Bell Canada and Rogers Communications announced Friday that the two media conglomerates have partnered together to acquire a 75% majority share ($37.5% each) of Maple Leaf Sports and Entertainment for $1.32B. The two companies will each pay the current owner, the Ontario Teachers’ Pension Plan, about $533M for a 37.5% share and 75% combined. Maple Leaf Sports and Entertainment (MLSE) runs the Toronto Maple Leafs, the Toronto Raptors, Toronto FC, the Toronto Marlies and the Air Canada Centre, among a host of other assets, including Leafs TV and Raptors TV.
As part of the agreement, Kilmer Sports Inc. (KSI), owned by Toronto businessman Larry Tanenbaum, will increase its current 20% stake in the company to 25%. Tanenbaum will also remain as chairman of MLSE and as a governor of the NHL, the NBA and Major League Soccer. The transaction is expected to close in mid-2012 following required regulatory and league approvals.
“I am excited to welcome our new partners Bell and Rogers. I am proud this is a Made-in-Canada deal that will bring resources and expertise to help us win on and off the ice, court and pitch. This is a terrific path forward for our teams and our fans. It will ensure MLSE continues to make a positive impact in Toronto and across this great country of ours.”
Many people were shocked when the news broke that Bell and Rogers–two of the largest companies in Canada, rivals and competitors in every sense of the word–were teaming up together to purchase a majority stake in MLSE and grab hold of the largest hockey market on the planet. But we see ourselves as consumers cheering for assets or conglomerates, but rather, fans cheering for teams. The Leafs, the most valuable franchise in the NHL at $521M, are part of MLSE, which sold 80% of its stake at $1.32B.
We will end up seeing some kind of partnership between TSN (Bell) and Sportsnet (Rogers). Both companies will reportedly split radio rights next season, but the TV rights remain up in the air. It’ll likely be a coinflip, with each side going back and forth, picking games from each team’s schedule that their respective broadcasts can air. These companies have partnered before in the 2010 Vancouver Olympics, but that was a one-time thing that lasted just a few weeks. It’ll be interesting to see how this changes after a full calendar year.
What many people fail to remember is that sports is a business. It comes down to profiting, not winning. As much as fans such as myself don’t want to hear it, it’s the truth.
Here’s where things get weird–while Bell is now a part-majority owner of the Leafs, they will keep its 18% share in the Leafs’ arch rivals, the Montreal Canadiens. The Habs also play at the Bell Centre. Rogers, meanwhile, while part-majority owner of the Leafs, also has their name on the Vancouver Canucks rink, Rogers Arena. Odd ownership issues like this are nothing new in Canada, though–in the CFL, the same team that owns the Toronto Argonauts owns the B.C. Lions.
Ultimately, however, it’s not too big a deal. While American investors were lurking at the potential purchase of MLSE, Bell and Rogers have made sure that the Leafs–’Canada’s team’–remains north of the border.
“It’s all about winning. It’s all about championships. And there’s no confusion from that perspective we have a common interest. By the way, championship teams drive our network business,” said Nadir Mohamed, president and CEO of Rogers Communications.
With Bell and Rogers manning the helm, the Leafs’ product will be accessible nearly anywhere–TV, radio, cell phones, tablets. You name it. But no matter what, they will find a way to get the product to the consumer.
Many are asking what impact this sale has on the Leafs, and whether or not it’ll help them win faster. Most likely, nothing will change. The experience the Leafs brings you may change, but will probably do so at a higher cost. The reason for the sale, meanwhile, could possibly be that the Leafs have maximized everything they can do in terms of making money while the team remains out of the playoffs–the next step in making money for this franchise is a Stanley Cup run, one that will satisfy their fans who’ve waited since 1967 for another taste of glory. At the very least, the Leafs reaching the cap will never be a problem. Not that it was before, but with the continued financial backing, they’ll be able to keep adding contracts while finding ways to rid themselves of bad ones.
First and foremost, however, they’ll need to decide if GM Brian Burke is the right guy for the Leafs, and if GM Bryan Colangelo is the right guy for the Raptors. While that gets answered, however, Bell and Rogers have just acquired what could be the most powerful sports asset in Canada. They now control everything from subscriptions to charges to what we see and don’t see.
There’s a new era in Leafs Nation.