After the Maple Leafs won the Stanley Cup in 1967, Kelly announced his retirement as a player, and negotiated with the expansion Los Angeles Kings to be their inaugural coach on the strength of Imlach's assertion that Toronto would not stand in the way of Kelly's coaching career. Imlach insisted, however, that Los Angeles draft Kelly in the expansion draft, and after the Kings failed to do so, refused to release Kelly's rights until Los Angeles traded minor-league defenceman Ken Block to the Leafs. Kelly guided the Kings to second place in the West Division and made the playoffs two years in a row.