that highlighted her painted-on black-and-white dress.

In another corner, former Rams MVP quarterback Kurt Warner, now retired and with a TV gig, had a microphone in front of quarterback Russell Wilson.

"This is football players interviewing football players," observed the legendary sports writer, Art Spander, now covering his 39th Super Bowl.

And reporters interviewing reporters.

No stone is left unturned at Media Day.

Sharapova overpowers Bouchard
Russian star denies Canadian's bid for a second straight semi-final berth at Melbourne Park
The Canadian Press
Tuesday, January 27, 2015 – Print Edition, Page S2

MELBOURNE, AUSTRALIA -- Canada's Eugenie Bouchard was eliminated from the Australian Open on Tuesday after a 6-3 6-2 loss to Russia's Maria Sharapova in the quarter-finals.

The loss was a disappointment for the Westmount, Que., native after reaching the semifinal a year ago at Melbourne Park.

Bouchard finished with 13 winners and 30 unforced errors on Tuesday, missing on both of her break-point chances while dropping serve four times.

Bouchard started on her back foot, dropping serve in the opening game of the high-profile quarter-final. Bouchard got to work recovering her poise, holding for 1-2 with a winning backhand return.

But Bouchard was never able to close the gap despite forcing Sharapova to save break points in the sixth game. Three games later, Bouchard saved a set point with a winner but lost the set a point later after sending a backhand wide.

Sharapova took a 3-1 lead in the second set after another misplaced backhand by Bouchard.

Sharapova earned a match point from a Bouchard forehand error and landed a winner of her own in the corner to seal the victory and advance to the tournament's semifinal.

Three of the four matches played between Bouchard and Sharapova have come at majors, with the Russian beating Bouchard at the French Open the past two years.

In the semi-finals, Sharapova will face Ekaterina Makarova, who raced to a 3-0 lead in the first nine minutes of the match and beat third-seeded Simona Halep 6-4 6-0 in the first quarterfinal on Tuesday.

It will be Makarova's second consecutive Grand Slam semifinal. She made her first major semi at last year's U.S. Open, losing to Serena Williams.

Halep, last year's French Open runner-up, was under pressure from Makarova's array of strong forehands to all areas of the court. Serving at 5-3 in the first set, the Romanian saved two set points, but Makarova clinched the opener on the third when Halep netted a backhand.

The 26-year-old Makarova has had her best Grand Slam results at Melbourne Park, advancing to the quarterfinals two of the past four years and the fourth round in the other two. "I love this court, I'm so happy I came through," said Makarova, who said she ate the same breakfast she's been having all tournament - yoghurt and toast - before Tuesday's match.

Associated Graphic

Maria Sharapova reacts after winning a point against Eugenie Bouchard during their quarter-final match at the Australian Open in Melbourne Tuesday.


Quick oil rebound unlikely as industry adjusts to new reality
Monday, January 19, 2015 – Print Edition, Page B1

OTTAWA, CALGARY -- For Alberta's unnerved oil sands producers, Joe Oliver's soothing words were just want they wanted to hear: markets will rebound and the industry and province will prosper again.

The federal Finance Minister delivered his pep talk to the worried oil crowd in a speech to the Calgary Chamber of Commerce last week.

"Demand for oil will rise in the intermediate and longer term," he said. "For Albertans and their energy sector, that has meant - and will mean - prosperity at home."

But there are plenty of signs that point to a fundamental realignment in the industry. To survive for the long term, Canadian producers, many on the high end of the global cost curve, will have to adjust to a world of far tougher competition and sluggish demand growth that will keep a lid on their hoped-for recovery.

Producers shouldn't count on the future looking much like the recent past, when the industry expected ever-rising oil prices to justify $30-billion-a-year investment in oil sands expansion.

With Saudi Arabia-led OPEC no longer willing to support prices by cutting production, the oil world is becoming a whole lot more Darwinian.

Fierce competition for global market share is occurring even as demand growth falters under a combined weight of economic, technological and environmental trends.

"Re-balancing of the market does not equate to a return to the status quo ante," the International Energy Agency warned in its oil market report Friday.

"It is clear that the market is undergoing a historic shift ... While there might be light at the end of the tunnel for producers as far as prices are concerned, the next few years could nevertheless prove a period of reckoning for a market and an industry that, through the course of their 150year history, have had to periodically reinvent themselves."

In his speech in Calgary, Mr. Oliver gave a classic assessment of commodity cycles: that the best cure for low oil prices is, in fact, low prices. "They reduce production from high-cost producers, and therefore constrain supply, and they stimulate economic growth and therefore ultimately drive up global demand," he said.

That response will take a while.

Oil prices halted their free fall last week with West Texas Intermediate settling at $48.70 (U.S.) a barrel. But analysts don't see a sustained rally in the near future.

"The market is still trying to find a balance," Anthony Yuen, global energy strategist with Citi Research, said in an interview.

"And at this point, if you look at both supply and demand balance, you are still looking at an oversupply environment."

Mr. Oliver's comment about high-cost producers getting squeezed out of the market was grim reminder for the Alberta industry. The oil sands sector and Canada's tight-oil producers face some of the highest costs in the world and billions' worth of new spending has already been sidelined due to the price slump.

Suncor Energy Inc., which has already slashed its 2015 budget by $1-billion and cut 1,000 jobs, is prepared to "take further action" if the oil rout persists, chief financial officer Alister Cowan said last week. As many as 16 oil sandsproject phases that have yet to receive board sanctioning are at risk of further delays because of low prices, according to energy consultancy Wood Mackenzie.

Canadian producers will be working hard to lower their break-even costs. But they're aiming at a moving target: U.S. shale producers are laser focused on boosting productivity and reducing costs so they, too, can be competitive in the global game.

Typically in a commodity market, lower prices stimulate demand growth, and analysts are expecting that to hold true in the current downturn. But the IEA warned that the weak underlying conditions around the globe - except in the United States - will delay and mute that response.

That's not to say prices will remain at $50. But like many forecasters, Citi Research predicts a slow return to $90 (U.S.) a barrel, which it posits as a new ceiling.

There are two major wild cards: war in the Middle East and climate change. The Persian Gulf remains a tinderbox, and eruptions in any of the major producers there would drive up prices.

The climate change threat is part of a larger demand picture that has seen oil consumption decoupled from economic growth, certainly in rich countries and increasingly in emerging markets such as China. Many analysts argue the world is in the midst of a resource productivity revolution that will permanently reduce our reliance on oil.

Under an aggressive climatepolicy scenario, the IEA sees crude consumption peaking in 2020, and then declining. That scenario is likely unrealistic given political inertia, but is illustrative of the direction in which many world leaders wish to head.

Associated Graphic


RBC turns to U.S. in quest for growth
Chief executive officer Dave McKay makes first big splash with $5.4-billion deal for City National; has eye on London
Friday, January 23, 2015 – Print Edition, Page B1

Determined to expand internationally, Royal Bank of Canada is buying Los Angeles-based City National Corp. for $5.4-billion (U.S.), the largest deal struck by a Big Six lender since the financial crisis.

Ever since RBC's stunning pullback south of the border in 2011, when the lender sold its troubled retail banking arm, executives have wrestled with the best way to break back into the U.S. market.

Underscoring the search was their necessity to add a new revenue stream - whether it was in wealth management or personal and commercial banking.

Because the Canadian market is already heavily saturated, the list of expansion opportunities at home has been rather short.

"We needed a new growth platform; we needed something that we could get excited about," chief executive Dave McKay said in an interview.

What RBC settled on is a deal that adds back a retail footprint in the United States - albeit one that is focused on niche high net worth clients instead of the mass market. The deal also builds out RBC's substantial U.S. wealth management footprint, which the bank has said it is keen to grow.

Elaborating on the growth potential, Mr. McKay said a longterm goal is to expand City National's offering to London, where RBC already has a sizable wealth management footprint.

City National's managers describe their company as both a private bank and a business bank. It is best known for serving wealthy clients, particularly entrepreneurs, in major cities including New York, Los Angeles and San Francisco. The company also has deep ties to Hollywood and offers the industry's chic clientele a variety of products such as mortgages and lines of credit.

Because of its entertainment roots the bank successfully expanded in New York City over the past decade. Mr. McKay believes London's connection to this same industry is what offers the best growth potential to the United Kingdom.

Since he took over RBC last August, Mr. McKay has repeatedly stressed his desire to expand the bank's wealth management arm, but never suggested that such a major deal was on the horizon.

The CEO started pursuing City National in 2013, believing from the get-go that a deal would allow RBC to offer its existing U.S. clients a suite of private banking services.

Now that a deal has been signed, Mr. McKay went so far as to note that RBC will likely start offering products such as "jumbo mortgages," typically loans that exceed usual limits, in cities such as New York.

The size of the transaction surprised some analysts. However, Mr. McKay said he and his team do not view this as a massive undertaking, despite the $5.4-billon price tag, because it amounts to roughly 5 per cent of RBC's market value. "We saw this as a very reasonable, manageable size," he said.

RBC is using cash and stock to acquire City National; $2.7-billion in cash and the rest in shares.

"With an acquisition premium of about 26 per cent, [RBC] is acknowledging that growth outside of Canada will be dilutive to overall profitability but that it is a trade-off it is willing to make," BMO Nesbitt Burns analyst Sohrab Movahedi wrote in a note to clients.

RBC has long focused on the high net worth market and the deal pivots the bank even more toward rich clients.

Mr. McKay noted that the combined high net worth population of New York, San Francisco and Los Angeles is 4.5 times larger than Canada's equivalent market.

City National was founded in 1954 and it now has assets totalling $33-billion as well as assets under management amounting to $49-billion. The company made a profit of $256-million during its last fiscal year. City National's current CEO, Russell Goldsmith, who has run the company since 1995, will become the head of RBC's U.S. wealth management arm once the deal closes.

Boston-based analyst Brian Klock at Keefe, Bruyette & Woods said City National is well-known in financial circles despite its small asset base. Because of its high net worth clientele, particularly in New York, the bank has been on Wall Street's radar because "a lot of investment bankers could be their clients."

Mr. Klock said that RBC stepping up as the buyer for City National was a surprise to many Americans.

"The thought was always that they might sell to Goldman [Sachs] or Morgan Stanley" he said. "But we never thought a Canadian bank would go to California."

Royal Bank (RY) Close: $74.71, down $1.15

Associated Graphic

The $5.4-billion deal, which CEO Dave McKay describes as 'manageable,' amounts to about 5 per cent of RBC's market value.


Oil's threat vs. household debt: Poloz's delicate balancing act
Thursday, January 22, 2015 – Print Edition, Page B1

The Bank of Canada's move to cut interest rates reflects a tricky balancing act: Protect the economy from the oil slump, without fuelling household debt that's already near record levels.

In dropping the overnight lending rate to 0.75 per cent from 1 per cent, its first rate cut since September, 2010, the bank shocked markets by putting longstanding worries over rising levels of household debt behind a bigger concern: what plummeting oil prices will mean for the country's economy.

Only last month, Canada's central bank renewed its warnings about rising levels of household debt, which hovers near an alltime high of 163 per cent of disposable income, and said it believed home prices were as much as 30 per cent overvalued. Yet, in lowering rates, the bank made it clear it sees the effects of lower oil prices spreading far beyond Alberta, with job losses and cuts to income potentially cascading throughout the economy and leaving indebted households even more vulnerable.

"This decline in oil prices has been a shock to Canadian incomes, which from a debt-to-disposable income point of view is not good news," senior deputy governor Carolyn Wilkins told a press conference. "Certainly the interest rate movement we made today is designed to offset part of that."

The bank predicted that without a cut, the household debt ratio could have risen by as much as four percentage points as plunging energy profits harm investor portfolios and the job market.

Canadians who headed west in search of employment are returning east, making job markets more competitive in other provinces and contributing to a rise in unemployment and a drop in incomes.

"The record-high evolution of [debt to income] is something which matters a lot to us because it makes the economy vulnerable to a shock," Bank of Canada Governor Stephen Poloz said, adding the bank sees plunging oil prices as "exactly the kind of trigger we imagine."

Yet by slashing interest rates after years of warning about the risks that rising house prices and skyrocketing consumer debt levels pose to the economy, the bank also runs the risk that consumers will start turning a deaf ear to its long-standing pleas for Canadians to curb their appetite for cheap credit and may even fuel the flames of the country's overheated housing market.

"At the end of the day, if you're a consumer or a homeowner and you see what essentially now amounts to zero or slightly negative real interest rates, you're going to go out and borrow, probably no matter how much the bank is telling you not to," said Bank of Montreal senior economist Robert Kavcic.

A rate cut will be "unambiguously good" for the Canadian housing market, particularly outside Alberta, said Toronto-Dominion Bank economist Diana Petramala. Consumers seemed to echo that sentiment yesterday, with real estate brokerage Zoocasa reporting that traffic to its online listings website jumped 20 per cent after the bank's announcement.

A cut to the central bank's overnight lending rate will make it cheaper for the roughly 30 per cent of home buyers with shortterm or variable-rate mortgages, said Bank of Nova Scotia economist Derek Holt.

Ms. Petramala expects mortgage rates to follow, with banks possibly reviving teaser rates below 3 per cent and said yesterday's rate cut has raised the likelihood the central bank could cut rates even further down the road.

While that will give a boost to already strong housing markets outside of Alberta, particularly in cities like Vancouver and Toronto, it also risks encouraging young home buyers to take on more mortgage debt than they can afford. "It's important for [buyers] to not forget that this is not a normal interest rate environment," she said.

An interest rate cut will only mean good news for Vancouver's housing market, said Hareesh Sara, president of Intergulf Development Group, which has several housing and condo developments under way in both British Columbia and Alberta. While his company is being cautious about whether to proceed with planned developments around Calgary and Edmonton, it is plowing ahead with projects in B.C.'s Lower Mainland.

"I think this is going to be a huge boost because money is even that much cheaper," he said.

Several analysts, however, warned that while the rate cut may give a short-term boost to home buyers, it also heightens the risk of a more severe housing correction when interest rates eventually rise.

Associated Graphic

The Bank of Canada's decision to lower interest rates is the first such move by a Group of Seven country in the face of oil's massive price drop.


Short-term pain, long-term gain seen for Target's rivals
Saturday, January 17, 2015 – Print Edition, Page B1

The impending departure of U.S. discounter Target Corp. from Canada sets the stage for a new retail era in which top players could emerge stronger while weaker ones lose more ground.

Target's abrupt decision on Thursday to quit Canada after less than two years will bring shortterm pain for rivals as the chain prepares to liquidate inventory at its 133 stores - a boon for consumers that increases pressure on competitors.

In the longer run, retail heavyweights such as Wal-Mart Canada Corp., Loblaw Cos. Ltd., Canadian Tire Corp. and Costco Canada stand to shore up their leading positions. They will likely try to acquire some of Target's leases.

But underperforming players, already pushed to the brink by e-commerce, the expansion of U.S. powerhouse and a tight market, will need to find new ways to grab business.

In these challenging times, merchants "have to fight and scratch and work hard to both satisfy customers and make a reasonable return," said Humphrey Kadaner, president of Mastermind Toys, a chain of 36 stores.

Target's exit is a win for incumbents, among them Canadian Tire and Loblaw, which worked hard to raise their game in preparation for the U.S. chain's arrival in 2013.

But the heavily competitive retail environment shows few signs of easing as contenders clamour for a slice of the roughly $2-billion of annual sales that Target is leaving behind.

"That's $2-billion of sales that are up for grabs," said Brian Yarbrough, an analyst at Edward Jones Investments. "That's a lot of business."

On Thursday, Target stunned industry insiders and consumers when its Canadian unit filed for bankruptcy protection, giving up after having sunk $7-billion into building its business here. Since opening its stores in March, 2013, the chain projected it will have racked up $2.5-billion of pretax operating losses by the end of January.

Target's spectacular failure here is an eye opener for other major foreign retailers that may be considering coming to Canada, Mr.

Yarbrough said.

"This is a case study of how not to come to Canada," said Edward Sonshine, chief executive officer of RioCan Real Estate Investment Trust, which is Target's largest landlord. The problem "wasn't Canada - it was Target. Still, it makes people nervous."

He expects that major incumbent retailers will vie for some of his malls' 26 Target leases, along with home improvement chains Rona Inc. and Lowe's Canada. The Target closings are an "aggravation" for RioCan but could result in it attracting more productive retail tenants and higher rents, Mr. Sonshine said. RioCan's Target leases are generally guaranteed by Target's parent for their remaining terms, he said.

He doesn't expect new retail entrants to try to swoop in. U.S. discounter Kohl's Corp., for instance, has studied the Canadian market but not shown interest recently, industry sources have said.

The sluggish economy, weak Canadian dollar and slumping oil business may also deter U.S. retailers from setting up shop here, Mr. Kadaner said.

"One less player in Canada may ease up some of the pressures on some people," Mr. Kadaner said.

"But there are always other natural and competitive pressures.

The good ones will fill the void and pick up more than their fair share of what Target is leaving behind."

CIBC World Markets retail analyst Perry Caicco said Wal-Mart and Loblaw are likely the only two "material" bidders for Target leases. "Wal-Mart wants and needs these assets," Mr. Caicco said. "Loblaw needs to stop Wal-Mart from acquiring these assets, since a much more productive exTarget asset base could put pressure on their sales and reduce their dominance."

Wal-Mart spokesman Andrew Pelletier said this week it was too early to speculate on whether it would assume any Target locations. A Loblaw spokesman did not respond to an e-mail.

Lowe's Canada spokeswoman Sandy Indig said the home improvement retailer is "always on the lookout for great real estate" although did not comment directly on the Target leases. With just 37 stores in Canada now, it plans 25 more in the next three years.

Banks hold off on rate cuts, but brokers see record lows by spring
Friday, January 23, 2015 – Print Edition, Page B1

Canada's major lenders are so far holding off cutting mortgage rates in the wake of the Bank of Canada's quarter-point interest rate cut, but industry officials predict rates will fall to historic new lows just in time for the all-important spring housing market.

Toronto-Dominion Bank said it is not planning to lower its prime rate following the central bank's decision. Both Royal Bank of Canada and Canadian Imperial Bank of Commerce said Thursday they were reviewing their rates in light of a lower overnight rate.

Mortgage brokers, however, say it is only a matter of time - anywhere from a few days to a few weeks - before banks start slashing their rates, with some predicting that as Government of Canada bond yields plummet below 1 per cent, fiveyear fixed rates could hit a new record-low 2.5 per cent, reigniting a fierce competition for new borrowers.

"Spring is around the corner and market-share battles will start to heat up," said Vince Gaetano of "The first bank to make that change, it's going to be huge from a market-share perspective.

"Someone will blink and that will probably lead everybody down the same path."

Some small non-bank lenders have already begun cutting their fixed-mortgage offerings, said Drew Donaldson, a mortgage broker and executive vice-president Safebridge Financial Group. Consumers with variable-rate mortgages and preapprovals have been calling Mr. Donaldson's office in droves looking to find out when their rates might drop.

In the past, when rates were high and lenders could expect wide margins on their mortgage businesses, the major banks would quickly follow on the heels of a Bank of Canada rate movement.

But with bond yields and interest rates plummeting to new lows and lenders facing a host of new regulatory requirements in the aftermath of the global financial crisis, banks have become far more reluctant to slash rates, mortgage planner Robert McLister said.

Banks will likely wait until the end of the fiscal quarter on Jan. 31, after a large share of homeowners have refinanced their mortgages, to slash rates in order to protect their profits, Mr. Gaetano said.

Some industry officials say that while banks will inevitably be forced to drop their fixed mortgage rates if bond yields settle at record lows, they may put off dropping their prime rate, which affects variable-rate mortgages along with a host of non-mortgage lending, such as car loans and personal lines of credit, in order to protect their non-mortgage profits and push borrowers toward longer-term fixed rate mortgage contracts.

Others speculated that federal regulators may be pressuring banks not to lower their rates too drastically by warning that they could introduce tighter lending rules to avoid driving up already high levels of household debt.

"They may very well be considering that and discussing it quietly," said Will Dunning, chief economist of the Canadian Association of Accredited Mortgage Professionals. He warned the threat of new mortgage rules could spell bad news for the housing market, where continued growth is likely to be one of the main drivers of the economy as oil prices stay low.

"It would be very harmful, not just to the housing market, but to the economy as well to reduce mortgage lending."

But with the average five-year rate among the major banks now sitting around 195 basis points above five-year government bond yields, well above the historical range of between 150 and 160 basis points, most expect the banks to eventually bow to consumer pressure to slash their rates, sending potential buyers running back into the housing market.

"You'll definitely get more interest in homebuying when you see rates go below 2.5 per cent," Mr. McLister said.

"It's going to be a huge flood of buyers."

Saturday, January 24, 2015


A Friday Report on Business story on rate cuts incorrectly quoted mortgage planner Robert McLister saying: "It's going to be a huge flood of buyers." He was referring to home buyer interest if rates go down to 2.5 per cent. In fact, he actually asked: "Is it going to be a huge flood of buyers?"

Books, boxes, box office: Amazon jumps into movies
Tuesday, January 20, 2015 – Print Edition, Page B1 Inc. is taking a bold leap into movie production, with plans to bankroll a dozen original feature films each year, and to compress the time it takes to move them from theatres to viewers' homes.

The first film projects are expected to begin production at Amazon Studios later this year, and to make their debuts in U.S.

theatres. But Amazon plans to push them to its Prime Instant Video subscription service as little as 30 to 60 days later, doing away with traditional lag times of several months that have typically preceded home video releases.

The long-standing timeline for movie releases is already under pressure, and Amazon's latest move is another step toward collapsing it to satisfy increasingly impatient audiences. But where rival Netflix Inc. has sought to do away with wait times entirely, Amazon has chosen a more cautious approach that offers cinema chains some window of exclusivity and filmmakers a chance to let their work live on the big screen.

When Netflix promised last October to commission a sequel to the 2000 martial arts hit Crouching Tiger, Hidden Dragon, and to release it on its streaming site the same day it would open in theatres in the fall of 2015, cinema owners balked. "We believe the theatrical window is an important component of the overall movie sales cycle," a spokesperson for the Cineplex Inc. theatre chain said at the time.

Amazon's approach appears to target smaller-scale films that might not enjoy long runs in theatres, while staying on the good side of cinemas. Roy Price, vice-president of Amazon Studios, told The New York Times the new productions would have budgets ranging from $5-million to $25-million.

"Not only will we bring Prime Instant Video customers exciting, unique and exclusive films soon after a movie's theatrical run, but we hope this program will also benefit filmmakers, who too often struggle to mount fresh and daring stories that deserve an audience," Mr. Price said in a statement released on Monday.

Paul Dergarabedian, senior media analyst at entertainment research firm Rentrak, expects many of Amazon's original movies will have the feel of independent films with their more challenging subject matter, often made for $10-million or less. The goal isn't to go toe to toe with "the big blockbuster machine," with their $100-million-plus production budgets.

"I don't see this as laying down the gauntlet," Mr. Dergarabedian said. "It's a strategy of co-existence, and I think it's a complementary strategy."

Amazon has not said whether it will seek distribution in Canadian theatres, and company officials were not available to comment on Monday. Prime Instant Video offers online access to a wide array of films and television shows for $99 (U.S.) a year, including original TV series such as Transparent, which won a Golden Globe Award for Best TV Comedy or Musical last week. But it is not currently available in Canada, unless viewers use a virtual private network (VPN) to disguise their location.

It is also unclear what sort of reception Amazon's short-window strategy would get if the company comes knocking in Canada. "If they bring the service here ... we would require our regular theatrical windows as we do with other distributors," Cineplex spokesperson Pat Marshall said in an e-mail. That window can vary from film to film, but averages about 100 days.

The new venture, dubbed Amazon Original Movies, will be led by Ted Hope, an American independent filmmaker best known for producing 21 Grams and Adventureland.

"Audiences already recognize that Amazon has raised the bar with productions in the episodic realm, tackling bold material in unique ways and collaborating with top talent, both established and emerging," Mr. Hope said in a statement.

A 'transformative' Canadian: Oil, real estate and beyond
Wednesday, January 28, 2015 – Print Edition, Page B1

Joseph Rotman founded a business empire that gave him the financial clout to make transformational donations to fund educational, scientific and arts institutions throughout Canada. The Toronto businessman died Tuesday at age 80 following complications from heart surgery.

Mr. Rotman launched Canada's first oil trading operation in the 1960s and was an early investor in Alberta's burgeoning oil industry, helping create a series of companies as the petroleum sector grew.

He later branched out into real estate and venture capital investments, founding Clairvest Group Inc. in 1987 to provide financing for new companies.

The private equity firm currently has $1.5-billion in assets under management and is listed on the Toronto Stock Exchange. Mr. Rotman was a member of the company's board until his death.

Roger Martin, former dean of the Rotman School of Business at the University of Toronto, said Mr. Rotman deserves credit for recognizing opportunities in the emerging oil sector, leveraging his wealth in a variety of different industries and using his funds on numerous causes to better Canada.

"I think he was one of Canada's greatest living citizens," Mr. Martin said Tuesday.

One of Mr. Rotman's most prominent causes was the business school at the University of Toronto, where he had completed a master's degree in 1960.

The school was renamed the Rotman School of Management in 1997 after he pledged more than $15-million in donations.

Mr. Martin said Mr. Rotman's influence can be seen in the school's recent fourth-place finish for research institutions in the Financial Times rankings of business schools.

"When Joe Rotman made his gift to the Rotman School, I don't think we would have been in the top 150 or 200 for research," Mr. Martin said. "That was all made possible by Joe being a generous and super strategic and intelligent benefactor."

Former University of Toronto president Robert Prichard, who helped recruit Mr. Rotman as a major donor, said Mr. Rotman was "a dear friend and a profoundly positive force not just in our community but in my life."

Mr. Rotman also supported the University of Western Ontario, where he did an undergraduate degree, and funded the Rotman Institute of Philosophy within the university's department of philosophy. He was the university's chancellor until his death.

"He was one of those rare leaders who dedicated much of his time, business acumen and personal wealth toward a wide range of philanthropic endeavours that had transformative effects on the arts, health care and higher education in Canada," said Western president Amit Chakma.

Mr. Rotman also amassed a large collection of modern art and supported arts organizations throughout his life. He previously served as chair of the Art Gallery of Ontario and co-founded the Siminovitch Prize for Canadian theatre. He was also the current chair of the Canada Council for the Arts, saying he approached the funding of artists as a businessman who felt arts could strengthen the vitality of Canada.

Canada Council chief executive Simon Brault said Mr. Rotman "made a lasting impression on the trajectory of the council" by advocating tirelessly for the role of the arts in individual lives, the economy and the development of communities.

He also provided long-time support and funding for research and innovation - especially in the field of neurosciences, which he felt was overlooked by donors. He helped fund the Rotman Research Institute at the Baycrest Health Sciences centre in 1989 to study human brain function and served as chair of the Ontario Brain Institute until his death.

Mr. Rotman's funeral is scheduled for Friday at 1:30 p.m. at Holy Blossom Temple in Toronto.

A new ad campaign focuses on adventure to lend recreational vehicles an upmarket feel
Monday, January 26, 2015 – Print Edition, Page B1

Pigeonholed as the vacation choice of retirees and lowerincome families, the RV industry has an image problem. Recreational vehicles are not usually pitched as a dreamy, aspirational getaway choice. A new advertising campaign is attempting to address that.

Launched online this month, and coming to television in March, the campaign does not linger on images of RVs. Instead, the focus is on artful shots of sunlight streaming through the ropes of a hammock, and urban-liberated freerange children running through the mud and finding critters in the grass. The ads are designed to combat people's negative impressions of RVs, and instead to lend them a more premium feel.

"Because we deal with this perception issue, one of the ways we can overcome that is showing the RVs in their natural habitat - these beautiful natural areas - and showing that's accessible," said Chris Mahony, executive director at Go RVing Canada, a non-profit association that pools the marketing budgets of RV manufacturers and dealers to promote the activity.

Following a severe dip in 2008, RV sales have generally been growing in Canada, with the industry tracking one of its biggest years in 2013. The industry wants to keep that momentum going: Last year, sales were roughly flat, with declines in Ontario and Quebec offset by growth in the rest of the country. Go RVing felt it needed an advertising shift.

In recent years, its campaign slogan has been "unschedule." Its commercials featured harried families weighed down by too much screen time and overlapping ballet, guitar and martial arts lessons.

Camping was pitched as the antidote. The association decided to focus less on the problem and more on the solution.

The new ads propose that consumers can use an RV purchase to rediscover "wildhood" for themselves and their kids.

The idea is to appeal especially to consumers in their 40s with children, who have been a growing segment of RV users. While many people think of empty-nesters when they picture RV vacations, 67 per cent of owners are under the age of 55. That's up from close to 50 per cent just seven years ago.

It can be a good sell when it comes to those for whom a cottage property is out of reach. About 10 per cent of Canadians own cottages, according to the industry group, while about 14 per cent own RVs.

But the industry still faces some resistance. In market research, a few factors held Canadians back from considering an RV purchase, including fear of driving a larger vehicle, cost and storage concerns. (Many dealers offer storage services as part of a purchase, something that Go RVing is hoping to communicate to potential customers, particularly urban and suburban dwellers.) But the biggest factor by far was emotional: Many Canadians do not feel that RVing is "for people like them."

"It is so much more than the stereotypes," said Denise Rossetto, partner and executive creative director at DS+P, the advertising agency behind the campaign.

Staff at the agency used an actual RV as a "war room" when working on the campaign, and invited their kids to spend time in it as well.

"It's funny, all our kids loved, loved, loved the RV and the sense of adventure and freedom from rules ... , " Ms. Rossetto said. "We thought if we could capture that, then we would have something that would get people to consider RVing."

Associated Graphic


The new ads for recreational vehicles propose that consumers can use an RV purchase to rediscover 'wildhood' for themselves and their kids.

With Barbie 'falling off a cliff,' Mattel shakes up management
Tuesday, January 27, 2015 – Print Edition, Page B1

MONTREAL -- At 55, Barbie is showing signs of fatigue.

Mattel Inc., parent company of the iconic doll, is going through a bad patch, warning of a fifth consecutive fall in quarterly sales amid the continued decline in Barbie's popularity.

El Segundo, Calif.-based Mattel on Monday removed its chairman and chief executive, Bryan Stockton, after only three years at the helm. Long-time director Christopher Sinclair is taking over until a new CEO is found.

The company is hitting the restart button as it struggles to breathe new life into its marquee Barbie brand and find the right mix of toys that resonate with boys and girls in an industry that's increasingly technologydriven.

At the same time, Mattel - which also makes Hot Wheels and owns the pre-school FisherPrice portfolio - has made some smart diversification moves, such as last year's acquisition of Montreal-based construction-toy maker Mega Brands Inc., say analysts.

"Yes, Barbie is falling off a cliff. But the business is generally sound," said Lutz Muller, president of toy-industry consultants Klosters Trading Corp.

Sales of Barbie dolls fell 21 per cent in Mattel's third quarter and investors are waiting anxiously for the fourth-quarter earnings report on Friday.

New York analyst Chris Byrne, also known as The Toy Guy, says Mattel still has many strengths in the fight for retail shelf space against Lego AG and Hasbro Inc. and other smaller players.

He points to the company's recent commitment to new product development with the appointment of two respected industry players, Richard Dickson and Tim Kilpin, as co-presidents and chief brands officer and chief commercial officer, respectively.

The Mega Brands deal provides global expansion in the preschool construction category with the MEGA Bloks brand as well as co-branding opportunities with Fisher-Price, Mr. Byrne said.

Needham & Co. toy industry analyst Sean McGowan said he was anticipating disappointing fourth-quarter earnings but that Mattel came up even shorter than he expected on its fourthquarter preannouncement.

In its preliminary fourth-quarter results, Mattel said worldwide net sales in the fourth quarter were $1.99-billion (U.S.), down 6 per cent from last year. Profit dropped nearly 60 per cent to $149.9-million, or 44 cents a share, compared with $369.2-million or $1.07 in the fourth quarter of 2013.

It will take a while before the company shows signs of a turnaround, Mr. McGowan said.

"These problems can be addressed quickly but they can't be fixed quickly," he said.

Among the plans to refresh Barbie is a feature animation film - Barbie in Princess Power - slated for spring in which she features as a superhero.

"I think they're on their way to driving Barbie with a story," Mr. Byrne said. "[Creator] Ruth Handler is probably spinning in her grave thinking of Barbie as a superhero."

Mr. McGowan suggests that there is a paradoxical element to the aging Barbie storyline. "For some consumers, like mothers and grandmothers, the fact that Barbie has been around for almost 60 years is a plus and for others it's a negative; they want something new."

Mattel has successfully marketed other dolls, such as the Monster High and American Girl lines, but not enough to offset almost three years of falling Barbie sales.

The company also needs to go more boldly into the high-growth digital and games sector, Mr. McGowan said. "It's definitely time for them to shed their fear of digital consumer entertainment software."

Mattel (MAT) Close: $26.64 (U.S.), down $1.40

Alaska unbowed by Canadian trade stand
State says it will 'let this unfold' and decide on a response in the event Ottawa punishes companies that agree to Buy America rules
Wednesday, January 21, 2015 – Print Edition, Page B1

OTTAWA -- The state of Alaska is pushing ahead with a project to rebuild a B.C. ferry terminal with U.S. steel, undaunted by Ottawa's vow to punish companies that bend to Buy America rules.

A senior Alaska government official vigorously defended Governor Bill Walker's refusal to seek a waiver from the protectionist purchasing rules that apply to all U.S. government-funded transportation projects.

"Alaskans and Americans benefit from the Buy America requirement," Patricia Eckert, associate director of international trade, said in an interview Tuesday.

"We're going to let this unfold and we'll respond to that action if and when it occurs."

The ferry terminal sits on Crown land in Prince Rupert's federally run port, but is leased to the Alaska Marine Highway System under a 50-year lease that expires in 2063.

The project could also benefit Canada, she added, pointing out that "it's likely that Canadian firms would be highly competitive in the process."

Buy America rules apply only to the steel used, not the labour, services and other building components to be used in the project.

Ms. Eckert said it's irrelevant that the terminal is on Canadian soil because the U.S. government is footing the bill for 91 per cent of the project, worth an estimated $10-million to $20million (U.S). The Alaska government is paying the rest.

On Monday, the Canadian government signed an order under the Foreign Extraterritorial Measures Act, a federal antisanctions law that has been used only once, in 1992, to counter the U.S. trade embargo on Cuba.

Federal International Trade Minister Ed Fast called the project's Buy America provisions "an affront to Canadian sovereignty."

The Canadian order means companies or individuals seeking to work on the ferry terminal will immediately run afoul of Canadian law by simply agreeing to the Buy America provisions of the contract. That will expose them to fines of up to $1.5-million (Canadian). The situation appears to put any company agreeing to supply steel for the ferry-terminal overhaul in contravention of either U.S. or Canadian law, possibly creating a stalemate on the project.

Alaskan officials said they were surprised by the angry Canadian reaction.

The Prince Rupert Port Authority, a Canadian government agency, "understood the details of the bid offering, and there was no objection raised at that point," Ms. Eckert said.

"The project has been out for quite a while and it wasn't until very recently there was any objection raised," she said.

Alaska will begin evaluating bids for the project Wednesday.

If the Canadian move causes a stalemate, Alaskan officials said the Alaska Marine Highway will continue operating the old terminal, a key way station for ferries plying routes between Alaska and Washington State.

"If there is an inordinate delay, either because there are no bidders or there are other problems, we can maintain that Alaska Marine Highway Prince Rupert operations at normal standard for several years, until this gets sorted out," Ms. Eckert said.

The most honest liar in U.S. popular culture
New England coach Bill Belichick is the generally accepted genius of football and the unlikeliest of self-made men. His less-than-credible handling of Deflategate is just another chapter in the legend of an unrepentant rule-breaker
Saturday, January 24, 2015 – Print Edition, Page S2


When he was still a comer in the NFL, Bill Belichick liked to tell people how he'd worked his way out of football's mailroom.

When he got his first (disastrous) head coaching job in Cleveland, aged only 38, he told The Washington Post: "I've done all the jobs in an organization you can do: typing, driving people to the airport, lining the fields, coaching. Everything."

Ten years later, he took over the New England Patriots. He repeated that line to The Boston Globe.

It's close enough to verbatim, one suspects he's been deploying it his whole adult life.

"There really isn't a job I haven't done. I made the airport runs and picked up the towels and all that crap. I know what 'entry level' means."

But this week, faced with another slippery scandal, Belichick played the naif.

In last Sunday's game, 11 of the 12 game balls his Patriots used on offence were found to be underinflated - making them easier to throw, catch and carry.

"I had no knowledge of the various steps involved in the game balls and the process that happened between when they were prepared and went to the officials and went to the game. So I've learned a lot about that," Belichick said in a prepared statement.

This is, to put it mildly, hard to credit.

When it turned to questions, Belichick slipped into his primary press-conference mode - swaying slightly in place, lizard-eyed and bored up to and well past the point of contempt.

To most questions, no matter how inflammatory or off-topic, he mumbled either "I've told you everything I know" or "I don't have an explanation."

This is football's greatest coach - maybe the most impactful coach in all of sport. But he is more impressively its greatest dissimulator. Belichick has repeatedly stretched the limits of that tired football mantra - win at all costs. Afterward, he transparently pretends contrition. Yet the more he's caught, the bolder he becomes. As such, he may be the most honest liar in American popular culture.

His refusal to compromise to the sanctimonious tone of the times has made Belichick a hero in New England, and a charming villain everywhere else.

This is no up-by-your-bootstraps story. Despite his look - regal hobo - Belichick is not hardscrabble.

He is the son of a college coach, raised around the Naval Academy at Annapolis, a teenage confidant to the likes of Cowboys legend Roger Staubach.

He was handed every early opportunity by family friends, but managed to maintain a critical sense of thwartedness. He is part Mozart - devising his own plays aged only 10; and part Iago - the overlooked man.

When he was the defensive coordinator in New York, he was repeatedly contrasted with Buddy Ryan, and accused of plagiarizing Ryan's set-up with the great Chicago Bears teams of the mid-80s.

When he acted as Bill Parcells's top lieutenant on a Super Bowl team, he was once described as the more bombastic coach's "marionette."

He came to Cleveland in 1994 determined to stand alone. Too determined. His initial team talk lasted over an hour, and descended into accusatory screed.

"I've worked too long and too hard for this chance to let you guys [expletive] it up for me," Mike Baab, a former player, recalled as Belichick's summation.

This was his introduction.

Predictably, they screwed it up for him. When owner Art Modell moved the club to Baltimore, he initially intended to take Belichick along. The players talked him out of it.

To hear tell of it, Belichick verged dangerously on fun as a young man. He dated girls. He studied things aside from gameplanning. He played sports. Like most very successful teachers of the game, he played them poorly.

He was the guy who knew where everyone else was supposed to be on the field, but lacked the athleticism to get there himself.

He had a temper and could not suffer fools. Despite being a skinny 5 foot 10, he played centre in college. One teammate - a bigger, better, less-studious lineman - repeatedly asked Belichick to remind him of his blocking assignment as they came out of the huddle. Belichick eventually snapped. He pointed at the defender and shouted, "That guy over there."

"The guy knew I was coming, and he killed me," the teammate, Kevin Falangus, told an interviewer.

After finishing school, he applied for more than 100 assistant coaching positions at the college level. He kept the letters of rejection. Friends wrangled him an internship with the Baltimore Colts. He was 24.

He's handled the assistant's role at every level, for nearly every position. He's had many mentors, but few real allies. When Parcells resigned as New York Jets head coach in 2000, he tapped Belichick - once again an assistant - as his successor. Parcells intended to remain in the organization as an adviser. At the time, people still referred to Belichick as 'Little Bill.' Before any change was made official, Belichick was asked to interview for the top job in New England - a more attractive option. He sought permission from Parcells. It was angrily refused.

Minutes before his introductory news conference as the next Jets head coach, Belichick walked into the team president's office and handed him a handwritten note: "I have decided to resign as HC of the NYJ."

Then he went to the podium and, for an excruciating halfhour, explained his decision.

This was probably the last public appearance of the first iteration of Bill Belichick. He was 47 years old. He was wearing a suit.

He stumbled through his speech, sweating and overexplaining.

Though he was combative - subtly shifting the blame in Parcells's direction - he spent the whole time slowly backing up.

Nobody tried to understand his side of things. Amongst many others, The New York Post rounded on him in a back-page headline: "Belichick Arnold." The lesson stuck.

Belichick was allowed to leave for New England in exchange for a first-round draft pick. He'd never been pursued so ardently. Patriots owner Robert Kraft was the first person who'd ever really wanted Belichick - enough to pay dearly for him.

Belichick and Parcells didn't speak for six years. By that point, the student had won three championships to the master's two, and surpassed him as football's generally accepted genius.

If there is a Belichick style in terms of tactics, it's the lack of one. His schemes are endlessly adaptable, and shift constantly to suit his personnel. He is a brilliant spotter of undervalued talent, and a ruthless trimmer of roster fat. Everything revolves around Tom Brady - the quarterback plucked by New England with the 199th pick of the 2000 draft.

Brady and Belichick share little in terms of personality. They do have one key thing in common.

Six quarterbacks were picked ahead of Brady 15 years ago.

They've all been forgotten. Brady can still rhyme their names off without pausing to think.

In the future, the Belichick style will more importantly be associated with his approach to everything around the game. When he arrived in New England, coaches were still cut in the Parcells/Mike Ditka/Jimmy Johnson mould - folksy motivational speakers, articulate screamers and occasional unhinged maniacs.

Belichick is as ascetic as a Jesuit, but a sinister one. He gave up the suits, preferring a ratty sweatshirt at all times, in all conditions - his version of sackcloth. He doesn't answer questions. He briefly tolerates their existence, and then ignores them.

It was once true that nearly every commercial pilot spoke in a drawl, imitating the West Virginian accent of the most glamorous airman of all time, Chuck Yeager.

