A source confirmed the long-awaited deal, which ends Defoe's roller-coaster year in Major League Soccer.
Toronto had been looking to send the 32-year-old Defoe to Sunderland with 25-year-old U.S. international forward Jozy Altidore and cash coming back to TFC.
That is expected to still happen. But Altidore's journey to Toronto will have to go through the league's allocation process which governs the return of players to MLS.
Goals have been hard to come by for Altidore in England but he remains a key player in the U.S. national team setup.
Cash from the Defoe sale is expected to trigger a series of moves as Toronto, a franchise yet to make the playoffs since entering the league in 2007, looks to fill key defensive and midfield holes on its roster.
Toronto is looking to add another designated player in a creative attacking midfield role, with two targets currently playing in Europe. Neither will be available until July 1 and the MLS club may find itself with a logjam of DPs unless something gives.
Star midfielder Michael Bradley isn't going anywhere. Toronto execs look to make the intense American the team leader on and off the field.
Reports in Italy have also suggested an interest in 27-year-old Juventus forward Sebastian Giovinco. Toronto also has its sights set on Real Betis defender Damien Perquis, a 30-year-old French-born Poland international.
Sunderland (3-7-11) currently stands 16th in the English Premier League, one point above the relegation zone. The move to the northeast of England reunites Defoe with Black Cats manager Gus Poyet, who was both a player and assistant manager at Tottenham.
Sky Sports reported earlier Tuesday that up to 10 Premier League clubs had been in the hunt for Defoe. Toronto GM Tim Bezbatchenko said last week that most of the interest came from teams in the bottom half of the standings.
The January transfer window is a seller's markets. Reliable strikers are hard to come by, even if they are on the wrong side of 30 and coming off a groin injury.
The price of a player like Defoe may be high in January but it pales compared to the financial losses of falling out of the tony Premier League.
Defoe's future has been cloudy since Toronto turned down a franchise-record transfer fee from an English team at the end of the summer transfer window. That turned into a soap opera and Toronto execs were determined to resolve the matter in the January transfer window before Defoe's return date of Jan. 17.
Defoe seems to have landed on his feet, with Sunderland reportedly willing to take on wages of 80,000 pounds (C$145,000) a week. The MLS Players Union listed Defoe's Toronto salary at US$6.18 million (which equals C$142,375 a week).
Some will say Defoe was a disappointment in Toronto. But he was a striker, not a saviour.
When healthy, Defoe was a force to be reckoned with in North America. Toronto did not lose (6-0-2) when he scored in league play.
It speaks volumes about Toronto's woeful offence in the past that Defoe, who ranked fifth on Tottenham's career scoring list with 142 goals in two spells, exits No. 5 on Toronto's all-time scoring chart with 11 goals — a feat he achieved in 13 MLS games.
He scored three goals in his first two games. But after potting a goal July 16 in a 1-1 tie with Vancouver, he did not score again, missing 12 of the next 18 games through suspension (one game) or injury (11).
Defoe returned to England for injury rehab as rumours swirled about his future. And Toronto (11-15-8) failed to make the playoffs for the eighth straight year.
That's not on him. But Toronto oversold the quiet striker.
Tim Leiweke, president and CEO of Maple Leafs Sports & Entertainment, brought David Beckham to the Los Angeles Galaxy and led the way in luring Defoe to town. Toronto pulled out all the stops, even enlisting Raptors global ambassador Drake to bend Defoe's ear.
Leiweke did not expect Defoe to be Beckham. But the English forward did not become the face of the franchise and was seemingly ill-prepared for what awaited him.
When he was surrounded by cameras and reporters in the Toronto locker-room at the first home game, he looked aghast as he walked out of the showers.
Defoe was polite with the media — the biggest complaint was the occasional mild beef over how long he took to moisturize before talking to assembled reporters — and his teammates said he had little ego in the dressing room. But when he left for treatment in England, the soap opera surrounding his future was a distraction.
Defoe arrived to unprecedented fanfare last January along with Bradley before a balcony full of chanting, singing fans at the hangar-sized Real Sports Bar & Grill.
"To come here and to have a reception like that is unbelievable. Such a great feeling, I feel at home already," Defoe said at the time.
A double-decker bus was parked outside the news conference where Leiweke touted the signing of what TFC billed as a "global football superstar."
At some US$10 million apiece, Defoe and Bradley each broke the MLS record for transfer fees. Toronto had started the spending spree in December by signing Brazilian forward Gilberto, another marquee designated player.
The club trumpeted the signing of Defoe with a marketing campaign titled "It's A Bloody Big Deal," a slogan it perhaps began to regret as the forward's future became murkier and the losses mounted as the season wore on.
The slender five-foot-seven striker said at his unveiling that he was here "to win trophies and do my best for the club and the team."
But a season that started with goals ended painfully with the former West Ham, Portsmouth and Tottenham star on the sidelines. Missing out on the England World Cup squad also hurt, raising the suggestion that moving to a lesser league had not helped his cause.
In the end, while he never said it, he seemed he just wanted to get healthy and go home.
The two phones that sat in his locker — one presumably for North America and the other for Britain — seemed to tell a story.
By the end, Defoe was clearly upset that some had questioned both his commitment to the club and the extent of his injuries.
"There are a few fans that have said certain things and I'm like 'well that's a bit harsh,' but obviously I would never retaliate," he told reporters in October. "But at the same time, I think if you do want someone to stay at a football club, at least support them. At least show them that you want them to be here."
Defoe said he had never publicly asked to leave Toronto but didn't know what the future held. Toronto, meanwhile, said while he remained their property the club would listen to offers.
Still the assumption remained that Defoe wanted to move on and Toronto was willing to accommodate him, as long as it recouped its considerable investment.
Defoe underwent surgery to correct his groin problem in the off-season and was given permission by Toronto to train for a week with Tottenham as part of his fitness regimen.
Leiweke said TFC would lose money this season due to its investment in its designated players. On the plus side, the club set a franchise record for attendance in 2014.
Toronto drew 375,463 fans to BMO Field, up 30,928 over the previous franchise record of 344,535 set in 2011. TFC attracted 15 straight sellouts of 22,591 before attendance at the two final home games dropped to 18,269 and 18,329, respectively.
The club drew 308,233 fans in 2013.
Toronto averaged 22,086 a game this season, second only to the Seattle Sounders (43,734) and well above the league average of 19,147.
Toronto had 17,000 season-ticket holders in 2014 — its most ever — with a waiting list of 3,000.
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