TORONTO (CP) -- The Arena Football League says neither the CFL nor the Toronto Argonauts should be threatened by the Toronto Phantoms, the league's first Canadian-based franchise.

But neither the CFL nor the Toronto Argonauts are buying it.

In fact, Argos owner Sherwood Schwarz said Tuesday he and other CFL owners have discussed countering the AFL's arrival in Canada by forming their own indoor football league to begin play in 2002.

"Arena football has mentioned it wants to be in a lot of places in Canada so I think everyone realizes it is either American football or Canadian football," the New York insurance magnate said.

"We might also explore the possibility of an arrangement with the XFL (the WWF-sponsored spring league to kick off in February) to provide Toronto fans with exciting football year-round."

A local group headed by Rogers Communications Inc. -- which recently bought a controlling share of baseball's Toronto Blue Jays -- purchased the former New England Sea Wolves and relocated the club from Hartford, Conn. on Tuesday.

Terms of the sale were not disclosed but the Phantoms will begin play in April, 2001, at the Air Canada Centre.

Maple Leafs Sports and Entertainment, which owns the ACC as well as the NHL's Maple Leafs and NBA Raptors, has no stake in the franchise.

Schwarz has reason to be concerned.

The Argos are struggling to attract fans and now face having to go head-to-head with a rival franchise.

The AFL season begins in April and runs until August, creating a two-month overlap with the CFL, which kicks off its regular campaign in July.

AFL commissioner David Baker isn't finished taking arena football globally.

He said Tuesday he wants to further expand into Canada -- most likely Montreal and Vancouver -- and added he has has been approached by potential suitors in Europe, Asia and South America.

Those are hardly encouraging words for CFL president Jeff Giles.

"I'm disappointed in the arena league because they said they wouldn't do anything to harm or hurt the CFL," said Giles. "I think it is extremely naive to say that it (arena football) won't hurt the CFL.

"First, you have seasons that will overlap partially. Secondly, the Argonauts and Phantoms will be out selling corporate sponsorships at the same time -- January through March and April -- and will also be trying to sell tickets to games at the same time.

"Hopefully, it will, but being better might not necessarily be the right solution."

Giles held year-long talks with Baker about the two jointly bringing arena football into Canada.

But Canadian governors dismissed Giles' proposal, then a majority refused to give him the mandate to prevent New England from moving to Toronto.

That prompted Giles to announce his resignation following next month's Grey Cup.

Giles was also critical of Rogers' involvement with the Phantoms and denied comments made Tuesday by company president Tony Viner that the CFL has never approached the communications giant about getting involved with Canadian football.

"That's absolutely false," Giles said. "It would be very naive to think that as the CFL we haven't approached CanWest Global, Rogers and CTV about getting involved with this league.

"We have approached them all and we've done so in the last year. Obviously Mr. Viner hasn't been part of those discussions."

The AFL has national television deals with TNN, ESPN, ESPN2 and ABC but the Phantoms have yet to negotiate their own deal in Canada.

However, that could be a moot point given Rogers' ownership of the franchise.

But Baker and Phantoms' president Rob Godfrey say Giles and Schwarz need not be concerned.

"I hope with all my heart that 10 years from now the CFL will be stronger and one of the many reasons it would be stronger is because of the AFL getting involved in Canada," said Baker, a mountain of a man at six-foot-nine and nearly 400 pounds.

"People should support Canadian football but they're also going to get the opportunity to support arena football. "

As a sign of good faith, Godfrey said the Phantoms won't play home games the same nights the Argos are at SkyDome.

"We have a rich football culture here because of the CFL and we're going to work with them to the extent that they want to work with us," said Godfrey. "What we think we will do is create an atmosphere where people are excited about football and come August when we're done that people will be starved for football and will go out and see the CFL."

By Dan Ralph