Belichick is football's Yeager. As the years pass, more and more head coaches have adopted his surly, mush-mouthed manner.

A few years ago, I attended a postgame news conference in the team's cavernous media auditorium. The Patriots had won. It should have been a happy time.

Belichick came out and monosyllabled his way through a few queries.

Someone launched into a detailed X's and O's question the sort not meant to elicit information, but instead to impress the audience on hand. It's the kind of thing that drives all coaches to distraction. Heads in the room began turning in a worried way. They saw what was coming.

Well into his question/speech, the reporter said something about a "cover two" - meaning the two safeties had deep coverage responsibilities.

Belichick was enduring this soliloquy in a pose of downcast suffering. He suddenly perked up and interrupted.

"It was a cover three."

Then he turned and left. No one looked surprised.

He is also an opportunist of the highest order. In 2007, the team was caught secretly videotaping the signals of New York Jets coaches on the sideline. Belichick shoulder-shrugged his way through the controversy. Finally forced by the league to apologize, he did so, but behind a barricade of caveats.

"I accept full responsibility for the actions that led to tonight's ruling," his prepared statement began. He was personally fined $500,000 (U.S.) by the NFL. The Patriots lost a draft pick.

By the end of his apology, he'd begun dissembling magisterially: "My interpretation of a rule in the Constitution and Bylaws was incorrect."

Belichick insisted that while he'd known that videotaping opponents was illegal, he'd believed the injunction applied only to use during the specific game being filmed. It was a little like arguing that bank robbery is wrong, but not if you don't spend the money right away.

Shortly after Spygate erupted, the Patriots re-signed Belichick to a long-term deal. The next season, they came one win from a perfect season.

Belichick is proof of a perverse kink in human psychology: We don't like people who break the rules. We love people who break the rules and get away with it.

He's brought that same air of detachment to this latest scandal.

Who? Me? What balls?

Whatever the NFL chooses to do to him, it's difficult to imagine it mattering much. He's made Kraft the most envied owner in all of sports. He's put Brady one win from becoming the consensus greatest quarterback of all time.

His legacy was secure a decade ago. All he can do now is embellish it.

Still, he remains his own greatest work. He began with all the advantages, then spent half a lifetime shedding their weight.

Belichick is that unlikeliest of self-made men - one who managed the trick twice, and perfected it the second time round.

Follow me on Twitter:@CathalKelly

Associated Graphic

New England Patriots head coach Bill Belichick likes to say he did every menial job on the way up, but on Deflategate he pleads ignorance about game-ball procedures.


Beckham's failure highlights MLS's problem
Saturday, January 17, 2015 – Print Edition, Page S1


Though everyone involved has agreed to a great forgetting, David Beckham's tenure in Major League Soccer was largely a disaster.

The English star seismically shifted expectations when he agreed to cross the water in January, 2007. MLS scrapped its restrictive pay structure to make it worth his while. The deal was advertised by Beckham's management at $250-million (U.S.) over five years - a made-up number.

He arrived in July, halfway through the MLS year, having injured his ankle during his last days at Real Madrid. This should have been the tidying-up period that precedes moving on to new employment. Instead, Beckham received cortisone shots to get him through those games.

He played 16 mincing minutes on his first night in Los Angeles, in a friendly against Chelsea. Then he didn't play again for months. No one mentioned cortisone this time.

The Beckham Show rolled through city after city. The man who'd sold all the tickets wore funereal black on the bench. You could spot him because he was the guy with the bodyguard. He started two games in his debut season.

Then he did something that changed MLS again - he decided to work through his vacation.

The MLS season runs spring through fall. Every estimable European league runs fall through spring. That quirk of scheduling has helped create MLS's greatest credibility problem.

Now finally healthy, Beckham returned to Europe and caught on as an occasional sub with AC Milan. It was never suggested by anyone in MLS management or at the L.A. Galaxy that several months of extracurricular wear on an oft-injured player was a bad idea.

Certainly, no one would go a logical step further - that Beckham was taking advantage.

And then the step after that - that Beckham liked the idea of what MLS might be, but didn't rate its current incarnation. There is no equivalent in top-calibre sports. No one's tried anything like it since the Babe Ruth barnstorming days - and nobody was trying to break the Babe's legs every time he took batting practice out in the sticks.

The key difference is money.

MLS pays like a major league, but it doesn't play like one. In the NBA or NFL, veteran players will offer a discount to play on a great team. In soccer, they no longer have to make that choice.

They swan off to Europe to play for a super-team in the winter.

MLS makes up the financial difference in the summer.

MLS had a chance to cut this off at the beginning, but every head bowed to Beckham's whims. Who can blame him for capitalizing?

The faults lies with the league.

It folded. That mistake has become the biggest issue facing MLS as it tries to make the growing leap into the top tier of North American sport.

The league is tethered to its superstars. Plainly, its superstars do not feel similarly attached.

Beckham came to North America for several reasons - the money, the branding opportunities provided by a perch in Hollywood, the chance for a quieter life away from the tabloid press.

Soccer featured very low on that priority list.

He also came on behalf of his colleagues. Beckham acted as a de facto lead scout for every name-brand European looking for a lucrative way to round out their careers.

The way he was allowed to carry himself sent back a clear message - MLS is a lucrative hobby league.

Trace a straight line between the freedom allowed Beckham then, and Jermain Defoe and Frank Lampard now.

MLS has had one unqualified success with a major European player - Thierry Henry. The Frenchman clocked in and did a solid five-year shift (and only returned to Europe once, an abortive stint with Arsenal). Henry committed to the league in a way no real star had before or since.

Nobody talked about him while he was here. He wasn't a guest on late-night TV or a reliably viral presence. Removed from the hothouse of European soccer, his image withered.

Henry did the same good work he'd done in Europe - scoring plenty of goals. Nobody cared. He dropped entirely off the map as an international commodity.

He only popped back up again a few weeks ago, as he announced his retirement. That sent its own message.

Henry is a worldly man. MLS has had its share of talents, but it's had very few of those. That's another problem that's never been addressed. The league repeatedly conflates players who like the paycheque with players willing to accept the responsibility of building something.

They've all learned the patter - "a new adventure" - but no one's followed through.

Defoe is the most glaring example. Lured to Toronto with the promise of cash and profile (but mostly the cash), he convinced himself this was the only way to make England's World Cup team.

He wasn't playing in Europe. MLS wasn't a destination - it was a showcase. It doesn't appear that Defoe really thought about what might happen after Brazil 2014.

Once his World Cup opportunity fizzled, Defoe collapsed in on himself. It's hard to rally a bunch of $60,000-a-year guys when the one making $6-million doesn't want to be there.

Like Beckham, he came with a nagging injury - a hamstring.

That moved north into a groin problem. He took a seat on the bench, which gave him time to nurse his grievances. His handlers began agitating for a move away. At the least, Defoe had the sense never to say it himself.

He did take this one large step further than Beckham - he didn't want to moonlight in Europe. He just wanted to go home. This was never really about hating Toronto. It was about missing England.

Owing to long-standing tradition and EU employment laws, soccer contracts don't mean much in Europe. If a guy wants to leave, he just says so and - presto whammo - he gets what he wants. On rare occasions, a team will sit a restive player down as punishment, but he's now a declining asset and he's still getting paid. So he's moved eventually. There isn't a recent high-profile instance in which a player hasn't won one of these fights once it becomes public.

The difference in Europe is that the pros want to remain within the same system - albeit with bigger clubs. Lesser teams also want to cash in on them. Owners and employees have found a compromise that creates a kind of balance.

That isn't the case here. Money isn't MLS's problem. Most owners have plenty of it. What they want is loyalty. As of yet, that can't be bought.

European pros repeatedly bring two corrosive beliefs to MLS - one old world ("I can leave whenever I want"); one new ("This league doesn't really matter.") That problem reached its zenith with former Chelsea and England star Frank Lampard.

He's 36 years old. His club thought he was finished. Facing the humiliating choice of moving down a tier - to the Aston Villas or West Hams of the world - or moving out, he chose escape.

Debutant MLS club New York City FC signed him. It announced him. It unveiled him in a glitzy presser. He moved to Manchester City in the interim - a bigger club with the same ownership. Things went well. And suddenly he wasn't a NYCFC player. It turns out he'd never signed with it in the first place. Instead, he'd done a contract with the holding company that owns a stable of teams, including NYCFC and City.

Now he's staying in England.

The signature signing of a brand new club will not join it until July - halfway through the coming season. It's a disgrace. The league doesn't seem to understand how embarrassed it should feel. It has got used to this sort of abuse.

Toronto FC has taken the issue in hand. It had Defoe. It rid itself of him, and got American Jozy Altidore in return. Altidore has been an abysmal failure at the highest level in Europe. He has nowhere left to go. He's the perfect MLS player.

It's been reported the deal is worth $11-million. It's not at all clear where that money is being spent. It's been suggested that number refers to the salaries involved, rather than a transfer fee.

"We're not permitted to disclose the terms of the transfer," team GM Tim Bezbatchenko said.

They were pretty keen on talking about them a year ago. This strongly suggests that Defoe was given to English club Sunderland for Altidore in something approaching a straight swap - selling him for pennies on the dollar. Altidore is a serviceable pro. Defoe was a star. The club learned a very expensive lesson - only Americans can be counted on to care about North America.

On Friday, TFC unveiled Altidore with markedly less fanfare than Defoe. A year before, there had been props. MLSE CEO Tim Leiweke had worked himself up to the verge of tears.

Now, it was the matter of 15 minutes. Nobody pretended to be excited.

"I'm committed long term," Altidore said, in what was clearly a rehearsed line. That's all anyone wants to hear any more.

What's the solution?

Since the league lacks the courage to get eye to eye with its stars, there's only one - harmonize the seasons.

This would mean playing through winter, outdoors, in Canada. But it's the only way to prevent its lackadaisical poster-boys from wandering.

It won't happen, despite FIFA's prodding. The league is still married to live attendance - the only way people regularly consume this product.

MLS will remain in thrall to a few brand names, most of them English. The L.A. Galaxy just signed Liverpool legend Steven Gerrard. The club that made him couldn't guarantee him a starting spot any longer. So he moved on.

MLS greeted his arrival as the new Beckham - a transparent effort to stop people talking about the Lampard debacle. He is the standard bearer for a billiondollar concern.

On Thursday, Liverpool CEO Ian Ayre told the BBC that Gerrard's return on a loan deal was "conceivable."

"It happens a lot in MLS," Ayre said. "It's something we've talked to Steven and his representatives about."

One wonders when MLS will hear about it.

Follow me on Twitter:@cathalkelly

Associated Graphic

David Beckham makes a rare appearance on the pitch for the L.A. Galaxy against the Houston Dynamo in the 2012 MLS Cup.


From backyard dreams to the big leagues: Pompey eyes centre stage
Tuesday, January 27, 2015 – Print Edition, Page S1

TORONTO -- The moulding of a Major League Baseball player began with a plastic bat being placed in the hands of a young boy who was encouraged not only to swing from the left side, but also the right.

Dalton Pompey was just four years old when he became a switch hitter.

Pompey's parents, Ken and Valerie, had a dream of what the future might hold for their precocious child almost from the time he was potty-trained.

And they would go to great lengths to ensure that dream would become a reality.

That included selling a home and purchasing one in a new jurisdiction so that young Dalton could play for the minor league baseball team of his choice.

It also meant Valerie had to take a crash course in how to score baseball games in order to more accurately track her son's progress.

"We knew from a really early age that Dalton was just good at baseball," she said in a recent interview. "And we decided that we wanted to give him every chance we could to take it as far as he could."

It's hard to argue with the results. Dalton Pompey, now 22 and an angular 6 foot 2 and 200 pounds, has a chance to become the starting centre fielder for the Toronto Blue Jays this season.

It would be quite the accomplishment for the Mississauga native.

"For me, it's all about confidence, just believing in myself and trying not to be overwhelmed with everything going on around me," the even-keeled Pompey said in a recent interview.

Unless general manager Alex Anthopoulos has another trade up his sleeve, Pompey and 26year-old Kevin Pillar will be the two main contenders for the position when spring training begins next month.

"If the season were to start tomorrow with what we have today, with what I saw last year, I'd love to see Pompey out there," came the ringing endorsement from Toronto manager John Gibbons back in November when asked during a radio interview who would be patrolling centre for the Blue Jays in 2015. "It was a short audition, but I tell you what, he played very, very good. I think he's got a chance to be a hell of a player."

If Pompey, a lowly 16th-round draft pick out of high school in 2010, earns a starting role, it would cap what has already been a remarkable 12-month period.

It began last April with Pompey buried in the lowest depths of the Blue Jays' minor league system, toiling in the Class-A Florida State League with Dunedin. He hit .319, with six home runs, six triples and 12 doubles in 70 games, earning a promotion to Double-A New Hampshire. In 31 games with the Fisher Cats, Pompey hit a solid .295, and in mid-August he was on the move again, this time to Toronto's top Triple-A affiliate in Buffalo.

With the Bisons for 12 games, Pompey continued to blister opposing pitchers, hitting at a .358 clip that really caused the Blue Jays brass to sit up and take notice. He had exceeded all expectations. The Blue Jays elevated Pompey to their big-league roster for the final month of the season, and he wound up starting the final 10 games. He did not look out of place.

He stroked a homer off Felix Hernandez in one game. Three days later, he hit two triples and a double in a memorable outing against the Baltimore Orioles in which he also made a great catch in foul territory in left field.

His performance helped spur the decision to let the often-indifferent Colby Rasmus, the Jays' starting centre fielder since 2011, depart to the Houston Astros via free agency. It was also a factor behind Toronto's decision to trade Anthony Gose, the previous centre fielder-in-waiting, to the Detroit Tigers for second-base prospect Devon Travis.

Anthopoulos realizes that the major league sample size for Pompey is minuscule, and that the team might be taking a chance by giving an inexperienced player a shot at a major league job for 2015.

"Just because you earn the job in spring training, it doesn't mean you're going to keep it," Anthopoulos pointed out. "We've seen that plenty of times with young players. I think a lot gets made of, 'Wow, they made the opening-day roster.' It doesn't ensure you're here all year. So you still need to perform well and you still need to have depth. These guys have options.

"Opening day is just a day. I know it's a big deal, I respect it, I understand it. But you have to continue to play well the entire year to stay up here."

Earlier this month, Pompey joined the likes of slugger Jose Bautista and knuckleball pitcher R.A. Dickey at a downtown Toronto shopping mall for an autograph session.

"It's pretty surreal, actually," Valerie Pompey said said of her son's swift ascent. "We used to be the ones who were in the lineups and waiting hours and hours and hours to get an autograph when Dalton was younger. Now he's signing. It's absolutely crazy."

She said her son still has a pair of batting gloves sitting on top of his dresser at their home that were given to him years ago at the Rogers Centre by former Blue Jays infielder Orlando Hudson.

Being a local boy, Pompey said he knows his presence in the Toronto lineup will attract attention. He said he is ready for it, and will not let it alter his mindset.

"I still expect a lot out of myself," he said. "I'm not trying to go in there and just do okay with whatever performance that I have. I've always strived to be great, and that's the approach I'm going to take. There are a lot of great players on this team, so the pressure is kind of lifted off of me a little bit. As long as I stick to my game, I think I'll be all right."

Associated Graphic

Dalton Pompey

NHL all-stars quick to give offence
Players score a combined 29 goals in the mid-season exhibition, setting records for defensive futility
The Canadian Press
Monday, January 26, 2015 – Print Edition, Page S2

COLUMBUS, OHIO -- By the time players finished scoring a record 29 goals at the NHL all-star game, they agreed that there was one loud, ear-piercing negative: the cannon at Nationwide Arena.

"I hate the cannon," Philadelphia Flyers captain Claude Giroux said.

Florida Panthers goaltender Roberto Luongo added that the cannon wasn't his favourite part of the weekend either.

The cannon went off more times in one game in the building than ever before, marking goals by the team led by Nick Foligno of the host Columbus Blue Jackets. Team Toews beat Team Foligno 17-12 in the midseason exhibition featuring many of hockey's top stars playing shinny with no hitting, no defence and no mercy for goaltenders.

"All we're really doing out there is having fun and kind of trying to show our skill at the same time," Chicago Blackhawks winger Patrick Kane said. "Kind of feels like summer hockey a little bit where there's a lot of breakaways, a lot of odd-man rushes."

And a lot of goals, breaking the record set in 2001 in Denver when North America beat the World 14-12. This one was a wideopen affair in which all but three players registered at least a point.

Jakub Voracek of the Philadelphia Flyers had six points on a hat trick and three assists, tying Mario Lemieux's 1988 record.

"I think it's a little different, Voracek and Lemieux, right?" said Voracek, the former Blue Jackets winger who also leads the NHL in scoring at the all-star break. "Three secondary assists.

I'll take it, but I wouldn't make a big deal out of it."

Despite tying Lemieux, Voracek was not the most valuable player.

Hometown star Ryan Johansen received that honour as part of an online fan vote.

"Joey deserved it the way he handled the weekend," Voracek said. "Him and Nick Foligno were under a lot of spotlight. At the skills yesterday and the game today, they did a great job. It was well deserved."

John Tavares of the New York Islanders became the sixth player in all-star game history with four goals, joining the elite company of Wayne Gretzky, Lemieux, Vincent Damphousse, Mike Gartner and Dany Heatley. One of his four also went down as the game-winner.

"It's pretty cool," Tavares said.

"It's something you don't really think about going into a game like this. You get your opportunities and just was happy to put them in."

Most players left happy, including winning captain Jonathan Toews and fellow Canadian Olympian Patrice Bergeron of the Boston Bruins, who each finished with five points. Goaltender Marc-André Fleury of the Pittsburgh Penguins was less than thrilled with the proceedings.

Fleury gave up seven goals on 16 shots in the second period, which was the most scored by one team in that time in the game's history. He heard that on television at the second intermission.

"It was so long, probably the longest 20 minutes of my career," Fleury said in French. "We are at this game to have fun, but at one time, it was frustrating. Normally, I'll be quick out of the game way before giving up seven goals."

Luongo, who started for Team Toews, said Fleury approached him at the bench early in the second period.

"He was looking for some comfort words or something from me," Luongo said. "He wasn't on my team, so I wasn't going in for him. What are you going to do?

It's an all-star game."

This was the first all-star game since 2012 in Ottawa, after the lockout forced Columbus to have its opportunity rescheduled and the Sochi Olympics left no room for the festivities. The 2015 allstar weekend might best be remembered for the unveiling of the 2016 World Cup of Hockey, but there were plenty of memorable moments from Friday night's draft and Saturday night's skills competition.

The game itself featured a handful of new records: most goals by a team in a game (17) and a period (seven), most combined goals in a period (11) and fastest two, three and four goals scored.

"If I was a goalie in this game, I would be ... not happy," Zemgus Girgensons of the Buffalo Sabres said.

Goalie torment aside, it was a showcase of some of the NHL's best players. The effort wasn't really there, but most players didn't expect it.

"I was sitting on the bench getting the shakes a little bit," Panthers rookie defenceman Aaron Ekblad said. "I was trying not to try too hard. That's kind of like the thing to do almost. It is hard to do. I got chirped a little bit for trying too hard."

Players' trying or lack thereof was measured by chips in their jerseys and the puck as the NHL experimented with tracking in a game for the first time. A prototype program could show players' shift lengths, top speeds and other things in real time.

It's something that could be coming to the league at some point in the future but not before analyzing how it went in the allstar game and figuring out the real implications.

"We're right in the beginning phases of this," the NHLPA's Mathieu Schneider said Saturday.

"We'll see what comes out of it.

Fans and players are excited about it. We can work together to really enlighten a whole new group of people that haven't really followed the game."

For fans who tuned in just for this all-star game, it didn't enlighten much about real hockey. But ultimately it didn't have to.

Associated Graphic

Ryan Getzlaf of Team Toews scores on Carey Price of Team Foligno during Sunday night's game.


McMorris's journey to budding snowboarding superstar
Thursday, January 22, 2015 – Print Edition, Page S1

VANCOUVER -- It's midday on Halloween, and Mark McMorris is considering his costume. He's in a Vancouver hotel room with a friend from boyhood who has dropped by.

McMorris, the snowboarding star from Regina, is in town for the screening of a new Oakley movie in which he co-stars.

His first Halloween idea is to go as a soccer player - more athletic performance art than static costume. "Just whenever anybody bumps into you," McMorris explains to his buddy, then trips himself and flops to the floor. Laughs all around.

He leans instead toward something less conceptual. Suspenders, white dress shirt, socks pulled up high, a taped-up pair of Oakley Frogskins. "Classic nerd," he says. "It's so easy."

That easygoing personality caught wider attention outside the small world of snowboarding last February at the Sochi 2014 Winter Olympics. But McMorris is a serious star of snowboard slopestyle, an event in its Olympic debut that was staged on the first full day of competition. He was a favourite to win gold until he broke a rib in a fall several weeks earlier at the X Games; despite the injury, he rallied dramatically to win a bronze medal in Sochi.

This week, he leads a contingent of 22 Canadian snowboarders and skiers to the Winter X Games, a four-day festival that begins Thursday in Aspen, Colo. The 21-year-old is the most prominent among the group, but many of his teammates have accomplished much in the new Olympic sports of slopestyle and halfpipe, which have long been mainstays of X Games.

Dara Howell brings her Sochi gold in ski slopestyle to Aspen. Mike Riddle won Sochi silver in the ski halfpipe. And in McMorris's snowboard slopestyle, Canadians have won gold in the past four X Games: Maxence Parrot last year, with McMorris taking silver; McMorris in 2013 and 2012; and Sebastien Toutant in 2011.

Personality and performance made McMorris a social media star of the Sochi Olympics. He was ranked No. 1 by a wide margin in fan interactions on Facebook, Instagram and Twitter as measured by Hookit, a company that tracks athletes' digital influence. After the Winter Games, his popularity translated into everything from public-speaking gigs to big parts in Oakley's new movie and a short feature on McMorris made by Red Bull, one of his sponsors.

"Even when I won a medal, that's just my personality, to be laid back," McMorris says.

"People noticed it because it's different than everybody else.

What's this mellow snowboarding kid doing, you know, who has a lisp. Who is this kid?" X Games was the platform that propelled McMorris in snowboarding. But it was the Olympics that vaulted him to a higher level, so the next Winter Games, in 2018 in South Korea, are a primary focus.

"I have some Olympic hopes and wants still," McMorris says.

Unfinished business? "Yeah. So to speak. It brought me a lot of frustrations, but it brought me triple the happiness, of everything I went through. It was just so rad. What it created for me, and my life, is huge."

Oakley's film, For Me, was put together quickly after the Olympics. It considers the history of snowboarding, and the film's riders are billed as among "the most talented, versatile and influential groups of snowboarders ever assembled." McMorris had not expected to garner much screen time, but ended up as one of the main names. In it he is paired several times - in the British Columbia back country and in Norway - with Terje Haakonsen, a 40-year-old legend of the sport.

The Red Bull short feature, released this week, is a more intimate look at McMorris's life.

Filmmaker Kevin Foley of Toronto-based Project 10 Productions Inc. saw in McMorris an athlete at ease in front of cameras. Foley had previously made films on Baseball Hall of Famer and former Toronto Blue Jay Roberto Alomar, as well as golfer Mike Weir, the one-time Masters champion.

McMorris, even as he aims for the 2018 Winter Olympics, is cutting back on contests this winter, focusing only on the biggest ones. A new showcase is the first Air + Style event, a snowboard contest that started in Austria, expanded to Beijing and is landing in the United States now that Shaun White has purchased a majority stake in the event with plans to transform it.

The two-day show will be staged at the Rose Bowl in Pasadena, Calif., on Feb. 21 and 22, with snowboarding and freestyle skiing complemented by music, food, fashion and art. The centrepiece remains a 16-storey-tall jump: The ramp is 140 metres long and the jump is 21 metres high, off which athletes perform gyroscopic flips and spins.

McMorris is billed as one of the main riders.

White jumped from Olympic halfpipe golds in 2006 and 2010 to celebrity and business riches.

Slopestyle's success in 2014 was clear when it became a marquee event in its first Olympics. "It's cool the Olympics sort of see that they need us," McMorris says. "Youth culture wants to see snowboarding."

With Air + Style, White hopes to take another leap.

"He's trying to make snowboarders into superstars," McMorris says. "He's trying to give back, so it's cool. And I'm not complaining about a little contest in February in L.A. It's so weird."

Associated Graphic

Mark McMorris's easygoing personality gets attention.


Mark McMorris, who won bronze in slopestyle at the 2014 Sochi Winter Games, is now focusing on the 2018 Games in South Korea. 'I have some Olympic hopes and wants still,' he says.


Stroman takes his own never-give-up advice
Wednesday, January 21, 2015 – Print Edition, Page S1

CALGARY -- Weeks ago, Marcus Stroman posted an admission on his Twitter account that read: "Chip on my shoulder. Doing everything they said I couldn't ..."

For something more permanent, he went with a tattoo high on his chest near his right shoulder. It shows a poker chip. Written inside it are the words "Critics Doubters & Haters." Outside the chip: "Height Doesn't Measure Heart."

For Stroman, those are words that stand tall. They are not only trademarked by the Toronto Blue Jays' 5-foot-8 pitcher, they are the essence of who he is, why he's so good and what has made him that way. It's a topic he embraces on a January stopover in Calgary, where he and three of his teammates have come to promote baseball as part of the Blue Jays' Winter Tour.

The tour's message is aimed largely at kids, advising them to never give up on their dreams, no matter what others say. It's an easy pitch for Stroman. Last season, his rookie campaign, Stroman was among the Jays' best starters. His six-pitch arsenal made it tough on opposing batters who were still trying to get a read on him.

In a game against the Boston Red Sox, Stroman had a no-hitter going until the seventh inning.

He finished the season with an 11-6 record, and adds much hope for 2015. Not bad for a guy who was told by one online hack he wasn't good enough to line the fields at Duke University. (All he did at Duke was win the Atlantic Coast Conference's top freshman award and play second base when he wasn't on the mound.)

"[At Duke], I wasn't just short, I was 'superundersized,' " Stroman said of the taunts hurled his way.

"When I started in the minors, I was told I can't hold up, that I would have too many injuries.

Have coaches tried to change the way I throw? All my life."

If you scour the Internet, you can find opinions and reports saying height really isn't that big a deal for a pitcher. But you can also find scientific data and baseball types arguing the opposite - the taller the pitcher, the more leverage and velocity he has.

Throwing over the top, the taller pitcher's throws will travel to home plate at a steeper angle.

The American Sports Medicine Institute once calculated that a 6-foot-4 pitcher with a longer stride will release the ball as much as 20 centimetres closer to the plate, giving the batter less time to react. That's why we're seeing things such as this: On their 40-man active roster, the New York Yankees have three pitchers listed at 6 foot 7 and two at 6 foot 8. That's like the starting five for the Knicks.

"I've had coaches who have tried to change the way I pitch," said fellow Blue Jay Aaron Sanchez, who stands 6 foot 4 and lives with Stroman during the season and off-season. "I think [Stroman's] mentality and how he pitches a game is what's important. We talk about what pitches for what hitters. We're always trying to get better."

Whatever Stroman lacks in leverage and pitching angles, he has more than enough confidence to win the day. The idea he could do whatever he wanted as an athlete was preached to him by his father, Earl, a detective in Suffolk County, N.Y. He told his son to concentrate on what he wanted to accomplish.

"My dad said, 'Don't let anyone tell you that you can't do something,' " Stroman said. "I'm not arrogant or cocky. I know I have enough confidence for me and everyone around me."

Yet whenever he needs a jolt of self-assurance, Stroman will read the e-mails and tweets that bashed him and his stature. Originally, he would print the chatroom barbs and read them before every game he started. Now, he has stored many of them on his phone. That can get him "fuelled up," he acknowledged, but not to the point of ruining what works for him.

"One of the important things is being yourself," Sanchez said. "Marcus is always himself; he never changes. It doesn't matter if he's a starter or a reliever. He goes out and he pitches the best he can."

Of course, Stroman will have to show his stuff all over again when the season begins anew. At the first sign of trouble, the doubters will doubt, the haters will spew. None of that, however, will catch Stroman by surprise. He has his dreams all mapped out, with his trademarked mantra - Height Doesn't Measure Heart - leading the charge.

"I want to be a main component in leading the team to the playoffs," he said. "Obviously the goal is to win a ring, and our team is pretty special right now. We have a really explosive lineup. If we stay healthy, who knows what we're capable of?"

Associated Graphic

Marcus Stroman says it's about heart, not height.


Hawks trip up Packers in overtime
Seattle scores 15 points in the final four minutes to force extra frame as coach Carroll & Co. seal a return trip to the Super Bowl
The Associated Press
Monday, January 19, 2015 – Print Edition, Page S2

SEATTLE -- The loudest stadium in America was silent. A return trip to the Super Bowl was slipping away.

Time for the Seattle Seahawks to show why they are champions.

"You have the belief these guys have in one another, there is nothing you can't do," coach Pete Carroll said after an implausible comeback for a 28-26 victory over Green Bay in the NFC championship game Sunday.

Plagued by turnovers and outplayed much of the day, the Seahawks staged a stunning rally built on resilience. Russell Wilson, who struggled until the final minutes, hit Jermaine Kearse for a 35-yard touchdown 3:19 into the extra period to win it.

The Seahawks became the first defending champion to make the Super Bowl in 10 years, and will play AFC champion New England. How they got there was stunning.

"The will and the drive of these men is unbelievable," Wilson said. "We always find a way to finish."

Seattle (14-4) trailed 19-7 with about four minutes remaining and had been ineffective on offence all game. Wilson finally put a drive together with passes to Doug Baldwin and Marshawn Lynch - initially ruled a touchdown but called back because he stepped out of bounds. Wilson finished with a one-yard scoring run to cut the lead to 19-14 with 2:09 left.

The onside kick went high to Packers tight end Brandon Bostick, but he couldn't gather it, and Seattle's Chris Matthews recovered at the 50. The crowd, quiet since Seattle fell behind 16-0, came alive, and Lynch sped and powered his way to a 24-yard TD run. On the two-point conversion, Wilson - about to be sacked - threw a desperate pass hauled in by Luke Willson to make it 2219 with 1:25 remaining.

Aaron Rodgers, limping on an injured calf, calmly led the Packers (13-5) down the field to set up Mason Crosby's fifth field goal, a 48-yarder with 14 seconds to go to force overtime.

Then Wilson and Kearse struck, with Kearse - the target on all four of Wilson's interceptions - beating Tramon Williams on the winning pass. Kearse also caught the winning score in last year's conference title win over San Francisco.

"Just making the plays at the end and keep believing," said Wilson, who was overwhelmed and sobbing after the game.

"There was no doubt ... we had no doubt as a team."

Kearse, who has caught touchdown passes in four straight postseason games, and several other Seahawks leaped into the stands behind the end zone, saluting the stadium-record crowd of 68,538. Wilson ran through cameramen to jump on Kearse's back, and defensive end Michael Bennett borrowed a bicycle from a police officer and rode around the edge of the field saluting the "12s."

Until the final minutes, there seemed to be no doubt the Packers were headed to the big game Feb. 1 in Glendale, Ariz. Despite All-Pro Rodgers' injury, Green Bay and its overlooked defence was carrying the day.

"It's going to be a missed opportunity that I'll probably think about for the rest of my career," Rodgers said. "We were the better team today, we played well enough to win. We can't blame anybody but ourselves."

Special-teams trickery lifted the Seahawks back into the game after falling behind 16-0. Their first touchdown came on a fake field goal when holder Jon Ryan threw 19 yards to tackle eligible Garry Gilliam in the third quarter. And Matthews' onside kick recovery kept the Seahawks alive.

Lynch rushed for 157 yards on 25 carries and was the one consistent offensive force Seattle had.

He was crucial to both late scoring drives in regulation.

The 16-point comeback was the largest ever in a conference title game. The Colts defeated the Patriots after trailing 21-6 in 2006.

The matchup of Green Bay's top-ranked scoring offence against the league's stingiest defence instead was being controlled by the Packers' ability to stop - and turn over - the Seahawks. The five giveaways were the most in the Carroll era that began in 2010.

The silence of the fans was remarkable for much of the windy, intermittently rain day. Rookie safety Ha Ha Clinton-Dix had two interceptions and Green Bay sacked Wilson five times.

Yet it wasn't enough.

"I felt our football team was a special group. They've been great all year," coach Mike McCarthy said. "This is a hard one to swallow."

Seahawks All-Pro cornerback Richard Sherman played much of the final quarter holding his left arm at his chest. The centre of conversation after last January's NFC championship win against the 49ers, he quietly left the field with his arm still pinned to his body, an NFC championship towel hanging off his right arm.

Sherman said after the game about the Super Bowl: "I will 100 per cent be able to play."

Associated Graphic

Packers running back James Starks avoids safety Earl Thomas during Sunday's game. The Packers led 16-0 at the half.


Mo Pete pivots into analyst role
Former Raptor joins TSN broadcast crew, and the fan favourite is thrilled to be back, Rachel Brady writes
Tuesday, January 20, 2015 – Print Edition, Page S1

Morris Peterson recalls vividly the emotions that hit him the first time he came back to play at the Air Canada Centre after his days as a Toronto Raptor had ended.

He kissed the Raptors logo at centre court that night back in 2008, despite the fact that he was suiting up for the New Orleans Hornets. He had played seven seasons here and had been a fan favourite from the day he was drafted, but Mo Pete's role with the team had shrunk, and the Raptors let him slip away into free agency.

He had once hoped to finish his career in Toronto, and today - in a way - he's getting that chance. TSN has added the now-retired swingman to its Raptors television broadcasts as an analyst.

When Peterson donned a suit and tie, along with a pair of chic dark-rimmed glasses, and debuted before the cameras in Toronto last week, he got some of that old feeling back.

In fact, Peterson can't cross the street without people stopping him. The long-time ACC parking attendant outside leaped up and hugged him on his first day back.

"I started my career here - they were the first people to take a chance on me," Peterson said during a courtside interview at the ACC. "I could have gone other places to broadcast, but they don't take care of you in other places like they do at home. It's been 15 years since I was drafted here, and I feel like Toronto is giving me a second chance."

The Raptors drafted him 21st overall in 2000, just after the native of Flint, Mich., helped lead Michigan State to an NCAA men's basketball title. His 542 games as a Raptor remain the most of anyone in franchise history, as are the 801 three-pointers he made.

While long-range shooting and perimeter defence were his biggest assets, he's also remembered for pulling off some improbable circus plays.

He once made highlight reels across the NBA when, while he was driving to the basket, a defender swatted his headband down over his eyes - yet he still made the no-look layup. In 2007, trailing the Washington Wizards by three points with 3.8 seconds left, a Wizard tossed the ball high in the air to burn the clock, but Peterson grabbed it and then launched a buzzer-beating Hail Mary to send the game into overtime. Toronto went on to win.

"He's one of the most popular Raptors in history, and fans always loved him for leaving it all on the floor," said TSN basketball analyst Leo Rautins. He is bringing some of that work ethic to his new job, Rautins added: "Sometimes former players think they can wing it as broadcasters, or that just showing up is enough.

Mo has already shown that he comes really well prepared and he wants to be very good at this."

Peterson played on a few good Raptors teams that made playoffs, and some abysmal ones too, before he got inconsistent minutes in 2007. His contract expired, so he went to New Orleans, then to Oklahoma City until 2011.

Today he and his wife, Tara, are parents to two sets of twins - three girls and a boy, all under five. Back in Flint, where he still resides, he recently bought a 70,000-square-foot building, where he plans to start a clothing company called World Artist Refuge.

"I bought the building to bring some jobs back to Flint's economy - I'm hoping like 50, 60 jobs to start off," said Peterson. "Fashion is a passion for me. I've been involved in fashion since 2000, going to trade shows, trying to learn the business."

The style part well in hand, Peterson studied broadcasting by sitting in with others, including his close friend and former MSU teammate Mateen Cleaves, now a basketball analyst with CBS and Fox Sports Detroit. Peterson will also work on TSN's March Madness coverage in studio, joining Rautins, Jack Armstrong, Rod Black and Matt Devlin.

During a preseason trip to Toronto, he watched young NBA players such as Kelly Olynyk and Cory Joseph practising with Canada Basketball, kids who had grown up watching the long-time Raptor.

"They gave me some Basketball Canada shorts and T-shirts, and even though I'm not from Canada, I feel like a Canadian, like Toronto is home," said Peterson. "I'm kind of an honorary Canadian I guess."

Associated Graphic

Morris Peterson, who played 542 games in a Toronto Raptors uniform, has joined the crew that broadcasts the team's games on TSN.


Perquis adds flair to Toronto FC backline
French-born defender is eager to help club reach the playoffs after a miserable experience in Spain
The Canadian Press
Wednesday, January 28, 2015 – Print Edition, Page S2

TORONTO -- Judging from first impressions, Toronto FC has added style and substance on defence in one fell swoop.

Newcomer Damien Perquis, a French-born Polish international, will likely partner with Scottish veteran Steven Caldwell in what could be a hard-nosed centre back pairing.

"He's a leader. He's aggressive," Toronto head coach Greg Vanney said of the former Real Betis defender. "He's a guy who doesn't give away a lot of space to attackers, he gets tight. He's challenging balls that are coming into forwards."

"He's sort of a no-nonsense fellow," Vanney added of Perquis.

"He's a guy who's definitely going to have presence when there's time to have presence on the attackers. That's part of our strategy - we don't want to concede space this year, we want to take away space and look to get the ball back as soon as we can."

The 30-year-old Perquis has flair off the pitch as well. Resembling a younger version of French actor Tcheky Karyo (The Missing) he met the media Monday looking as if he had just walked off a Milan runway with an oversized scarf casually arranged around his neck.

The 6-foot-1, 165-pound Perquis played for Troyes, Saint-Étienne and Sochaux in France before moving to Spain to sign with Real Betis ahead of the 2012-13 season.

Of Polish decent through his grandmother, Perquis has won 13 caps for the Polish national team.

He's happy to be wanted after falling off the radar with his Spanish club, which was dealing with relegation and financial issues.

"I don't play and it was very difficult for me there," the former Real Betis vice-captain said in English. "So I will enjoy my job and I will take pleasure doing what I love the most in my life.

Now I'm here to help the club to get to the playoffs at the end of the season."

Perquis, who arrived in Toronto last Thursday, has not played since a Copa del Rey game in midDecember.

He got a heads-up on MLS from friends such as French midfielder Vincent Nogueira of the Philadelphia Union and New England Revolution forward Charlie Davis.

"[Davis] said, 'Bro, you must be here because the new football is here,' " recalled Perquis, who speaks French, English, Spanish and a little Polish. "So I said okay."

Toronto was thin at centre back last season and the cupboard got a little more bare in the off-season when Doneil Henry joined West Ham United. That left Toronto with just Caldwell and Nick Hagglund, a rookie last season.

The addition of Perquis, Eriq Zavaleta and draft choices Clement Simonin and Skylar Thomas gives Toronto the six centre backs it wants to stock its MLS and USL Pro rosters. Toronto FC II will make its debut in the USL Pro League this season.

For GM Tim Bezbatchenko, bringing Perquis on board represents one of Toronto's bigger offseason moves.

"I'm over-the-moon excited about having Damien on our roster," he said. "Because this league is hard and there's a lot of travel.

People will get injured. You need leaders, people with experience and that's what Damien brings."

Associated Graphic

Damien Perquis, centre, said that New England forward Charlie Davis urged him to join MLS: 'Bro, you must be here because the new football is here.' The 30-year-old will bolster a thin TFC defence.


Fans vote Lowry into starting lineup
Point guard sneaks past Wade to join Wall in East backcourt
Friday, January 23, 2015 – Print Edition, Page S2

TORONTO -- Canada's push worked. Kyle Lowry has been elected by fans as a starter for the NBA all-star game.

After a great deal of campaigning on social media by the Toronto Raptors and Canadians, the Toronto point guard has earned enough fan votes to get into his first all-star game as a starter. He becomes just the third Raptor to be chosen by fans to an all-star starting five since Vince Carter (2000-04) and Chris Bosh (2007).

Lowry was elected as an Eastern starter alongside Cleveland Cavalier star LeBron James, Carmelo Anthony of the New York Knicks, Washington Wizard John Wall and Pau Gasol of the Chicago Bulls.

The game will take place on Feb. 15 at Madison Square Garden in New York. The NBA's 30 head coaches will select the reserves.

In recent weeks, Canadian celebrities and politicians have provided a big push for Lowry votes on social media. Lowry (805,290 votes) rallied from a deficit of more than 100,000 votes at the last balloting update to overtake the Miami Heat's Dwyane Wade and join the Washington Wizards' John Wall (886,368) in the starting backcourt for the Eastern Conference.

This season, Lowry is averaging career highs in points (19.8), rebounds (4.9), assists (7.5) and steals (1.62) through 42 games.

He ranks 18th in the NBA in scoring and sixth in assists. He was snubbed in last year's all-star selections, while Toronto's DeMar DeRozan was chosen. Lowry had been especially impressive while shouldering the load during DeRozan's recent 21-game absence because of a groin injury.

The Western Conference starters are led by top vote-getter Stephen Curry of the Golden State Warriors , along with Anthony Davis of the New Orleans Pelicans, Blake Griffin of the LA Clippers, Memphis Grizzlies big man Marc Gasol and Los Angeles Lakers guard Kobe Bryant.

Bryant seems unlikely to play.

The Lakers said on Thursday that Bryant tore his right rotator cuff on Wednesday. The rest of his season could be in jeopardy depending on the severity of the tear.

Pau and Marc Gasol have been voted the first brothers to start in the NBA all-star game.

Tom and Dick Van Arsdale played in the 1970 and 1971 games, but the Gasols - once traded for each other - are the first brothers chosen to start.

