The city of St. John's is closer to landing an American Hockey League franchise.

On Thursday, St. John's City Council approved in principle a lease agreement between an AHL team and St. John's Sports and Entertainment Ltd. (SJSEL), St. John's Mayor Dennis O'Keefe announced in a press release.

"The city is extremely pleased that the proponent was able to broker an agreement which will see the AHL return to St. John's," O'Keefe said. "We gave St. John's Sports and Entertainment a mandate to negotiate within the current $1.25-million subsidy level.

"We are pleased to announce that SJSEL has developed an agreement with the proponent which represents minimal financial risk to the city and its taxpayers and may in fact allow us to decrease subsidy in the future. This is a big win for the city and the province as a whole."

The deal has not been fully completed as of yet, but the city council vote of approval paves the way for a potential return of professional hockey to the province, which lost the St. John's Maple Leafs in 2005 to Toronto.

Specific details of the agreement were not released, but the City of St. John's will not not be part of the ownership of the franchise, which will play in Mile One Centre in downtown St. John's.

The deal is for three years with the franchise carrying the option for a fourth season.

On Tuesday, True North Sports and Entertainment Ltd., led by Canadian billionaire David Thomson and local businessman Mark Chipman, announced it had purchased the NHL's Atlanta Thrashers and would move the franchise to the city of Winnipeg pending approval from the league's board of governors.

That left the AHL's Manitoba Moose in limbo and it has been widely speculated the Moose will be heading east, although no official announcement was made as to which team would be relocating.