TORONTO - NHL legend Wayne Gretzky thinks the Toronto Maple Leafs are headed in the right direction.

Mike Babcock was named the team's new head coach Wednesday afternoon, leaving the Detroit Red Wings for a $50-million, eight-year deal.

"Obviously it's exciting for the people in Toronto. You get a coach of that calibre that's got a Stanley Cup, a couple of Olympic gold medals, it's a really good acquisition for the Toronto Maple Leafs," said Gretzky outside the ballroom of the Royal York Hotel in downtown Toronto. "I'm sure the people in Detroit are a little bit disappointed when you lose a guy of that calibre, but that's the way the business is now in sports.

"I think he's really going to enjoy being in Toronto and I think he'll do a great job."

Gretzky, the NHL's all-time leading scorer and a Hall of Famer, was attending a fundraiser for Parachute, a children's safety charity.

He and Babcock worked together at the 2010 Vancouver Olympics. Gretzky was special adviser to the Canadian men's hockey team for the Games, while Babcock was the team's head coach. Team Canada won gold at those Games and again in 2014 at the Sochi Games with Babcock back behind the bench.

After playing for the Edmonton Oilers, Los Angeles Kings, St. Louis Blues and New York Rangers, Gretzky retired to become co-owner and later coach of the Phoenix Coyotes. As a former player, team executive and coach, Gretzky believes that Babcock's record-setting salary as the Maple Leafs' new coach will spur higher pay for coaches around the league.

"Top-paid guy makes a million dollars a year, the second-best coach gets $700,000. Top guy's making 8 million, you're going to ask for 6 million," said Gretzky. "That's just capitalism. That's just the way life is. In professional sports the dollars keep rising."

Gretzky says that although Babcock will be making more money than most of the players on his team — only captain Dion Phaneuf and all-star forward Phil Kessel will make more per year of active Leafs players — he is worth the high salary.

"We have to understand the importance and the imperative of what a coach brings to the table. Is he worth what the best player on your team makes? Obviously, in this case, the Toronto Maple Leafs feel that they need to get a coach of that calibre that is worth as much as probably their highest paid players make," said Gretzky. "That's just the way it's going to be. In sports it's always been like that and it's never going to change."