Wall earned his first appearance last year, and now he's earned his first start. The East hasn't had both its guards making their first start since Philadelphia's Allen Iverson and Charlotte's Eddie Jordan in 2000.

Toronto's DeRozan was seventh in fan voting among guards with 159,123 votes while Lou Williams finished ninth (82,135). Centre Jonas Valanciunas was seventh among frontcourt players (231,741).

Associated Graphic

Raptors guard Kyle Lowry, right, was snubbed last year for the all-star game. This year, he's one of the East's starting five.


Target's exit: Suppliers, pharmacists and the early signs of trouble
Saturday, January 24, 2015 – Print Edition, Page B1

When U.S. retailer Target Corp. this month announced its decision to exit Canada, the shocking news reverberated across the country. Just two years into its major cross-border expansion, the company was suddenly calling it quits.

To some who did business with Target Canada, however, the company's misguided strategies and financial pain were evident early on. Long before the retailer pulled the plug, Target had created rifts with pharmacists, suppliers and other stakeholders, often steamrolling along without seeking input, industry insiders say.

Among the first to feel the pinch were Target's franchised pharmacists. They had each sunk more than $50,000 into inventory to team up with the retailer for its much-touted arrival in 2013, encouraged by projections of high-volume prescription sales and heavy shopper traffic.

But about a year after Target's launch in the spring of 2013, some struggling Target pharmacists, grappling with lower-thanexpected revenues, were already mobilizing to push the company for a better deal. They formed an association to fight Target, charging on a website they created that their pharmacy franchise operations were "a failed business model for pharmacy franchisees."

Target was "forcing franchisees to continue to bleed money, while giving periodic financial injections to stay alive and knowing that one of the only ways out is by declaring bankruptcy," the pharmacists said on the site.

The pharmacists' message in 2014 was eerily prescient. Last week, Target Canada sought bankruptcy-court protection from creditors and is now moving swiftly to close its 133 stores by May, letting go 17,600 employees.

Despite $7-billion of investments in its operation here, Target couldn't see a path to profit until 2021.

The grim outlook was partly formed during an executive visit to the Canadian stores. On the weekend before Christmas, typically the busiest shopping days of the year, Target Corp.'s new chief executive officer, Brian Cornell, visited several stores in Ontario and Quebec. Strolling the aisles, he found "not as much traffic as we would have expected," a company source said.

But Target's pharmacists, suppliers and other stakeholders had felt cracks in the operations long before Mr. Cornell's pre-Christmas store tour.

Even so, the company's abrupt decision to stage a wholesale retreat from Canada remains a mystery to some, who thought Target was slowly starting to turn a corner. Some suppliers said that in the month leading up to the chain's Jan. 15 bankruptcy-protection filing, they received merchandise orders from Target that were considerably larger than previous ones in 2014.

"They were really starting to get it together," said Gary Grundman, president of Garbo Group Inc. in Toronto, which supplied privatelabel fashion accessories, such as jewellery and scarves, to Target Canada. Garbo is owed $39,160. "I think there is a back story here that we don't know about."

Santo Fata, vice-president of Sager Food Products Inc. in Montreal, which is owed more than $11,000 - he calculates $16,000 - said he was finally beginning to see "wonderful" sales numbers of its cooking oils at Target by late November, receiving its last order the day before the filing.

The inventory orders "were steady, regular and getting larger," Mr. Fata said. "We were happy."

Now some suppliers owed hundreds of thousands of dollars are considering ways they can force Target to return their unsold goods that were shipped within 30 days of the filing - rather than have the inventory be included in the chain's liquidation sales.

The vendors would have had the right to try to reclaim unsold merchandise that had been delivered 30 days before the filing had Target filed for protection under the Bankruptcy and Insolvency Act, said Ivan Bern, a lawyer for Elfe Juvenile Products in Montreal, which is listed as owed $38,294.

(Mr. Bern says the debt is $147,758). But instead, Target filed under the Companies' Creditors Arrangement Act, which doesn't have the 30-day goods provision.

Target spokesman Eric Hausman said this week its Canadian team "was operating the business as normal until the day of the announcement" of the filing. Mr. Cornell and other Target executives weren't available for interviews.

From the start, Target was plagued with supply chain problems that often left its store shelves empty, while it grappled with customer complaints of high prices. "We missed the mark from the beginning by taking on too much too fast," Mr. Cornell said last week.

He said the retailer had "undertaken a massive effort" to ensure that it entered the crucial holiday season with levels of stock that were at "an all-time high." But Target didn't see as much an improvement during the holiday season as it had been seeking, he said.

While wrestling with its supply challenges, Target also faced increasingly disgruntled franchised pharmacists, many of whom were struggling with mounting losses.

They initially had been assured by Target that the stores would enjoy heavy traffic, which they counted on for a healthy prescription business. But by the spring of 2014, some Target pharmacists had formed the Pharmacy Franchisee Association of Canada to take on Target.

By the end of 2013, Target had agreed to provide ailing franchised pharmacists with annual payments of up to $110,000, a source familiar with the situation said.

However, "only some received this while others who were in a similar or worse financial situation did not receive anything," said Stavros Steve Gavrilidis, a Target pharmacist in Windsor, Ont., and PFAC's acting secretary.

Now many of the Target pharmacists face an uncertain future.

Other drugstore retailers aren't generally rushing to pick up Target prescription lists, suggested Clint Mahlman, chief operating officer of London Drugs Ltd. of Richmond, B.C.

Not many Target pharmacists have lucrative lists of prescription customers because they didn't have the two to three years usually needed to build them up, he said.

Target typically shared little sales information with suppliers about how business was going, Garbo Group's Mr. Grundman said. "They didn't really take advantage of the knowledge in the market. ... They just came in here with a preconceived idea of how they were going to land and market in this country." Still, suppliers were starting to see improvements in recent months, Mr. Grundman said.

And not all creditors see the Target experience as a disaster. Michael Budman, co-owner of fashion chain Roots Canada Ltd., said it successfully re-ignited the Beaver Canoe line, which generated strong sales at Target. Now Roots, which is owed $433,248 in royalties, will "assess all our options" for selling the brand elsewhere.

Some industry observers said Mr. Cornell may have had little upside in hanging on to Target Canada because the stumble would have quickly become part of his legacy with no quick fix in sight.

Sager Food's Mr. Fata said he doesn't blame Target for deciding to leave Canada given the anticipated long turnaround period.

"It was a little shocking and disappointing," Mr. Fata said. "But it's a tough market."

But Rick Chad, president of executive search firm Chad Management Group, said he helped recruit some executives for Target - plucking people from secure jobs - and found the retailer's officials he dealt with "wouldn't take anybody's advice."

"In my estimation, they threw in the towel too early," Mr. Chad said. "I think they came in in a ridiculous way - they ran before they walked. Americans sometimes seem to think they know more about Canada when they come here than Canadians do."

Associated Graphic


From the start, Target grappled with customer complaints of high prices.


The rising threat of deflation, and the danger of low prices
Saturday, January 17, 2015 – Print Edition, Page B1

The deflation dragon, once thought largely slain by the efforts of the world's central banks in the wake of the financial crisis, has risen again as a threat to global economic stability - and this time oil's epic collapse is feeding the beast.

The European Union said Friday that euro zone consumer prices were down 0.2 per cent in December from a year earlier, as plunging fuel prices drove inflation into negative territory for the first time since the 2009 recession. Sixteen of the EU's 28 member nations are now in deflation territory, while euro zone giants Germany and France are knocking on the door, with annual inflation of just 0.1 per cent.

Meanwhile, U.S. inflation slumped to 0.8 per cent in December, its second-lowest year-end rate in 50 years (only 2008's 0.1-per-cent rate was lower). The U.S. inflation rate has rapidly retreated from 1.7 per cent just two months ago, amid oil's precipitous decline. Earlier this week, Britain also reported an oil-fuelled gutting of its inflation rate, which fell to a 14-year low of 0.5 per cent in December.

Canada's December inflation report doesn't come out until next Friday, but the theme should be similar - sharp declines in fuel prices leading to inflation rates that are in rapid retreat.

Economists estimate that Canada's inflation rate will come in at about 1.6 per cent, down sharply from 2.4 per cent just two months ago. And some predict that it's on track to be near zero, or even negative, by the middle of the year.

While consumers typically welcome the notion of paying less for their everyday purchases, economists agree that a generalized deflation, or downturn in prices across a wide range of goods and services, can cripple an economy if left unchecked.

Lower prices lead to lower consumption - both because they create a disincentive to spend in the short term because the cost is expected to be lower at a later date, and because they lead to lower corporate profits and by extension to reduced wages and payrolls, which reduce consumer demand. In short, deflation is a recipe for recession.Deflation could be particularly problematic at this juncture because the world is acutely indebted. Total household, corporate and government debt is equal to nearly 230 per cent of global gross domestic product.

The link between deflation and debt was identified by Yale University economist Irving Fisher in a 1933 paper, which sought to explain how the 1929 market crash sunk into the Great Depression. He argued, compellingly, that deflation becomes an economy killer because when prices fall, debts don't deflate with them. The effect is that the economy's debts become bigger relative to the incomes generated to service them - which prompts further belt-tightening by consumers; that drives prices down even more, which further lowers corporate profits and leads to more payroll cuts. This is known as a deflationary spiral, and it chokes off an economy.

But deflationary spirals are usually associated with a more persistent, widespread deflation across an economy, typically brought on by a pre-existing demand slowdown and/or economic shock. Think of the bursting of Japan's property and credit bubble in the early 1990s, which led to modest yet stubborn deflation that hog-tied the Japanese economy for much of the past two decades.

The question now is whether a sharp drop in a single, albeit important, commodity - oil - can trigger a true deflation problem, and just how much monetary policy makers need to worry about it.

"None of this applies when we're just talking about a onetime drop in oil," said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce. "Real deflation is when we're talking about an economy so weak that it has widespread declines in prices and wages. That's not the case in the U.S. and Canada."

The Bank of Canada has repeatedly made clear that it looks through short-term price shocks from energy and other isolated factors, and focuses its attention on the so-called "core" inflation rate, which excludes notoriously volatile goods such as fuels. However, given Canada's substantial energy production and export sector, there is concern that oil's sharp declines could have a broader effect in slowing the economy - and, therefore, will have a wider deflationary spillover that the Bank of Canada may eventually need to combat with low interest rates.

The deflation threat is much bigger in Europe, which was in a broad and persistent economic funk long before oil's downturn. Euro zone economic growth is believed to have been only about 0.8 per cent in 2014 and isn't expected to do much better this year, and this tepid demand has led to broad-based inflation weakness. Excluding energy, the euro zone's inflation rate is 0.6 per cent - in positive territory, but still too low for comfort.

That's why the European Central Bank is widely expected to launch a large-scale asset purchasing program at its upcoming meeting Thursday, a stimulus strategy known as "quantitative easing" that is aimed at re-inflating the European economy.

Major euro zone economic power Germany has long resisted such a move, but with its own consumer prices on the verge of deflation, the Germans may be prepared to grudgingly accept QE.

Mr. Shenfeld said oil's decline is actually a positive for the euro zone economy, which is a net consumer of petroleum products.

Still, he said, the fact that oil has pushed European inflation into negative territory creates the optics the ECB needs to win political support for QE, which many economists feel is long overdue.

"In that perspective, it's a positive," Mr. Shenfeld said.

Sharp drop in oil prices pumps up U.S. economy
Monday, January 19, 2015 – Print Edition, Page B1

Slumping oil prices may be denting Canada's economy, but south of the border, the dramatic fall is being heralded as a positive force that's adding momentum to the business environment.

As the fourth-quarter earningsreporting season gets under way, the bosses at some of the biggest financial and industrial firms in the United States insist that plunging oil prices will - on balance - be good for that country's economy.

Some companies, individuals, and even whole states will suffer, the executives acknowledge, but low gasoline prices are pumping huge amounts of extra cash into consumers' pockets, and that's a good thing.

"While lower oil prices have created volatility in financial markets, America as a whole is a net consumer of energy and American households will benefit from the decline in energy prices, which is positive for the U.S. economy," Wells Fargo & Co. chief executive officer John Stumpf declared on a conference call after his company's earnings release last week.

Still, he noted, "That's on average, because there's going to be some states that are impacted, some customers who are going to be impacted and some business is going to be impacted." However, "net-net, it's an opportunity," he said.

Only a handful of U.S. companies have reported their fourthquarter profit picture, although several of the big financial institutions have done so in the past week or so.

At U.S. financial giant JPMorgan Chase & Co., CEO Jamie Dimon said the company might take some hits because of its exposure to commercial or consumer real estate in Dallas, Denver and Houston, where the oil-price slump hurts. But on the other hand, he said, "when you add $800 a year to the consumer's cash flow statement" it will show up more broadly as a boost in car sales and overall retail spending. "It's quite clear it helps consumers. It helps their credit broadly," he said.

For some companies, the slump in oil prices is almost entirely positive. At aluminum producer Alcoa Inc., for example, for every $10 a barrel the price of oil falls, pretax profit goes up by $40-million, CEO Klaus Kleinfeld told analysts last week on his company's earnings call.

That's because of lower transport costs, and the fact that the company has two oilfired aluminum refineries - one in Suriname and another in Brazil - where costs will decline.

Mr. Kleinfeld acknowledged the drop in gasoline prices can diminish the fuel-cost savings of light cars and planes made with aluminum, but he expects demand for these vehicles to stay strong in any event.

Over all, the U.S. economy benefits from low oil prices because it is still a big importer of oil, said BMO Nesbitt Burns Inc. senior economist Robert Kavcic.

"The benefits for consumers and for lower costs through the manufacturing chain are probably going to considerably outweigh the negatives in the oil sector itself," he said.

BMO projects that U.S. gross domestic product will grow 3.1 per cent this year, up from 2.4 per cent in 2014. Canada, by contrast, will see growth diminish to 2.1 per cent this year from 2.4 per cent in 2014, partly because of the economy's commodity focus.

Some U.S. companies directly tied to the oil patch are suffering. Oil-field service company Schlumberger Ltd., for instance, said Friday it will cut 9,000 jobs and slash costs.

But others, even if they have some ties to the oil sector, expressed few worries about the price drop. Clarence Gooden, chief sales and marketing officer at rail company CSX Corp. - which transports oil by rail - cited studies that suggest only 10 U.S. states have employment levels "directly impacted by the oil boom."

At the same time, he said, sending crude by rail makes up less than 2 per cent of CSX's business, so the benefits of putting more money in consumers' pockets outweighs any downside.

"For the average U.S. person, it's like getting a tax break of almost $2,000 a year, so it puts a lot of dollars into the economy," Mr. Gooden said. "I think lower crude oil prices [are] very positive for our economy."

Bank of America CEO Brian Moynihan acknowledged that there is a "technical risk" to the oil-producing companies that are the bank's clients, but the benefits to the consumer - and thus the overall economy - are real and already apparent. "Even in the first week or so of January, we're seeing the benefit to the consumer very starkly in the year-over-year comparison," he said on a quarterly conference call. "You're actually seeing consumers spend the money they are getting," he said.

Still, Mr. Moynihan noted, if low oil prices persist, the benefits on the consumer side of the bank's business could be offset by problems that could develop in its commercial loan portfolio.

Canadian bank executives said last week that energy lending makes up only a small part of their portfolios, and they are not particularly concerned about credit risk.


"American households will benefit from the decline in energy prices, which is positive for the U.S. economy." - Wells Fargo CEO John Stumpf

"The price decline, if it stays here, is a tail wind for global economic growth."

- Goldman Sachs chief financial officer Harvey Schwartz

"It's a positive experience for the American taxpayer, for the American economy."

- Clarence Gooden, chief sales and marketing officer, CSX Corp.

Associated Graphic

Lower prices put cash in consumers' hands. 'It's like getting a tax break of almost $2,000,' says CSX Corp.'s Clarence Gooden.


Draghi takes aggressive approach in second euro rescue mission
Friday, January 23, 2015 – Print Edition, Page B1

ROME -- European Central Bank president Mario Draghi unleashed an unexpectedly aggressive quantitative easing program in an all-out, and perhaps final effort to fight potentially damaging deflation and revive the moribund euro zone economy.

The sheer size of Mr. Draghi's QE onslaught marked his second genuine market surprise since he joined the ECB at the height of the European crisis in late 2011.

The first came in mid-2012, when he used a London news conference ahead of the Olympics to announce calmly that the ECB would do "whatever it takes" to keep the crisis-shaken euro zone intact. The assurance sent sovereign bond yields plummeting, allowing Greece to step back from the euro zone exit. It happened without the ECB spending a single euro to fund the sovereign bondbuying program that he promised to put into action if any euro zone country were to find itself losing access to the bond markets.

On Thursday in Frankfurt Mr. Draghi unveiled the second rescue mission, though this one involved spending vast amounts of newly created money. His QE effort is designed to flood the financial system with liquidity, pump up asset values and kick start stalled inflation.

The launch of QE itself was no surprise; the surprise was the size of it - no less than 1.1-trillion ($1.6-trillion) of government and private bonds are to be purchased by September, 2016, and possibly more if inflation doesn't bounce back. That works out to 60-billion a month, about 15billion a month more than most economists had expected.

Mr. Draghi, in effect, has set in motion the second version of his "whatever it takes" pledge.

Economists and investors were pleasantly shocked - British bank HSBC said the "punchier" package was "ahead of expectations."

The European stock markets and the euro plummeted at the prospect of the wave of new money hitting the market, taking the one-year fall against the U.S. dollar to 15.8 per cent. While the ECB does not comment on, nor specifically try to adjust, exchange rates, the fall of the currency used in 19 European countries was just what Mr. Draghi wanted. An export-led recovery just got a bit easier.

Mr. Draghi's QE program was all the more surprising in that it managed to overcome well-telegraphed resistance from the German central bank, the Bundesbank, and the German contingent on the ECB's governing council. The Germans had been somewhere between cool and hostile to QE, for fear it would stoke too much inflation and remove any incentive from national governments to reform their economies to make them competitive.

But it appears their resistance was overcome by outright fear of economy-wrecking inflation. In December, year on year, consumer prices fell 0.2 per cent - the first instance of outright deflation since the height of the financial crisis.

Prolonged deflation would sabotage the euro zone's tentative recovery by encouraging consumers and businesses to postpone purchases, in the belief that prices will get ever cheaper.

Mr. Draghi also appeased the Germans by revealing that 80 per cent of the bond risk will lie with the national central banks; the rest will be "mutualized." If, say, Greece were to default on its bonds, the losses would be largely contained within Greece, not spread among the taxpayers of Germany and other solvent countries.

While the ECB's QE program is committed through September, 2016, Mr. Dragi left open the possibility of extending it "until we see a sustained adjustment in the path of inflation, which is consistent with our aim of achieving inflation rates below, but close to, 2 per cent over the medium term."

Will it work?

Some economists think QE will certainly help, but that, on its own, is unlikely to trigger an economic miracle. "There is no guarantee that QE will work," said ING Financial Markets economist Carsten Brzeski. "The ECB can prepare the grounds for more investment and activity, but it cannot force consumers to spend or companies to invest. ... Today's QE announcement is historic but it is also the ECB's last trump card. There are no more hidden aces."

Indeed, Mr. Draghi's statement, while optimistic, tacitly admitted that the ECB was running out of tricks and that it was now up to the national governments to get serious about economic reforms.

At the ECB news conference, he made a plea to governments. "It is crucial that structural reforms be implemented swiftly, credibly and effectively," he said.

The trouble is, the positive market reaction to the big, fat QE program, as the Germans have warned, could encourage governments to slack off on reform. If that happens, Mr. Draghi is unlikely to embark on another rescue; his ammunition box is now pretty much empty.

€1.1-trillion The ECB plan to buy 60-billion of government and private bonds every month through September, 2016, and could be extended if inflation remains too low.

80% Attempting to appease critics of the bond-buying plan - Germany chief among them - the ECB placed most of the default risk on individual countries.

11-year low The euro's U.S. dollar value fell to $1.136 from $1.161, putting it at a level last seen in 2003.

Associated Graphic

Mario Draghi made good on his promise to do 'whatever it takes' to keep the euro zone intact Thursday by introducing a robust quantitative easing program.


Europe's bold quantitative easing plan buoyed the bulls in Frankfurt, where stocks rose 1.3 per cent on Thursday.


For Michael Wekerle, an old friendship becomes a $1.3-million feud
Thursday, January 22, 2015 – Print Edition, Page B1

Former star stock trader Michael Wekerle is embroiled in a lawsuit with a long-time business associate who wants to push the CBC Dragon into bankruptcy.

Rohit Sehgal, a portfolio manager with Dynamic Funds, alleges in court filings that Mr. Wekerle owes him $1.38-million (U.S.) from the 2014 sale of a property in New York. He alleges that he has pursued payment from Mr. Wekerle for months and now wants him "adjudged bankrupt and that a bankruptcy order be made in respect of [Mr. Wekerle's] property."

"He has repeatedly promised to pay the [debt] and hasn't done so," said Catherine Francis, a lawyer at Minden Gross LLP in Toronto who is representing Mr. Sehgal.

Mr. Wekerle, who appears on the CBC-TV program Dragons' Den, has filed a notice of dispute, explaining that he intends to oppose the bankruptcy application: "The applicant [Mr. Sehgal] is attempting to use the bankruptcy process to collect an alleged civil debt."

"Mr. Wekerle has not committed an act of bankruptcy" and is "able to pay his debts as they become due," the notice reads.

In an interview, Mr. Wekerle said he will repay Mr. Sehgal - "a guy that I took care of for 30 years" - $1.1-million and "not a penny more" and hopes to have the matter settled by the end of the month.

"I'm very upset with the way he's acting. He's putting pressure to get an additional $200,000."

The dispute dates back to 2011, when Mr. Sehgal, Mr. Wekerle and Robert Sali, a resident of Singapore, teamed up to invest in a $2.4-million condominium in New York's fashionable Tribeca neighbourhood.

According to court filings, Mr. Sehgal and Mr. Sali kicked in $1.1-million each toward the purchase price. It isn't clear how much Mr. Wekerle contributed but the property was purchased without a mortgage. The title was assigned solely to Mr. Wekerle, as condo rules did not permit joint ownership, according to court filings. Mr. Sehgal alleges that Mr. Wekerle executed a promissory note to him and Mr. Sali valued at $1.1-million each to protect their financial interests.

Mr. Sehgal alleges that in May, 2014, he learned that Mr. Wekerle had taken out a mortgage on the property in violation of their agreement. He also alleges that the new mortgage exceeded the value of Mr. Wekerle's equity in the property. Then a month later, Mr. Sehgal alleges he found out that Mr. Wekerle had put the property up for sale at $4.6-million without his knowledge.

In court filings, Mr. Sehgal said once Mr. Wekerle repaid his mortgage, the remaining proceeds were insufficient to cover what was owed to Mr. Sehgal and Mr. Sali.

Mr. Sehgal headed to court, filing a lawsuit against Mr. Wekerle last summer and adding the bankruptcy application in November.

In an interview, Mr. Wekerle denied the allegations of bankruptcy. And he said the two had done property deals before.

"This is the second time I've carried Rohit on a property," said Mr. Wekerle. "I brought him into the property ... I did all the legal work myself. I didn't charge him anything on the fees."

Mr. Sehgal declined comment.

Mr. Wekerle rejected any suggestion that he is running out of money. "One hundred and ten per cent incorrect. A lot of people like to talk about me. And it's malicious. If I was bankrupt I wouldn't have just flown to Europe in my own jet, which was about $100,000," he said.

In December, Mr. Wekerle was unable to meet a $2.5-million (Canadian) margin call from his broker, Richardson GMP, on debt securities he holds in his firm, Difference Capital. At the time, Mr. Wekerle explained that his money was tied up in illiquid investments, stating that he was "asset rich and cash poor."

During the same interview, Mr. Wekerle said his single biggest asset was his investment in Difference, the publicly-traded merchant bank he co-founded in 2012. He owns 23 per cent of the company's common stock, valued at approximately $8.4-million. His debt holdings are worth around $8-million. Shares in Difference have lost 81 per cent of their value since the company went public in May, 2012, and most of the company's early investments have performed poorly. Difference has also suffered from a slew of departures of management and board members in the past year.

Mr. Wekerle himself will be on the move soon. On Wednesday, he said he plans to vacate his exclusive Toronto neighbourhood, partly because he's become disillusioned with all of the gossiping. "I'm in the process of selling my house in Forest Hill," he said. "The crowd around here in Forest Hill are too Chatty Cathy. I'm going to move back to Bayview and Steeles, where my mum lives."

Associated Graphic

Michael Wekerle says he was unable to meet a December margin call because he was 'asset rich and cash poor.'


Buy America squabble exposes cracks in cross-border relations
Monday, January 26, 2015 – Print Edition, Page B1


Alaska's decision to scrap the controversial rebuilding of a remote B.C. ferry terminal is the inevitable postscript to a sad episode in Canada-U.S. relations.

Any contractor willing to take on the work would have faced the impossible choice of running afoul of either U.S. or Canadian law.

Trade Minister Ed Fast insisted he would not let protectionist Buy America purchasing rules apply on Canadian soil. And he invoked a seldom-used anti-sanctions law to ensure they wouldn't.

Alaska Governor Bill Walker and the U.S. government were equally steadfast, refusing to waive rules that mandated the use of American iron and steel on their project.

It would be easy to dismiss this story as a meaningless sideshow. Reconstruction of the Prince Rupert, B.C., ferry terminal would have cost $10-million to $20-million (U.S.), of which the steel component might have been less than $2-million. That's roughly equal to the goods and services traded between Canada and the United States every minute.

And it's hard to imagine this setting any sort of precedent. The ferry terminal is unusual - a U.S.funded project on land leased from a federal port authority in Canada.

But make no mistake: There is cause for concern here. If Canada and the United States can't work out the easy stuff, how are they ever going to overcome the larger challenges confounding a vast, complex and increasingly strained relationship?

The Prince Rupert ferry terminal demonstrates that even minor disputes have now become hard to fix. Domestic politics trump common sense at every turn, making compromise virtually impossible.

What hope is there, then, for the tough stuff, such as the Keystone XL pipeline, energy policy more broadly, agricultural trade or a litany of persistent border problems?

Both sides had easy and relatively painless options open to them.

Alaska Governor Bill Walker could have quietly sought a waiver from the U.S. Department of Transportation, which was putting up 90 per cent of the money. There is a precedent: By agreement, Canadian and U.S. steel is being used in the construction of the new Windsor-Detroit bridge.

There was no obvious domestic constituency pushing Mr. Walker to play hardball on the ferry terminal, other than nationalist chest-thumping. Not a single job in his state would be created or saved. Alaska does not produce any steel of its own, and no major corporate interests are in play.

And yet Mr. Walker stood his ground, insisting that Buy America was good for Alaskans and good for Americans, oblivious to its noxious effect on a neighbour.

Likewise, the U.S. Department of Transportation could have suspended its own rules, in light of the delicate circumstances.

But U.S. officials apparently judged they had little to gain by doing Canada any favours, and plenty to lose if they failed to strictly enforce Buy America rules mandated by Congress.

On the Canadian side, Ottawa failed to use its own leverage to head off controversy. The Prince Rupert Port Authority, a federal agency, signed a 50-year lease on the ferry terminal with the Alaska Marine Highway System in 2013. At the time, Alaskan authorities made it clear to their Canadian counterparts that Buy America rules would apply to any work done owing to the U.S. government picking up most of the tab.

The port authority could have demanded an exemption from Buy America as a condition of the lease - a perfectly reasonable request in light of the recent controversy. Facing no apparent objections from the port, Alaska sailed on, oblivious to the storm that lay ahead.

Mr. Fast is getting kudos in Canada for standing up to the United States over Prince Rupert.

But it's not clear that the Canadian government is doing everything it can to fight the worrying proliferation of Buy America-style local-content laws across the United States, which risks costing Canadian businesses billions of dollars in lost opportunities. Ottawa should be pushing much more aggressively for a bilateral procurement deal.

Mr. Fast can't do a victory lap, because everyone loses.

An aging ferry terminal, vital to business and the lucrative summer tourist trade on the B.C. and Alaska coast, doesn't get the overhaul it badly needs. Not a dollar of economic value, nor a single job, is created in either country.

And Canada and the United States squander another opportunity to find common ground.

Canada fights back in Buy America feud
Ottawa invokes rarely used anti-sanctions law to push back against U.S.-only rules in rebuilding of B.C. ferry terminal
Tuesday, January 20, 2015 – Print Edition, Page B1

OTTAWA, MONTREAL -- A simmering feud over the spread of Buy America rules to a remote B.C. ferry terminal has mutated into a full-blown trade fight, highlighting growing Canadian frustration with U.S. protectionism.

The federal government invoked a seldom-used antisanctions law Monday that will make it illegal for construction companies to bow to U.S.-only steel purchasing rules during the rebuilding of a B.C. ferry terminal.

"The application of protectionist Buy America provisions on Canadian soil is unacceptable and an affront to Canadian sovereignty," Trade Minister Ed Fast said.

The Canadian government signed an order under the Foreign Extraterritorial Measures Act, a federal anti-sanctions law, has been used only once, in 1992, to counter the U.S. trade embargo on Cuba.

Ottawa decided to dust off its anti-sanctions law after Alaska Governor Bill Walker denied a Canadian request to seek a waiver from the Buy America law on a U.S.-funded overhaul of a ferry terminal in Prince Rupert, B.C. The state of Alaska, which runs the Alaska Marine Highway System, is now slated to close bids on the project Jan. 21 and then award final contracts.

Alaska's decision ends weeks of quiet diplomacy aimed at finding a compromise, led by Canadian ambassador to Washington Gary Doer.

The ferry terminal sits on Crown land in Prince Rupert's federally run port, but is leased to the Alaska Marine Highway System under a 50-year lease that expires in 2063.

Under the Canadian anti-sanctions move, companies seeking to work on the ferry terminal will immediately run afoul of Canadian law by simply agreeing to the Buy America provisions of the contract. That will expose them to fines of up to $1.5-million. The situation appears to put any company agreeing to supply steel for the ferry-terminal overhaul in contravention of either U.S. or Canadian law, possibly creating a stalemate on the project.

The spat is about more than a few million dollars worth of steel at a tiny ferry terminal.

The Buy America showdown demonstrates how difficult it is for Ottawa to counter protectionist purchasing rules, which are legal under World Trade Organization rules and deeply ingrained in U.S. political culture, Toronto trade lawyer Lawrence Herman pointed out.

"It's an illustration of how inward-looking U.S. governance is, generally," he argued. "They only consider what's good for the U.S., and what's good politically for immediate vested interests."

U.S.-only purchasing rules, mandated by Congress, continue to be politically seductive. Politicians and officials risk being tarred as enemies of U.S. job creation for opposing Buy America.

Mr. Fast said Ottawa would continue to try to convince the U.S. government to waive the Buy America restrictions in the Prince Rupert case and to "end the harm such policies are doing within our shared North American economy."

"Buy America provisions deny both countries' companies and communities the clear benefits that arise from our integrated supply chain and our commitment to freer and more open trade," he said.

The port of Prince Rupert, located nearly 800 kilometres north of Vancouver near the southern tip of the Alaska Panhandle, sits on Canadian Crown land. The port authority sublets the ferry terminal to Alaska.

Bidding documents posted on the Alaska Department of Transportation website make clear that "all iron and steel products associated with this project are subject to the Buy America provisions." The $10-million to $20million (U.S.) terminal and wharf project, is slated to be completed in 2016.

In a statement, Mr. Walker, the Alaskan Governor, said: 'I remain in contact with Canadian officials to find a way forward regarding this issue."

The federal move comes as a Canadian steel group launches a public campaign to convince Ottawa to require minimum Canadian content on the multibillion-dollar replacement of Montreal's Champlain Bridge.

"If we're going to be shut out in some markets then you have to find a way to protect our projects such as the Champlain Bridge," said Tareq Ali, marketing and communications director for the Canadian Institute of Steel Construction.

"There is no requirement for [the bridge] to have any Canadian content. They should have some," he said.

Associated Graphic

The Prince Rupert ferry terminal is on Canadian Crown land, but is leased by Alaska until 2063.


Netflix looks further afield to stay ahead of rivals
Wednesday, January 21, 2015 – Print Edition, Page B1

Netflix Inc. added subscribers faster than expected in the fourth quarter, and said it will speed up its international expansion plans as it looks to stay in front of an increasingly crowded market.

The video-streaming giant boosted its worldwide membership to 57.4 million in the quarter, adding 4.33 million net new subscribers and besting its own prediction of four million. But much of the new growth is coming from outside the U.S., as domestic additions continue to slow.

After launching in several new locales including France, Germany and Belgium last September, Netflix now operates in about 50 countries and will add Australia and New Zealand in the coming months. But the company is promising to accelerate its growth plan, adding "additional major countries" later this year and exploring options for a "modest" offering in China, while aiming to go online in as many as 200 countries within two years.

"Internet TV is really becoming substantial. ... Just across the board, you see this phenomenon that we described a few years ago of channels becoming apps," Netflix CEO Reed Hastings said on a conference call Tuesday.

"For us, it's more competition, and it's more consumers coming in the market," Mr. Hastings said.

The company acknowledged the growing list of online streaming services it now counts as competitors, calling out recently launched Canadian offerings among them.

Rogers Communications Inc. and Shaw Communications Inc. teamed up to launch a streaming service dubbed Shomi in November, and BCE Inc. followed suit a month later with CraveTV which, at $4 a month, costs less than half of what Netflix does, but is available only to traditional TV subscribers. (BCE owns 15 per cent of The Globe and Mail). The three companies launched the new services in an effort to retain traditional television subscribers who might consider cutting the cord altogether, and to cater to changing viewing habits.

A new American challenger is also waiting in the wings as HBO has plans to offer its own standalone streaming service, but Mr. Hastings told analysts he believes viewers are willing to subscribe to multiple services.

"We'll just wait and see. I think even if they were going to match us in pricing, it's just going to be a lot of people subscribing to both," Mr. Hastings said. "It's definitely not a zero-sum situation."

In the coming years, Netflix will continue to increase its spending on original series like House of Cards and Marco Polo, and also produce new feature films. The company said its original shows have proven to cost less relative to the audiences they attract than much of the content it licenses from other producers.

In the United States, Netflix added 1.9 million subscribers during the fourth quarter, down sharply from the final quarter of 2013, and predicts the slowdown will continue into early 2015. But it added another 2.43 million new members internationally, beating expectations by 280,000.

Netflix does not break out numbers for individual countries aside from the United States, though industry observers estimate the service has close to four million Canadian subscribers. A report released last fall by the Canadian Radio-television and Telecommunications Commission (CRTC) said 29 per cent of English-speaking Canadians use the streaming service.

In Canada, Netflix has also faced regulatory uncertainty. In September, it became embroiled in a public spat with the CRTC, challenging the regulator's power to demand information about its Canadian operations. Meanwhile, the federal government is in public consultations about potential new rules that could require Netflix and other companies to charge Canadian customers sales tax, which might lead to future price increases.

Netflix reported profit of $83million (U.S.), or $1.35 a share - boosted by a tax accrual release worth $39-million or 63 cents a share, but still ahead of expectations - compared with profit of $48-million or 79 cents in the same quarter a year earlier.

Revenue was $1.48-billion, up 26 per cent from $1.18-billion year-over-year. The company's shares rose nearly 16 per cent to $404 in after-hours trading on the Nasdaq Stock Market.

Associated Graphic

Netflix now operates in about 50 countries and will add New Zealand and Australia in the coming months.


Banks on brink of mortgage price war
RBC drops five-year fixed rate to near-record lows after the Bank of Canada's surprise cut last week
Tuesday, January 27, 2015 – Print Edition, Page B1

Canada's major banks are heading into a renewed mortgage price war in the wake of the Bank of Canada's surprise decision to cut interest rates.

Mortgage brokers reported that Royal Bank of Canada dropped its five-year fixed rate for qualified borrowers to 2.84 per cent over the weekend.

While smaller, non-bank lenders have started offering even cheaper rates, RBC's rate cut is likely a record for a major bank, said Drew Donaldson, executive vice-president of Safebridge Financial Group. The bank also slashed its posted 10-year fixed rate to 3.84 per cent, the lowest nationally advertised rate in the country, said Robert McLister, founder of

RBC spokesman Wojtek Dabrowski said the bank continues to "review the impact of the Bank of Canada's rate decision," and that the company's "individual product lines continue to make pricing adjustments in the regular course of business to ensure we provide competitive rates in the marketplace."

Toronto-Dominion Bank, Bank of Nova Scotia and National Bank of Canada have also cut fixed rates on broker-originated mortgages by 10 to 20 basis points in recent days.

Mortgage officials said RBC was among the last of the major banks to introduce new rate specials.

"National Bank already offers competitive rates over the mortgage rate spectrum as we moved early over the past weeks," bank spokesman Claude Breton said.

A battle in the mortgage market seemed inevitable given that Government of Canada bond yields have plummeted in recent weeks, falling 57 basis points in the past month to historic lows.

Brokers had predicted that falling bond yields were almost certain to drive down the fixed-rate mortgage pricing ahead of the competitive spring housing market even as banks have largely kept their prime rates, which govern variable-rate mortgages along with other types of loans, unchanged.

All the major banks will soon be forced to follow the Bank of Canada and cut their prime rates 25 basis points to 2.75 per cent, Mr. Donaldson said. "We expect more cuts to come from all lenders," he said.

Even ahead of the Bank of Canada's unexpected rate cut last week, the country's major banks already seemed poised for a new round of rate cuts this year. Earlier this month, BMO Financial Group chief executive officer Bill Downe told an industry conference the bank was expecting to "again have a fresh offer that is appealing to customers" in the spring. The bank drew the ire of former finance minister Jim Flaherty in 2013 after it dropped its five-year fixed mortgage rate to 2.99 per cent in what Mr. Flaherty called a "race to the bottom."

The renewed price war is raising concerns that the central bank's rate cut will add fuel to the country's overheated housing market even as Canadians struggle under the burden of rising household debt. Canadian Imperial Bank of Commerce deputy chief economist Benjamin Tal warned last week that falling mortgage rates could lead to "a monstrous spring in the real estate market."

Others argue that low rates may not be enough to kick start a housing market that had already begun to slow toward the end of this year as oil prices plunged.

Even as they predicted that Canada's central bank will cut interest rates a second time later this year, TD economists said Monday they expect Canada's real estate market to fare poorly this year as cheap crude and sky-high house prices in major cities are making it difficult for new buyers to afford to jump into the market despite low mortgage rates.

"The housing market is ... projected to be a drag on growth, with changes in existing home sales and prices, as well as housing starts, forecast to tilt into negative territory," the bank said.

Banks' prime-rate cuts fall short of BoC
Six largest banks drop key lending rates by 0.15 percentage points instead of matching the Bank of Canada's reduction
Wednesday, January 28, 2015 – Print Edition, Page B1

Canada's big banks reduced their prime lending rates in the wake of the Bank of Canada's unexpected move last week, but stopped short of matching the central bank's quarter-percentage-point cut in a bid to protect profits.

Royal Bank of Canada was first to announce Tuesday that it would cut its rate by 0.15 percentage points to 2.85 per cent on Wednesday. Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada and Bank of Nova Scotia swiftly followed suit with identical cuts.

The prime rate drops came a week after the Bank of Canada lowered its overnight lending rate by 0.25 points, and amid mounting speculation that lenders were under pressure from Ottawa to pass along the central bank's monetary stimulus. RBC was also the first to slash fiveyear fixed-rate mortgage rates over the weekend, as Government of Canada bond yields touched record lows. But banks had held off touching their prime rates, drawing the ire of consumers who had expected lower rates on their variable-rate mortgages, lines of credit and loans.

RBC said in a statement that its rate cut was driven by "a number of factors," not solely the Bank of Canada rate. Traditionally, bank prime rates move in lockstep with the central bank, but RBC said it now factors in other variables, such as the industry's competitive landscape as well as the bank's funding costs. The latter includes the rate it pays depositors as well as the rate it must pay to borrow money in debt markets.

Historically, the country's two largest banks, RBC and TD, have tended to be the first to act on central bank rate changes, said David McVay of McVay and Associates, a financial services industry consultant. Last week, TD announced it was holding its prime rate at 3 per cent, sending a signal to smaller banks to delay rate cuts. RBC's move on Tuesday changed the game.

But in lowering their prime rates, banks opted not to fully match the central bank rate cut, choosing instead to protect their profit margins as spreads between the rates at which banks borrow and lend money have bottomed out.

The big banks hadn't changed their prime rates since September, 2010. The prime rate has never fallen by less than a quarter point since the Bank of Canada began tracking such data in 1935, said Robert McLister, founder of "Bottom line, banks saw this as an opportunity to retain profit in the face of margin pressures that have been building for a few years," he said.

With retail lending growth slowing amid a drop in oil prices, banks have been under pressure from shareholders to boost their profits by 10 per cent a year, a tough target. Some had begun slashing expenses in order to shore up profits even before the central bank rate cut.

"I'd say [banks] are being prudent in that they are trying to pass the benefits," Mr. McVay said. "They've reduced their mortgage rates and reduced the prime rate, not as much as the bank rate has gone down, but as much as they consider prudent given the profit pressures they're under right now."

With the major lenders slashing their prime rates, there is little room for banks to compete for market share on price alone.

Finance Minister Joe Oliver's office declined to comment on the banks' rate cuts, saying the government has no plans to get involved in the daily operations of the banks. "That is a decision for the banks to make," said Mr. Oliver's press secretary Nick Bergamini.

HOW A TEACHER GOT THE JETS TO SOAR; 500 ... regular-season wins and counting.
Jets head coach Paul Maurice views coaching as a life-long learning experience. He quietly surpassed a major milestone for regular-season wins in the NHL, and he's not done yet, Eric Duhatschek writes
Saturday, January 24, 2015 – Print Edition, Page S1

Two weeks ago, when Winnipeg Jets coach Paul Maurice won the 500th game of his NHL career, he considered celebrating it the way he did the first, with a run through the Burger King drive-through on the way home from the rink. But it was late, his wife, Mitch, was with him, as well as the youngest of his three children, and there was school the next day to consider.

