The 1977 Major League Baseball expansion resulted in the establishment of expansion franchises in Seattle and Toronto in the American League of Major League Baseball. The Seattle Mariners and Toronto Blue Jays began play in the 1977 Major League Baseball season, becoming the 25th and 26th teams in Major League Baseball.
Seattle and Toronto were included in a list of potential expansion cities in a survey conducted by the American League in 1960. The others were Atlanta, Buffalo, Dallas-Fort Worth, Denver, Oakland, and San Diego (all of which received franchises eventually through expansion or relocation except Buffalo).
In the 1969 Major League Baseball expansion, Kansas City, Montreal, San Diego, and Seattle were each granted a franchise; the Kansas City Royals and Seattle Pilots were added to the American League, while the Montreal Expos and San Diego Padres joined the National League. The Seattle Pilots only played one season, during which they faced financial difficulties owing to no television coverage, a poorly performing team, a stadium with problems, and the highest ticket and concession prices in the league. Owners of other American League teams wanted Dewey Soriano and William R. Daley to sell the team to a Seattle owner who would improve the team and address issues at Sick's Stadium, particularly uncovered seats with bad views. After several attempts to sell the team to a Seattle owner failed, on 1 April 1970 judge Sidney Volinn declared the team officially bankrupt; it was sold to Bud Selig, who moved the team to Milwaukee and renamed it the Milwaukee Brewers. Selig had negotiated a deal for the purchase with Soriano during Game 1 of the 1969 World Series.
As a result of the relocation of the Seattle Pilots to Milwaukee, in 1970 the city of Seattle, King County and the state of Washington sued the American League for breach of contract. The 32.5 million dollar lawsuit proceeded until 1976, when at trial the American League offered the city a franchise in exchange for the city, county, and state to drop the suit. On 2 November 1972, King County had broken ground on the Kingdome, which would come to be used by the Seattle Mariners for baseball and by the Seahawks for football.
On 15 January 1976, the expansion franchise was approved, becoming the 13th franchise in the American League. It was owned by Lester Smith and Danny Kaye, who paid an expansion fee of US$6.5 million. Owing to the history surrounding the franchise, sportswriter Emmett Watson of the Seattle Post-Intelligencer joked that the team should be named the Seattle Litigants.
Toronto had a long history of interest in baseball. Its first professional baseball team was established in 1885, and in 1886 Sunlight Park was built to host its games. In 1897, Hanlan's Point Stadium was built at the Toronto Islands for the Toronto Maple Leafs of the International League, and on 5 September 1914 it was the site of baseball legend Babe Ruth's first professional home run and only minor league home run. In 1926, Maple Leaf Stadium was built for the Toronto Maple Leafs. The team was successful, sometimes drawing more fans than established Major League Baseball teams. The team was owned by Jack Kent Cooke, who in the mid-1950s sought municipal financing of a major league baseball park on the grounds of the Canadian National Exhibition. He was also involved in the failed attempt to establish the Continental League as a third league in Major League Baseball. Maple Leaf Stadium was demolished in 1968 after the Toronto Maple Leafs were sold to Walter Dilbeck and moved to Louisville, Kentucky. (The team moved again, and is now the Pawtucket Red Sox.)
In the early 1970s, Toronto City Council alderman Paul Godfrey proposed a plan for a publicly financed domed stadium in the city, but it was opposed by taxpayers and amateur sports groups. Undeterred, he proposed renovation of Exhibition Stadium to support baseball. The stadium was renovated in anticipation of the city being awarded a Major League Baseball team, costing C$15,000,000. Half of the funds were provided by the municipal government, and the other half from an interest-free loan from the Government of Ontario. Its seating capacity was increased to 40,000.
There had been strong interest from several groups and individuals to own a Major League Baseball team in the city. The most prominent was Labatt Brewing Company, who wanted to use ownership of a sports team as a means to establish a visible presence in the Toronto market.
On 9 January 1976, the National Exhibition Company, owners of the San Francisco Giants, established an agreement in principle to sell the franchise to a consortium owned by Labatt Brewing Company, Vulcan Assets, and the Canadian Imperial Bank of Commerce for C$13,250,000. The Giants had failed to repay a US$500,000 loan from Major League Baseball, and had experienced declining revenues since the relocation of the Kansas City Athletics to Oakland in 1968. Of the sale price, US$5,250,000 was to be placed in escrow to "meet certain possible obligations with respect to the transaction", especially the lease of Candlestick Park, which would expire in 1994.
The new owners of the Giants, led by Don McDougall, would move the team to Toronto pending approval from the other eleven National League teams, which would be sought on 14 January at the Winter Meetings of General Managers in Phoenix. The team would be known as the Toronto Giants and would begin play during the 1976 Major League Baseball season. The deal was scuttled by a Superior Court of California, which issued an injunction blocking the sale on 11 February 1976; the injunction was requested by the city of San Francisco on 10 January. The National Exhibition Company eventually accepted a purchase proposal from Bob Lurie in a deal brokered by George Moscone, the Mayor of San Francisco.
The American League provided an opportunity for a Toronto franchise, and two groups bid for the rights to franchise ownership in the city. Ultimately, an ownership group named Metro Baseball Ltd. consisting of Labatt Brewing Company, the Canadian Imperial Bank of Commerce, and Imperial Trust won the bid for a franchise fee of C$7,000,000. The other bid was made by Atlantic Packaging.
After the city was awarded the franchise, U.S. President Gerald Ford attempted to pressure Major League Baseball to instead award the franchise to Washington, D.C., which he claimed should have a team before Toronto. Both the American League and National League dismissed his request.
In preparation for the 1977 season, Toronto City Council approved a further C$2,800,000 for renovation to Exhibition Stadium.Paul Beeston was hired as the team's first employee, and Peter Bavasi was hired as the team's first president and general manager.
In order to stock the roster of each team, a draft was held on 5 November 1976 in which each of the extant teams would make available to the expansion franchises some of the players on their major league and minor league rosters. Each team was allowed to protect fifteen players on the major league roster, and an additional three players after each of the first and second round of the draft. The Seattle Mariners and Toronto Blue Jays each selected 30 players in the draft.