This is easily the biggest mistake that happened in Leafs history, and that was giving Harold Ballard full control of the team.
Rumors had it, a drunken Stafford Smythe, co-owner of the Leafs at the time, was coerced into selling his share of the team to Ballard by Ballard himself. Ballard was born a crook.
Ballard was all about making money and never about winning and making his players and employees happy. He has went down as likely the most hated NHL owner in league history.
When Smythe eventually died in 1971, Ballard assumed total control of the squad, and really, ever since he took over, the Leafs just got worse and worse by the year.
Ballard would run countless Leafs out of town, mainly some of the best to ever lace them up in a Leafs jersey. Darryl Sittler was dealt for practically nothing just to get his face out of the Gardens.
Lanny MacDonald was given away as well in a trade with the Colorado Rockies.
Dave Keon's relationship with Ballard was tumultuous at best, and when his contract expired in 1975, the 15-year Maple Leaf was set free to sign in the WHA. Keon would receive an offer from the up and coming Islanders team; however, Ballard still held the rights to Keon and blocked the deal. Keon was allowed to finish his career out in Hartford. Keon hasn't forgiven the Leafs organization since.
Ballard had a bad attitude towards player salaries and wanted to control them better; however, this had him at odds with the NHLPA. One member of the NHLPA at the time was Darryl Sittler, who eventually fell out of favor with Ballard, and yes, was sent packing as well by the enigmatic owner.
A full description of Ballard's work can be found here http://en.wikipedia.org/wiki/Harold_Ballard
Needless to say, he hurt a lot of people, and with his micromanaging of the Leafs from the time he was bought the club, to the day he died in 1990, the Leafs rarely made any playoff appearances and were a disgrace in the NHL after Sittler was dealt out of town.
Easily the worst thing to happen to this organization in all of its existence.