"If there had been one remotely on the way, we would have done it, because we were talking about it," Maurice said with a laugh. "But there wasn't one that we could easily go through. Up where we are, it's Harvey's but there's no drive-through, so we couldn't do it."

The glamour of an NHL coaching life never ceases, no matter how well or badly things may be going. Maurice's 500th career win came in the midst of the Jets' most challenging stretch of the season - seven games in 11 days - so he had about 60 seconds to ponder the milestone before moving on.

With apologies to the New York Islanders, the Jets may be the single biggest surprise story in the NHL this season, sitting fifth in the Western Conference at the all-star break, seven points clear of a playoff spot.

The Jets play in the ultracompetitive Central Division, the only division in which all seven teams remain in the playoff hunt.

Last year, five of seven made it, but the Jets didn't - finishing last, which is where many had them picked to finish again.

Maurice took over in January, 2014, and the team responded to the coaching change by winning eight of its first 10 games. Ultimately, the Jets faded down the stretch - injuries had something to do with that - but were a respectable 18-12-5 in Maurice's first 35 games behind the bench. Currently, he has exactly 83 games of experience with the Jets and in that time, they are 44-26-13 - a respectable winning percentage for any team, remarkable for a team that is using a rookie goaltender, Michael Hutchinson, about half the time and at different times this season was missing up to five starters on its blueline.

Winnipeg, which had won five in a row going into the NHL allstar break, is a team committed to building through the NHL entry draft because attracting the top free agents is not a viable business option for an organization that will not spend to the limit of the salary cap. And yet here are the Jets, defying expectation, and generally getting the most out of the talent at hand, threatening to make the playoffs for the first time since relocating from Atlanta in 2011 and for only the second in the franchise's 15year history.

Maurice is, in the words of Jets defenceman Jay Harrison (who previously played for him in both Carolina and Toronto) "dedicated to his craft ... a professor of the game. His love for the game comes through with everything he does, and guys rally around it.

It's inspiring."

Maurice has made a significant difference in the way the team plays, especially on defence - they are No. 5 in the NHL after finishing 22nd overall defensively last year.

Former NHL defenceman Brian Engblom, who regularly does colour commentary on Jets telecasts, says Maurice "instantly" changed the demeanour of the team upon his arrival last year.

"He's pretty well known for being a quick assessor of teams, and he really came in last year and proved that," Engblom said.

"He knew exactly what needed to change and what parts he wanted to move around. He got a feel very quickly of how he wanted to handle the players and that has increased this year.

"He's very good at language; the players know exactly what's going on. If you don't get it after Paul Maurice tells it to you, you're an idiot. And they do get it. And he makes them accountable - in no uncertain terms."

Maurice became the secondyoungest coach in NHL history to reach 500 wins (at 47 years and 11 months, he was two years and eight months older than Scotty Bowman, when Bowman reached the milestone), in part because he was hired by Jim Rutherford in 1995 to coach the Hartford Whalers at the ripe old age of 28.

Rutherford, now the Pittsburgh Penguins' general manager, says he knew Maurice would have a long and enduring coaching career back when he was still a teenager, the captain of the Windsor Spitfires, soon after an eye injury had ended his playing career.

"We had a year-end party and Paul gave a speech - and what he said and how he presented it showed what great leadership qualities he had," Rutherford said. "That was at a time when he was just a teenager and had lost his eye and knew he wasn't going to play at the pro level. I knew this was a guy that had a future in hockey, so when his junior career was over, I offered him a chance to get into coaching right away.

"People talk about him getting his NHL coaching opportunity at such a young age, but if you look at it, it's not about age, it's about experience. The fact is, he started coaching when he was 20. By the time he got to coach in Hartford, he had seven years of experience.

It's no different than if a former player retires and then goes to the minors or coaches as an assistant in the NHL for a few years and then becomes a head coach. Paul had a lot of experience at a young age."

The proof of Maurice's commitment to the craft of coaching came during the most recent NHL lockout when he opted to leave a TV studio job with TSN to coach in Russia - in the steel town of Magnitogorsk. Maurice lived in a barracks - assistant coach Tom Barrasso was his primary company for the better part of a year.

Maurice said he went to Russia largely out of a spirit of adventure - that he'd been coaching all his adult life, never ventured to Europe on a Grand Tour the way some of his peers did, and wanted to see if he could coach a team where the vast majority of players didn't speak English.

In the end, Maurice believed it made him a better coach - and gave him a far clearer understanding of the challenges a European player faces when first arriving in North America.

Fundamentally, Maurice is a teacher - but he also views coaching as a life-long learning experience.

"Honestly, I just feel like I'm starting to get the hang of this," Maurice said. "I had a real unusual start. I started learning about coaching in the NHL. I had two years of junior experience and then you're doing it. My time in Russia had a big impact on how I view the game, and maybe even more importantly, my appreciation for the National Hockey League - for how good the players are and how much of an honour it is to be here. So in so many ways, I just feel like I'm starting. I don't know what lies ahead, but I hope it lies in Winnipeg, because I've really enjoyed my time here.

"This may sound funny, but Winnipeg is so much like my home, Sault Ste. Marie, that there's a feeling of coming home in some ways - and then you hit 500. That's a big number. So this one's a little different for sure, and at the same time, I'm brand new here. I'm still just 47. I'm hoping there's quite a few more."

Engblom generally does his commentary from between the benches and from his perch there suggested that one of Maurice's more understated contributions to the Jets' success was injecting more life into a team that was spookily quiet before he arrived.

"All their leaders are very quiet," Engblom said. "Dustin Byfuglien jokes around, but Bryan Little's quiet. Andrew Ladd's quiet. Zach Bogosian's quiet. Toby Enstrom - you can't hear anything from him. So he made them talk. He went in there and told them, 'Guys, start talking. I don't care what you say, but start talking.' It carried through on the bench; now there's a lot more talk on the bench; they're a lot livelier, and they're in the game far more quickly.

"That may seem small, but it's made a big difference. He told players, after last year, 'Training's camp going to be really tough so you better be ready' - and he followed through. Guys who were in the league 10 years said that's one of the toughest camps they've ever had and it made them ready to play a fast-paced game.

"He knew he had a big team, he knew he had a fast team and he knew he had a physical team, and they've really become a toughminded team through this last difficult stretch, and it's something they did not have last year or the year before. It's basically the same core group and they've responded to him in a big way. He knows when to get all over them and when to back off. He's fun to be around."

Beyond his impact on the team, Maurice has had a significant impact on the city of Winnipeg, according to Mark Chipman, the Jets' executive chairman and governor.

"Paul is what you see - and that straightforward humility really resonated with people here," Chipman said. "It's not just people that are watching our team play live, but people frequently say to me how impressive he is, in terms of the way he articulates himself and does it in a really grounded, humble way. So I think people felt right away he was a fit.

"The other thing is, I've seen Paul in rinks around town. His kids are playing hockey here and he's very involved in their lives.

It's interesting because he'll turn heads when he walks into the rink, but he doesn't see himself as special in any way. He's a real humble guy. Obviously, he's had a positive effect on the fortunes of our team, but I think he and his wife have embraced the city - and the city's embraced them. It's real gratifying to see."

Maurice will likely get serious consideration for the Jack Adams trophy as the NHL's coach of the year, if he can get the Jets into the playoffs. Just in the past fortnight, he has moved past two Hall of Famers, Toe Blake and Pat Burns, up to No. 17 on the all-time coaching wins list. A key to longevity is to keep calm and carry on, even in the midst of, say, that run of injuries to defencemen they had earlier this season.

"We lost our top four and we play that little game in the coaches' office when it happened: 'What would the other team look like without their top four?' Which is a foolish game to play, but it makes you feel better somehow," Maurice said. "But coming in here and changing the focus on what we're good at, then being good at that, there wasn't any falloff when we had the injuries. The message didn't have to change because the message was, 'We're all going to try and do these two or three different things and hold ourselves accountable to them' and then it won't matter, when players went down to injury."

Follow me on Twitter:@eduhatschek

THE CAREER Hartford Whalers/Carolina Hurricanes (1995-2004): 268 wins, 291 losses, 99 ties, 16 OTL Toronto Maple Leafs (2006-2008): 76 wins, 66 losses, 22 OTL Carolina Hurricanes (2008-2012): 116 wins, 100 losses, 30 OTL Winnipeg Jets (2013-present): 44 wins, 26 losses, 13 OTL Total 504 wins, 483 losses, 99 ties, 81 OTL

Associated Graphic

Paul Maurice was all smiles a year ago when he won his first game as head coach of the Winnipeg Jets. He's since added to the list and is a candidate for the NHL's coach-of-the-year award for his work with the Jets this season. He surpassed 500 regular-season career wins two weeks ago.


Winnipeg Jets head coach Paul Maurice becomes the second-youngest coach in NHL history to reach 500 wins.


Legal dispute exposes grimy underside of franchise ownership
Fragile partnerships and fickle relationships abound
Tuesday, January 27, 2015 – Print Edition, Page S1

Back in November, a few paragraphs of an Associated Press wire story out of Erie, Pa., made their way into Canadian newspapers and websites. The item noted that Sherry Bassin, owner and general manager of the major-junior Erie Otters of the Ontario Hockey League, lost a $4.6-million (U.S.) judgment to Daryl Katz, owner of the NHL's Edmonton Oilers.

On the face of it, is seemed just another business-deal-gone-bad - the settlement amount was for a loan Katz advanced to Bassin, plus interest, nearly three years earlier. It was before the Otters had drafted the bankable teen phenom Connor McDavid, and Bassin needed the money to prop up the financially struggling franchise. Then, for reasons that weren't made clear in the wire story, Katz called the loan.

Bassin couldn't pay, so off to court they went.

But a closer look at the dispute and what led to it reveals the indecorous underside of sports franchise ownership, not to mention the fickle relationships between teams and their communities, and the fragile "partnerships" between owners in various leagues.

So much for the honour in pro sports.

The details will follow, but in short, Katz made the deal with Bassin not because he was interested in the welfare of fans in Erie. Instead, if he could quietly buy the Otters, he could move them to Hamilton and take control of his ultimate prize - the hockey lease at Copps Coliseum - even though a fellow NHL owner, Michael Andlauer, was the existing leaseholder at the Hamilton arena.

Andlauer, who made his fortune in the transportation and logistics industries, has a minority stake in the Montreal Canadiens and also owns their American Hockey League farm team, the Hamilton Bulldogs.

Bassin agreed to be his front man in the Hamilton transaction because Katz insisted on a low profile.

No one is saying it straight out, but the timing of Katz's move on Copps in late 2012 suggests he may have been interested to use the Copps lease as leverage to get more public funding in Edmonton in a deal to build a new downtown arena for his Oilers.

Despite Katz's efforts to be discreet, rumours quickly spread in Hamilton civic circles that he was the power behind Bassin.

Some city councillors and power brokers were happy to play along because, as always, Hamilton longed for an NHL team. And there were rumours that Andlauer might deprive the city of any professional hockey by moving the Bulldogs to the Montreal suburb of Laval when a 10,000-seat arena in that city was completed.

City officials kept Bassin's identity hidden at first, which angered Hamilton Mayor Bob Bratina. He wanted to know why it was taking so long to renew Andlauer's lease at Copps. Bratina, who did not run in the 2014 municipal election, said he was initially told the delay was due to a potential new tenant whose identity was confidential. But once he learned it was Bassin on behalf of Katz, Bratina had no doubt about what was happening.

"My sense was [Hamilton] was going to be used against the City of Edmonton as leverage for their deal," he said in an interview. "That's my opinion."

Through the fall of 2012, when it looked like Bassin just might grab the lease to Copps, Katz maintained his hard line with Edmonton council. But in December, Hamilton Entertainment and Convention Facilities Inc. (HECFI), the agency that then managed city properties, voted to negotiate a lease exclusively with Andlauer.

The HECFI vote came on Dec. 7, 2012. Five days later, without Hamilton's leverage, Katz agreed to go back to the table with Edmonton along with a mediator in a final attempt to make an arena deal. With the rhetoric suddenly turned down, Katz and Edmonton reached an agreement on the new arena in January.

However, that was not the end for the other people in this story.

Bassin, now 75, had wanted to sell his hockey team to Katz to pay his debts and ensure his own financial well-being. But he became collateral damage. The Oilers called his loan in June, 2013, demanding he sell the team to pay them back. Even though the Otters have a rebuilt arena, and McDavid's star power has boosted the team's attendance to more than 4,700 fans per game (fifth-best in the 20-team league), Bassin didn't earn enough from operations to pay back the Oilers.

In pushing for a quick sale, the Oilers were still intent on taking over the Otters. Documents show that Katz's people interfered with Bassin's attempts to get a new arena lease in Erie in 2013.

Katz himself wrote a letter to OHL commissioner David Branch in October, 2014, threatening to make the legal dispute with Bassin public if he did not transfer ownership of the Otters from Bassin to him.

In yet another twist, the Oilers' ambitions may also have been to keep the Otters away from Andlauer who, ironically, is now in position to be the saviour of the OHL team. He is one of at least two parties negotiating with Bassin to buy the Otters, and it's apparent the Bulldogs will move to Laval no later than 2017. Andlauer's lease at Copps, since renamed FirstOntario Centre, calls for him to provide a hockey team as a tenant, without specifying it must be an AHL team.

In early December, a U.S. District Court in Erie overturned the earlier judgment against Bassin that called for an immediate auction of the Otters. The Oilers must now proceed with a conventional civil action to recover their $4.6-million, which allows Bassin time to sell the team on his terms.

Citing the ongoing litigation, Bassin declined to comment on the matter in detail. "I owe [the Oilers] the money and we want to pay them back," was all he would say.

Through an Oilers spokesman, Katz also declined to be interviewed. Pat LaForge, president and chief operating officer of Oilers Entertainment Group, who handles the Oilers' business affairs and was Bassin's primary contact with the NHL team, did not respond to requests for comment. Andlauer did not respond to interview requests either.

But documents filed as part of the Oilers' lawsuit against Bassin in the U.S. District Court provide many of the details of what happened between Katz, Bassin and the City of Hamilton. The story began on Dec. 29, 2011, when Bassin signed a loan agreement with Katz's Ontario Major Junior Hockey Corp.

At the time, the Otters were having trouble staying afloat financially - the average Erie crowd in 2011-12 was 2,855, among the smallest in the OHL.

The loan agreement spelled out Katz's interest in buying the Otters, moving them to Hamilton and getting control of the Copps lease. The loan was to be for a total of $6.25-million (U.S.) at 6-per-cent interest, and came in two parts. The first was for $3.5million, and with that money, Bassin was to buy out his existing partners and pay off any team debts.

The second part, $2.75-million, was to be paid once Bassin had received OHL approval to transfer the Otters to Hamilton and transfer the ownership of the team from Bassin to Katz. It also stipulated that Bassin had to secure an agreement from Hamilton "to grant an exclusive first right of negotiation of a lease of Copps Coliseum."

The agreement also spelled out specific items Bassin was to get in the Copps lease, such as exclusive rights for all hockey teams except for the NHL, although there is no doubt Hamilton officials would have welcomed Katz had he arrived with the Oilers.

"Certainly that's attractive," Hamilton city councillor Lloyd Ferguson said of Katz's NHL connections. Ferguson and fellow councillor Terry Whitehead met with Bassin during the negotiations.

Andlauer also offered a connection to the NHL through the Canadiens, but to Hamilton officials, Katz may have been the more attractive suitor on the tiny chance he might follow through on a threat to move the Oilers.

In the midst of all this, Katz was pilloried in late September, 2012, for staging a clumsy public visit to Seattle. Along for the trip was Wayne Gretzky, who allowed himself to be used to send the obvious message to Edmonton politicians - here is a city that wants us.

The backlash was so severe that Katz issued a public apology. He was lucky, though: Edmontonians would have been even more enraged had they known about his then-ongoing dealings in Hamilton. His intentions there were earlier outlined by LaForge in an e-mail to Bassin on Aug. 23, 2012. In the e-mail, which was later entered in the court documents, LaForge noted "we are all working on our plan to get the Otters relocated to Copps Coliseum" and "[the Oilers] will get the hockey opportunity we have been looking for in that market."

However, LaForge also complained to Bassin about the Otters' "miserable financial performance" in Erie. Eventually, the loan to Bassin grew to $4.2-million from $3.5-million.

But then, thanks in part to Bratina's support, Andlauer won the HECFI vote and eventually signed a three-year lease in March, 2013, with an option for two more years. His only obligation is to provide Hamilton with a hockey team, and he retains the rights to the Bulldogs name if they move. In April, 2013, he said he would like to buy an OHL team and build a new arena in downtown Hamilton; some consider FirstOntario Centre, which opened in 1985, a worn-out facility. Andlauer also admitted to talking to Bassin about buying the Otters, who only have to pay a maximum of $76,000 (U.S.) to get out of their Erie lease.

After losing the Hamilton battle, Katz called Bassin's loan in June, 2013. Things took a nastier turn in 2014 when the Otters' lease at the rebuilt Erie arena came up. After failing in an attempt to prevent Bassin from signing a new lease, Katz wrote a letter to Branch on Oct. 9, 2014, demanding that the Otters be turned over to him.

"As matters transpired," Katz wrote, "I am now very concerned you have not taken a leadership role in finding a hockey solution that will keep this from becoming a very public legal dispute. If this is not resolved, unfortunately, Sherry Bassin, the OHL and all the sponsors and fans of major junior hockey will witness a public legal dispute instead of looking forward to the 2014-15 hockey season."

Katz ended the letter with a most unsubtle remark. "I am providing references of my partners in other hockey organizations," he told Branch, and listed NHL commissioner Gary Bettman, Hockey Canada president Tom Renney, AHL commissioner Dave Andrews, Western Hockey League commissioner Ron Robison and East Coast Hockey League commissioner Brian McKenna. Court documents filed by Bassin's lawyers indicated Bettman and the other leaders were all sent a copy of the letter.

Branch did not officially respond. He felt this was a private dispute between Bassin and his lender which did not affect ownership of the team. There was no further word from Katz.

"I thought it was, ah, I was surprised," said Branch, who still seems bemused by the letter. "I didn't choose to pursue it in any way, shape or form."

Branch admits he has talked to Andlauer about joining the OHL, and not necessarily with the Otters. "The other thing that cannot be overlooked is, as a league, we think Erie is a very good hockey market," Branch said.

Bassin said the same thing about Erie, but he needs to sell the Otters to pay the debt. So it'll be up to the new owner to decide if Erie, the innocent bystander caught in the Katz/Bassin/Hamilton crossfire, will get to keep its team.

Associated Graphic

Edmonton Oilers owner Daryl Katz tried to make a deal with the OHL's Erie Otters because he allegedly wanted to move them to Hamilton.


$117,191,045 Head injuries exact a physical toll, but there is also a staggering financial reckoning. Researchers hope that by applying dollar signs to such injuries they can prompt more action on the player-safety front
Saturday, January 17, 2015 – Print Edition, Page S1

They say that heart is valued most in hockey, but they have the wrong organ.

It should be the brain.

Heart may have a great deal to do with how a hard-checking and even harder-shooting defenceman with the Nashville Predators, Shea Weber, will make $14-million (U.S.) this season, or how a driven centre, Sidney Crosby, can be paid $12-million a year to play for the Pittsburgh Penguins.

But it is the brain that costs NHL players, costs the league and insurance companies and, for that matter, costs everyone involved in future earnings in everything from contracts that injured players will never sign to endorsements they will never receive.

Charles Tator of Toronto Western Hospital is acutely aware of the physical costs of injuries to the head. The Canadian neurosurgeon is a leading international expert in concussion research and treatment, and as founder of ThinkFirst Canada and a board member of Parachute Canada, has dedicated his career to injury prevention and the healthy enjoyment of life.

This Saturday at the Krembil Neuroscience Centre at Toronto Western, Tator and two colleagues - Richard Wennberg and researcher Carmen Hiploylee - will be key presenters at the Canadian Sports Concussion Project's third annual symposium.

Their academic journal paper, "The Financial Toll of Career-Ending Concussions in Professional Hockey," is an attempt to apply dollar signs to an injury professional hockey is increasingly reluctant to discuss. Dr. Tator's hope is that "by showing a huge financial loss, you have another motivator to make the game more safe."

Motivation is critical, he feels. As public awareness of the effects of head injuries grows, the word "concussion" has become increasingly stigmatic, to be avoided if possible by teams, coaches and even players affected.

The NHL prefers not to discuss the topic - though the league was asked by The Globe and Mail, as was the NHL Players' Association - and there may well be legal reasons behind such reticence.

Last week in St. Paul, Minn., the league sought to have dismissed a class-action legal suit brought by former players with concussion-related injuries. The suit, filed by more than 200 former NHLers on behalf of some 5,000 living former players, is roughly similar to the one filed by former NFL athletes, which resulted in their league offering a $765-million settlement in 2013 that would cover nearly 20,000 players over the past 65 years.

Six former NHLers - Gary Leeman, Bernie Nicholls, Mike Peluso, Dan LaCouture, Reed Larson and David Christian - are serving as class representatives in the suit. U.S. District Court Justice Susan Richard Nelson listened to the legal arguments from both sides during a five-hour hearing this month without making a ruling. The judge gave no timetable for a decision.

In gaining an appreciation for the financial impact for both sides - league as well as injured players - Justice Nelson might be wise to consider the paper that will be tabled in Toronto this weekend.

The researchers concerned themselves with post-concussion syndrome (PCS) that fails to be resolved in what medical circles would consider a normal time frame. The players studied lost their hockey careers to PCS. It could, however, still get worse for some of them, as there is now ample scientific evidence that multiple concussions can lead to chronic traumatic encephalopathy (CTE). CTE is a progressive condition that can lead to brain degeneration and manifest itself as dementia and other mental and neurological disorders such as depression, anger and violence.

Former football and hockey players who committed suicide in recent years have been found to have evidence of CTE when their brains have been examined.

The researchers hope that by applying dollar signs to such injuries they can prompt more action on the player safety front. Of great concern is when there are, to an expert, obvious signs of a concussion suffered during a game and yet the player remains on the bench and is never diagnosed. It is believed 10 per cent of concussions are missed this way.

The researchers tabulated a variety of factors during the period 1995-2014. They narrowed their list to players who could be said to have suffered career-ending concussions while playing in the NHL. They gathered their data from news reports and online sources, and had access to hockey experts who helped with such matters as insurance coverage.

After the list had been narrowed to 35 players - multiple players were dropped from the list because they had suffered their final concussion in another league or else data could not be confirmed - the researchers were able to produce an overall cost: $117,191,045.

The list begins with Brett Lindros, just 19 years old when a third concussion brought an end to his days with the New York Islanders. The salary cost of such an unexpected turn was calculated at more than $4-million.

Nine years later, Eric Lindros, Brett's highly gifted older brother, was forced out of the game at age 30, having suffered a sixth concussion. His salary cost was in excess of $1-million.

Some costs proved impossible to calculate fully. Steve Moore of the Colorado Avalanche, as all hockey fans recall, lost his career at age 25 following a vicious hit from behind by Todd Bertuzzi, then with the Vancouver Canucks. It was Moore's first concussion and he never played again. In pure NHL terms, the financial amount came to $67,378.05 in lost salary. No one knows, however, how many millions were involved in last year's out-of-court settlement reached in the case following Moore's long-fought civil suit.

"We had no way of handling that," Hiploylee says.

"One of the problems in society is that settlements are confidential," Tator adds.

"Knowing what that settlement was could be a useful deterrent."

There are a number of NHL superstars on the list. Hall-of-Famer Pat LaFontaine kept trying to play on with the New York Rangers after a third concussion but, at 33, finally had to retire in 1998. Paul Kariya was trying to come back from concussion with the St. Louis Blues in 2009 when he decided to pack it in at 35.

Hiploylee says the list is extremely "conservative" for a variety of reasons - one of which is told in the stories of LaFontaine and Kariya. LaFontaine's financial loss is listed at less than $1-million and Kariya's at less than half a million, as each were considered gambles by their current teams and unable to command the salaries or contracts they could have if healthy. Both players missed vast amounts of playing time recovering from previous head injuries; that lost time would have raised the overall cost by millions of dollars.

"The salaries lost to concussion when the players are in the prime of their careers is hard to calculate," Tator says.

The impact of once-healthy stars suddenly losing their careers is shown by two of the final names on the list. Marc Savard, who had several concussions prior to the 2011 injury that put him out of hockey, had nonetheless recently signed a massive deal with the Boston Bruins; when he left the game at 33, the financial loss was calculated at more than $24-million.

That same year, 37-year-old Philadelphia Flyers defenceman Chris Pronger suffered a second concussion and was unable to continue playing, leaving a loss of more than $25-million.

The researchers say the SavardPronger situation is "unusual" in that the figures account for 40 per cent of the total costs in the study. "I don't think we foresaw that," Wennberg says.

They believe, however, that the financial shock of these two lost contracts may have proved beneficial to players who came along later.

"The rule change to make intentional hits to the head illegal in 2010-2011 and 2011-2012 [originally introduced as Rule 48] and the downward trend [in employing] enforcers may have helped mitigate concussion-induced retirement," the researchers say in their paper.

"I wonder if the league itself took that as an indication of what lies ahead if we do not do something," Tator says.

This season the NHL appears to have all but eliminated the "goon" who brings no other attribute than his fists to the game, and "staged fights" have virtually disappeared.

"This has got to be attributable to the concussion concerns," Tator says. "If there is anything positive that we can say it is that it looks as if the league is going in the right direction."

The researchers would just wish it would move a little more quickly.

At the end of their report, they list a number of simple recommendations that the scientists believe would help make the game safer for players at all levels of competition.

They would like to see the NHL take to the larger European ice surface. More space for today's larger, faster and stronger players would be its own safety zone. None of the current NHL rinks has that extra width, though Olympic hockey - so beloved by North American fans - is usually played on the larger rink.

"This has long been my particular hobby horse," Wennberg says.

"But I don't know how you get the message out to those who need to hear it."

The researchers would like to see injury determination fall to the diagnosis of independent physicians rather than team doctors, who might feel some obligation to have the player, particularly a star, return to action more quickly than he or she should.

They would want to see "zero tolerance" for hits to the head of any type. The NHL currently has harsh punishment for those who "target" heads during body contact. The researchers accept the difference between intended hits and accidental ones, but they believe in penalties for all head hits, with deliberate hits receiving increased punishment.

And finally, the scientists believe the time has come for real penalties for fighting rather than meaningless majors that have no effect whatsoever on the two teams playing. They would also like to see an escalation of penalties for repeat offenders.

Tator believes that, "with a stroke of the pen, you could write fighting out of the game."

He also believes that attitudes are changing.

"A corner has been turned," he says, when new rules begin appearing at the same time as players whose role is violence are disappearing.

"It's not just about money," he says.

It's also about lives.

Follow me on Twitter:@RoyMacG


The list

Researchers compiled a list of 35 players who could be said to have suffered career-ending concussions while playing in the NHL. They gathered their data from news reports and online sources, and had access to hockey experts who helped with such matters as insurance coverage. It's their attempt to apply dollar signs to an injury. For a full list of the total salaries lost, check our website:

Associated Graphic

From top, Pat LaFontaine, Paul Kariya and Eric Lindros: Concussions take a toll on career.

Rookie Flame's shiftiness, creativity and speed make him a favourite of teammates and fans, as well as a nightmare for many defenders who dwarf him
Friday, January 23, 2015 – Print Edition, Page S1

CALGARY -- Long before he got his popular nickname, long before the awards and the fame started to come, Johnny Gaudreau showed up in Dubuque, Ill., to play for the Fighting Saints of the USHL at the start of the 2010-11 season.

Dubuque's coach was Jim Montgomery, a former NHL player from Montreal, once traded straight-up for Guy Carbonneau. Montgomery saw the same thing everyone does when they first lay eyes on Gaudreau - an imp of a player. If you knew he was going to become a professional athlete, you would guess he'd be a jockey.

Early in the season, Montgomery took his Fighting Saints to Nebraska to play the Lincoln Stars, a team he described as "the Broad Street Bullies" of the USHL; they were always the biggest and toughest team.

"Morning skate, the opposing coach saw our team kicking the soccer ball around and says, 'Geez, that's nice, they let their stick boy warm up with them.' After the game, we'd beaten them 3-2 and I think Johnny had a goal and two assists and the coach comes up to me and says, 'Wow, that little stick boy shoved it up our asses.' " That little stick boy has been underestimated at every stop along his hockey-playing path.

As the NHL's all-star weekend begins Friday in Columbus, Gaudreau - the NHL's reigning rookie of the month - attends as one of six rookies chosen to participate in the skills competition. He has 35 points this year, second among NHL rookies, five behind the Nashville Predators' Filip Forsberg.

Trying to nail down Gaudreau's exact size is problematic, since it's listed differently practically everywhere you look - and none of the dimensions accurately reflect just how small he is. The former NHL MVP Martin St. Louis is also short - 5-foot-8 - but he is not small, and has legs the size of tree trunks. Gaudreau is both short and slight, rarely a winning combination in a league where small players generally have to prove they can play (frequently, big players have to prove they can't).

Officially, Gaudreau is listed as 5-foot-9 and 150 pounds in the NHL's guide and record book; he's 5-foot-9 and 157 in the Flames media guide. He is unquestionably shorter than that.

There has always been a place for some smallish players in the league, no matter what generation you consider. Camille Henry and Henri (The Pocket Rocket) Richard were excellent players in the 1950s and 1960s. Calgary has been a home to many small players, from Joey Mullen, who played on their 1989 Stanley Cup championship team and eventually made the Hall of Fame, to Theo Fleury, the secondleading scorer in franchise history, and even St.

Louis, a two-time NHL scoring champion who ultimately had to leave for Tampa to make his NHL mark.

But style-wise, Fleury and Gaudreau are completely opposite players. Gaudreau is slippery. His game has a now-you-see-him, now-you-don't quality that involves sidestepping the defensive giants trying to plaster him into the second row. Fleury embraced contact. He dished out more than he received.

Calgary Flames coach Bob Hartley had Fleury for a time in Colorado and now has Gaudreau on his team.

"Teams will always be looking to get big because of the wear-and-tear of the season and the grind of the playoffs," Hartley said. "But at the same time, you look at Johnny, the way he's competing in his first season and it's pretty amazing. He hasn't even played in all NHL buildings yet and he's had created quite an impact - an impact on our team and an impact around the league.

"With Johnny, it's all about his quickness in tight areas, his above-average hockey sense and his passing skills that are allowing him to really grow in the NHL."

"Theo was more of an inyour-face player," Hartley said. "He was more like Mighty Mouse. We'd always play Dallas in the playoffs; [Richard] Matvichuk and [Derian] Hatcher were chasing Forsberg and who was chasing those two? It was Theo. I would say, 'Theo, you're going to get killed,' and I can't even repeat what he was answering back. But that's who he was.

Johnny is another small player but with a totally different style, totally different make-up - and most importantly in a totally different league."

Flames captain Mark Giordano, who is accompanying Gaudreau to Columbus this weekend, says that the rule changes, introduced by the NHL following the 2004-05 lockout, to limit hooking, holding and interference accelerated the progress of a number of smaller players.

"I mean, Johnny, me, Russ [Kris Russell], guys who move the puck, we've all benefited from it," Giordano said.

"For a guy like Johnny, I don't know if he can play in the NHL if there's a 6-foot-5 guy who could grab on to you and hold on and pin you in the corner for three seconds. That's not taking anything away from his skill. His skill has always been there and it's always going to be there. But he is allowed now to come out of the corner and spin off guys without being grabbed on to.

"Ask any defenceman on our team: I'd much rather play against a bigger-sized guy who I know I can keep up with, especially when they're spinning out of the corner, than a small guy, who spins off you and has a step every time. You can't grab him; you can't do anything to him.

They're really hard to play against; and there's a lot of them in the league now, the little guys who are really shifty. And bottom line, I think they're the hardest guys to play against."

But where other small players may be broad and muscular, Gaudreau practically looks frail.

"He was 5-foot-7, 134 when I met him," Montgomery said. "We knew when we got him that we were getting someone who was much more intelligent, in terms of his vision and hockey sense, than anyone else that usually gets on the ice. To be honest, in our training camp, the first couple of days, he didn't do much, and I could tell some people in the organization were wondering, 'Did we commit to a kid that's never going to play that much?' Then as the camp went on, everyone was like, 'Okay, I get it.' Because when he plays with better players and gets used to the speed, he just adjusts. It's incredible. I knew he'd be good early, but I thought the wear and tear would get to him and he'd slow down in November.

"Instead, he took his game to another level. I don't know how he does it, because I was a smaller player and I would break down routinely in an 80-game season and have no energy. I just watch him. He looks better every time I see Calgary. I'm watching the game against Chicago and [Duncan] Keith and [Brent] Seabrook are out against him and he's protecting the puck for about 10 seconds against those guys and he's doing it because of his edges and his creativity and they're backed off because they don't know where he's going.

And that's what he does to people.

"It's like Patrick Kane: Patrick Kane's not the biggest player in the world but he has the puck more than anybody in the NHL because you don't know where he's going. He buys time and space, like special players do."

Gaudreau has played more games this year than he did all of the last three, and though his junior schedule was more complicated than his college schedule, nothing compares to the grind of the NHL. He and Hartley sat down in early January to discuss how the second half might unfold - and how he could conserve his energy to finish the year on an up note.

"I'm really taking that pretty seriously," Gaudreau said. "In college, you'd get those weeks off, so you could work out and study and didn't have as much of a game-practice-game-practice schedule, so it's a bit of a new thing for me."

To Gaudreau, the biggest change in adjusting to the NHL is the way teams aggressively pinch their defencemen to keep pucks in the offensive zone. It makes exiting the zone far more challenging than it did in college.

"For me, it's the defencemen crashing down the walls on the wingers," Gaudreau said. "In college, teams tended to back off a little more and let us take the puck out of our end a little more.

Now, you've got 6-5, 200 and whatever flying down on you and it's a lot more difficult than it was in college."

According to Montgomery, Gaudreau's personality is such that even as he gets a lot of publicity, he is so modest about his success that teammates generally don't feel any jealousy.

"He's the kind of kid who makes everybody around him happier to be at the rink. He loves being on the ice. He loves being in the locker room. He has that type of personality that makes everybody happy. ... "They have such a young team that has such energy and exuberance to them, and I'm sure Johnny's one of the main reasons for that. You sit on the bench and watch him do the things he's doing at the NHL level; at 5-foot-8, it makes you giggle and think, 'I can do this. I'm going to go now.' He's not doing it because he's small; it's because he's so talented and fearless."

Follow me on Twitter: @eduhatschek

Associated Graphic

Johnny Gaudreau, left, of the Calgary Flames, conferring with teammate Sean Monahan, is known as Johnny Hockey. Gaudreau is big in stature, if not in actual size.


Ryan Stanton of the Canucks, right, tries to contain slippery Johnny Gaudreau of the Calgary Flames last April in Vancouver.


In the wake of this season's incendiary off-field issues, this deflation scandal isn't a catastrophe - it's a boon for a beleaguered league
Thursday, January 22, 2015 – Print Edition, Page S1

Perhaps the most blatant instance of cheating in sports history involved that homicidal sociopath and noted fan of fair play, the emperor Nero.

Nero bribed Greek officials to postpone the Olympics in year 65 by two years so they would coincide with his tour of the country. He further convinced them to include musical performance and poetry reading to the roster of events - because that's what he considered himself good at.

He entered the four-horse chariot race, albeit with 10 horses. He fell out of the chariot midway through. He still won.

It raises the question: Is it still cheating if everyone recognizes the fix?

On that tip, it's getting harder and harder to understand the latest instance of the NFL versus Bill Belichick, leader of the Galactic Bostonian Empire.

The New England coach stands accused - again - of capitalizing on holes in the system. In business, this would earn him a year-end bonus and a book deal. In sports, it makes him a scoundrel (though a secretly admired one).

Here's the wrinkle Belichick allegedly mined: Every NFL team supplies 12 balls to be used during a game. Each club uses its own balls on offence.

The balls are measured and weighed by officials about two hours before the game.

They must be inflated to the point of rock hardness (between 12.5 and 13.5 pounds per square inch). A minor deflation makes them spongy - easier to grip, easier to throw and easier to catch, especially in bad weather. Last Sunday's playoff game in Foxborough, Mass., between New England and Indianapolis was played in a cold rain.

Belichick now stands accused of working that slightly daffy loophole to his side's advantage. Daffy because it's hard to understand how the balls are not under the supervision of neutral officials throughout the pregame.

After inspection, the balls are handed over to sideline handlers (paid by the home team) to mind and distribute.

According to reports, the NFL has discovered that 11 of the 12 New England balls used last Sunday were underinflated. On Wednesday afternoon, ESPN reported that the Colts first sounded the (very soft) alarm two months ago, after a regular-season loss to the Patriots.

Suspicions were raised after balls intercepted by the Indianapolis defence were carried to their sideline as souvenirs, then inspected.

In both instances (and surely there will soon be others), dozens of people were the potential tamperers. The obvious suspects are the Patriots-aligned ball boys and ball handlers. But the balls are kept relatively unattended in bags on the sidelines. There are all sorts of people milling around down there.

And what about the Colts? Just about every member of the defence touches the ball at some point or another. A ball thrown off the sideline might pass through two or three pairs of hands before it makes it back onto the field. The umpire regularly handles them as he places the ball after each play. It's exceedingly unlikely any of these people are to blame, but still remotely possible.

This may have been going on for years, and no one noticed. It's beginning to seem like plenty of people did and didn't really care. The space in between gives New England and Belichick a formidable alibi: "Sure, we had motive. But we weren't the only ones with opportunity."

What's the league seriously supposed to do now? Kick its marquee franchise out of the Super Bowl? Absolutely no chance.

Even the most onerous penalty won't be tacked on until next season. And since this is the NFL, it can always fall back on "lack of direct evidence" and skip the pseudo-judicial fuss altogether.

That's sort of its trademark.

No matter what the league does, it wins.

The expanding scandal - sigh, "Deflategate" - is being played in parts of the American press like the End of Days. It is instead an absolute gift to the NFL. It couldn't have planned this better.

It's so perfect, one half-seriously wonders if it planned it.

We're now about two weeks from the Super Bowl. That's a lot of column inches and airtime to fill. The game itself will occupy only a fraction of that space.

Instead, it's the perfect opportunity to begin a ruthless reconsideration of the season that has passed and the off-field issues that dominated it. Between Tuesday's opening media day and Sunday evening's main event, players are made available to a throng of journalists for countless hours.

On many occasions, it's just you and some anonymous punter or third-string linebacker, sitting at a table in a hotel ballroom, bored out of your minds, trying to come up with something to talk about. I once had a 20-minute conversation with a Pittsburgh Steeler about fishing. I have no idea who he was - and I don't fish. But it seemed to please him. Since you so seldom talk to an athlete who's genuinely engaged, I was happy to listen.

This is a ripe time for one disastrous sentence in the midst of ten thousand words of piffle. Just about every day, someone screws up. And then that's the story.

Does the NFL really want a hundred-odd guys being dozily grilled about domestic violence and brain injuries and their (often demented) political views?

It does not.

Now what they'll be talking about is air pressure.

If the NFL is smart, it won't make any investigative decision until the eve of the Super Bowl.

That will ensure this non-event gets front-page coverage for the entire lead-up.

The only thing that could ruin things is if every man jack on the Seattle Seahawks declares himself bored by the topic and refuses to engage. But I guarantee someone will say something incendiary. Then New England responds, raising the temperature.

Then Seattle responds in turn and - by a sort of rhetorical magic - the NFL is dealing with a football-related scandal (entirely manageable) instead of a cultural hot point (completely chaotic).

One supposes those living in the Roman Empire had real issues to discuss back in the year 67: tyranny, poverty, war. But for those few weeks in Greece, they talked about the idiot in charge and his amusing fix at the Olympics. That's the real wisdom of the ancients.

Follow me on Twitter:@cathalkelly

Associated Graphic

Patriots quarterback Tom Brady is handed a ball during warm-ups before the now-contentious Colts matchup last Sunday.


Bill Belichick

Wednesday, January 21, 2015 – Print Edition, Page S1

You invite a few people to your place for dinner. It starts out great - music, drinks, everyone's in the kitchen laughing. As the night wears on, things take a darker turn. You burn the roast. You run out of wine and crack open the Scotch. Someone brings up the Leafs, and suddenly people are rooting around in your drawers trying to find the knives. Then one of your guests tips over a framed photo of your mother. And so, you call the cops. This is sort of what happened at the Air Canada Centre on Monday night. Several fans threw jerseys on the ice - the closest thing Toronto now has to a sporting tradition.

Three landed while the game was going on. The barricade-stormers who'd committed this brave act of resistance were collared by security and handed over to police. According to reports, they were initially charged with public mischief.

By late morning Tuesday, Toronto police announced charges against three people had been downgraded to non-criminal fines because "discretion [was] used after investigations."

The fans have instead been banned for a year - the normal treatment for anyone who interferes with play at a major-league event anywhere in the city. That's sensible.

Everything else about this isn't.

When did people get so angry about a pastime that has only one viewing purpose - to make you happy? Would you light the screen on fire after a disappointing night at the movies?

Even the cops are getting weird about the whole thing. Toronto police's official Twitter feed wondered, "Car interferes w/ traffic, complaints why cops aren't there. Fans interfer [sic] w/ National game/ broadcast, complaints why cops bother."

Everyone's piling in to slam everyone else - the fans, the cops, the club, MLSE. Now that Rob Ford is gone, the Leafs are the only topic that draws this whole city to the public square. Everyone comes with metaphoric clubs tucked under their coats.

(Parenthetical: On the frantic, general discussion that must occasion every small twitch with this club, a quote jumps to mind, a bit of snark directed at the grindingly prolific novelist John Updike: "Has the son of a bitch ever had one unpublished thought?" We're all Updikes in Leafland.)

There is only one conclusion here: The Leafs aren't really a hockey team. They are a leading cause of nervous breakdowns.

These outsized reactions, by all involved, are the Leafs' last shudders of relevance. The only proof the Leafs matter any more is in how much people enjoy hating them, or hating the people who hate them, or hating the people who tell you that hating them just makes them perpetually hateable. As long there's hate in there somewhere.

This fan base is a beaten dog. You hold your hand up to hit it, it bites. You move in for a pet, it bites harder.

It's gotten so no one really cares if the Leafs win. They've been hurt too much before, and it robs them of their angry raison d'être. During the team's blazing run through early December, it was crickets. The usual silence in the arena, but also in the talk about town.

Instead, people preferred to discuss the Raptors or the offseason Blue Jays - two teams that take a half-century of hard feelings out of the sporting equation. The Raptors and Jays are Toronto's fainting couch. The city goes there to rest between hockey-related swoons.

It wasn't until the Leafs took another nosedive that the mob wandered back into the discussion. They got really interested when Randy Carlyle was fired. Froth began to form at the corners of their mouths when Phil Kessel took a run at the media.

By the time the team ran dry on the West Coast, everyone had quit their jobs in order to spend more time at home refreshing a half-dozen different screens.

The media stoke this co-dependence, but they don't create it. If no one read/ watched/listened to this stuff, it would dry up immediately. But everybody loves a good Leafs-related hit piece. In this town at least, we didn't remove violence from the game. We changed venues.

Eventually, all this bile has to come pouring out somewhere. There is only one reason to throw your jersey on the ice, and it isn't frustration. It's an attempt to elicit a reaction.

It's the logical conclusion of the desperate centralization of the "in-game experience." Actual hockey gets less and less important, while every quiet moment must be filled with promos and contests, all of which involve some middle-aged schmo in his Wendel Clark gear out on the ice or up on the big screen. The teams have broken down the fourth wall that once separated entertainers from the entertained. Now the fans want to be part of things while the game's still going on.

It's not enough that the team hears them.

It has to see them, and acknowledge them.

That was the dumbest part of SaluteGate - it proved to the ACC audience they were getting inside the team's heads and, therefore, winning. It emboldened them.

One wonders what would have happened if a player had stepped on a thrown jersey and taken a header into the boards.

Would the crowd have cheered?

"It's not about making an example," MLSE spokesman Dave Haggith said of the arrest of the jersey-throwers. "People have to know there's a repercussion for bad behaviour at a public event."

But that's all that's left - bad behaviour.

Bad behaviour by the team and most of its fans. No one who wanders into this near-50-year-old domestic squabble takes the time to figure out the lay of the land.

They just start yelling.

People wonder when the Leafs will start winning again. When it happens, I wonder if anyone will recognize it as fun.

Follow me on Twitter:@CathalKelly

Associated Graphic

Forward Nazem Kadri picks up a Maple Leafs jersey after a loss to the Washington Capitals in Toronto on Jan. 7. Three spectators have been banned from the Air Canada Centre for a year after throwing Leafs jerseys onto the ice during a 4-1 loss to the Carolina Hurricanes on Monday night.


Raptors hit rock bottom, bleeding confidence
Monday, January 19, 2015 – Print Edition, Page S1


When it was still turning the Raptors way in the third quarter, Terrence Ross was sitting on the bench, bereft.

Out on the court, Patrick Patterson launched a three. Everyone in white and red jumped up. Ross was nailed to his seat.

The shot went in. Ross stared, motionless.

That was the image of the game, an abysmal defeat.

This is the low point of the Raptors' 2014-15 season. Sunday afternoon. Game 40. A flip-flopflip 95-93 loss to the New Orleans Pelicans. The question is, how long will we think of this as the nadir? And does that mean things are getting better?

New Orleans is a decent team by Western Conference standards - so a very good one by the measure of the East. They aren't much of one without the best player in the NBA right now - Anthony Davis.

Davis took Friday night off and New Orleans lost by 15 to the 76ers. The 76ers! He missed Sunday as well. So did Jrue Holliday.

That was the cue for lightly regarded French centre Alexis Ajinça to turn into Moses Malone. Ajinça was so dominant off the bench, he played 34 minutes. He averages 10. He scored 22. He averages four.

Given the way Ajinça abused Toronto, it doesn't bear contemplating what Davis might have done to them.

This game was as close as it's going to get to a gimme for the next five weeks. Instead, the Raptors end a deflating 2-4 homestand bleeding confidence and, for the first time this year, cohesion.

The goat was Ross. That's becoming so regular a spot for him, he might as well buy himself sturdy, travelling horns.

"It wasn't all T-Ross's fault ..." coach Dwane Casey said afterward, apropos of nothing. Which means it is his fault.

Short of shooting on his net, Ross did just about everything wrong on Sunday afternoon.

Offence, defence, transition, positioning. All wrong.

At least this time, he was given limited opportunities to dig a hole for everyone else. He played eight minutes in the first quarter, two in the second, and then no more.

"We just have to help him any we can," Casey said. "Whether it's extra work, if coming out of the lineup is going to help him and his confidence, whatever it takes to get his mojo going."

At his locker, Ross's mood had not improved. He's a quiet man at the best of times, but this was a more morose silence than he typically gives off.

His answers: "Just keep playing."; "Gotta stay positive."; "Everybody goes through this."

The questions don't even matter.

On the subject of whether a benching would act as a confidence booster: "Who knows? I don't know."

This team's salutary trademark may be that, while they have weaknesses, they only display them one at a time. On Sunday, they emptied out a big bag of ugliness, and sifted through it for two hours.

First off - slow starts.

This wasn't 'slow.' This was Steve-Austin-starts-runningacross-a-field and the duh-duhduhs-kick-in slow. They scored 14 in the first quarter - their worst of the year - on 26-per-cent shooting.

They scored 36 points in the first half - another season low.

The only thing keeping them in it was the ineptitude of New Orleans' 'starting' squad, as they pushed out subs for the subs.

Toronto was purposeful in the third. That's true. Greivis Vasquez started in place of Ross. Good or bad, the Venezuelan is a human stimulant. As usual, he had the shooting fidgets, and shots were falling. You get the strong feeling that if you handed Vasquez a baby, he'd try to stuff it through the closest hoop.

Toronto pulled back a 14-point deficit. By the end of that quarter, they were up by seven. Crowd rocking, a little bit of swagger returning, normalcy restored.

Then another of their bad habits - eyes off the prize. It got very sloppy. It took two minutes at the end to erase that seven-point lead.

On the final New Orleans possession, score tied and the game clock under 24 seconds, it was left to Vasquez to face up slippery New Orleans guard Tyreke Evans.

Vasquez is many things. A great man-on-man defender is not one of them. Evans held the ball until the clock counted down, walked around Vasquez and laid it in off the glass. It was that kind of day.

By the fourth quarter, we knew this was a disaster.

If the Raptors had won it, we would've called it 'mitigated.' Everyone around here has stopped talking about that long string of holding fourth-quarter leads - because they don't hold them any more.

Having gone the other way, we have to gauge the size and importance of this disaster. Ten days ago, the team had lost four in a row. Someone asked Kyle Lowry how worried anyone should be.

Lowry shrugged and said everyone would forget it had happened if they then went on a 10-game losing streak.

"Have you already forgotten it?" someone asked him, implausibly.

Lowry gave the guy a withering look and said, "No. Because we haven't won one yet."

They kept on losing, and now we're into the territory of non-forgetting. Tellingly, Lowry had vacated the dressing room by the time the media showed up on Sunday - the first time he's done that this year.

They're in Milwaukee on Monday. It goes hot and cold after that: Memphis (scary); Philadelphia (doable); Pistons (scary); Pacers (doable).

It's not clear what exactly ails the Raptors right now. It may just be what Casey keeps describing it as - "a lull."

If it's still going on in a week, it's not a lull. It's a slide. And a week after that, it's beginning to become a ... well, let's not say it yet.

Let's take a page out of Lowry's book and try to work on selective forgetting, while we still can.

Follow me on Twitter:@CathalKelly

Associated Graphic

The Raptors, even with DeMar DeRozan, were terrible in the first half, scoring a season-low 36 points.


World Cup revival more about making money than 'growing the game'
Tournament will include only countries that pass the NHL's arbitrary bar for relevance
Monday, January 26, 2015 – Print Edition, Page S1


At the current rate of inflation, we soon won't have a hockey season, per se. We'll just have never-ending hockey.

That seems to be the NHL's current goal, beginning with the (re)creation of a quadrennial World Cup of Hockey, to begin in September, 2016. They've also floated the idea of a Ryder Cup-style tournament that will match some iteration of Canada and the United States versus Europe, to be played in between.

This is in addition to the Olympics. The NHL and the International Olympic Committee are now engaged in a tug-of-war over the sport's best players - though the IOC doesn't have to exert much force, and probably isn't as bothered as we'd like to think it is.

You might be drawn into pulling for the league over the IOC's animated corpses if this had anything to do with the quality of the product. But that's not what interests the NHL. Instead, it's transparently about money.

"We've grown to a $4-billion business," NHL COO John Collins said at Saturday's World Cup unveiling. "The question now becomes, where does that next billion come from?" Oh, I don't know. I'm looking for someone to shovel my driveway. I could pay a neighbourhood kid $20, but I'm willing to go up to $50 if you send over an NHLer.

Furthermore, one gets the disturbing feeling this isn't about money qua money. It's about - channel Tony Soprano as you say this - respect.

'What? The NBA got $2-billion (U.S.) for a team nobody watches?! We can do that, too.

Get Las Vegas on the blower. We'll see them a franchise, and then we'll get someone to go down there and explain what hockey is.' The obsession with box-office numbers ruined the movies. Annual revenue numbers are going to do the same to hockey. Short of the league going broke, why should a fan care about how much money the NHL makes? Because it's a way to show off, and they're failing at it.

Every other big league isn't just getting rich - they're getting Pablo-Escobar-builds-a-zooat-his-cottage rich. The NHL - only moderately, swimming-pool-in-the-backyard rich - is feeling left out.

You don't hear the NBA moaning about the Olympics, because they don't want the bother of creating and maintaining a tilted international tournament nobody cares about until the championship game.

But Americans aren't hung up about being seen as the best at basketball in nearly the same fragile way Canada approaches its hockey primacy.

The top suits at the NHL are Americans, and they've figured out precisely how to manipulate our small-man syndrome in this regard. Tell us it's about 'growing the game' and we'll do anything they say. They make a bunch of money. We get ... well, I'm not sure what we get. We get to give them a bunch of money.

Because there is no world in which winning a tournament pulled from the air matches the countrywide pride of our best players winning an Olympic gold medal. The most important people involved - the players - will tell you that. A good part of the reason the Summit Series/Canada Cups seem so romantic in hindsight is because they were our Olympic substitute. They were what the Olympics should have been, and now are.

The NHL has the same competition problem as the NBA, but they're willing to twist themselves into knots pretending it doesn't matter. They're so intent on squeezing every nickel out of international hockey, they've done away with the only real purpose of a national elimination tournament - by taking the 'national' out of it.

Only six countries (Canada, Russia, Sweden, Finland, the Czech Republic and the United States) will be entered in the World Cup - automatically, and presumably forever. The notion here is that only NHL players should play in the NHL's tournament. If your country can't meet the minimum number of properly accredited bodies, you're out. An epic, under-the-table kicking contest with Russia's Kontinental Hockey League still looms.

It's toweringly parochial - this sense no one can play hockey that matters outside our vision of it. Instead, they'll have a socalled Team Europe, featuring players whose countries have teams, but can't form an NHL quorum.

Slovenian Anze Kopitar - probably one of the five best players in the game - was shoved out by the league to give this exclusionary idea the patina of fair-mindedness.

"Personally, you want be part of the World Cup," Kopitar said, squirming ever so slightly. "But it's maybe a little bittersweet."

"Bittersweet." No kidding. Kopitar's father is the coach of the Slovenian national team. In Sochi, they made the quarters - equalling the Czechs and the Russians. Latvia, a team with just one NHLer, came a goal from the semis. We won't have any of those David stories at a World Cup. Only Goliaths are invited.

The eighth entrant - the 'Young Stars,' featuring a hodgepodge of kids not good enough to make their senior teams - are being set up as the overwhelming underdogs, but without any reason for you to care.

People will still watch. By 'people,' I mean Canadians. The hockey will be choppy, since the tournament begins after the summer break. It'll be fun.

Maybe it'll be great.

But it'd be more fun and even greater if we only did this once every four years, in a venue that welcomes the world under their own flags, rather than just the few countries that pass the NHL's arbitrary bar for relevance.

Follow me on Twitter: @cathalkelly

Forget this sad state - the Leafs need to start dismantling
Tuesday, January 20, 2015 – Print Edition, Page S1

The fifth stage of grief is acceptance. The Maple Leafs are currently easing into it.

They came home Sunday looking depressed (stage four), and continued that slide into Monday.

"The writing's on the wall," forward James van Riemsdyk said after the morning skate, while slumped in the doorway that doubles as his locker. He meant it in the sense that things had to change. It came out the way it reads.

At the end of that deflating road swing, Dion Phaneuf had a small, angry meltdown (stage three).

"I'm an emotional guy," Phaneuf said, so flatly it was nearly comic.

Around the same time, someone began floating the idea of a straight swap with the Kings - Phaneuf's marginally terrible contract for Mike Richards's monumentally terrible contract.

It'd be great for L.A. - adding some defensive heft in the continued absence of the suspended Slava Voynov. Why the Leafs would consider it is a D.B. Cooper-level mystery.

It's an idea so awful, only an agent could have come up with it. That's what good agents do - sell transparently bad ideas to the desperate. Even the Leafs haven't gotten that far yet.

They've given up, but they're still able to get out of bed in the morning.

But only just. They practised Monday in such funereal silence, it seemed as if they'd laid down ice in a church. Up in the stands, you felt weird about talking, in case the team was eavesdropping.

How Twilight Zone has it gotten in the dressing room? The only upbeat presence left is Phil Kessel. He was positively buoyant on Monday morning, sashaying in late to do one of his now-regular Fireside Chats with Phil.

We didn't expect you to come out, someone said.

"They made me!" Kessel said. Usually, when he says something like that, he does it like he's trying to decide whom to punch.

This time, he was aglow at the conversational possibilities.

Around the room, guys were looking around like the stretcher bearers would be by any minute.

Kessel was looking around for someone to pour him a drink. He wanted to stay a while.

"I think we were the top-scoring team in the league there for a while," he said. "Now we must be the lowest-scoring team in the league. But I think it'll change."

The longer you stare at that quote, the more sense it makes.

Which, considering the source, can be disorienting.

They went out west and played better. They still lost four games.

Everyone was keen to emphasize the betterness, as if the NHL was a course at The Learning Annex and the real goal was personal growth. The point is sustained excellence leading to points in the standings and a playoff berth.

The "better" Leafs are the alcoholic who switches from gin to white-wine spritzers. A more palatable delivery mechanism - same result.

We've moved beyond the stage of fixes. There's no fixing this. No three-game win streak is going to change the Leafs' basic calculus.

They are not, as currently constituted, a team of substance. It's not the individuals. It's the mix that doesn't work.

You know it's irretrievably broken because no one tries to explain the problem any more.

They've moved straight to deep hockey bafflegab about "one day at a time" and "concentrating on our start." Shouldn't they concentrate on the whole game? After all, it's only 60 minutes.

The first half of this season has been a staring contest between management and the roster. It's over. The roster lost.

The players had a final chance to prove they can succeed together. They couldn't. It's their fault, but it's pointless to blame them. If that's the way we're going to go, we may as well just keep climbing into the emotional wood-chopper of hockey in Toronto. Because this never ends.

It's time to begin the dismantling. Make it a general order. The only person who should be exempt is Morgan Rielly, and only because of his age. Get what you can. Then start over.

Through their actions and their words, the players know that's coming. Nobody knows how or when. But it's gone from a good, possible idea to the only logical step.

What management needs to get past is the fear of looking stupid, of being rooked in a deal. The only foolish thing left to do is nothing, while pretending that's a sort of progress.

People don't say this often enough in hockey: It's okay to be confused. Not every failure has a discernible cause.

The coach was the problem. So they fire the coach. Then the team is just as bad, but in a new way.

Turn the offence on, the defence conks out. Fix the defence, the offence loses juice. It's endless.

Years ago, I had a car I hated, but could not let go. Every two months, it was in the shop. I know nothing about cars, but it became clear to me that the thief who moonlighted as my mechanic was rebuilding the engine, one part at a time.

Thousands of dollars later, he finally let me off the hook: "Either you can pay me, or you can pay for a new car."

The Leafs need to pay for a new car.

Follow me on Twitter:@cathalkelly

Associated Graphic

There's no fixing this team; the Leafs are not, as currently constituted, a team of substance. It's the mix that doesn't work.


Beeston takes final swing
Blue Jays CEO is looking ahead, hoping to make good on his last shot at winning another World Series
Wednesday, January 28, 2015 – Print Edition, Page S1

TORONTO -- The Toronto Blue Jays are embarking on a season when both their president and general manager are on the final years of their respective contracts, and with a fan base that's exasperated by the baseball's team lengthy playoff drought.

For Paul Beeston, who has emerged slightly battered and bruised but otherwise upbeat after his employers at Rogers Communications finally saw fit to extend his contract to be the team's president and chief executive officer for another year, it all comes with the territory.

"I don't think we are dysfunctional at the present time," Beeston said somewhat defiantly during an interview on Sportsnet 590 The Fan radio in Toronto on Tuesday. "I think everyone now knows that I'm here for the year and we are going to go forward as a group."

But nobody said the job would be easy. The Blue Jays are at a crossroads heading into the 2015 season.

General manager Alex Anthopoulos is beginning his sixth season as the man calling the shots in the baseball department, and he has yet to deliver on his stated goal to get the Blue Jays into the playoffs.

That is something that Toronto baseball fans have not experienced since 1993, when the Blue Jays won their second of back-toback World Series championships. Their 21-year postseason absence is the longest active futility streak in the 30-team league.

This could be Anthopoulos's final shot. Should the Blue Jays falter out of the starting gate this season, the popular belief is that both Anthopoulos and Blue Jays manager John Gibbons will be relieved of their duties.

Would Beeston, who hired Anthopoulos in the first place, be willing to make that tough decision knowing that he himself already has one foot out the door?

"Let's be realistic - nobody feels comfortable firing anybody," Beeston said when asked directly if he would make midseason management changes if he felt it was necessary. "If they are, they've got to be a little bit sadistic. But the answer to that is yes. I mean, if you have to make the decision, then you have to make the decision."

As for the tawdry manner in which his own employment status was handled by Rogers over the past couple of months, Beeston, 69, took the high road. He is choosing to move forward, and not focus on what has transpired.

"We're now looking at what's happening from this day forward," Beeston said. "I don't think there's any benefit at the present time of discussing any of that. I wanted to stay here through 2015 and I'm here through 2015. So what happened, happened, and what didn't happen, didn't happen. The result is that I'm here and I'm happy to be here." After a couple months of the silent treatment, Rogers confirmed via a simple news release issued Monday night that the Jays' first-ever employee would return for one more season as president and CEO.

By doing so, the telecommunications giant put an end to a rather clumsy saga in which Rogers contacted at least two other MLB teams to inquire about hiring their executives away to replace Beeston.

The leading candidate was Baltimore Orioles GM Dan Duquette, who is under contract to the Orioles through the 2018 season.

This in itself raises serious questions about tampering by the Blue Jays in their pursuit of another team's executive.

The courtship of Duquette reportedly came to an end on Sunday after the Blue Jays decided Orioles owner Peter Angelos was asking too much in compensation for the release of his GM.

According to various reports, the Orioles were seeking a number of Toronto's minor-league prospects, including pitcher Jeff Hoffman, their top pick in the 2014 draft.

Beeston is of the belief that the Blue Jays are headed in the right direction and, with the off-season additions of Josh Donaldson, Russell Martin and Michael Saunders, should contend for the American League East crown this season. For that, Beeston said he is excited.

"Let's be realistic about it, no one wants to see their career played out in the media," Beeston said. "But you know, it's what sports is all about. And so I can't walk away from it any more than [ex-Maple Leafs coach] Randy Carlyle can walk away from it and say it doesn't affect him, or he doesn't think about it."

But Beeston said he's focused on the upcoming season, not on the recent controversy.

"So I don't think the company has been damaged by it, I don't think the ball club's been damaged by it," he said.

The seven-year slump
Global growth is flatlining - despite big bailouts, deep rate cuts and extreme monetary stimulus. Why we're still waiting on a revival more than a half-decade after the financial crisis. David Parkinson, Richard Blackwell and Iain Marlow report
Saturday, January 24, 2015 – Print Edition, Page B1

Bill Hammond has navigated a globally focused business through 37 years and a halfdozen economic cycles. But he's never seen anything quite like the long, slow, on-again-off-again recovery that the world economy remains stuck in, years after things should have returned to normal. Frankly, he's worried.

"It has become clear that we are really dealing with a different kind of economic recovery than anyone has experienced since World War II," says Mr. Hammond, chief executive officer of Hammond Power Solutions Inc., a Guelph, Ont. company that makes electrical transformers for industrial clients around the world.

"This is far different from any recession I have seen."

Seven years after Europe and the United States slipped into what would become the one of the deepest global recessions in history, and five and a half years since the North American economy returned to growth, the recovery remains a perplexing, inconsistent and frustratingly elusive work in progress.

Hammond Power's financial statements read like a summary of the recovery that never quite arrived: A slide in revenue during the recession, followed by an encouraging rebound to above pre-recession levels in 2012 fuelled by the commodity boom and government stimulus spending on infrastructure - only to slip back again after that short-lived boom fizzled.

Profits have never come close to their 2008 peak. The company, which sees little room for further expansion in Canada, is focusing on growth in the United States and selective markets in Europe, India, and other parts of the world.

In many respects, the global economy looks much better than it did several years ago. Growth is modest but generally positive; unemployment has declined; the financial system still has some issues, but is on much more solid ground compared with the brink on which it teetered in 2008. Yet much like Mr. Hammond's company, the economy has never really gotten back to its old self. Every step forward seems to be followed by a stumble backward.

In Canada, the pattern is disturbingly similar. The U.S. revival was supposed to finally lead Canada's economy to the promised land, but our recovery glass once again looks half-empty.While U.S. demand for Canada's exports is expected to lift the economy, the plunge in prices for oil and other commodities will hold some major sectors and economic regions down.

And the world has started 2015 in full stumble. The International Monetary Fund this week cut its forecasts for global growth by 0.3 percentage points to 3.5 per cent this year and 3.7 per cent next year. That would make four successive years of growth below what has historically been considered its "trend" rate - which suggests that the economy is actually getting further away from returning to its full capacity, rather than closing the gap.

A rapid succession of central banks, including Canada's, rushed this week to ease monetary policy, to fight against the slowing pace and resurgent deflation fears.

The recovery is also becoming increasingly uneven. While the IMF raised its forecast for the United States, advanced economies outside of the U.S. are expected to grow by a thin 1.7 per cent this year. Japan slipped into recession last fall, and the troubled euro zone will be lucky to scratch out growth of much more than 1 per cent.

The malaise is also spilling over to the once-fast-growing emerging markets. Powerhouse China is facing its slowest growth in a quarter century. Russia, crippled by the plunging oil price and economic sanctions in response to its actions in Ukraine, is destined for recession.

"I have never seen as much global instability," says Betty Lou Pacey, who runs a Vancouver-based specialty lighting company, BL Innovative Lighting, with international suppliers and clients. She just returned from seeing a client in Argentina, where inflation is running at about 40 per cent. Even in her primary market of the United States, where so much of the world's recovery hopes are now pinned, she senses the tremors from the nagging global woes and the lingering hangover from the recession: Big U.S. restaurant chain clients are no longer investing in renovations.

"I mean, we've got the euro, which has got troubles.

We've got political issues all over the world. Where this is going, I don't know."

And there's a growing concern that the recovery is running out of chances. The average expansion phase of economic cycles over the past half century is about six years.

As this underdeveloped recovery limps toward its sixth birthday, there is a growing sense of impatience to figure out just what is going wrong and to fix it - before the clock runs out.

Monetary stimulus

What recovery in demand the global economy has achieved has come with a great deal of help from ultralow interest rates and extraordinary monetary stimulus from major central banks. But these extreme measures, meant to stave off a financial system collapse and a descent into deflation, have remained entrenched far longer than central bankers ever imagined. At a time when central banks had expected to be returning their interest rates to more normal levels, their economies remain too fragile to stand without support from highly stimulative monetary policy.

Indeed, central banks have recently stepped up their efforts as the global economy again faltered. The European Central Bank this week launched a major quantitative easing program, while the Bank of Canada cut its key rate for the first time in nearly six years. China, Japan, Norway, India, Denmark and Switzerland have all recently eased their monetary policy.

Even in the United States, where the recovery is going full-steam and growth of a healthy 3.6 per cent is forecast for this year, the Federal Reserve has kept its pedal to the metal - its key interest rate remains essentially at zero, and the Fed looks likely to raise it only very slowly over the next few years.

"This period has been enormously frustrating for central bankers and market participants alike," says Fidelity Investments portfolio manager David Wolf, who served as an adviser to the past two Bank of Canada governors. "I don't think any of us would have thought five years ago that we we would be sitting here now with rates still on the floor almost everywhere."

Mr. Wolf says central banks have been fighting an uphill battle, as factors such as government austerity programs, high consumer debts and tighter financial sector regulations have all conspired to restrain economic activity.

"Monetary policy has been the only game in town fighting against all these headwinds."

UCLA economics professor Roger Farmer says that in this recovery, monetary policy simply hasn't transmitted to the economy the way it normally does. Usually, rate cuts and other forms of monetary stimulation increase the flow of money to the broad economy, which spurs spending and investment. But in many major world economies, most notably in Europe and Japan, broad money supply has been very slow to grow in response to central banks' priming of the financial system. And the money that has flowed through to the broader economy has not translated to business investment.

"The normal channels by which monetary policy operates are simply not working," he says.


As the Great Depression taught us, this kind of transmission failure is typical of severe economic downturns brought on by financial sector crises. A big reason for that is the excessive debt that brought on the financial crisis in the first place - something the world still hasn't adequately reined in.

Last fall's Geneva Report, an annual paper on world economics published by the International Centre for Monetary and Banking Studies and the Centre for Economic and Policy Research, pegged total world debt (government, corporate and household) at a record 212 per cent of gross domestic product as of the end of 2013, up from 174 per cent in 2008. Some countries, such as the U.S. and Britain, have largely swapped excessive private sector debts for higher government debt burdens; in others, including Canada and many emerging markets, household debts have risen to troubling levels.

Economists say high debts feed a vicious circle that impedes post-financial-crisis economic recoveries. Money that might otherwise go to spending and investment is instead eaten up by debt servicing and reduction, which slows economic growth. And slower economic growth generates less income to pay back debts, slowing the debt reduction process. This is why financial crisis recessions are so hard to shake.

"This was always going to be a longer-than-average recovery," Mr. Wolf says.

Global trade

Another problem has been a persistent lack of traction in international trade, which had been a key engine to the global economy's strong growth in the pre-crisis era.

From 1996 to 2007, world trade volumes grew by an average of 7 per cent a year, according International Monetary Fund data. Since 2010, it has grown by just 4 per cent a year.

Peter Hall, chief economist at Export Development Canada, said trade had been expected to be the salvation for advanced economies, as booming emerging markets seemed to come through the crisis largely unscathed, offering an ongoing source of demand as those markets continued their march toward modernization. But the lingering weakness of developed-world demand has increasingly worn on emerging economies, which have remained more reliant on external demand to keep their economic engines humming than many observers had hoped. The IMF forecast emerging-market growth at a modest 4.3 per cent this year, their weakest since the recession ended.

"There was a presupposition by many that emerging markets had gotten lift on their own, that they were able to self-generate growth. In fact, the growth was fuelled in large part by massive stimulus programs," Mr. Hall says.

"They are still follower economies."

"In 2008, we were all talking about the BRICs [Brazil, Russia, India and China], they were going to be our solution," says Scott Shepherd, CEO of Northstar Trade Finance Inc., a Vancouver-based company that provides financing for exporters and foreign buyers. "But Brazil has melted down. I have huge exposure in Brazil. I followed a bunch of exporters there, and they're having a hard time."

He also has exposure in Russia, where geopolitics and plunging oil have decimated the economy.

"I've been doing international business for 32 years and I've never seen anything like this," he says. "A huge, interconnecting global trading system has developed, where somebody sneezes over there and someone gets a cold over here. It's all interrelated."

The China syndrome

Chief among the emerging-market disappointments is China, whose massive economic clout and rapid growth was expected to lead the way out of the recession - especially for commodities-rich countries such as Canada that were counting on China's seemingly insatiable demand for raw materials. Instead, China has bent under the weight of sluggish Western demand for its exports, and is in the midst of an economic pause as it works to transition its economy to more domestic-driven demand and away from struggling export markets. The growing pains have also manifested themselves in a real estate bubble and an overstretched banking sector, which the Chinese government is trying to cool.

China is expected to grow by a little less than 7 per cent this year - still torrid by Western standards, but far from the double-digit growth that was routine in the pre-recession years. Canada's exports to China were down 5.5 per cent by dollar value in the first 11 months of 2014 from the same period in 2013, led by sharp declines in iron ore and coal. Weaker commodity prices certainly played a part in that - but the slowdown in Chinese demand was the key cause of that price weakness.

"They were hungry for everything for a while. But the demand has gone down," says Mike Yochlowitz, the fourth-generation director of sales at family-owned scrap metal company ABC Recycling of Burnaby, B.C. Total volume of non-ferrous shipments to China processed through ABC Recycling's facilities last year was down 40 per cent from the heady days of 2010. On a recent trip to China, Mr. Yochlowitz saw customers struggling with higher labour costs, and some of his Chinese clients had seen their financing tighten by upward of 40 per cent, evidence of the country's efforts to get credit conditions under control.

Ms. Pacey, whose lighting business has sourced components from China for decades, saw first hand the evidence of China's slowdown when she went to tour several factories there in October - only to find near-empty facilities.

"You're walking through these huge buildings - I mean, massive - and nobody's there," she says. "It's weird."

Too much capacity

The bottom line, economists say, is that the global economy still has excess capacity. While many economies, especially in the developed world, shed substantial capacity during the recession's deep downdraft, there is more capacity to produce than there is demand for that output.

The IMF estimates that the world's advanced economies are still operating at about 2.5 per cent below their capacity - and chronically below-normal global growth means demand hasn't been sufficient to close that gap.

The continued overcapacity has meant little need to hire more workers. The International Labour Organization reported this week that the global labour market still hasn't fully recovered what it lost in the 2008-09 crisis. It said global employment is 61 million jobs below its longterm trend line, reflecting the gap that opened up during the crisis and has never closed. The global unemployment rate of 5.9 per cent is still above pre-crisis levels (5.5 per cent in 2007), and the global labour force participation rate remains below pre-crisis levels, indicating that an additional nearly 40 million people worldwide have abandoned looking for jobs entirely.

"Global economic growth remains significantly below pre-crisis trends and is too slow to close output and employment gaps that opened due to the crisis," the ILO said in its annual report on labour trends.

The labour slack also means employers are under less pressure to raise wages. Put it all together, and the result is a lack of money making its way into consumers' pockets - which translates into a lack of consumer spending.

Thus the overcapacity is not only caused by a lack of demand, but it is fuelling and perpetuating a lack of demand.

Mr. Hammond believes companies built up too much capacity because of the overheated optimism spawned by the rise of China as an economic superpower.

"With China not being the global engine of growth as it was up until 2012, we're back to the reality and challenge that in most of the world's largest economies ... more than 60 per cent of GDP is generated by consumer spending," he says. But with employment growth sluggish, and the jobs that have been created paying less than ones that were lost during the recession, there is just no momentum, Mr. Hammond adds.

How do we break out?

Breaking free from the clutches of a post-financial-crisis funk isn't easy. Prof. Farmer notes that it took a massive government fiscal response -specifically, the financing of a world war - to bring the Great Depression to an end.

U.S. government spending soared from 15 per cent of GDP to 50 per cent. "People are not prepared to go to those extremes," he says.

But there are plans afoot for a more modest, and more peaceful, effort by global governments. Last year, the Group of 20 countries, which account for roughly 90 per cent of the global economy, agreed to work together to raise the level of global output by 2 per cent, over and above the typical growth trend, by 2018. It might not sound like much, but it's enough to finally lift the world out of its post-crisis rut and permanently expand the global economy's punching power.

The plan calls for co-ordinated government policies that would "restore near-term demand, remove medium-term supply constraints, and build consumer and business confidence." It includes commitments for increased spending on infrastructure, fostering private sector investment, regulatory reforms to promote competition and removal of trade barriers.

Many economists believe infrastructure investment may be governments' best way to contribute to the solution. While Prof. Farmer is quick to say he's not a fan of big-spending government stimulus largesse, he argues that the current ultra-low interest rates do give governments the cheapest borrowing costs they have seen in decades, affording them an inexpensive opportunity to invest in a wide range of projects that would enhance productivity and produce long-term economic dividends.

As for Mr. Hammond, he advises Canadian business operators to "run tight and be flexible." And he suggests business owners get used to the idea that the good old days are gone for a while.

"We certainly don't expect this decade to be as positive as the very good years of the last decade."

If you ask Hammond Power Solutions' CEO Bill Hammond, the roots of the current economic malaise reach back to long before the financial meltdown in 2008.

Essentially, he said, companies built up too much capacity because of the overheated optimism that was spawned by the rise of China as an economic superpower. The result was the commodity "supercycle" which in turn drew speculators who further drove up prices.

China has now slowed, and at the same time, "governments have not played the traditional role of investing in public infrastructure projects ... because they have been too burdened with high levels of debt."

For Mr. Hammond's company, which makes electrical transformers for dozens of applications, the current economic strength in the United States is a key reason for optimism. But how long the U.S. can stay "uncoupled" from the slowdown in the rest of the world is a key question.

Elsewhere, the plan for Hammond Power is to focus on niche markets - which can be lucrative if chosen carefully, Mr. Hammond said. "Yes, Europe is very slow right now," he acknowledges. "But we have such a small market share in Europe we believe we can increase that, even in a slow economy." The company also bought a transformer maker in India a few years ago, and is using that to make inroads on the subcontinent, which is "one of the more positive and robust economies in the emerging world," Mr. Hammond said.

His company is creating contingency plans for a variety of economic conditions that could affect the firm in the future. It is crucial to be prepared and plan for a variety of "likely and logical scenarios," he said. Richard Blackwell

IMF global GDP growth

2008 MARCH As the credit crisis deepens, JPMorgan buys Bear Stearns - with help from the Federal Reserve and U.S. Treasury.

SEPTEMBER The U.S. government takes control of mortgage finance companies Freddie Mac and Fannie Mae. Bank of America buys Merrill Lynch. Lehman Brothers collapses. Markets crumble as politicians argue over a rescue plan.

2009 JULY As the Great Recession officially comes to an end, the Bank of Canada projects that the Canadian economy will return to full capacity by mid-2011.

2010 MAY Greece, teetering on the brink of collapse under the weight of its government debts, receives a massive bailout from the International Monetary Fund, the European Central Bank and its fellow euro zone countries.

2011 APRIL European Central Bank raises interest rates for the first time since 2008, citing concerns that surging oil prices could spark inflationary pressures. The move was considered the beginning of an unwinding of record-low rates adopted to combat the financial crisis.

JULY The Bank of Canada projects that the Canadian economy will return to full capacity by mid-2012.

2012 FEBRUARY Greece, at risk of a major default on its debt, receives a second large bailout.

JULY European Central Bank cuts interest rates to then-record lows. The Bank of Canada projects that the Canadian economy will return to full capacity in the second half of 2013.

SEPTEMBER U.S. Federal Reserve introduces its third quantitative easing program (QE3).

2013 MAY Federal Reserve chairman Ben Bernanke muses about the possibility of beginning to scale back QE3, triggering a global slump in financial markets.

OCTOBER The Bank of Canada projects that the Canadian economy will return to full capacity by the end of 2015.

MARCH The international community imposes the first of several rounds of economic sanctions on Russia.

2014 SEPTEMBER Japan slips into a technical recession (two consecutive quarters of economic contraction).

OCTOBER The Bank of Canada projects that the Canadian economy will return to full capacity in the second half of 2016.

NOVEMBER China's central bank cuts interest rates, amid the slowest growth in nearly a quarter century.

2015 JANUARY Bank of Canada cuts key interest rate for the first time in nearly six years, saying that without the rate cut, the Canadian economy likely wouldn't return to full capacity until late 2017. The European Central Bank launches a large-scale quantitative easing program, as slumping oil prices threaten to send the euro zone into deflation.

Associated Graphic


Bank of Canada Governor Stephen Poloz recently made a surprise interest rate cut.


Brian Vandeven assembles a multipulse transformer at Hammond Power Solutions.


A currency exchange rate board in Moscow. The country has been weakened by sanctions.



A construction site in Shanghai. Powerhouse China is facing its slowest growth in a quarter century.


Betty Lou Pacey of BL Innovative Lighting: 'I have never seen as much global instability.'


European Central Bank president Mario Draghi. The bank has launched a stimulus program.


With 250 million people and a growing middle class, Indonesia is emerging as an Asian economic powerhouse - and global companies are racing to invest in a country being compared to China in the 1980s Iain Marlow reports from Solo, Indonesia
Saturday, January 17, 2015 – Print Edition, Page B1

Mahni Suyoso sits beaming in the passenger seat of a bright red pickup truck as it rolls slowly through the bustling streets of central Jakarta.

She's in a parade featuring jubilant brass bands and volunteers throwing out water and treats to the crowd, mostly local office workers. In the back of the truck is a 1.8-metre-tall pyramid of wired-together eggplants, carrots, snake beans, cabbages, tomatoes, corn and a pile of yellow rice - along with the national flag.

It's the celebration of a new Indonesia.

Ms. Mahni, an entrepreneur with eight restaurants, had the vegetables dug from her farm to showcase rural prosperity, and then piled into the vehicle with her employees to drive a day and a half across Java from the small city of Wonosobo. Indonesia was finally inaugurating a president they thought was worth honouring: Joko Widodo, known to all as Jokowi.

Ms. Mahni is elated, she explains, because Jokowi is a successful, hard-working business person from a small city, just like her - not part of the old Jakarta elite who have dominated politics since the fall of Suharto in 1998.

"I'm from the village, I don't have any education, but I know money," says Ms. Mahni, 42, as she secures a Jokowi headband around her turquoise head scarf.

"He became successful from business, not from corruption. Jokowi knows how to make us prosper."

Indonesia is experiencing a burst of unprecedented economic and political optimism. The world's fourth most populous country, with some 250 million people, is emerging as a powerhouse of Southeast Asia, at the dawn of an awakening that many compare to pre-boom China three decades ago.

After decades of dictatorship and corruption, the country is quickly shifting course with the election of a political outsider that many think will usher in a new era of sustainable economic growth.

Global companies, eager to get in on the ground floor, are racing to invest and sell consumer goods to Indonesia's rapidlygrowing middle class.

Ottawa-based billionaire investor Sir Terence Matthews compares Indonesia to China in the late 1980s. He just opened a Jakarta office for his investment firm Wesley Clover, which has extensive holdings in technology and real estate.

Sir Terence struck his first joint venture in Beijing in 1980. "I've been doing business in this region for well over 30 years and I generally avoided deals in Indonesia," he says in an interview.

But that has now changed. "Timing in life is almost everything - I don't care whether it's sex, a new market or a new product," Sir Terence says. "We think timing for Indonesia is good. The government feels the same way."

The country is still vulnerable to sudden capital outflows, and there are lingering concerns about the regulatory and legal framework. But with Jokowi as President, business people and foreign investors - as well as ordinary citizens - are hopeful his reformist government will build desperately-needed infrastructure, clamp down on corruption and liberate the country's vast potential.

Cameron Tough, a Canadian who works in investor relations for PT Adaro Energy, a major coal miner, says "Indonesia in the next 10 years will blow us all away."

Targeting corruption

Indonesia's economy, the biggest of the various Association of Southeast Asian Nations (ASEAN) countries, has posted growth on average of about 5 per cent a year for a decade, and exports doubled to $204billion in the five years leading up to 2011.

The country has an abundance of natural resources, and boomed as China gobbled them up: It is the world's largest producer of thermal coal, tin and nickel. It has vast supplies of oil and gas, and is by far the biggest exporter of palm oil. Japanese investors seeking strong returns as their economy sputters at home have become the largest foreign investors in Indonesia - and their footprint is visible from bank towers and infrastructure projects to the Yamaha motorcycles zipping through Jakarta's gridlock.

But corruption has been a problem for years, bleeding away state revenues that could have been used to build infrastructure and pay for services. Indonesia's Corruption Eradication Commission has been making headway, and Jokowi even had his cabinet vetted; financial institutions were approached for financial records and several potential cabinet ministers were excluded. He's appointed technocrats to key economic portfolios. And most importantly, Jokowi has acted quickly since his inauguration on Oct. 20 to slash Indonesia's fuel subsidy - which, combined with other other subsidies, ate up one-fifth of the national budget in 2012, more than three times the spending on infrastructure. That will free up money to build roads and ports that will help growth.

"I remember my grandfather saying 'Watch Brazil,' " says Francisco Goncalves, a Canadian who heads PT McElhanney Indonesia, a mapping firm that works with clients such as mining giant Rio Tinto. "They were doing nothing. Then they woke up. I think it's the same thing with Indonesia. It has everything."

Many worried Jokowi would lose the election to Prabowo Subianto, a former army general under Suharto, who ruled the country for three decades. But with Jokowi in charge, a new approach to business is already visible. Chris Bendl, the chief executive officer of Manulife Indonesia, said two of his Indonesian executives were interviewed by the new President's transition team.

"That would never happen in the past," Mr. Bendl says. "The fact that they're listening to the business community is a positive sign."

Manulife, which has more than two million customers in the country, is getting a slice of the lucrative growing consumer class. Mr. Bendl says barriers to entry in Indonesia are high, but local partnerships can help foreign companies overcome the challenging logistics - and reach the people. Manulife, for example, partnered with a bank that had deliberately opened branches next to traditional Indonesian markets in order to give out small loans to the vendors. They now also sell them insurance.

"It's a distribution play, more than any other," Mr. Bendl says.

Although national income is still only $3,580 (U.S.) a person, it's on the rise. Consulting firm McKinsey estimates that Indonesia's middle class numbers about 45 million, an already large market for goods and services that could grow to more than 135 million people by 2030.

Boston Consulting Group estimates that number may be even higher, saying in 2013 that there is around 74 million Indonesians in families that spend $200 or more a month who are about to "ramp up" spending on everything from household items to financial services, creating a "critical window of opportunity" for consumer goods companies.

Regional discount airlines such as Lion Group and AirAsia have made record aircraft orders - one Lion Air order for 234 Airbus aircraft was $24-billion - as they struggle to keep up with rapid growth in Indonesia and its ASEAN neighbours.

Western brands, lured by millions of consumers with newly disposable income, are seeing strong growth in Indonesia. Unilever Indonesia has seen steady sales for its soaps and soups through a network of 500 distributors with hundreds of thousands of outlets. Best Western International, citing "an important period in the history of Indonesia," is expanding rapidly from just five hotels in Indonesia in 2013 to 31 by the end of 2015. And despite infrastructure challenges, corporations, from Japan's Honda and South Korea's LG to General Motors, have opened up factories here - helping turn the country into a manufacturing hub for Southeast Asia.

Infrastructure bottlenecks

On the way out of Jokowi's hometown of Solo, a mid-sized city in central Java, the main road begins winding past hundreds of tiny, wholesale furniture stores displaying newly made cabinets, ornately carved doors and dining room tables. Some of the shops have freshly hewn logs out front, or heaps of stacked rattan - hints of Indonesia's tropical climate and booming forestry sector.

After an hour, a side road veers over a bridge and onto a gravel road lined with bamboo. It is here, across from a field of freshly planted peanuts, that Jokowi started the furniture export business that led him to the presidency. On this afternoon, a truck has backed a 12metre Evergreen shipping container up to one of the warehouses. In the shade near some parked motorcycles, Sehadi, a 42-year-old machine operator who goes by one name like many Indonesians, explains that he was here at the beginning.

He briefly left Jokowi's firm for a better salary, but returned - not for more money, but because Jokowi was a good boss.

"He started very small. He started with a team of 10 staff.

He even drove an ugly car in the beginning" says Mr. Sehadi, drawing laughs from colleagues. "When Jokowi was here, it was very nice. He treated employees really well."

By the time Jokowi shocked his friends by running to become mayor of Solo, Jokowi's factory was dispatching about 80 containers a month to overseas markets, according to one local businessman. Jokowi, who travelled internationally to industry conferences in the U.S. and Europe, grew a profitable business in a country that the World Bank currently ranks at a dismal 114 in ease of doing business (out of 189 countries).

Boosting manufacturing is crucial if Indonesia wants to find decent-paying jobs for the roughly 16 million young graduates flooding the job market in the next six years, who will fail to find meaningful work if gross domestic product growth remains below 6 per cent, according to the Asian Development Bank.

"That's still below Indonesia's potential," says Edimon Ginting, the bank's deputy country director in Indonesia. "The solution is structural reform."

For a furniture maker in Solo, structural reform would involve removing the infrastructure bottlenecks that have choked expanding firms - particularly at the hundreds of ports that dot the shorelines of this massive, archipelagic nation.

Supriyadi, a friend of Jokowi's, owns a furniture exporter in Solo that directly employs 240 people, indirectly employs another 600 weavers and artisans, and pulls in about $2.5-million (U.S.) a year shipping rattan furniture to the U.S., Sweden, Mexico and Canada. As he strolls through his cavernous factory, past chairs destined for Pier One Imports, Supriyadi details his frustrations. Whether he's getting raw materials from the massive islands of Sumatra or Kalimantan, or shipping out finished products from Solo, the poor condition of Indonesia's ports is a constant irritant.

Smaller barges are often necessary for transfers to larger boats, resulting in extra costs and delays, he says. And because it's only possible to use seven-metre containers between Indonesia's thousands of smaller islands, it becomes prohibitively expensive to ship within Indonesia. It is often more expensive to ship goods from one Indonesian island to another than it is to ship from Indonesia to Singapore, China and even Rotterdam. This prevents Indonesian businesses from taking full advantage of their own domestic market.

For example, buying a sack of cement in the remote islands of eastern Indonesia can cost 10 times what it would cost on Java, where nearly 60 per cent of Indonesians live. In many smaller ports, goods are unloaded by hand. But even in Jakarta, it can take eight days before a waiting freighter can enter a major port, according to local consultant Paul Rowland.

Jokowi understands all this, Supriyadi says, and that's why he's optimistic. "Jokowi's going to fix the system," Supriyadi says.

Working-class support

On the banks of the river where Jokowi swam as a boy, more than a dozen children squat with fishing rods. His old neighbour, Sutarti, 62, strolls the narrow lanes of shacks that still make up this riverside shanty town. She recalls Jokowi as a simple boy from an average family, who played marbles and flew kites. She would occasionally take him to his uncle's place on the back of a bicycle she has since thrown out. "If I knew he was going to become president, I would have kept it," she laughs.

It is in working-class communities like this - first in Solo and then in Jakarta where he was elected governor - where Jokowi forged a key part of his appeal: What people here call blusukan - effectively, dropping in on poor communities to negotiate with residents. In later years, this also meant surprising civil servants to ensure accountability.

But he learned it under tutelage. When political neophyte Jokowi first ran as mayor of Solo, he partnered with veteran grassroots organizer F.X. Hadi Rudyatmo. Mr. Rudyatmo became Jokowi's deputy, but was also the businessman's mentor as he transitioned to politics.

"I introduced Jokowi to the people," says Mr. Rudyatmo, who became mayor of Solo when Jokowi moved on. "At the beginning of blusukan," he adds, "there were a lot of complaints [from Jokowi]. He was cold. He got sick."

But it worked. Though dismissed by some as a gimmick, blusukan got results. It earned Jokowi respect from communities - particularly among street vendors and other urban poor who needed to move for infrastructure projects - that helped power re-elections in both Solo and Jakarta.

After winning their first mayoral term with 36 per cent of the vote in Solo, they won a second term with more than 90 per cent after dozens of meetings allowed him to peacefully move street hawkers to a new trading area. Jokowi then moved on to Jakarta, where he scored numerous successes in the gridlocked capital. Jokowi introduced universal health care, issuing cards that empowered citizens to demand medical services.

In Jakarta, he eventually broke ground on a desperately-needed subway system. He negotiated land rights for a crucial ring road, where his predecessors also failed. Jokowi ventured into slums to relocate residents from a flood catchment area to north Jakarta, where he arranged for subsidized apartments, free TVs and fridges, as well as a sea bus route to take the residents - many of them maids and construction workers - back to their old neighbourhood jobs.

Sitting in front of a new apartment, Preyetno, a local village head, said residents originally didn't want to move, despite constant flooding. But Jokowi convinced them. "Everything was explained to the people in great detail," Preyetno says. "We even ate together" with Jokowi.

"We had a big feast. We all sat on the floor."

But can a president directly negotiate across an archipelago of more than 10,000 islands? In interviews across Solo and Jakarta, in working-class communities won over by Jokowi, people repeatedly expressed the unrealistic hope that Jokowi would still pop by to see them.

Mr. Sulistyo says that with technology, Jokowi can engage in "e-blusukan," but another on Jokowi's team, the pollster Saiful Mujani, laughs at the term.

"E-blusukan? What is that?" asks Mr. Mujani, noting he worries about the public's huge expectations. "He's so busy and Indonesia's so big."

Even his former neighbour Ms. Sutarti, who says she still celebrates Ramadan with Jokowi's mother, has found her links to Jokowi severed, much to her disappointment. "It's very hard to meet Jokowi nowadays, but we still pray for Jokowi," she says.

Rising middle class

Despite misconceptions that Indonesia is a pure commodity play or overly reliant on manufacturing exports, McKinsey argues that the economy is driven largely by domestic consumption and services. In a recent survey, the Economist Intelligence Unit surveyed 171 business and discovered that cheap labour ranked 10th among reasons for manufacturing products in Southeast Asia.

The No. 1 reason was access to the rising middle class.

In addition to being a hot market for Manulife, for years Indonesia was also BlackBerry Ltd.'s most crucial emergingmarket bastion. "We had a pretty small team doing some pretty serious business," says Andy Cobham, who used to lead the firm's local operations.

Of course, the economy has slowed in recent quarters. Cooling Chinese demand has dampened prices for commodities, which make up more than half of Indonesia's exports. And the U.S. Federal Reserve's clawback of bond-buying stimulus led to huge capital outflows, which put pressure on the Indonesian currency. But a depressed currency, combined with expected infrastructure-building and Jokowi's desire for - and knowledge of - small and medium-sized business, could lead to expanding manufacturing and exporting.

This would improve incomes, boosting consumption and the economy.

Even an export ban on unprocessed minerals slapped in place by the previous government, which took effect in 2014 to the dismay of miners, could eventually help domestic manufacturing, balancing out an extractive sector that has been criticized by environmentalists.

Still, Indonesia has been a risky place. Mr. Cobham, who notes that the country remains a volatile place to invest, knows this better than most. In 2009, he was having a regular breakfast meeting when a suicide bomber walked into the JW Marriott hotel in Jakarta and detonated explosives. Mr. Cobham spent 10 weeks in the hospital.

"We were targeted," he said.

But even though he's cautious, he's still here. In fact, he was hired to lead the new Jakarta office of Sir Terence's Wesley Clover investment firm.

Virtuous circle of investment

Sitting in a wooden pavilion at his restaurant in Solo, Slamet Raharjo - who also owns a handicrafts company and founded an exporters' association with Jokowi - motions to the road. It used to be full of hawkers, he says, but Jokowi relocated the vendors and remodelled the street on Singapore's Orchard Road. The improved atmosphere convinced Mr. Raharjo to expand his restaurant, which serves chilled tamarindflavoured drinks and chicken satay on lemon grass stalks.

As Jokowi begins his promised overhaul of Indonesia's vast port system, Mr. Raharjo is so confident that he plans to open up a brand-new fisheries business.

But unlike with his other export-oriented business, he's planning to take advantage of Indonesia's vast domestic market. And he's just one of many with such plans: He says new ports would be the start of many new businesses, and mentions hoteliers he knows that are already planning to take new chances on more distant islands - like they once did with Solo when Jokowi was in charge, sparking a cultural and economic renaissance in the city. This creates a virtuous circle of investment that he sees spreading through the archipelago.

"There is a new hope among business people," he says, noting that the vote he cast for Jokowi this past summer was the first vote he's ever cast in a general election.

"Everything is changing."


How to bet on Indonesia's rise

Long viewed as a mineral-rich country with an eager buyer in nearby China, Indonesia's economy has shifted in recent years as more companies take advantage of the archipelago nation's booming middle class. Although the regulatory and legal regimes can be unpredictable, many foreign investors have faith in a newly elected administration - and its attention to anti-corruption initiatives - and are hoping that plans for desperately-needed infrastructure will proceed without delay. From expanding commercial real estate companies to the vast Telkom Indonesia - which has around 140-million mobile subscribers - there are number of ways for investors to gain exposure to the largest economy in ASEAN (the Association of Southeast Asian Nations).

iShares MSCI Indonesia ETF

Top holdings include PT Bank Central Asia, PT Astra International (property development), PT Telekomunikasi Indonesia (Telkom Indonesia), Bank Rakyat Indonesia, PT Bank Mandiri

Market Vectors Indonesia Small-Cap ETF

Top holdings include PT Multipolar Technology, Kawasan Industri Jababeka (commercial and residential real estate), Modernland Realty, PT Lippo Cikarang (real estate), PT Eagle High Plantations (palm oil)

ADR stocks include: Bank Rakyat Indonesia, PT Adaro (coal), PT Telekomunikasi Indonesia, PT Bumi Resources (coal), PT Astra International

Associated Graphic

The Indonesian President's old neighbour, Sutarti.


Indonesian President Joko Widodo, popularly known as 'Jokowi.'


Young Indonesians at a rally for President Joko Widodo.



Indonesian President Joko Widodo speaks to the media with his cabinet members at Merdeka Palace in Jakarta.


The furniture-making district on the outskirts of Solo, Indonesia.


A campaigner for Joko Widodo hands out rally flyers in a Jakarta market.


A vendor in a Jakarta market reads a Joko Widodo campaign flyer.


Debt woes loom again as Greece votes on new path for troubled economy
Pledging to write down the country's debt, Alexis Tsipras's anti-austerity Syriza party is leading the polls ahead of next week's vote
Monday, January 19, 2015 – Print Edition, Page B1

ROME -- This time next week, Greece could be taking its first step out of the euro zone or preparing to engage the European Union in a nasty debt war, rattling sovereign bond investors throughout the world.

Such are the risks of a victory in the Jan. 25 election by the radical left Syriza party, led by Alexis Tsipras. The charismatic firebrand has used his anti-austerity message, combined with a pledge to write down Greece's apparently crushing debt, to take a small but unwavering lead in the polls. A flurry of recent readings put Syzria about three percentage points ahead of Prime Minister Antonis Samaras's centre-right, pro-austerity New Democracy party. One poll put Syriza's eight percentage points ahead.

Greek voters are apparently fed up with five years of economycrunching austerity and are willing to gamble that Mr. Tsipras has the audacity and negotiating skills to convince the European Union to dilute Greece's bailout terms.

The vote comes as Greece once again is raising widespread concerns about its economy and finances. Some of the country's big banks have sought emergency liquidity lines from the central bank as a precaution in case funding is needed to backstop recently increasing outflows of deposits.

A grand game of bluff by both political sides is in the offing. But Mr. Tsipras may be more bluster than bite. An EU official involved in Greece's bailout, who did not want to be quoted by name, said: "Why would Germany reward Greece with a debt writeoff?" when Greece has not made good on a number of its austerity and reform promises, from privatizations to civil servant head count reductions.

Greece's debt is now 175 per cent of gross domestic product, the highest in Europe by a long shot (Germany's is just less than 75 per cent, a figure the debt-hating Germans themselves consider excessive).

Born in Athens, Mr. Tsipras is only 40. His threats to overhaul Greece's bailout terms have made him one of Europe's bestknown politicians; he gained a lot of European-TV face time last year when he ran for president of the European Commission. He studied engineering and urban planning at university and joined the Young Communists Society in the late 1980s. His introduction to elected office came in 2006, when, on the Syriza ticket in the municipal elections, he won a seat on the Athens council. In the 2009 election he went national, joined parliament and became head of the Syriza parliamentary group.

In the 2012 election, Syriza nearly upset Mr. Samaras, winning 26.9 per cent of the popular vote to New Democracy's 29.7 per cent.

As Syriza gains popularity, it is moving closer to the political and economic centre. Gone is any suggestion that Syriza wants to yank Greece out of the euro zone and the wider EU. But the anti-austerity message remains intact, as does its desire to hammer down Greece's debt load.

Mr. Tsipras's economic message has undeniable appeal in Greece, where the unemployment rate is 26 per cent and the only industry that show signs of life is tourism. If there is less austerity, and less debt, the government could reopen the social spending spigot. "Austerity is both irrational and destructive," he said the other day. "To pay back debt, a bold restructuring is needed."

Is it? Greece's official debt figure is somewhat misleading. Even the International Monetary Fund (which handed Greece about 32-billion in bailout loans on top of the 195-billion from the EU member states) thinks so.

In its early 2013 review of Greece's financial state, the IMF said the package of interest-rate reductions and debt-maturity extensions awarded to Greece, for fear its economy would entirely collapse, means the headline debt figure "overstates the debt burden." For example, the interest on more than half of the EU portion of the debt is "capitalized" until 2022, meaning the debt payments will only start in that year. Japonica Partners, a U.S. hedge fund that loaded up on Greek bonds, calculated that if the country's debt were valued on a discounted cash flow basis under international accounting standards, its true debt-to-GDP ratio would be a mere 18 per cent.

Still, the debt exists and, at some point way down the road, it will have to be repaid. In spite of the rate reduction and maturity extensions, almost every economist considers the debt "unsustainable," given Greece's weak growth - it emerged from outright depression last year - shattered industries, shrunken wages and, now, euro zone deflation, which makes it impossible to "inflate away" the debt. But Mr. Tsipras won't get his debt deal unless Germany and its proausterity allies says so. In an interview Wednesday in the Financial Times, Finnish Prime Minister Alex Stubb said his country would give a "resounding no" to any Greek effort to trim its debt.

If Mr. Stubb's view is shared by Germany and the other northern European creditor countries, Mr. Tsipris will fight a battle that will be exceedingly hard to win. The game of bluff might see him threaten to default on the debt, virtually ensuring Greece's exodus from the euro zone, unless he gets his way. Or it might see Germany threaten to allow Greece to leave if Mr. Tsipris insists on getting his way. A recent article in Germany's Der Spiegel, citing unnamed government sources, said that Ms. Merkel is open to the idea of a Greek exit now that the euro zone has enough built-in crisis protection.

While Greece's exit is unlikely, because both sides have too much to lose, it's not out of the question if Syriza wins Sunday's election. Three years after the height of the crisis, the euro zone is becoming nervous again and about to step into the unknown.

Associated Graphic

Banners showing Syriza party leader Alexis Tsipras and reading 'Hope is on the way' appeal to Greek voters looking for an alternative to austerity.


Teck Resources under pressure as commodity rout takes toll
Friday, January 23, 2015 – Print Edition, Page B1

Don Lindsay didn't have much time to eat when he sat down for dinner last month with investors in a wood-panelled private dining room at Hy's, the popular Bay Street steakhouse.

Oil prices were falling faster than the temperature on the December night and fund managers at the table wanted Mr.

Lindsay, chief executive officer of Teck Resources Ltd., to explain why the company wasn't changing course to adjust.

The Vancouver-based mining giant was already reeling from a jarring price collapse in the company's core metallurgical coal and copper commodity markets.

Why, some investors wanted to know, was Teck persisting with its $2.9-billion minority investment in the sprawling Fort Hills oil sands project after spot oil prices had fallen precipitously by more than 60 per cent.

"Can you afford this project at these prices?" one investor asked, according to people familiar with the session. Mr. Lindsay's response was difficult for some investors to swallow.

"I love low oil prices," Teck's CEO enthused. Cheaper, he explained, meant lower construction costs for an oil mining complex that is still nearly two years away from production.

Since the dinner, oil, coal and copper prices have continued their descent, dramatically shrinking profits and placing more pressure on Mr. Lindsay to defend Teck's strategy. Teck's stock has fallen 74 per cent since its 2011 peak to $15.97 as of yesterday's close on the Toronto Stock Exchange, its lowest level since 2009.

To be sure, Teck's weakened condition is largely a byproduct of one of the deepest and most sustained resource commodity crashes in more than a decade. Mining and energy companies across the board have been hit hard.

Teck's current woes mark the second time the company has struggled under the leadership of Mr. Lindsay, a former investment banker hired as president in 2005.

The last time was 2009 when the company nearly succumbed to heavy debts from a takeover. Mr. Lindsay has continued to consider mining acquisitions, including Glencore's Las Bambas copper project in 2013, at a time that some investors believe the company should be more focused on cutting costs.

According to sources close to Teck, some company directors are pushing for new senior managers and directors with deeper mining experience. The company lost one of its most seasoned mining veterans, senior vice-president Ron Vance, in 2013 and Christopher Thompson, former CEO of Gold Fields Ltd., has notified the company he won't stand for reelection as a director this year.

Sources said that at least one director has questioned Mr. Lindsay's performance. But a majority of board members, including the company's controlling shareholder and chairman, Norman B. Keevil, back Mr. Lindsay's leadership.

Mr. Lindsay declined to be interviewed for this story. Through a spokeswoman, Mr. Keevil issued a statement endorsing Mr. Lindsay.

"The Board, and I, support Don's leadership and his ability to manage through difficult times like this. He's done it very well before, and knows as well as anyone what needs to be done."

In his statement Mr. Keevil conceded that there is "some tension" on the board, which he attributed to the impact of plunging commodity prices.

"A little tension is a lot better than everyone staring straight ahead with an Alfred E. Neuman 'What, me worry?' attitude," he said. "It's worth noting that this kind of tension, or diversity of opinion, is good, and is not the same as dissension."

To bolster Teck's mining bench strength, Mr. Keevil said the company has launched a search for two new board members with mining experience.

Teck has stumbled before under Mr. Lindsay. The mining giant narrowly avoided catastrophe in 2009 when the financial crisis and a temporary crash in commodity prices left it with insufficient capital to pay off debts from its $14billion takeover of Fording Canadian Coal Trust. The mining company was rescued by a $1.74billion investment by stateowned China Investment Corp., today the largest shareholder of Teck's class B shares with a 17-percent stake.

A spokesman for CIC declined to comment on its investment in Teck.

Today, Teck is in a much stronger position financially, with about $2-billion of cash and $8-billion of debt. Its biggest challenge is metallurgical coal, which accounts for 44 per cent of its revenues. Since the commodity boom peaked, coal prices have plunged 60 per cent and the outlook is grim for a mineral used primarily in steel production.

Teck's biggest competitors continue to produce large volumes of metallurgical coal at a time when demand in China, one of the world's biggest buyers, wanes.

Copper, which accounts for onethird of Teck's revenues, faces similar issues of oversupply and slowing demand. The red metal has dropped 38 per cent in three years.

This is reflected in Teck's financial statements. Teck's profit for the first nine months of last year fell 68 per cent to 40 cents a share.

"We continue to see headwinds for Teck in 2015, including a persistent supply glut for seaborne hard coking coal, significant capital requirements at Fort Hills and lack of free cash flow," said Shane Nagle, a metal analyst with National Bank Financial.

A less serious threat is the company's minority stake in the Fort Hills oil sands mining project in northern Alberta. Teck and Suncor, Fort Hills's majority owner, are committed to developing the project despite low oil prices.

"We are working to take advantage of the current low oil price environment which is expected to reduce cost pressures during the construction phase," Mr. Keevil said.

Teck's capital commitment for the project is $850-million this year. The expense will erode Teck's free cash flow, forecast to be negative $1.25-billion this year, according to National Bank Financial estimates.

Railway real estate: CP to develop portfolio of properties
Wednesday, January 21, 2015 – Print Edition, Page B1

Canadian Pacific Railway Ltd.

has formed a partnership to develop its portfolio of surplus real estate, as the company looks for new ways to boost cash flow and shareholder value.

The joint venture with Toronto-based real estate company Dream Unlimited Corp. will develop more than 30 unused pieces of CP land in major North American cities, including Calgary, Montreal, Toronto and Chicago.

"We think there's tremendous value to be unlocked from these properties," said Mark Wallace, CP's vice-president of corporate affairs, who will head the venture called Dream Van Horne Properties, named in part for one of CP's first presidents, Sir William Cornelius Van Horne.

The project is the result of a study of the company's assets that began three years ago and identified more than 45 properties totalling 4,000 acres suitable for development, lease or sale as a result of yard consolidation.

CP will provide the land while Dream will supply the expertise to build the developments, which will include commercial, residential, industrial and mixed uses.

The announcement on Tuesday did not put a dollar value on the portfolio, but analysts have been expecting CP to tap into real estate worth $1-billion.

Hunter Harrison, CP's chief executive officer has been saying for more than a year the Calgary-based company wanted to sell real estate worth $2-billion as part of its efforts to become leaner and more efficient.

CP spokesman Martin Cej said the company is not ruling out the sale of any real estate.

The joint venture will focus on rural and urban properties in North America, including Schiller Park, a 75-acre site in Chicago; Obico, a 74-acre site in Toronto; the 92-acre South Edmonton Yard; and Montreal's Lucien L'Allier, a three-acre site.

Land in Vancouver, Calgary and Vancouver will also be eyed for development.

Royal Bank of Canada analyst Walter Spracklin said the news was good for the railway, but his financial forecasts for the company are not changed, pending discussion with management on the timing of the venture and the expected cash flow.

"We view this announcement favourably as the deal helps CP execute on its long-standing objective of monetizing surplus real estate across the network," Mr. Spracklin said in a note to clients on Tuesday. "The company had previously identified $1-billion of excess real estate; therefore, a key question for management is what proportion of the surplus portfolio is included in the joint venture."

Dream Unlimited is a publicly traded company that manages more than $14-billion worth of real estate in North America and Europe. The joint venture will be run by a four-person board, two from CP and two from Dream.

Development on some of the properties could begin as early as next year, Mr. Wallace said by phone from Calgary.

"This is a really large portfolio.

We've got a portfolio of about 30 here with potentially more over time that would come into the joint venture so getting our heads around a large portfolio like this will take some time," Mr. Wallace said.

"These properties have been sitting around CP for some time.

These are underused properties; they are not earning their keep.

We have found a partner who shares the same values and the same sense of urgency and the same sense of creating longterm shareholder value as we do."

Benoît Poirier, an analyst with Desjardins Securities Inc., said any cash generated by the joint venture will make the company shares more attractive, and that he expects the company to begin to show returns on the project in two to three years.

"This announcement reflects CP management's strong ability to create value for its shareholders," Mr. Poirier said.

Since taking the top job at CP in 2012 after a boardroom battle, Mr. Harrison has slashed costs and boosted efficiency at what was once North America's poorest performing rail company.

The stock price under Mr. Harrison has risen by almost 200 per cent to $219, and the operating ratio, a closely watched measure of efficiency, has improved to 62.8 per cent from 83 per cent.

"The idea was to create one of the best operating railroads in North America, bring down the operating ratio and optimize assets," Mr. Cej said. "This is just another one of the assets and it's taken a while for the company to evaluate and organize all the real estate assets and now we know what to do with it. So the next platform is the company is poised to grow, and this is part of that."


Canadian Pacific Railway is trying to squeeze cash from unused railway land in a real estate joint venture with Dream Unlimited Corp., developing more than 30 surplus tracts in several cities.

Here are three Canadian parcels:


Reason for surplus: Yard restructuring Location: 7710 100 Street NW A rea: 92 acres Features: Large tract with highway access in growing employment area Current use: Rail yard Potential use: Office park, retail, high density residential


Reason for surplus: Intermodal consolidation Location: 36 North Queen Street Area: 73.5 acres Features: Large parcel with highway access in growing employment area Current use: Rail tracks, storage Potential use: Office, industrial, residential


Reason for surplus: Ongoing property review Location: Rue de la Montagne and Rue Saint Antoine (downtown) Area: 3 acres Features: Direct access to public transportation, commuter rail and condo developments Current use: Metro station, parking Potential use: Retail, office, high density residential

Associated Graphic


The end of guidance: In a new era for central banks, expect the unexpected
Thursday, January 22, 2015 – Print Edition, Page B1

In recent years, as the world's leading central banks have moved toward more transparency in their policy thinking, the element of surprise has become a relic of bygone years, locked away and collecting dust in the attic. The Bank of Canada just dusted it off and proved it can still make one hell of a bang.

The Bank of Canada's decision Wednesday to cut its key interest rate by one-quarter of a percentage point, to 0.75 per cent, was a flat-out shocker. Sure, some economists had mused that the central bank should be considering a rate cut, as the free fall in oil prices threatened to slam the brakes on Canada's economic growth, constrain national income, slow business investment and sap hiring.

But this isn't the way modern central bankers do this kind of thing. They are supposed to send signals, by first changing their rhetoric in speeches and (especially) in rate policy statements to reveal that they are about to change direction, before actually moving in that direction. It's all about broadcasting and baby steps.

Secrecy and big surprises have been supplanted in global monetary policy in recent years by "guidance" - central banks giving increasingly explicit detail about their policy direction, intentions and timing.

In the turnaround from the depths of the financial crisis, this kind of clarity was lauded as pivotal to providing the certainty and confidence the world needed to get its financial and economic wheels turning again.

But several central banks seem to have concluded that the time for guiding is over; the time for using brute force has arrived. In the past week, Switzerland, Denmark, India and now Canada unleashed surprise policy cuts. Toward the end of last year, China, Japan and Norway unveiled similar policy stunners.

It should be said that the Bank of Canada had already made clear that it wasn't enamoured with the transparency being practised by many of its international peers.

Governor Stephen Poloz has dismissed suggestions that the bank should publish minutes of its Governing Council policy meetings, as the U.S. Federal Reserve Board does with the deliberations of its Federal Open Market Committee.

Last fall, he said he wasn't interested in providing forward guidance, either - the bank's policy statements would no longer spell out its "bias" (whether it leaned toward raising, lowering or keeping rates steady in the future), but rather would lay out the facts and risks and let market participants figure it out for themselves.

In retrospect, it's hard to avoid thinking that Mr. Poloz wanted to hold back his cards precisely for a moment such as this. He wanted to be sure he had the capacity to shock the markets, if and when he needed it. Shock may not have been the overriding purpose of this rate surprise, but it would be naive to think it wasn't a big attraction to the plan.

Mr. Poloz certainly could have steered market thinking in a new direction simply by indicating in Wednesday's policy statement that he was pondering a rate cut, thus telegraphing a cut that he could have made at the bank's next meeting in early March.

But if monetary policy is going to be used to mitigate the impact of a sudden and intense economic shock - and that's what oil's decline has been for Canada - then time is of the essence.

The most visible, and predictable, consequence of the surprise cut was the immediate selloff of the Canadian dollar. I've never believed much in the theory that Mr. Poloz, formerly the head of Canada's export development agency, habitually uses the Bank of Canada's policy stance to drive the dollar downward to lend a hand to the export sector.

But in this instance, a currency downturn does cushion the effects of the oil shock, giving oil producers some foreignexchange relief and providing an offsetting lift to non-energy exporters. It even helps prop up flagging inflation - another key concern for the central bank.

And given the widening ratecut mania (and with the European Central Bank poised to ease its monetary policy Thursday), there was a growing risk that the Canadian dollar might actually face upward pressure in the midst of this oil shock as currency speculators go shopping for markets where rates aren't falling. That would have sent the Canadian economy out of the frying pan and into the fire. The Bank of Canada's surprise cut has instantly taken the loonie off the potential "buy" list and planted it firmly in the "sell" column - which, whether Mr. Poloz is willing to say it out loud or not (and he's not), is a convenient place for it to be right now.

Still, the surprise cut will leave Mr. Poloz and his colleagues with a credibility issue. The whole point of transparency is to lessen the guesswork that can fuel market volatility and shake confidence. When you yank away that predictability, you might get the desired effect for now, but that genie will be hard to get back in the bottle.

Consider what transpired after the rate announcement. Mr. Poloz was telling a press conference that the oil shock was merely a "setback" for Canada's recovery, and calling the rate cut a bit of "insurance" to keep things on track. The bond market? It was busy pricing in the possibility of another rate cut, in March.

Greek election sets stage for debt clash
Radical left Syriza party vows to revive the economy and roll back austerity measures as Greece's creditors maintain hard line
Monday, January 26, 2015 – Print Edition, Page B1

$1.11 (U.S.) The euro dropped about 0.6 per cent Sunday to an 11-year low.

Greece appeared headed for a clash with Germany, the main sponsor of the bailout package that spared Athens from default during the financial crisis, after Syriza, a radical left anti-austerity party, placed first in Greek parliamentary elections.

Even before the final election results came rolling in, Jens Weidmann, president of the Bundesbank, the German central bank, said on Sunday evening that Greece would have to stick to its agreements if it wanted more financial assistance.

"I believe it's also in the interest of the Greek government to do what is necessary to tackle the structural problems there," he said in an interview with German public broadcaster ARD.

"I hope the new government won't call into question what is expected and what has already been achieved."

The warning came as the euro, in apparent reaction to the Syriza victory, fell sharply. The currency used in 19 European Union countries was down 0.6 per cent, to $1.11 (U.S.), its lowest level in 11 years.

Traders and economists warned that the Syriza victory would rattle markets this week even if Greece's exit from the euro zone seemed only a remote possibility.

"Political tensions in the euro zone are set to rise sharply in the coming days and weeks," said Nicholas Spiro, managing partner Spiro Sovereign Strategy, a debt consultancy in London. "Right now, Athens and Berlin appear to be at daggers drawn."

Syriza, led by former communist Alexis Tsipras, 40, handily outpolled the ruling, pro-austerity New Democracy party that narrowly won the 2012 election and pushed through an austerity package - deep spending cuts and tax hikes - demanded by the European Union, the European Central Bank and the International Monetary Fund, often referred to as the troika.

Millions of Greeks blamed austerity for deepening the recession and pushing the jobless rate up to more than 27 per cent. Mr. Tsipras expertly tapped into the rage and despair of millions of Greeks.

Syriza has pledged: To strike a deal with the troika to write down the value of Greece's debt, which officially stands at 175 per cent of gross domestic product, the second highest in the world; go after the Greek "oligarchs" who either evade taxes or exploit loopholes that effectively ensure they are immune to taxes; use any budget supluses to fund public investments; establish a development bank to help small entrepreneurs; raise the minimum wage; and abolish newly introduced property taxes that are universally loathed by house owners.

"The vicious cycle of austerity is over," Mr. Tsipras declared on Sunday, before polls closed.

George Tzogopoulos, a political analyst and lecturer at the European Institute in Nice, France, said Sunday evening that he doubted Mr. Tsipras would have an easy time renegotiating Greece's bailout and austerity package, but may be able to secure some tweaks that would allow him to claim progress.

"The creditors, like Germany, have given so much money to Greece and they want this money back," he said. "I suspect there will be only superficial changes."

Before Mr. Tsipras can even launch into his debt-reduction and anti-austerity drive, he has to form a government and appoint a finance minister.

Picking a finance minister who can negotiate with the troika will be an early priority. A leading candidate is said to be the GreekAustralian political economist Yanis Varoufakis, who is fluent in English and has used recent TV appearances to vow that Syriza would move fast to end Greece's humanitarian crisis, renegotiate the austerity demands and go after the Greek oligarchs. "We are going to destroy the Greek oligarchy system," he said on Britain's Channel 4 News last week.

Greece's current bailout program has been extended to the end of February. If Syriza is not able to negotiate an extension of the program while it settles into government and launches an economic reform program, Greece's fragile banks could face a potentially debilitating deposit run. Greece will also have to find enough money to repay 1.4-trillion to the IMF in March and faces an ECB bond repayment in June.

Analysts and economists doubt any negotiations with the troika will go smoothly, meaning bond and currency investors might be in for a rough ride in the next six months. Elsa Lignos, currency strategist with RBC Capital Markets, said that investors "are being far too sanguine. ... We think that international investors are underestimating Syriza's internal party divisions and the hurdles to the new parliament voting through a deal."

Negotiations to reduce debt promise to be even more fraught.

Two EU countries, Finland and Ireland, have said they would rule out any outright forgiveness of debt, even if they are open to changing some terms, such as extending debt maturities.

Associated Graphic

Syriza party supporters, angered by austerity and high unemployement, expect leader Alexis Tsipras to renegotiate Greek debt.


The growing wealth gap
Each year, a larger proportion of the world's money is held by a smaller number of people. A new report from Oxfam reveals exactly what that means
Tuesday, January 20, 2015 – Print Edition, Page B1

1. Fewer people hold ever-greater wealth What do these two groups have in common? They share the same amount of wealth - and the number of people at the top of the scale keeps shrinking.

World's richest 80 people = World's poorest 3.5 billion people

2. The billionaires' share is growing The wealth cap is widening. One particularly stark figure: By 2016, the world's richest 1 per cent will own as much as the bottom 99 per cent combined.

Top 1% = Bottom 99%

3. What the wealthy look like ...

The two-word summary: Greying males. Three in 10 are U.S. citizens, and more than one-third inherited some or all of their riches.

1,645 billionaires 85% are 50 years old or older 90% are men

Business leaders and politicians land in the posh Alpine town of Davos, Switzerland, this week where global inequality and what to do about it will dominate discussions.

They meet as a new Oxfam report says that the richest 80 people in the world now have the same amount of wealth as the bottom 3.5 billion of the global population.

It's not the only study flagging the dangers of the growing wealth gap; global organizations such as the International Monetary Fund and the Organization for Economic Co-operation and Development have repeatedly warned that inequality threatens not just the poor, but social cohesion and economic growth as a whole.

"The scale of global inequality is quite simply staggering," Winnie Byanyima, executive director of Oxfam International, said in a statement. "Despite the issue shooting up the global agenda, the gap between the richest and the rest is widening fast."

The study, published ahead of the annual World Economic Forum, uses Credit Suisse global wealth data and the Forbes billionaires list. It estimates that if current trends continue, by next year the richest 1 per cent will own more of the world's wealth than the remaining 99 per cent combined.

Many of the same billionaires on the list, such as Bill Gates, Jack Ma and Eric Schmidt, are jetting to Davos to discuss key themes in the global economy.

More than 1,500 business leaders and 40 heads of state are expected to attend the Davos forum, which begins Wednesday.

The chorus of concern over disparities may be growing, but there's little consensus on just what to do about it.

Oxfam, an anti-poverty charity, is calling for greater disclosure of lobbying activities, minimum wage hikes, the end of tax havens and more taxes on the wealthy.

In the United States, President Barack Obama will give his annual State of the Union address on Tuesday, where he is expected to address inequality - specifically wealth inequality - proposing a plan to raise $320billion (U.S.) in the next decade by hiking capital-gains tax for wealthy Americans and closing loopholes to help finance tax cuts for the middle class.

The proposals have little chance of passing, given the Republican party's control of Congress.

Canada's middle class has fared better in the past decade than its U.S. counterpart, a new analysis by the Center for American Progress shows. But it is not immune to global trends of income and wealth concentration at the top.

The wealthiest 10 per cent of Canadian families held almost half of the country's net worth in 2012, according to Statistics Canada.

Here are some of Oxfam's findings:

1. Fewer people are holding greater wealth.

The wealth of the richest 80 people in the world doubled in cash terms between 2009 and last year, while the wealth of those in the bottom half fell in that time. In 2010, for example, it took 388 billionaires to equal the wealth of the bottom half of the world's population; now it's just 80 billionaires.

2. Their share is growing.

The gap between the extremely rich and everyone else is increasing. Last year, the richest 1 per cent held 48 per cent of global wealth. If trends continue, by next year the top 1 per cent will own more than half of the total share of the world's wealth.

3. Who are these 1,645 billionaires?

The world's billionaires tend to be "male and greying," with about nine in 10 of them male and over the age of 50. A third have inherited some or all of their fortunes. Almost 30 per cent are citizens of the United States. Many have gotten rich from interests in either the financial and insurance sector or the pharmaceutical and health-care industry.

Associated Graphic


REITs warned over failure to disclose shortfalls
Tuesday, January 27, 2015 – Print Edition, Page B1

Real estate investment trusts are providing poor disclosure to investors when their operating cash flow falls short of the level needed to pay distributions, according to a new Ontario Securities Commission review of the REIT sector.

The OSC said 33 per cent of REITs it reviewed had insufficient cash flow from operations in a recent period to fully fund payouts to investors, requiring the REITs to find other sources of money - primarily borrowing - to finance their distributions.

None of the REITs with shortfalls provided the "expected disclosures" to investors, the OSC said, although some published a "boilerplate" disclosure noting there was a shortfall.

"REITs are an important investment vehicle for many investors, and we expect a REIT's disclosure to accurately represent its current risk profile and its ability to sustain distributions at current levels," the regulator said in a staff notice to the REIT sector issued Monday.

REITs are investment funds that own incoming-producing real estate assets and pay distributions or dividends from the income.

They are popular with investors because they can provide a predictable stream of cash flow, and investors often choose to invest in REITs based on their size of their distributions.

However, the OSC said it is concerned that REITs are under competitive pressure to maintain and increase their distributions, pushing managers to seek other sources of funds when the underlying properties are not generating enough cash. In such cases, the distributions are not a return on capital, but a return of capital, the OSC argued, because REITs are using other assets for payouts, decreasing the value of their units.

"We are concerned that investors may be potentially misled if these risks are not appropriately disclosed," the commission said in its staff notice.

Neil Gross, executive director of shareholder advocacy group FAIR Canada, said he is pleased the OSC is telling the REIT sector to give investors plain and clear disclosure when cash flow is not sufficient to cover distributions.

"That's crucial information for assessing whether the distributions are sustainable, and therefore it's also essential for evaluating the overall risks associated with the investment," Mr. Gross said Monday.

The notice says the OSC sent comment letters to 15 of the 30 REITs it reviewed, and 67 per cent of those letters required companies to improve their disclosures in the future. None of the REITs were required to refile or restate previously published disclosures.

The OSC said it will continue to monitor reporting, and REITs that do not comply with disclosure expectations "will be expected to take corrective action."

The regulator provided an example to REITs of what it considers adequate disclosure about cash shortfalls, saying it should include an explanation of what a shortfall means for investors, how the REIT raised the financing to cover the shortfall, what rate of interest it paid on the borrowing and why the REIT thinks the current distribution level is still sustainable.

Toronto lawyer Stephen Pincus of Goodmans LLP, who specializes in working with REITs, said it is good news that the OSC report found that REIT disclosures were generally good in other areas, and said the REIT sector will be quick to improve reporting on cash flow shortfalls.

"There are a number of areas where a minority of REITs have room for improvement, but I think that would be the case in any sector that is examined," Mr. Pincus said. "And I think that improving disclosure from more general to more specific is always a good thing for investors and for the sector."

He said it is important that the OSC found no disclosures that required restatements.

"The way I would summarize it would be to say there was nothing fundamentally problematic," he said. "I do think the sector will welcome these comments and will follow them."

The notice also warns REITs that they must make clear disclosures to investors even in cases where their non-cash distributions - primarily payments in the form of additional units under dividend reinvestment plans - exceed cash flow from operations.

The commission said REITs should add non-cash distributions into the totals when calculating whether operating cash flows were sufficient to fund distributions, and should tell investors that non-cash distributions increase the REIT units outstanding, which will cause cash distributions to increase over time.

The OSC also reported that 10 per cent of REITs it studied would have reported a cash shortfall if they had not opted under new international accounting guidelines to classify their mortgage interest costs as a financing item in their financial statements rather than an operating cash flow item.

Greenback's rise hits key earnings, U.S. markets
Wednesday, January 28, 2015 – Print Edition, Page B1

The surging U.S. dollar is inflicting damage on some of the world's biggest multinationals, sending the Dow to a triple-digit loss and raising fresh doubts about the momentum of sales growth for the year ahead.

The Dow Jones industrial average fell 291.5 points, or 1.65 per cent, to 17,387.21, as investors reacted to a slew of disappointing fourth-quarter earnings results from stocks that make up the index.

An unexpected drop in orders for U.S. durable goods also rattled market players, who are counting on growth in the American economy to offset some of the weakness being seen abroad.

Prior to this earnings season, analysts cautioned that multinationals' foreign sales would come under pressure due to the U.S. dollar's rise.

But the magnitude of this headwind is only now becoming apparent.

Microsoft Corp. was one of the leading decliners on the Dow, dropping 9.3 per cent, as traders reacted to news late Monday that the main engine of its historic earnings power - selling Windows and Office to big businesses - showed signs of waning.

In a conference call, Microsoft chief financial officer Amy Hood said that the firm's earnings in the coming quarter would take a 4-per-cent hit because of unfavourable foreign exchange movements.

Meanwhile, A.G. Lafley, chief executive of Procter & Gamble Co., referenced "unprecedented currency devaluations" to explain its disappointing fourthquarter results on Tuesday morning. Shares of the company fell 3.4 per cent.

Heavy machinery maker Caterpillar Inc. cut its profit outlook for 2015 and warned the plunge in oil prices would hurt its energy equipment business, sending its shares tumbling 7.1 per cent.

Management said it expects global growth to pick up only modestly in 2015, and its outlook on Chinese demand has dimmed.

Other firms that cited a currency headwind on Tuesday included Pfizer Inc., Bristol-Myers Squibb Co., and E.I. du Pont de Nemours & Co.

All firms generate a larger portion of their revenues overseas than most U.S. large-cap equities, and are among the most acutely affected by the buoyant greenback.

On the economic front, traders had to grapple with the poor durable-goods orders report for the month of December. The 3.4-percent monthly decline for total orders could be brushed aside due to the volatility of the headline figure.

However, a surprising 0.6-percent decrease in orders excluding the defence and transportation segments was more difficult to ignore, as it suggests the world's supposed growth engine may not have entered 2015 with as much momentum as hoped.

The U.S. dollar failed to gain further upward traction on Tuesday, however, amid speculation that the Federal Reserve might hold off on raising interest rates for longer than expected. The U.S. central bank is due to release a policy statement on Wednesday after a two-day policy meeting.

In its previous statement, published on Dec. 17, U.S. monetary policy-makers provided reassurance that they would be "patient" before beginning to tighten policy, and that it continued to be appropriate to maintain current levels of stimulus for a "considerable period."

Though Fed Chair Janet Yellen has indicated she plans to act as a steward for the U.S. economy rather than cater to the wishes of the equity market, many market players remain optimistic that the end of near-zero interest rates policy is not coming any time soon.

"A rate hike as early as the Fed's mid-2015 guidance looks increasingly implausible," wrote Morgan Stanley economist Ellen Zentner, who believes the central bank will stand pat on rates until March, 2016.

Canadian equities managed to advance while U.S. stocks faltered, with the S&P/TSX composite index rising 36.05 points, or 0.24 per cent, at 14,833.88, in part due to a rise in gold miners and energy stocks.

The weaker loonie relative to the greenback will help cushion the blow of falling commodity prices for companies in the natural resources sector, and may help firms boost their sales to the United States.

However, National Bank senior economist Krishen Rangasamy notes that the good times for Canadian equities may be shortlived, as the "Great White Short" trade is now back in vogue.

"Unlike the past couple of years when those shorting Canada did so based on a hunch that there was an 'imminent' housing collapse (which never really materialized), the current case against Canada is arguably more compelling after the commodity price collapse," he wrote.

Saturday, January 24, 2015 – Print Edition, Page F1

Billionaire and philanthropist Michael DeGroote invested more than $100-million in Dream Corporation, whose partners were bent on founding a new Las Vegas in the Dominican Republic. But those partners became more interested in squeezing each other out than in running the business. Things turned violent. Soon, Mr. DeGroote's millions were gone, and his dream had turned into a nightmare


When Andrew Pajak ran into Michael DeGroote at a wedding, he told his longtime acquaintance about an exciting new venture -- supplying gaming technology to a Jamaican casino. Mr. DeGroote later became convinced that Mr. Pajak and his partners were on to something

Francesco and Antonio Carbone had tried their hands at everything from house-painting to tobacco distribution. Now, with Mr. DeGroote's money, they went on a Dominican shopping spree, buying beachside gambling houses that featured a few card games and a handful of slots, as well as full-sized casinos outfitted with all manner of wagering

Former lawyer Peter Shoniker introduced Mr. DeGroote to someone who, like Mr. DeGroote, had a grievance with the Carbones. Alex Visser offered to prove that the brothers had defrauded Mr. DeGroote. 'Ask me to do whatever,' he told the billionaire. 'I'm at your disposal, Mike.' Mr. Visser was not who he said he was

To see if the bitter dispute among the partners in Dream could be resolved peacefully, Montreal Mob kingpin Vito Rizzuto reached out to the Carbones, alleges Antonio Carbone. A series of meetings was allegedly arranged by Bruno Pisani, a 75-year-old former heroin trafficker

When Michael DeGroote stepped up to the lectern at McMaster University last May 23, he cemented his position as one of Canada's most generous philanthropists.

In his distinct gravelly voice, the now 81-year-old billionaire, who made his fortune in trucking and waste management, announced to a graduating class of medical students that he was giving their school another $50million - bringing his family's total contributions to the Hamilton university to more than $175-million. The surprise announcement sparked gasps, whistling and a standing ovation.

But at the same time as Mr. DeGroote was being heralded for his largesse, thousands of kilometres away another of his investments was caught up in an entirely different commotion: mounting evidence that the philanthropist had been defrauded, and an underworld war involving Canada's most powerful and feared Mafia family.

In 2011, Mr. DeGroote served as the sole investor in a casino company trying to capture a swath of the gaming industry in the Dominican Republic. There were three owners of that company, Dream Corporation, and when relations between those three deteriorated, the Mafia inserted itself into the conflict, a joint investigation by The Globe and Mail and CBC's the fifth estate has found.

This battle erupted in a number of ways, in the form of lawsuits filed in Ontario Superior Court and violence in the streets of Santo Domingo, the Dominican capital.

Video and audio evidence, as well as interviews, show that as the dispute escalated, Vito Rizzuto, the godfather of the Montreal Mafia, inserted himself into the affair, and members of his criminal network helped protect and manage the casino chain.

Mr. DeGroote, who responded to questions through his lawyers, said that he was not complicit in any way in the involvement of the Mafia into the dispute. And there's nothing to suggest he was. The philanthropist has never had "any association of any kind" with Mr. Rizzuto, his lawyer William McDowell said in a Jan. 13 letter.

In 2012, Mr. DeGroote launched a lawsuit against the owners of Dream - brothers Antonio and Francesco Carbone, and Andrew Pajak - alleging they misappropriated portions of $112-million he lent for the acquisition of more than a dozen casinos, about 200 sports betting parlours and 1,100 lottery terminals. Several Ontario Superior Court judges have ruled in favour of Mr. DeGroote and the many motions he has filed as part of the suit. Mr. Justice Frank Newbould declared in November, 2013, that the trucking magnate has "established a strong case in fraud" against the Carbones and Mr. Pajak.

"Mr. DeGroote has been targeted by a series of unscrupulous people, as the court decisions reflect," his lawyer said. "He has been the victim of wrongdoing at every stage of this matter."

In a bid to demonstrate that they have been miscast as the villains in this plot, the Carbone brothers have mounted an aggressive defence. Armed with surreptitiously recorded audio, surveillance footage, e-mail and other documents, they've launched a scorched-earth litigation strategy. Two judges have deemed their recordings inadmissible and unreliable. Another has called them irrelevant to their defence of Mr. DeGroote's claim of fraud.

Through interviews with a combination of sources - including organized-crime experts, individuals in the Dominican Republic, officials from Dream Corporation, and some criminals - The Globe and Mail and the CBC have corroborated key information contained in the recordings. What that information shows is the ways in which the Mafia exploits conflict, and how organized crime intersects with business.

The story of Dream Corporation is a complex case study in the power of capital and the perils of venturing into high-risk jurisdictions in search of profit. It is also a cautionary reminder that there is far more at stake in an investment than simply making or losing money.

The Dominican Republic has all the characteristics - lax regulations, poor law enforcement, corruptible public institutions - that make for a hazardous business environment. But the country, which shares an island with Haiti, has another distinct feature that renders the gambling industry that much more dangerous: a selection of Canadian Mafiosi who consider the Dominican a second home.


The story of Dream Corporation starts with a wedding and a godfather - but not that kind of godfather. It was at the marriage of his goddaughter in the fall of 2010 that Mr. DeGroote ran into Andrew Pajak, a man he had called a friend for 40 years.

In the 1980s, when Mr. DeGroote was already a well-established titan of Canadian business, Mr. Pajak was a high-rolling real-estate developer who was married, at the time, to a former Miss Toronto. But now, Mr. Pajak explained, he had moved into the gambling business. He was working for a gaming-technology company with two brothers, Francesco Carbone, who is now 47, and Antonio Carbone, now 39.

The trio were manufacturing sleek, screen-based gaming machines designed to offer much more than the passé thrill of pulling a slot-machine handle.

The company had already identified an opportunity in Jamaica.

A nightclub and gambling facility, the Vegas Flamingo, was on the cusp of opening in Montego Bay, and the Carbone-Pajak team was hoping to fill it with its machines.

After touring the trio's Torontoarea office and visiting Jamaica with his chief financial adviser, Mr. DeGroote was convinced they were on to something; he provided their company with a $5-million loan on Dec. 1, 2010.

It was not uncharacteristic for Mr. DeGroote to latch onto shiny new investment opportunities.

As Canadian Business magazine once put it, "DeGroote's real love - and talent - is buying more companies."

Mr. DeGroote, who emigrated from Belgium with his family as a teenager, dropped out of high school to work on tobacco farms in order to help support his family. In his 20s, he bought a small trucking outfit, Laidlaw Inc., which he gradually built into a $5-billion company with schoolbus and waste-disposal operations as well as its original business. He sold his stake to Canadian Pacific in 1988 for $500million.

Laidlaw itself, built by a string of acquisitions, illustrated Mr. DeGroote's love of the deal. Over the decades, he has also sunk capital into the taxi industry, the CFL's Hamilton Tiger-Cats, homesecurity systems, a trust company, car dealerships, and oil and gas exploration. He collects companies the way some people collect stamps. In a 1997 interview with the Financial Post, he compared his latest venture at the time to owning an animal. "I love it," he said. "It's great to have pets to play with."

By the time the opportunity presented by Mr. Pajak and the Carbones came up, Mr. DeGroote might have been content to rest on his laurels. Long having resided in Bermuda, he had been made an Officer of the Order of Canada in 1990 and, via his first large donation to McMaster, become the first person to put his name on a business school in Canada, in 1992. And he'd had headaches too: In 1993, he and others had paid $23-million to the Ontario Securities Commission to settle allegations of insider trading of Laidlaw shares. There was no admission of wrongdoing.

Yet Mr. DeGroote not only went for the gambling play in 2010; he quickly upped the ante. His initial returns were good, and he made further investments. The revenue reports he received from Jamaica showed that the machines generated profits of $1.7-million in their first four months of operation.

A little more than a month after the Vegas Flamingo opened, Mr. DeGroote and the trio turned their attention to the Dominican Republic, setting their sights on full-service casinos. Despite suffering from a chronic pain condition that he likens to "living in hell," Mr. DeGroote braved the Dominican Republic's notoriously dangerous and unmaintained roads in January, 2011, with Antonio Carbone to scout possible acquisitions.

Shortly after, the Carbones and Mr. Pajak formed the Dream Corporation and went on a shopping spree. They bought all kinds of casinos: beachside gambling houses that feature a few card games and a handful of slots, as well as full-sized casinos outfitted with all manner of wagering. All this was financed with Mr. DeGroote's money, which he sent to the trio in instalments, in exchange for interest payments and a share of the profits.

The structure of the deal kept Mr. DeGroote at a distance from the company. Even though Mr. DeGroote was the sole investor, Mr. Pajak and the Carbones were the owners. "I am not an owner of Dream. I am strictly a creditor," he would later say in a cross-examination.

Nevertheless, Mr. DeGroote was in dangerous territory. His money was being used to purchase assets from questionable businessmen. Among them was a Dominican national who had once been indicted by the U.S. Drug Enforcement Agency for his alleged role in laundering the profits of a Mexican drug cartel.

Money laundering - taking the profits from crime and funnelling them through another business to make them appear legitimate - is rampant in the Dominican Republic. A year before the Carbones and Mr. Pajak began snatching up casinos, a U.S. State Department official warned that the country was stumbling toward narco-state status.

"Unless the country's leaders show that crime is not profitable, real concerns exist that both security and democracy in the DR could be undermined as they were in Colombia," wrote Richard Goughnour in a 2009 diplomatic note released by WikiLeaks. Mr. Goughnour cited the country's casinos as "important vehicles" for this crime.

But the country's reputation did not scare off the trio, whose Dominican acquisitions would be the start of something bigger. The ultimate goal of their blistering expansion, it seemed, was to create a Caribbean gaming empire and to take the company public.

The gaming world was unfamiliar ground for Mr. DeGroote, but he and Mr. Pajak had known each other for decades.

Law-enforcement officers had known him differently. Four former investigators - two with the Toronto Police Service and two from the RCMP - said in interviews that Mr. Pajak was known to police as someone who is close with mobsters. One of those sources called Mr. Pajak "a mob associate of the first degree."

In a secretly recorded conversation that has been entered into the court record by the Carbones in response to Mr. DeGroote's lawsuit, and obtained by The Globe and Mail and the CBC, Mr. Pajak was heard saying, "I arranged to take care of all - of a lot of - the Mob's money, investments. Because I do everything straight."

Mr. Pajak, who declined to respond to numerous requests for comment for this story, does not have a criminal record.

There is little on the public record that explains how Mr. Pajak and the billionaire became acquainted. In an examinationfor-discovery proceeding, Mr. Pajak testified that he and Mr. DeGroote "go back a long way from the disposal business."

One of the former investigators identified Mr. Pajak as an official with the Super Group, a onetime Toronto-based company whose waste-management wing, Super Disposal, was the subject of a sweeping organized-crime investigation in the early 1980s.

Super Disposal was described by prosecutors in 1982 as "one mass of criminal activity." There is nothing on the public record to indicate that Mr. Pajak was implicated in that probe.

But Mr. Pajak was only onethird of Dream.


"I make it very clear ... Because one thing, one thing you said right is they fight to the end. I'm ready to fight to the end." - Antonio Carbone

Antonio Carbone speaks with a confidence that belies his background as a house painter. Often decked out in a trim suit set off by a hockey-puck-sized Louis Vuitton belt buckle, he paces while he speaks, draws out syllables for effect, and inserts dramatic pauses - often while he's taking a long drag on the cigarette that seems permanently affixed between his fingers.

Francesco is less loquacious than his older brother. When he does speak, his tone is more measured.

Despite their differences in age and manner, the brothers tend to act in unison, sometimes finishing each other's anecdotes.

They grew up in Woodbridge, a suburb north of Toronto, and have moved in lockstep throughout their working lives, shifting from one industry to another. They started out with a housepainting business and then shifted to tobacco distribution. They sold their own brand of cigars and flavoured cigarillos under the name Don Carbone. They had only recently moved into slotmachine manufacturing when, with the backing of Mr. DeGroote, they became casino executives in 2011.

The brothers credit their smooth transition into the gaming business to two things: their work ethic and the example of Howard Hughes, whom Antonio idolizes and credits with cleaning up and corporatizing Las Vegas. "Our vision here was to create Las Vegas in the Caribbean," Antonio Carbone said. "Brand-new facilities, proper uniforms, Englishspeaking dealers, English-speaking bartenders, the proper Las Vegas look and feel."

"We bought 12 casinos in 13 months and refurbished them. I don't think it's ever been done in history," he said. "Dream dominated the country overnight."

But there is another factor besides ambition and vision that launched the Carbones into the casino business. Although neither man will admit it, they had recently run an online bookmaking service. The Carbones' website, known as or the Don Carbone Sportsbook and Casino, was once part of the Platinum Sportsbook group, a network of betting websites that was first linked to organized crime in a 2004 shooting and was eventually dismantled by police in 2013.

The Don Carbone Sportsbook had ceased to exist by March, 2010, archived Internet records show, and the Carbones were not implicated in any way in the 2013 police operation. Indeed, the Carbones deny any involvement with DCSC. And the only explanation they have offered for the abundant documentary evidence to the contrary - which includes the appearance of their names on the incorporation records - is that someone must have used their names and forged their signatures to create companies they knew nothing about.

In court filings, Mr. DeGroote has said he was told the brothers were "experienced gaming operators."

In the summer of 2011, he would learn that they had attracted police attention.

In the early stages of Dream's Dominican expansion, the Carbones pleaded guilty in a Toronto courtroom to possession of illegal firearms. The charges stemmed from a search warrant that had been executed on the head office of their tobacco business in 2009. Provincial revenue agents executed the search, alleging the brothers had been evading taxes by underreporting sales. That particular allegation never held up, but as the investigators scoured the warehouse for books and ledgers, they uncovered two illegal handguns: A .32 calibre revolver was found locked in a filing cabinet next to Antonio's desk, and a loaded 9-mm semi-automatic pistol - its serial number filed off - was located in a backpack under Francesco's desk.

The search had other consequences: The seizure of the Carbones' books and records eventually led to the Bank of Montreal's obtaining a courtappointed receiver to recover what it could of $10-million in loans.

As for the guns, the brothers say they acquired the weapons for protection after Francesco received five bullets in the mail along with an unsigned note promising that there were more bullets destined for his skull. Police investigated, but were unable to charge anyone. The brothers say they suspect a rival in the tobacco trade was behind the threat. "It was business-related," Antonio Carbone said. "We have always been very aggressive businessmen."

In July, 2011, Mr. DeGroote's chief financial adviser, Jim Watt, received an e-mail from an associate of Mr. DeGroote, warning him about the gun charges. The Carbones say that Mr. DeGroote was unfazed. The following month, in August, Mr. DeGroote and the trio agreed to a credit facility of nearly $92-million.

By late 2011, a number of red flags were raised for Mr. DeGroote's team of advisers. First, in September, Jamaica's Vegas Flamingo closed, a development that the Carbones blamed on a falling-out with one of their partners there.

In November, that disgruntled partner wrote to Mr. DeGroote's financial adviser, Mr. Watt, and said that the actual profits at the Vegas Flamingo had amounted to about 7 per cent of the figures that Antonio Carbone had reported to the billionaire.

The next month, it was suggested to Mr. DeGroote that another Carbone company had run afoul of the U.S. justice system. An official with Jamaica's gambling regulator wrote to a lawyer for Mr. DeGroote, and explained that a website operated by DC Entertainment - a Carbone brothers company that supplied the Vegas Flamingo with slot games - had been "shut down ... by the United States Federal Bureau of Investigation and the Department of Homeland Security." (Neither the FBI nor Homeland Security could elaborate on this episode.)

Nevertheless, as per his August agreement with the trio, over the next five months Mr. DeGroote provided the Carbone brothers and Mr. Pajak with the remainder of the funds used to create the Dream chain - some $64-million.

In early 2012, Mr. DeGroote began asking for a comprehensive audit of Dream's books and records, while continuing to send the funds. He eventually involved PricewaterhouseCoopers and his lawyers in his demands.

The Carbones dismissed many of these warning signs, and told Mr. DeGroote that the whistleblower from Jamaica was "a liar." They responded to the audit requests by saying they would release the books at Dream's fiscal year-end. That year-end turned out to be elusive - because, the Carbones say, they were overwhelmed by the pace of growth. First they moved it to May 31 - on their accountants' advice, they said. Next, it was moved to Aug. 31. Then, Mr. DeGroote was notified by the Carbones' lawyer that they were moving it a third time - and that he would have to wait an additional 120 days after this new date to learn the results.

That was enough for Mr. DeGroote. He sued the brothers and Mr. Pajak.

As the fissure between the Carbones and their sole investor widened, a divide between Mr. Pajak and the Carbones also began to form.

Although the brothers owned 85 per cent of Dream's shares - with Mr. Pajak owning the remaining 15 per cent - they had given their shares to Mr. Pajak, in trust, shortly before Mr. DeGroote began advancing the company the Dominican funds.

This structure allowed the Carbones to comply with a Dominican law that forbids anyone with a criminal record from having anything to do with a casino licence.

All the squabbling and suing, combined with the Dominican Republic's elastic rule of law, laid the groundwork for a new reality: The ownership of Dream seemed to be up for grabs. The discord was a beacon for gangsters and ne'er-do-wells, who descended on the Caribbean island looking to place their chips on the winning side.


"I'm going to give you my life in DR. I'm going to go to DR, where I'm going to carry a gun with a licence. And I'm going to change everything in their world." - Alex Visser

On May 10, 2013, two men took the elevator up Toronto's shimmering Ritz-Carlton tower to a condominium owned by the DeGroote family.

They were met by Michael DeGroote, who complained that he had been "robbed" by the Carbone brothers. "They shouldn't be in business ... slimebags," the billionaire told his guests, in the first of two conversations that were recorded without Mr. DeGroote's knowledge. Copies of those recordings were entered into the court record and obtained by The Globe and the CBC.

One of his guests - Peter Shoniker, a former Crown attorney and criminal-defence lawyer who had pleaded guilty to money laundering in 2006 after he was caught up in an undercover RCMP sting - was the son of someone who had been close to Mr. DeGroote: Mr. Shoniker's late father, Eddie Shoniker, had chaired the Ontario Highway Transport Board, which regulates the trucking industry, at a time when Laidlaw was one of the biggest players in the industry.

The elder Shoniker, a onetime fundraiser for Ontario's Progressive Conservative party, had gotten to know Mr. DeGroote, and the billionaire thought highly of him. So he responded positively when Eddie's son, Peter, contacted him through an intermediary, Mr. DeGroote later said in a sworn statement.

Peter Shoniker explained to Mr. DeGroote that he had been consulting for Mr. Pajak at Dream, that he was familiar with the company's books, and that he could help Mr. DeGroote prove that he had been defrauded. That revelation gave rise to the meeting.

The man accompanying Mr. Shoniker introduced himself to Mr. DeGroote as Alex Visser.

He was large and loud, with dark black hair, and was surprisingly fresh-faced for someone who claimed to be 60.

He said he was a former soldier - he didn't specify for which country - who had been hoodwinked by the Carbones in a casino deal gone wrong in Montenegro.

Mr. DeGroote wanted to know where his money had gone, and Mr. Visser said he could help him.

Using contacts he had in the Dominican Republic, he was prepared to gather up witnesses and affidavits for Mr. DeGroote to prove that the Carbones, in building Dream, had paid less for casinos than they reported, and had pocketed the difference.

"I'll bring you everyone from their organization," Mr. Visser said. "You ask me to do whatever.

I'm at your disposal, Mike."

Mr. DeGroote was adamant that he wanted Mr. Visser to speak with his lawyers at the Bay Street powerhouse McCarthy Tétrault. But Mr. Visser was dismissive of the idea. He aggressively pressed the billionaire - repeatedly asking Mr. DeGroote to look him directly in the eyes - to unleash him on the Carbones. The exchange seemed to exhaust the billionaire; at one point he had to lie down.

"I'm going to make sure the Carbones can't even sell chestnuts on the corner of the fucking street," Mr. Visser said.

DeGroote: "Well, hopefully they'll be in jail by then."

Visser: "Fuck jail. Jail's too nice."

Mr. Visser said he needed $500,000 and Mr. DeGroote's complete confidence. He described how he would need to pay certain Dream officials to procure their evidence and testimony. "I'm looking you in the eyes and I'm not wavering. ... When I tell you you're going to need $5,000 to pay off the head of security for a statement, you're going to give him $5,000."

Mr. DeGroote replied, "I cannot buy evidence."

But Mr. Visser prodded the billionaire, trying to get him to yes.

They discussed the possibility of giving Mr. Visser an ownership stake in the company once Dream was no longer controlled by the Carbones.

Eventually, Mr. DeGroote agreed to wire Mr. Visser $250,000, and promised to pay him an additional $250,000 if he could come up with proof that he had been defrauded.

"I'm ready to go to war," Mr. Visser said.

"You've got to do it quietly."

"I'm stealth. I'm the shadow of the shadows. You hired me to be your shadow ... You're a man that can take care of me."

The discussion continued the next day at the Ritz. Mr. DeGroote said he had spoken with his lawyer, who had advised him that he shouldn't "dare do it."

Mr. DeGroote said he didn't want Mr. Visser to do anything for now, but nonetheless agreed to retain him for possible work in the future.

DeGroote: "Give me your wiring instructions, where to send the money to."

Visser: "Okay."

DeGroote: "No strings attached.

I am not buying anything right now. But you'll keep it in mind in the future. I am going to send you $150,000 Monday morning for nothing."

He explained that, before he could deploy Mr. Visser, he needed to discuss the matter with his lawyers in more detail: "When I get things straightened out with the lawyers, how to do it, then we'll be in touch. Then we'll make it a deal. I have to do it right or I can't do it at all."

Unbeknownst to the octogenarian, Mr. Visser was one of many identities utilized by the intense man standing before him.

Crown attorneys and police across Ontario know Mr. Visser as a con artist named Zeljko Zderic, with a record of dozens of criminal convictions for, among other crimes, fraud, assault and uttering threats. He's also known to carry a Croatian passport with the name Pavle Kolic, as well as a Canadian passport with the name Sasha Vujacic. (In the underworld he is simply known, like a criminal rock star, as Sasha.)

The billionaire also was unaware that his new acquaintance was recording these conversations - and that at some point in the days after their meetings, he would give the Carbones snippets of his first exchange with Mr. DeGroote.

The two brothers filed the recordings in response to Mr. DeGroote's suit, arguing that there was a conspiracy to derail their business. Mr. DeGroote responded by saying that after the meeting he had received legal advice that paying for affidavits or evidence would be illegal, so he never sent Mr. Visser any money. He also sent Mr. Visser a letter four days after the meeting stating that the deal was off. "It is not my desire to interfere in the running of the business," he wrote.

(Judge Newbould of the Ontario Superior Court ruled in November, 2013, that Mr. DeGroote's discussion with the gangster did not undermine his claim of being defrauded by the Carbones. "A huge amount of money appears to have been misused, and it is understandable that without any reports that he was entitled to, [Mr. DeGroote] would try to obtain evidence from someone who would know the situation in the Dominican Republic," the judge stated.)

Relying on Mr. Visser also proved to be damaging for the Carbones. Given their shared penchant for recording conversations, it should have come as no surprise to them that Mr. Visser was also wired up when negotiating with one of them. Mr. Visser would later claim that in one of those recorded conversations Francesco Carbone discussed the idea of engaging him to murder Mr. Pajak.

Starting in late July, a lawyer for Mr. Visser entered into talks with Mr. DeGroote about handing over Mr. Visser's recordings. They were unable to reach an agreement because Mr. DeGroote refused to pay for evidence, the billionaire said in an affidavit.

But on July 30, Mr. Shoniker agreed to go to the Ritz to play the recording of the alleged murder discussion for Mr. DeGroote; he arrived with Mr. Visser's son.

What Mr. DeGroote heard showed how dangerous this venture had become.

Visser: "What do I have to make Pajak look like? Like just a shooting, or just like a ... But can we whack him in the Dominican?" Francesco Carbone: "No."

Visser: "We can't kill him in the Dominican?" Carbone: "It's worse, bro."

Vito Rizzuto's soldiers were firmly in place at Dream. When its head office was swarmed by attackers, Gianpietro Tiberio knocked down one of the would-be occupiers with a single punch. Santiago Valverde, one of Dream's first employees, was among those arrested in the fracas

Visser: "Why?"

Carbone: "It's worse there. Because it'll fucking hit every fucking paper ... the fuck you kidding? Bro, you're fucking destroying me. It will be a catastrophe.

Think about it. Fucking here it's a regular fucking builder - big fucking deal. Over there it's the president of Dream Corporation."

Now it was Mr. DeGroote's turn to pull a fast one. Unbeknownst to Mr. Shoniker, Toronto police officers were hiding at the Ritz, also listening in. They swooped in, seized the computer and took Mr. Visser's son and Mr. Shoniker in for questioning, according to two sources present for the meeting.

Mr. Visser's response was to flee the country.

A little more than a week later, the police charged Francesco Carbone and Mr. Visser with counselling to commit murder. (Mr. Visser was charged under the identity of Zeljko Zderic, but the charges were dropped two weeks later.) Mr. Carbone surrendered his passport - which meant he could no longer travel to the Dominican Republic.

In December, five months after the arrest, the charges against Mr. Carbone were also dropped. As is its standard practice, the Crown did not publicly explain the decision. Mr. Carbone has since launched a malicious-prosecution lawsuit against Toronto police and the Attorney General's office. As for the contents of the recording, he says, "I believe the tape was spliced and cut."

Not surprisingly, Mr. Pajak was not pleased when the news reached him that one of his partners in Dream had allegedly discussed trying to have him murdered. Now the two sides were officially at war. On Sept. 5, the Carbones served Mr. Pajak with papers demanding that he return their shares; he refused.

In a secretly recorded conversation, reputedly made by Boghos Alexanian, a Dream employee loyal to the Carbones, Mr. Pajak told Mr. Alexanian to have the locks changed at the Dream office north of Toronto. Mr. Pajak asked whether the brothers had bugged his office, and told Mr. Alexanian that they needed to ensure the brothers "can't infiltrate us."

Three days later, on Sept. 11, 2013, in another conversation secretly recorded by Mr. Alexanian, Mr. Pajak said he was outraged by how the brothers had treated their sole investor, the man he brought in on the venture. "I swear to God that I - I'd like to put a fucking gun right down their mouth and blow their fucking heads off. And they're trying to - they're hoping they can kill this guy because of the stress ... he's 80 years old. Honest to God."

But for reasons that he has not explained, Mr. Pajak did not sour on Mr. Visser - one half of the supposed conspiracy to have him murdered.

A little more than a week after Francesco Carbone's arrest, Mr. Visser was captured on a Dream casino surveillance camera touring one of the chain's casinos - not as a tourist looking for a roulette game, but as a future employee of Dream.

Having deftly played every angle and every person in the dispute, Mr. Visser had finally settled on which side he'd align himself with - Mr. Pajak's team.

But there was far worse news contained in the security-camera footage.

As Mr. Visser strolled the casino floor, he was not alone.


"If Vito wanted to call me, he should have called me." - Antonio Carbone

When U.S. marshals deported Vito Rizzuto to Montreal in late 2012 after he served a five-year term for his participation in the murder of three men, he returned to a city that was more leery of him than ever.

The Quebec government's Charbonneau Commission had revealed the mob's latest accomplishment: thoroughly corrupted public institutions and grossly inflated costs for taxpayer-funded infrastructure projects.

If there was a single person who symbolized that rot, it was Mr. Rizzuto, the godfather of the Sicilian Mafia in Canada. Thanks to Justice France Charbonneau's inquiry, the public would finally have a chance to hold him accountable.

So when he was spotted at Pierre Elliott Trudeau Airport less than four months after his return, it sparked a flood of press coverage and concern: Was he trying to avoid testifying?

His destination - on this trip and many others in 2013 - was the Dominican Republic. It had long been a retreat of choice for Mr. Rizzuto; he had a home there.

And, in addition to other business he was conducting, an opportunity in the casino industry had suddenly presented itself. On Aug. 14, 2013, footage and photographs obtained by The Globe and the CBC show, Mr. Rizzuto led the way as he and Mr. Visser surveyed the floor at Dream's Punta Cana location. In other undated footage, Mr. Rizzuto is wearing a Nike golf shirt and faded blue jeans, while observing a card game.

Exactly what prompted Mr. Rizzuto to become involved in the battle for Dream is unclear. But the secretly made recordings, cross-referenced with interviews and other documents, show that he began asserting himself in a significant way in September.

Back in the suburban Toronto office of Dream, Mr. Pajak was captured on an audio recording.

It contains only Mr. Pajak's side of a telephone conversation, in which he is anxious to meet someone he will not identify by name. The recording was made on Sept. 11, according to an affidavit sworn by Mr. Alexanian, the now-former Dream official loyal to the Carbones.

"And I am just waiting to meet the guy we talked about from - you know, that other province."

In mid- to late September, Mr. Rizzuto held meetings with Mr. Pajak and Mr. Visser at Casa de Campo, a luxury resort in the Dominican Republic, according to two people who said they witnessed those meetings. One of the sources, who agreed to be identified for this story, is Peter Shoniker, the former lawyer who initiated Mr. DeGroote's conversations with Mr. Visser.

Three other sources interviewed for this story, none of whom were present for the Casa De Campo meetings, said they had knowledge of Mr. Rizzuto and his family inserting themselves into the dispute between Mr. Pajak and the Carbones.

Mr. Pajak did not respond to numerous requests for comment.

One of the first developments that followed those meetings was a transfer of power. On Sept. 30, Mr. Pajak granted power of attorney over the affairs of Dream's subsidiaries to Mr. Visser, who now was operating under another one of his aliases - Pavle Kolic.

Perhaps feeling emboldened, Mr. Visser left several voice-mail messages for Antonio Carbone, making it abundantly clear what team he was now representing. In one of those messages, he asked, "Can you imagine if someone attacked your family, your wife or something - would you not answer the phone, too? Like, come on. You're a big boy. You don't live in some gated community, buddy." He added, "You can't keep on fucking everybody in the Dominican, and the old man."

Mr. DeGroote would later say in a cross-examination that he had argued against Mr. Pajak's latest hire when he learned of it. But Mr. Pajak insisted on it, saying, according to Mr. DeGroote, that he needed to "just use him for some things."

"I asked Mr. Pajak about him and Mr. Pajak thinks he'd [been] doing a good job for him ... because he's putting out fires while he's not there and there's a lot of fires burning," Mr. DeGroote' testified.

Back in Toronto, a recording and an interview show, Mr. Rizzuto continued to involve himself in the Dream dispute.

In November, Antonio Carbone alleges that, over two days, he was summoned to three meetings with Mr. Rizzuto to discuss the conflict and how they might bring about a peaceful resolution. Mr. Carbone alleges that the first meeting was arranged by Bruno Pisani, a 75-year-old long-time associate of Mr. Pajak's. Mr. Pisani was sentenced to 10 years in a United States federal prison in 1980 after he was convicted of importing and trafficking heroin in New York State.

(Mr. Pisani did not reply to multiple requests for comment, but in another surreptitiously recorded conversation, he discusses "the day we met - me and you with V," which is how Mr. Rizzuto is often referred to by members of the underworld. Mr. Pisani has also not been shy about publicly displaying his friendship with Mr. Rizzuto. On the wall of Prego Ristorante, a west-end Toronto establishment, hangs a photograph of Mr. Rizzuto with his arm wrapped around Mr. Pisani. The photo was taken in the fall of 2013, and Mr. Rizzuto is tanned, having just returned from the Caribbean.)

But Mr. Rizzuto's alleged mediations did not work. What happened next was anything but peaceful.


"All these guys from Montreal, they have no business in my business ..." - Antonio Carbone

In the early-morning hours of Dec. 19, 2013, a corporate takeover of a different sort was attempted in the heart of Santo Domingo.

More than a dozen Dominican nationals, many dressed in T-shirts and jeans, swarmed Dream's head office. When the police arrived, they discovered that the men were there to take the company by force.

Mayhem ensued. One by one, the attackers were shoved out of the building. Punches were thrown. Television news outlets reported that gunshots were fired. Cameras captured images of a young invader with blood splattered all over his T-shirt.

It became unclear who was there to uphold the law and who was there to break it; both a police sergeant and an army sergeant were arrested in the aftermath of the incident, the national police force said in a statement.

Observing it all unfold from the street, the force's Gen. Rhomel Lopez tried his best to explain the situation to baffled reporters.

"There is apparent litigation between ... businessmen who both call themselves owners of the company."

Safeguarding the building that day was someone who looked out of place amid the other defenders. This burly, light-skinned man was captured on camera knocking down one of the would-be occupiers with a single punch.

That man is Gianpietro Tiberio.

In the Dominican press, he was referred to as "a representative of the president, Mr. Andrew Pajak."

But at the Charbonneau Commission he was identified as a member of the Montreal Mafia.

The episode suggested that Mr. Rizzuto's soldiers were firmly in place. Among them was Stacey Richard Krolik - or Rick the Russian, as he is known on the street - said Santiago Valverde, who was one of Dream's first employees and one of the men who was arrested that day.

It has never been confirmed who engineered the raid. Allies of Mr. Pajak point to the Carbones, but the brothers deny any involvement. Dominican news reports pointed the finger at a former high-ranking police official, but he also denied any role.

Nine days before the raid, one of Mr. Rizzuto's chief rivals in the Montreal underworld emerged as a possible player in the conflict. A representative of the Carbones in the Dominican signed a legal document that allowed Patrizio D'Amico - who had been described as "crazy" by a Rizzuto loyalist caught on a police wiretap - access to facilities owned by the Carbones. But the Carbones say they had no knowledge of this, and there's no evidence to show that Mr. D'Amico played any role in the failed raid.

It is unlikely Mr. Rizzuto had much to say about the episode.

Four days after the raid, on Dec. 23, he died of lung cancer in a Montreal hospital. One Carbone associate called it "a Christmas miracle."

Still, the struggle continued - not just on the legal and extralegal fronts, but also in the Dominican media. In February, lawyers for Mr. Pajak appeared on a radio show, challenging earlier claims made on the airwaves that the Carbone brothers were the rightful owners of Dream. Mr. Tiberio attended with the lawyers. He said nothing on the show, but posed for a photograph.


"Where did the money go? Where's it being shipped to? Where are the accounts? Who got the money and where did it go?" - Michael DeGroote, recorded by Alex Visser

As the chaos was unspooling in the Dominican, the Ontario courts were trying to figure out what happened to Mr. DeGroote's money.

KPMG was appointed by the Ontario Superior Court as a limited-purpose receiver following Justice Newbould's ruling in November, 2013. The firm found that most of the accounting records it sought at Dream had been destroyed or withheld, or perhaps had never existed. Mr. Pajak and his management team blame the Carbones - and vice versa. Among other irregularities, auditors can't account for $21.7million supposedly spent on renovations.

The auditors analyzed revenue data given to the Jamaican gambling regulator, and determined in a November, 2014, report that the sales figures provided to Mr. DeGroote were "15 times greater."

As a result, Mr. DeGroote's legal team has concluded in its most recent court filings that the money he received from the Vegas Flamingo - the profitable portent that preceded his Dominican misadventure - was "sourced from his own funds."

It must have been bitter news for Mr. DeGroote, who at the beginning of the year had advanced $2.4-million in "emergency funding" to Dream, at the request of Mr. Pajak, after the battle in Santo Domingo. He is suing Mr. Pajak, but provided the funds because Mr. Pajak told him they were needed "to save Dream from collapse," said one of Mr. DeGroote's lawyers, Eric Block, in a letter to all the parties in the dispute.

The billionaire is arguing that the evidence that he was defrauded is so overwhelming that he is entitled to what is known as a summary judgment - a decision without a trial - concerning the Jamaican portion of his original loan.

As for the Dominican Republic, which is where more than $90million of Mr. De Groote's loans were supposed to have been spent, the courts also appointed a chief restructuring adviser last June to assess the viability of the business. The adviser enlisted a gaming expert, Anthony Novac, who concluded that, though Dream has debts of about $17million, portions of the company are salvageable. Mr. Novac added a few qualifications, noting that rescuing the company would require investing in better management. He said the existing team "appears to have been unqualified or at the least very disorganized."

The question of who actually controls the casinos is as murky as ever. The Carbones and Mr. Pajak continue to battle each other in the courts. Mr. DeGroote is battling both. Some casinos are being operated by a Dominicancourt-appointed administrator, some by Mr. Pajak's team. Others have been shut down by landlords because of unpaid rent.

What role the Mafia is playing, if any, has also become less clear. In November, one of Mr. Pajak's managers, Ed Kremblewski, spoke with reporters outside Dream's office in Santo Domingo.

Asked about Mr. Tiberio and Mr. Krolik - the two Montreal men who were there on the day of the chaotic scene at Dream headquarters - he acknowledged they had worked for the company, but said "these guys have nothing to do with us ... they're all gone."

The end of this saga remains uncertain for Mr. DeGroote, who declined repeated interview requests because he wanted to concentrate, he said, on his lawsuit. He did provide this statement, in a letter from his lawyer: "Frankly, I sincerely regret that I ever agreed to invest in this venture. Indeed, I am embarrassed by it, especially after a lifetime of growing successful businesses."

Associated Graphic


Michael DeGroote (left) and Andrew Pajak.


Michael DeGroote

Andrew Pajak

Antonio Carbone (left) and Francesco Carbone.

Antonio Carbone

Francesco Carbone

Peter Shoniker (left); Alex Visser.


Peter Shoniker

Peter Shoniker (left); Alex Visser. J.P. MOCZULSKI/ THE GLOBE AND MAIL

Alex Visser

Gianpietro Tiberio

Santiago Valverde

Vito Rizzuto

Bruno Pisani

Dream's casino, seen here and on page F1, in Santo Domingo is one of the gambling businesses acquired by Dream Corporation during its Dominican expansion between 2011 and 2012.


With the drop in oil prices, Ontario is being touted again for its economic potential. Adam Radwanski travels to revitalized Rust Belt cities in the United States, to see how they have remade themselves and what Canada's sputtering engine can learn from them
Saturday, January 17, 2015 – Print Edition, Page F1

"They were telling their children to get out as soon as they were able. ut much of what John and I loved about Akron was the very argument those forefathers were making: the abandoned landscape, the hard challenge, the long odds. We saw the same things but in a very different way, with an absolute belief that something was to be saved here, that lives were to be made, that we could remake all this as our own."

David Giffels, The Hard Way on Purpose

Ribs and beers were on the table. The firepit was crackling. And a TV was mounted to the back of a truck so that we could watch the football game, tailgate style. Wearing a Browns jersey, Richey Piiparinen bounces around the starter home in the blue-collar neighbourhood that he, his fiancée and their baby daughter have recently moved into - making sure we all have enough to eat and drink, and bantering with a burly army veteran turned stand-up comedian he grew up with.

When he finally sits down, Cleveland's leading urbanologist makes the passionate case for why Rust Belt cities like his - for all the economic pain they've suffered, people they've lost to more prosperous places, jokes made at their expense - are where the future is.

Snicker if you will. But as young Americans recoil from the 20th century's suburban sprawl and are priced out of New York City and San Francisco and Washington, the Rust Belt offers an alternative within the bones of once-great cities. Past glories have bequeathed a legacy of well-respected universities, cultural entities, attractive neighbourhoods and gritty industrial spaces. Courtesy of past exoduses, the cost of living is often jawdroppingly low. And for those who seek a sense of community, there is a chance to be leaders in (re)building. "There's this psychogeographic pull, this humanness," is how Mr. Piiparinen puts it. "We all have this longing to be part of something."

There has been less longing, in recent years, to be part of our own country's version of a rust belt - the one that comprises such Southwestern Ontario cities as Windsor, London and St. Catharines, and patches of Eastern Ontario. Young people have fled in droves as the region's employment numbers have tanked, seeing the loss of more than a quarter of manufacturing jobs in the last decade.

The plight of the region has been a driving force behind a provincial deficit that remains at over $10-billion, as well as a net loss for Ontario in the migration of people within Canada, and an alarmingly aging population.

Even with Alberta driving the national economy, the country could ill afford Ontario's struggles; it's hardly healthy for the largest province's per-capita GDP to be lower than the rest of Canada's, and it helps explain why the federal government has remained in the red.

With oil's current slide, Canada really can't afford for it to remain a drag - and in fact there is some expectation that Ontario will instead reclaim its old role as the leader of Canada's economic growth. Its premier, Kathleen Wynne, recently expressed optimism that plummeting oil prices and a sinking dollar will prove a boon to manufacturing. "I don't wish for low oil prices and a low dollar for Alberta," she said earlier this month. "But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then that's a good thing."

While they could indeed help in the short term, it's difficult to imagine those volatile factors leading to the lasting revival of traditional sectors competing with consistently low-cost jurisdictions such as Mexico, China and even the American South.

For sustainable renewal, Ontario's old industrial towns will have to work harder at reinvention - and they should be looking to some of their counterparts in the U.S. A two-week road trip through Pennsylvania, Ohio and Michigan revealed in often surprising ways how our neighbours are much further along in reinventing their most hard-hit cities, and how much we have to learn.

"The wind is at the back of these cities in a way that it wasn't before," says Jennifer Vey, a fellow at the Brookings Institute who studies the revitalization of old industrial centres. And although many of them will remain smaller than in their industrial heyday, the numbers bear that sentiment out. When the Manhattan Institute ranked America's 100 biggest U.S. metropolitan areas for their economic performance in the wake of the Great Recession, midsize Northeastern and Midwestern cities accounted for nine of the top 20.

As Mr. Piiparinen and others are quick to stress, jobs will always be the cornerstone of any regeneration. But employers themselves can be drawn to a city by affordability and infrastructure, and like to set up shop where highly skilled people want to put down roots. The renaissance of former industrial powerhouses is fuelled by attracting and keeping well-educated, entrepreneurial citizens committed to community-building and capable of creating wealth and quality of life around them.

Of course, direct comparisons between the U.S. and Canadian experience is never exact: The places I visited tended to be larger than their Canadian counterparts; and although they may have such superior amenities as major-league sports teams and world-class museums, they also suffer from some entrenched disadvantages - notably an appalling history of race relations that has left a legacy of poverty, crime and troubled public schools.

So why is it that a younger generation is finding opportunity in these Rust Belt cities (or some of them, at least; nobody sees Flint, Mich., or Gary, Ind., as models) more than in places like London or Windsor, which have some decent bones themselves? As Ontario attempts to take back Canada's economic reins, it would do well to learn from what's worked, and know what it's up against.

Tax rebates and budget cuts

"Are you a hockey fan?" I ask the mayor of Allentown, Pa., as he shows me around his baby: a gleaming new arena to host the Philadelphia Flyers' farm team. A short and stocky transplanted Chicagoan with a thin mustache, gruff manner and reputation for elbows-out politics, Ed Pawlowski gives a wheezy laugh.

"I am now," he answers.

Part of a $272-million sports, office and hotel complex, the arena is the centrepiece around which the eastern Pennsylvania city's dilapidated downtown is being rapidly rebuilt - part of an astounding commitment by the state that speaks to the urgency with which governments have been pursuing urban renewal. For a 30-year period that began in 2009, Pennsylvania has designated a 52-hectare swath of Allentown's core as a "neighbourhood improvement zone" or NIZ: Nearly all taxes collected from tenants there - in new or rehabilitated buildings - are being returned to developers for debt financing, which in turn allows them to offer cheaper rents.

Well beyond the arena complex, which was the impetus for the NIZ, the improvement zone has turned downtown into a construction zone as well - one where, Mr. Pawlowski hopes, "young professionals will want to stay and be engaged." For reasons of affordability, Pennsylvania has rebuffed requests from other municipalities to institute the same program. But it is an example of the extent to which Rust Belt governments are using tax instruments and tools to drive dense urban development.

Most common among those is tax-increment financing, which has made TIF something close to a household acronym south of the border, even as it is just entering the lexicon to the north of it. In its simplest terms, TIF involves creating designated downtown zones, inside of which governments forfeit property-tax gains that would normally result from rising land values that follow new development; in most cases, the money is directed back into the zones' infrastructure. To encourage developers to make use of land in cities' cores, rather than building outward, many cities are also offering "brownfield" tax credits to offset the costs of cleaning up and converting shuttered factories.

The willingness to use tax incentives - and taxes themselves - has been only one part of a brash willingness to take financial risks in pursuing urban renewal. In few places has that been more evident than in Pittsburgh, often considered the gold standard of Rust Belt revitalization for the way it bounced back from the calamitous collapse of its steel industry in the 1980s.

When Tom Murphy was mayor in the 1990s, locals were asked to pay an additional percentage point on top of the state's sales tax, with ensuing revenues leading to well over $1-billion in investment in the city's core assets. Mr. Murphy also freed up more money for urban development by slashing police and other budgets. Even so, the city still plunged deeply into debt restoring its riverfronts, buying up abandoned land that the private sector wouldn't, and rebuilding Pittsburgh's historic Market Square. "Everyone thought he was crazy," recalls Don Carter, a director at Carnegie Mellon University's Remaking Cities Institute, who calls Mr. Murphy "visionary."

Although Mr. Murphy still has his critics, in part because the debt he accrued helped force the cash-strapped city into a form of state oversight, Pittsburgh's core is booming. Last year, The Economist ranked it as the most livable city in the continental U.S. And scarcely anybody there denies that its economic reinvention in advanced manufacturing, lifesciences and information technology - which have seen a host of start-up successes - has something to do with becoming a place young professionals want to be.

The likes of Google and Disney have even set up shop. "Even as a flat-broke city, we built really world-class stuff," says Mr. Murphy, as we sit down for breakfast at a diner on Pittsburgh's edgy North Shore. "People will say, 'You can't afford that.' You can't afford not to do it."

Public cutting, private giving

Even before Mr. Murphy took the mayor's office, Pittsburgh and other American cities experiencing a rebirth had a leg up because of a rich and enviable culture of philanthropy and corporate responsibility, the likes of which doesn't exist in Canada.

Still, for Jim Rohr, it was painfully obvious when he came to Pittsburgh in the 1980s that the city was falling apart - and he had the paint chips in his hair to prove it. "I was in the Stanley Theater with my wife, at a concert, and the black paint on the ceiling rained on our heads," recalls Mr. Rohr, who would go on to serve as chairman of PNC Bank, which he is credited for helping keep in the city. "It was a dump."

Today, that old dump has been restored and is one of the busiest theatres in the United States. And where once the streets around it were lined with sex shops and rampant with crime, the Stanley is now surrounded by a bustling cultural district - part of a revitalization in which Mr. Rohr played an active role, learning in the process about his adoptive city's civic culture.

Kevin McMahon, who heads the not-for-profit that manages the cultural district, says the city government was "preoccupied with triage" as Pittsburgh suffered 18-per-cent unemployment and lost roughly half its population after the steel mills closed. So business leaders, led by Jack Heinz of the food-processing family, stepped up to preserve and build upon core assets - from universities to riverfronts.

Other Rust Belt cities have, like Steeltown, been able to lean on foundations set up by the industrialist titans of their golden age. While Pittsburgh had the likes of Andrew Carnegie and Andrew Mellon, Cleveland can trace a good chunk of its recent development to the legacy of John D. Rockefeller. Of all the factors working for American cities relative to Canadian ones, this sort of philanthropy is perhaps the least imitable.

Perhaps more importable, though, is a willingness on the part of current American business leaders to continue investing in their communities. In Pittsburgh and other places, those leaders may still lobby for lower taxes, but they partially counterbalance their resistance to government spending with a willingness to spend heavily themselves.

In Grand Rapids, Mich., it was only later in the 20th century that a small number of business leaders and their families -almost exclusively Republicans - responded to their city becoming a ghost town by pouring hundreds of millions of dollars into it. First, that included funds for infrastructure and anchor institutions: a new arena, a convention centre and hospital expansions. More recently, it has meant funding ArtPrize, an enormous threeweek arts festival that has helped turn the west Michigan town into a destination.

It is impossible to get through a conversation in Grand Rapids without hearing about philanthropy. "You don't participate in this community if you don't give time and treasure," says John Kennedy, a staunch conservative who started an auto-parts company in the 1980s that is now worth over $250-million. "I'm not talking about giving back, because I don't believe in that. I'm talking about investing in the future of the community."

Tapping into the DIY vibe

Grand Rapids offers another important lesson for Canadian cities looking to reinvent themselves. Looking the part in an open-collared shirt, designer jeans and boat shoes, the golden boy of the city's most powerful family helps point the way.

"When you look at the birth of the auto industry, it was a bunch of goofballs working on things that were seen as frivolous toys in cowsheds," Rick DeVos tells me as we sit down to talk in his openconcept downtown office. "You had a bunch of lumber and mining guys tossing money at these goofballs. And eventually, out of this primordial soup emerged this unbelievable industry."

It's that "freewheeling entrepreneurial culture" that Mr. DeVos - the son of former Republican gubernatorial candidate Dick DeVos, and the grandson of Amway co-founder and Orlando Magic owner Richard DeVos - is trying to help recreate. Best known for using a bit of the family fortune to start ArtPrize, Mr. DeVos, who is in his early 30s, is now devoting most of his time to Start Garden - a $15-million venture-capital fund that offers an initial $5,000 to fledgling companies, and up to $500,000 if their venture takes off.

Every investment, Mr. DeVos says, is made "with the goal of building a west Michigan start-up ecosystem," which is why there are monthly public events at which funding recipients can get updates on each other's progress. Less than three years in, it's difficult to measure Start Garden's impact. But there are plenty of signs this city is reconnecting with its risk-taking roots.

Take Founders Brewing Company - where every young professional in town seems to congregate after work, and which helped kick-start a brewing boom that has the formerly sleepy town branding itself "Beer City USA." Started in the late 1990s by a pair of college buddies who had hustle but little business savvy, Founders was on the verge of shuttering in 2001 because of mounting debt.

Then, a millionaire who grew up during the Great Depression came on board as a sort of angel investor. Other investment followed, and Founders is now poised to make 600,000 barrels of beer a year. Meanwhile, it became an anchor for a local industry that has exploded to include roughly 15 breweries.

Not all the start-ups and emerging businesses in Grand Rapids are as sexy. Some are tied to auto parts and office furniture, the traditional manufacturing around which Grand Rapids was built. Others are in communications technology or health sciences. Notwithstanding some growing financial-services companies, they tend to fit into the region's proud history of making things.

As the Brookings Institute's Vey notes, that tradition - and the accompanying institutional knowledge and infrastructure - can help Rust Belt cities take advantage of the current "maker's movement," in which a DIY culture makes the manufacturing market accessible to small enterprises. And so too, she suggests, can the fact that real estate and other key costs - and thus the stakes of investing - are lower than in bigger cities that didn't go through the same economic struggles.

In Grand Rapids, there is a pattern of entrepreneurs getting support from established business leaders. Beyond Start Garden, for instance, there is Blue35. A partnership between the office-furniture giant Haworth and a construction company owned by the DeVos family, the eight-storey downtown office building aims to provide smaller companies with shared space and what's billed as state-of-the art technology.

However much business leaders around the Rust Belt tend to argue that the best thing government can do is get out of the way, states have also encouraged risk in ways Canadian provinces have been more hesitant about. Among the best examples is Pennsylvania's Ben Franklin Technology Partners. Launched in the 1980s, it has since provided many hundreds of millions of dollars in public funds to roughly 1,750 companies, largely in seed capital to start-ups. Purporting to have generated over 50,000 direct jobs and roughly 90,000 spinoffs, the program has been imitated around the United States.

The university connection

In some Rust Belt cities, though, it's unlikely that either private or public investment would have been enough without another form of leadership, from institutions that - like their Canadian counterparts - long functioned as near-islands. A wave of postsecondary leaders recognized that if their schools became more integrated with their communities, and more ambitious, they could become vital assets in rebuilding economies.

Luis Proenza, who didn't even know that Akron, Ohio, had a university until he was given the opportunity to be its president, is a prime example. Barely anyone in Akron knew who Mr. Proenza was, either, when he was hired away from Indiana's Purdue University in 1999. By the time he retired last year, he was lauded as one of the most influential figures in rebuilding the former rubber capital of the United States, after the devastating shutdown of its tire factories in the 1970s and eighties.

When Mr. Proenza came on board, the University of Akron had already started to play a research role in helping the city partially replace rubber with the production of related polymers. But it was still struggling to get past its local reputation as "Hilltop High," which reflected both the school's isolation from the surrounding town and its perceived academic standing.

Mr. Proenza changed that in part by fundraising enough for the public university to be able to invest over $600-million to overhaul the dilapidated campus, add an engineering school, and create 14 hectares of new green space. Now, however, it's not the physical upgrades about which he seems proudest - it's helping to have fostered a more entrepreneurial culture.

A new foundation aimed at commercializing research, he says, was "the single most important" economic initiative to emerge under his watch. It started off with no assets other than access to the university's intellectual property, and made the most of underappreciated resources left over from better times. Abandoned space became "incubator" space; companies donated or lent underutilized equipment; people who once worked in senior manufacturing jobs were invited to share expertise.

In a decade, Mr. Proenza now boasts, the foundation accumulated $16-million in net assets while launching 50 companies. It also started Akron Regional Change Angels, an agency that connects entrepreneurs with angel investors and mentors. Meanwhile, the university tried to gear its programs more toward areas likely to provide local employment.

Although Canadian universities have recently been making efforts to better address the needs of surrounding communities, it's not unusual for such an entrepreneurial focus to meet the sort of ethical resistance that Mr. Proenza concedes he also ran into. "Still, some of my colleagues do not believe university ought to have anything to do with industry - that's making a deal with the devil," he says, sitting in the lakeside home in which he has semi-retired about 80 kilometres outside of Akron. "The very concept of universities as anchor institutions in an economy is really of recent vintage."

Again, Pittsburgh was at the forefront of this kind of culture change. Carnegie Mellon University and the University of Pittsburgh never lacked respect, but through the steel era their connection to the city was limited. "Like [Canadian] universities, they're there, they educate kids, they do research," says Tom Murphy, the city's former mayor. "But they weren't an important player in the economy of the region."

Yet, in the 1980s, those institutions started working with the business community and each other to lead Pittsburgh's economic diversification. First, they identified a few high-tech sectors where research could be married with Pittsburgh's industrial heritage, such as the robotics field - which has since become one of the city's big success stories. Then they helped build infrastructure and the technology-transfer capacity to make it happen. Now, Mr. Murphy estimates, roughly half of Pittsburgh's jobs are connected to the two universities.

While some schools lack the resources to be so ambitious about creating jobs, simply helping to arrest the outflow of talented young people is just as important. When I met him in Cleveland, Richey Piiparinen had just released a study, which had appeared on the front page of the local newspaper, showing that a growing (and now unusually large) portion of younger members of the city's workforce hold advanced postsecondary degrees. It was an extremely encouraging sign for the future, he suggested; it was also an indication that people with other options were choosing to live in Cleveland.

Much of that choice has to do with the combined impact of Case Western Reserve University and the mammoth Cleveland Clinic, both of which have embraced roles as communitybuilders. Cleveland is among many cities that have pinned its economic hopes largely on "eds and meds," and its booming University Circle area - which in recent years has sprouted new housing, hotel and retail developments alongside hospital expansions and upgrades to existing museums - suggests that the bet is paying off.

'Americans crave realness'

Not all the factors in getting people to settle and do business in places they would once have fled are quite so tangible. Beyond academic initiatives, densification policies, philanthropy, and venture capital, the Rust Belt's rebirth also involves something more emotional. A big part of this story still comes down to identity, and to restoring pride to places in which it was long ago lost.

On the corner of Euclid Avenue and East 4th Street, in the heart of an emerging entertainment district, Cleveland Clothing Co. is making a virtue of past misfortune. On the list of things that helped turn Cleveland into a punchline, the time its river caught fire ranks pretty high. So alongside hoodies celebrating heartbreaks inflicted by local sports teams, the store these days sells "Burning River Surf Club" T-shirts, with an image of a skeleton riding a fiery wave.

Forty-five minutes down the highway, Akron's Rubber City Clothing is helping create local iconography, minus the selfmockery. "No negativity," store manager Angela Roloff says emphatically as she points to apparel that celebrates Akron's neighbourhoods, its history, and the return of basketball superstar and prodigal son LeBron James. But her goal is the same: to get people to stop apologizing for their hometowns and to celebrate them, instead.

As head of Positively Cleveland, the area's convention and tourism bureau, David Gilbert says that a key factor in attracting visitors to his city is what locals say about it to family, friends and strangers online. He also knows, from a study his organization commissioned, that Cleveland long fared horribly on that front. Attracting tourists, Mr. Gilbert says, means "changing perception from the inside out, not just the outside in."

Indications of emerging civic pride were everywhere during my visit. The city had just hosted the Gay Games, an international sports and culture festival; and locals were still boasting that participants who usually go to more glamorous locations had offered no end of positive reviews. For a city that has also landed the 2016 Republican National Convention, the Gay Games afforded a clear example of how major events can offer a citywide confidence boost.

There are also more granular efforts to change attitudes among the younger generation. Teaching Cleveland, started by a highschool teacher, works to get local history into classrooms. Another organization, iCleveland, offers "experiential civic education" to college students, through internships and interaction with community leaders. The non-profit that runs the University Circle area is making what its president calls an "intentional effort to get kids to understand their city before they leave their city," in part through a program that funds summer work for highschool students at local institutions.

It helps that there are more things in which to take pride than there used to be. The river that caught fire has been cleaned up; old theatres have been restored; the seedy Flats neighbourhood has been replaced as the top nightlife hub by Ohio City, a trendy area that has developed largely around the enormously successful Great Lakes microbrewery.

At the same time, much of what's starting to work for this part of the U.S. is its embrace of the character-building aspects of hardscrabble pasts - something Mr. Gilbert suggests could translate well to a city such as Windsor. It's an attitude perhaps best embodied by the iconic blast furnaces in Bethlehem, Pa., which sits just down the road from Allentown. There was talk of knocking those furnaces down after Bethlehem Steel closed in the nineties. Instead, they became the backdrop for the town's new arts centre and outdoor concert space; they're lit up at night, and a walkway is being built along them.

In The Hard Way on Purpose, his book about Akron and his experience coming of age there in the eighties and nineties, author David Giffels describes having the run of an abandoned town. In the shuttered factories and vacant storefronts, others saw only failure; he and some of his friends saw a legacy to claim as their own.

"Americans crave realness," Mr. Giffels told me, over grilledcheese sandwiches and craft beers at a bustling downtown Akron diner, and difficult decades had given cities like his a frozenin-time quality that satisfies that craving.

To Mr. Piiparinen, it's all about capitalizing on an existing identity rather than trying to create a new one.

"You don't want to fetishize grit," he says, as we celebrate Rust Belt character with a bit of good old tailgating in his backyard. "But you've gotta invest in who you are."

Adam Radwanski is a columnist and reporter for The Globe and Mail, and covered Ontario politics from 2009-14.

Associated Graphic

People wait for a bus at Pittsburgh's Four Gateway Center, built in 1960 and made almost entirely from the output of Pennsylvania factories and mills.

Photography by Aaron Vincent Elkaim

An illuminated water pathway runs below the Pittsburgh's David L. Lawrence Convention Center.

Visitors check out the architecture at the Akron Art Museum.

Artist John C. Comunale works in his studio in the former B.F. Goodrich plant, now called Canal Place, in Akron, Ohio.

From top: Contractor Kodiak Boykin was born in Florida but, after hearing that the Pittsburgh economy was booming, moved last year to the Pennsylvania city, where his father was born; visitors flock to the three-week-long annual Grand Rapids ArtPrize, funded by business leaders and their families, that has helped turn the Michigan town into a destination for visitors; Gennaro Barilaro is a cellar tech for the Great Lakes Brewing Company in Cleveland.

The University of Pittsburgh has worked closely with the local business community to help forge the city's economic diversification.

Akron, Ohio, has been revitalized in part with the help of Akron Regional Change Angels, an agency that connects entrepreneurs with investors and mentors.

Pittsburgh is often considered the gold standard of Rust Belt revitalization for the way it bounced back from the calamitous collapse of its steel industry in the 1980s.

Stage star was famed for his rustic alter ego
Writer who helped pen Anne of Green Gables: The Musical was known for his quick wit and his character, Charlie Farquharson
Wednesday, January 21, 2015 – Print Edition, Page S6

Was he a clown, or was he a philosopher?

The author, comedian and actor Don Harron, a thoughtful student under Northrop Frye who went on to fame as the wisecracking, pun-crazed character Charlie Farquharson, was posed that question by the journalist Peter Gzowski in a televised interview in 1977. To Mr. Harron it wasn't an either-or proposition.

"You see, I happen to think that humour is very serious," he began his answer, not a hint of a smile on his face. "I happen to think it's like poetry."

When Mr. Gzowski suggested that his Hamlet-to-Hee Haw interviewee had always wanted to be an actor, Mr. Harron disagreed, explaining that his earliest dream was to be a cartoonist, but that he had ended up as a "caricaturist with my mouth."

And what a mouth.

Mr. Harron died of cancer on Jan. 17. He was 90. His legacy involves numerous books, a fouryear stint as the host of CBC Radio's Morningside, a complicated and event-filled marital history, a time as an afternoon talk-show host on CTV in the early 1980s and an instrumental role in bringing the Canadian classic novel Anne of Green Gables from the page to the stage.

He will probably be remembered mostly for entertaining generations of North Americans with his durable comic alter ego - a sweater-wearing and language-terrorizing hayseed from Parry Sound, Ont., who held court on stage in a one-man play, on radio for Toronto's CFRB and, from 1969 to 1992, on the American television series Hee Haw, a cornfield counterpart to Rowan & Martin's Laugh In.

The roots of the Farquharson persona reach back to a production at Victoria College in the 1940s, when Mr. Harron adopted a yokel's accent - earning him the nickname, "The hick from Vic." He later brought back the accent for CBC radio's popular lunchtime variety show The Happy Gang, drawing on his farmwork experience in Ontario for rural inspiration and vernacular.

In 1950, Mr. Harron was hired by noted Canadian actress Jane Mallett to play a second-banana role for a pair of her shows in Montreal, where he was mostly her foil but was also allowed the spotlight for brief political monologues.

Those spots, Mr. Harron recalled in his 2011 memoir, fared poorly with the audience. Later, Ms. Mallett offered her advice, explaining that Mr. Harron was too young to be taken seriously, and so he should hide his identity behind a mask - a masquerade of a much older person who had acquired the wisdom associated with maturity.

It was only in 1952 that his Charlie Farquharson character came fully into being, during the Toronto comedy revue Spring Thaw. That year, the character - garbed in a sweater "borrowed" from the CBC's Norman Campbell and a hat liberated from director Norman Jewison - was seen on the television variety show The Big Revue. As Mr. Harron has explained, "I finally had enough sense to hide my own political opinions under the peak cap of Charlie."

The character grew to be a dominant part of Mr. Harron's own legend, to the extent that his autobiography is titled My Double Life: Sexty Yeers of Farquharson around with Don Harn. The book's cover art shows both Farquharson (in his iconic threadbare cardigan and equally scruffy face) and the straight man, Mr. Harron, who appears to be chagrined in the company of his popular persona.

The dichotomy nearly defines him, and while friends and family and colleagues and cohorts unanimously describe Mr. Harron as intellectual, proper, warm of heart and quick of wit, they will also tell you he was a hard man to know deeply - a trait not unusual for men of his generation.

"He was very private," recalls Gary Michael Dault, who was Mr. Harron's Morningside producer, "and inaccessible, personally."

Martha Harron, who penned the 1988 biography Don Harron: A Parent Contradiction, describes her father as complex. "Anyone who claims to know him intimately is a liar."

The baby Don Harron was born in 1924 at the family home in Toronto. His parents were keen amateur performers, chiefly in productions associated with their church (Bathurst Street United), which was the centre of their social life.

His father was a cartoonist, gifted enough, according to his son, to be offered a job with King Features Syndicate in Chicago in 1929. But because his wife wished to stay put, the husband stayed in Toronto, working for the family's cleaning and dyeing shop.

These were the Depression years though - pressed trousers were an extravagance - and so the father earned more money on the side performing as a cartoonist, travelling a circuit and taking in a not insignificant $15 a gig. "For your next banquet or entertainment," a newspaper ad read in 1935, "lightning cartoons including caricatures of some of your own members."

His young son Don soon took up the trade, eventually replacing his father. He was 10 years old; his father couldn't compete with the novelty of a youth doing the same chalk-talk act. The precocious boy's first show happened at the Round Room, next to Eaton Auditorium and above College Street. His gift for gab led to a part-time job reading scripts for what was then called the Canadian Radio Broadcasting Commission.

Mr. Harron's studies at the University of Toronto's Victoria College and involvement in theatre, radio and cabaret on campus and off were interrupted by the Second World War. He enlisted in the Royal Canadian Air Force, where his delicate stomach suffered during the looping, swooping training exercises. It was too late to be sent oversees, however, so his training amounted to daylight sweeps not over London and Paris, but the Ontario versions of those cities. When his unit was put on indefinite leave, Mr. Harron waited out the war taking a variety of odd jobs, such as dressing up as an Easter bunny or selling shoes in Eaton's Annex with Elwy Yost, who went on to a prominent career as a television host.

When the war was over, Mr. Harron completed his education and took on acting and writing in Toronto. In 1949, he married Gloria Fisher (the first of his four wives). In 1950, the couple relocated to London, England, where Mr. Harron found work both onstage (including the West End) and with his typewriter.

One of his jobs was to rewrite radio-drama narrations, voiced by none other than the brash genius Orson Welles. In his memoir, Mr. Harron recalled their interaction: "I used to bring Orson my efforts while he was lunching in true Rabelaisian style at a Piccadilly restaurant. Between bites he never asked for rewrites, but I'm sure the genius ad libbed my changes later to his satisfaction.

As a conversation icebreaker, I told him about the time I had met him backstage at his Lear, and he roared with glee at the memory of that production. He was eating an enormous meal but he never invited me to partake in any of it."

After London, Mr. Harron returned to Canada, landing roles in the inaugural productions of the newly created Shakespearean festival in Stratford, Ont. He was cast as a minor henchman in Richard III, but in All's Well That Ends Well, he was cast as Bertram, opposite Alec Guinness.

Stratford in the 1950s was a breeding ground, with its boards tread by thespians the rank of Lorne Greene, William Shatner, William Hutt, Maggie Smith and Christopher Plummer, who bonded tightly with Mr. Harron.

"It was his humour," Mr. Plummer told The Globe and Mail this week. "It was extraordinarily pun-ish, and it drove us nuts. But he was very clever, very quick and had a natural wit. We used to love sending up the pomposity of people, including our own."

In 1956, Mr. Harron was recruited by CBC television producer Norman Campbell to fill a 90minute spot with a musical. It was Mr. Harron's idea to create a song-filled version of Anne of Green Gables, the beloved book by Lucy Maud Montgomery that he had been reading to his children that summer in Stratford.

What drew Mr. Harron to the novel was that it had a wealth of humour. In an interview with The Globe and Mail in 2009, he noted that "99 per cent" of the laughs were from the book's author. "I knew enough not to interfere with a good script."

After its made-for-television debut, Anne of Green Gables: The Musical found an onstage home at the Charlottetown Festival in Prince Edward Island, where it has been produced annually since 1965.

Outside of Canada, Mr. Harron found work on Broadway. One night in 1956, during a run of the drama Separate Tables at the Music Box Theatre, the red-blooded actor stopped his dialogue in mid-sentence. He had spotted the unmistakable Marilyn Monroe in the fourth row.

On another night, he opened his dressing room door to find Katharine Hepburn. "Her face was blotched with freckles like a winter apple," Mr. Harron wrote in his memoir, "but all the bones were firmly in their right place."

She was there to offer him a part he had already played: Bassanio in The Merchant of Venice.

Mr. Harron's acting experience and handsomeness also won him television roles in Hollywood, though the experience there in the 1960s, according to his eldest daughter, was less than fulfilling.

"He was just too smart to be chasing David Janssen around the dessert," says Martha Harron, referring to the drama The Fugitive. "I'm sorry, but those kind of roles were beneath him."

Hollywood would be kinder to another of Mr. Harron's daughters, Mary, a filmmaker and screenwriter best known for her films I Shot Andy Warhol, American Psycho and The Notorious Bettie Page.

Back in Canada, Mr. Harron took on the job as the host of current affairs program Morningside on CBC radio from 1977 to 1982. "He took to it like a duck to water," Mr. Dault remembers. "He was engaging, he was interested in people and he was very rapid in everything he did - in his speech, in his thinking and his ability to do things such as fully reading the book of any author he interviewed."

Also on radio, for more than a decade, CFRB employed Mr. Harron (in the voice of Farquharson) to deliver a weekly pair of threeminute editorials. They were more topical than the Hee Haw spots on fictional KORN, which were pretaped in bulk in Nashville.

Looking past the cornpone and mangled jargon, the CFRB commentaries showed Mr. Harron as a compassionate observer. "He was a progressive soul and fierce critic of what he called the 'retrenching of the Neanderthals,' " says Bob Rae, a family friend and former New Democratic Party premier of Ontario.

"He was deeply intellectual and very decent."

In the 1977 Gzowski interview, Mr. Harron spoke about the process of writing his CFRB editorials. He combed through newspapers for subject matter, and while he had to make the spots lighthearted, he was troubled by what he saw as the "disaster and absurdity" of the world.

In those commentaries, persona and person came together.

"The rustic figure who spouts wisdom," Mr. Harron explained, "is as old as the fool in King Lear."

Don Harron leaves his wife, Claudette Gareau; three daughters, Martha, Mary and Kelley; and grandchildren.

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Send us a memory of someone we have recently profiled on the Obituaries page. Please include I Remember in the subject field.

Associated Graphic

Comedian and actor Don Harron, seen here playing Charlie Farquharson, was irreverent and observant.

Don Harron is photographed on Shubert Alley in New York. Outside of Canada, Mr. Harron found success on Broadway.


From left to right: Martha Ann Harron, Don Harron, Gloria Fisher and Mary Harron.


A 180-page review of the New Brunswick shootings, conducted by retired assistant commissioner Alphonse MacNeil, recommends better training for supervisors and officers in how to handle high-risk situations, and training on the use of hard body armour
Saturday, January 17, 2015 – Print Edition, Page A10

MONCTON -- When the 911 call came in on that June day about an armed man dressed in camouflage and roaming a Moncton suburb, the RCMP responded quickly - but only one officer thought to grab a shotgun, while the others left with their service pistols. Not one of them donned hard body armour.

Police were no match for Justin Bourque, who, unlike them, was armed to the teeth with highpowered weapons, an excellent knowledge of guns and a hatred for authority so strong that he had decided to wage war on them.

Leaving with limited firepower was the first of many mistakes, miscues and miscommunications on June 4, 2014, as events unfolded quickly and violently, resulting in the death of three officers - Dave Ross, Fabrice Gévaudan and Doug Larche - and the injuring of two others.

Confusion reigned at the scene - communications faltered and there was no clear direction from senior officers. As Constable Gévaudan lay dying in the backyard of a suburban home, critical information about his location, the fact that he was shot by a high-powered rifle or the degree of his injuries was not broadcast because the officer attending to him had lost his radio and had no cellphone.

Less than two minutes later, Constable Ross was shot down - and a second wave of officers dispatched to the scene also neglected to put on body armour as another officer asked on the radio "who's injured?" No one knew how many ambulances to send.

One officer unknowingly drove directly to Mr. Bourque's location. That's because she was on a separate radio frequency from her colleagues - and so had no information that he was right there firing bullets at police cars. She was shot, but survived.

These chilling revelations are part of a 180-page independent review of the Moncton, N.B., shootings released Friday. It was conducted by retired assistant commissioner Alphonse MacNeil and contains 64 recommendations, including better training in how to handle critical situations for supervisors, more training for officers in how to handle highrisk situations and on the use of hard body armour. As well, the report calls for encrypted radio systems for officer safety. The RCMP says it has accepted all of the recommendations.

Mr. MacNeil's report is detailed and frank. He says his focus was on officer safety. "I wasn't thinking about, 'Will people think it's blunt or it's not blunt,' " he said. "I think it is to the point. I really believe it stands on its own. And anyone who reads it will see that it doesn't favour anyone other than officers' safety."

"There's nothing being hidden," said Staff Sergeant Abe Townsend, the head of the force's Staff Relations Representative Program, an elected body for more than 22,000 RCMP members. "You don't see that [level of transparency] in many places, and certainly not in policing ... These things are now in the public domain. This report belongs to all of Canada."

As the situation became even more chaotic on that June evening, officers were talking over one another on the radio, giving irrelevant information or sometimes valuable information that was lost, according to the report.

Talking in "10-code" (10-4 means "okay," for example) over the radio rather than using plain language also contributed to "confusion as to the severity of the situation," says the report.

Police, however, were reluctant to speak plainly as they wanted to avoid "broadcasting details to the public," according to the report.

"Moncton has avid monitors of police transmissions and unfolding calls were routinely posted to a news-chasing group on social media." In addition, no broadcast was made by a commander warning officers about the severity of the threat, leaving them vulnerable; some officers had no clue about the full scope of the fatalities until hours after the event.

Eventually, about 700 police officers from across the region were involved in the incident, during which the New Brunswick city was under lockdown for more than a day.

In his review, Mr. MacNeil provides a heartbreaking anecdote about a discussion between two officers over wearing hard body armour (HBA): "The Review Team learned through interviews that one member opted to go without HBA so that her colleague, who had children, could have the protection of HBA."

The report notes: "Members should never be in the position of having to decide who gets to wear the HBA."

But many officers, according to the report, had no idea that the armour was in their cars or were unfamiliar with how to wear it.

It is acknowledged in the report that hard body armour would not have saved the officers' lives, given the location of their injuries. But the report emphasizes that it is an important tool for the RCMP.

Important, too, was the fact that shotguns were available to officers, but they chose not to use them, even when they were up against Mr. Bourque and his personal cache of five firearms, including a semi-automatic rifle and a 12-gauge shotgun.

"Tactically, armed with service pistols and one shotgun, they were at a disadvantage due to the superior fire power and range of the shooter's weapon," says the report. "The tactical advantages are overwhelming in favour of Bourque."

When the extent of Mr. Bourque's weaponry was realized, one off-duty officer brought his own scoped hunting rifle to the scene.

The report looks at the issue of the "patrol carbine" - a highpowered rifle similar to an M-16 - that front-line officers are being trained on as a result of the Mayerthorpe Mountie killings in Alberta in 2005.

At the time of the Moncton shootings in June, only two officers in New Brunswick had been trained on how to use the carbines - and they were not in Moncton that day. Now, 120 have, according to Assistant Commissioner Roger Brown.

In his report, Mr. MacNeil writes that "the patrol carbines would have given a more effective lethal-force option and could possibly have influenced members' risk assessments, tactical approach and confidence levels."

Constable Larche had a shotgun but was shot by Mr. Bourque, who was less than 20 metres away, as he got out of his car.

The report notes that despite being seriously wounded, Constable Larche did not give up: "He struggled back to his feet and drew his pistol to engage the gunman. Constable Larche fought until the end, firing seven rounds, the last after being hit by what proved to be the fatal shot."

At that point, says the report, "Tactically, the situation was not under control."

The wives: RCMP report a 'vehicle for the changes that are needed'

This weekend, Constable Doug Larche's family will celebrate the man's birthday, his first since he was killed in the June 4 Moncton shootings that robbed his wife of a husband and his three daughters - his "girlies," as he called them - of their father. Aside from Valentine's Day, this is the last of such firsts for a family that just endured Christmas and New Year's without their loved one.

On the eve of Constable Larche's 41st birthday, which the family plans to mark with a celebration honouring his life, his wife, Nadine Larche, stood alongside the two other women who also lost their husbands that day.

The three women - Ms. Larche, Angela Gévaudan and Rachael Ross - appeared publicly together Friday on the occasion of the release of a much-anticipated independent report probing the RCMP's response to the shooting.

Ms. Gévaudan was flanked by the other two wives and was the only one to speak. "To me, this report is the vehicle for the changes that are needed to ensure the safety of our officers," she said, adding she had hoped to speak off the cuff but had to use notes because her memory "has not been functioning normally."

On Thursday, RCMP Commissioner Bob Paulson and the report's author met with the families of the fallen in Moncton. "The families were provided with a personal briefing and were given copies of both documents," RCMP spokesman Greg Cox said in an e-mail, referring to the report and the RCMP's response. "This allowed the families the opportunity to better understand the circumstances surrounding the tragedy and to ask questions in private."

The Moncton report: It is recommended that ...

the RCMP provide training to better prepare supervisors to manage and supervise throughout a critical incident until a Critical Incident Commander assumes command.

all RCMP members receive a briefing and demonstration on the appropriate use of hard body armour.

the RCMP create a policy that allows for the use of plain language as an alternative to 10-codes (10-4 means "okay," for example) in urgent situations.

the RCMP take immediate action to expedite deployment of patrol carbines, a firearm approved specifically for this kind of incident, across the force. This action must include significant and permanent augmentation of the force's training capacity.

automated messages no longer get sent to victims' families alerting them to the cancellation of certain benefits (health care, for example), as these automated processes lack sensitivity and cause undue stress.

*these recommendations have been edited for length and clarity


A. Justin Bourque's residence.

B. Dead end of Pioneer Avenue, where Mr. Bourque was seen entering woods.

C. Mr. Bourque's position when spotted by a constable.

D. Four constables, including Const. Fabrice Gévaudan, descend on this area.

E. Mr. Bourque's location when spotted by Const. Gévaudan and another constable.

F. After an exchange of gunfire in wooded backyard, Const. Gévaudan is fatally shot. Mr. Bourque emerges here.

G. Const. Dave Ross is fatally shot.

H. Witness reports sighting Mr. Bourque at fire hall.

I. Const. Eric Dubois and another constable come under fire.

J. Mr. Bourque's position when firing shots that injured Const. Dubois and Constable Darlene Goguen.

K. Const. Goguen is shot.

L. Const. Doug Larche's position, on foot.

M. Mr. Bourque's location when firing at Const. Larche.

N. Mr. Bourque seen here at 12:36 a.m. on June 5.

O. Mr. Bourque arrested at 12:10 a.m. on June 6.

Associated Graphic

Justin Bourque is seen in this photo taken in June, 2014. A report on the shootings notes that shotguns were available to responding officers, but they chose not to use them, even when they were up against Mr. Bourque and his cache of firearms, which included the semi-automatic rifle and 12-gauge shotgun seen here.


Rachael Ross, left, Angela Gévaudan, centre, and Nadine Larche appear together on Friday at the release of a much-anticipated independent report probing the RCMP's response to the June 4 shootings in Moncton.


Emergency response officers enter a residence in Moncton in June, 2014. A report released Friday says many officers had no idea that hard body armour was in their cars and were not familiar with how to wear it.


In this photo from June 9, 2014, RCMP officers prepare to search a wooded area behind a Moncton, N.B., shopping plaza located across a highway from the area where a suspected gunman was taken into custody. Justin Bourque, who was arrested after allegedly shooting five RCMP officers, is charged with first degree murder in the deaths three RCMP officers.


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