Toronto Maple Leafs: Could Rogers Media Monopolize the Toronto Sports Scene?
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The rumours are starting to fly around the city of Toronto.
It is amazing, really. The Toronto Maple Leafs are in a playoff race for the first time in recent memory and yet it is news about the ownership which seems to have taken over the front page.
The Ontario Teachers Pension Plan (OTPP), who owns the majority stake in Maple Leafs Sports Entertainment (MLSE), has made it known that their shares are available for purchase.
MLSE is not limited to just the Toronto Maple Leafs, but also includes their minor league affiliate the Toronto Marlies, along with the NBA franchise Toronto Raptors, Major League Soccer franchise Toronto FC and various other sports related products, including television stations and a sports bar.
For many sports fans in Toronto, there was dissatisfaction in the ownership of their beloved sports franchise being owned by an impersonal entity like the OTPP, with suggestions that a lack of individual leadership was creating poor results in the franchises owned. Regardless of that, MLSE was considered to be generating so much wealth that the OTPP had no interest in selling its shares.
Until now, reportedly.
The story appears to get more interesting with the rumours about Rogers media possibly being a major suitor.
A minority holder, Larry Tanenbaum, has long been the closest thing to a public face MLSE has had. Tanenbaum also reportedly has the "first right of refusal" on any shares being sold, allowing him to become the majority owner should he choose—something which many people have believed to be the most obvious result should those shares go on the open market.
Which is why the rumours about Rogers media become relevant and make the whole story that much more interesting.
Many people have taken Tanenbaum’s "first right of refusal" to mean that the OTPP would have to sell to him first, and then if he rejects those shares, they can go on the open market.
But, while I do not presume to know the absolute details of where Tanenbaum’s (or any other shareholders) rights lay, I rather suspect that it would operate in a fashion somewhat similar to the NHL’s restricted free agency. Meaning the shares could be sold for any amount of money, Tanenbaum simply reserves the right to match the price if he chooses to and if he can afford to.
So, does he want to? Can he afford to? It does not seem like it to me. If the OTPP felt that Tanenbaum was going to be able to give them the money they wanted, the deal would have been made behind closed doors and we, the public, would simply have been notified that MLSE has a new majority owner.
To me, this says that any preliminary talks between the OTPP and Tanenbaum ended with Tanenbaum giving them a far lower price than the OTPP felt they could get elsewhere.
Now that this statement has been made public, with suitors other than Tanenbaum being named, it seems that the OTPP is out to maximize their investment dollar. With a bidding war soon to follow (if it has not already been started long ago), Tanenbaum seems to be in an unfavourable position. A media giant such as Rogers, likely has the ability to outbid what they would guess that Tanenbaum is able to afford.
This does not mean that Rogers would be the only bidder on the shares. I would expect that Bell Canada and Jim Balsillie (amongst others) would be extremely interested in purchasing MLSE.
But the Rogers potential is what makes for a lot of interesting possibilities to speculate upon.
Rogers already owns a Major League Baseball franchise in the Toronto Blue Jays, not to mention several sports-only television and radio stations. This is to say nothing of servicing countless Canadians with television, telephone, cellular phone and all sorts of other media.
If they were to then purchase the majority of MLSE, they would then control all sports entities of any importance in Toronto, aside from the Canadian Football League’s Toronto Argonauts.
To which some Toronto sports fans will say, “Rogers will control all sports entities of any importance in Toronto. Period.”
So, if we speculate that Rogers does manage to purchase these available shares, what does this mean?
Well, it might mean that the iconic Hockey Night in Canada on the Canadian Broadcasting Corporation (CBC) could lose coverage of the Toronto Maple Leafs. But I personally see that as unlikely, the CBC tradition is strong enough that there would likely be a very negative backlash against Rogers.
Not to mention, they could still make a lot of money by selling CBC the right to televise those games—by having no financial need to have another bidder, they can ask their price and CBC can either match it or not.
It might also mean that The Sports Network (TSN) runs into severe trouble. This is perhaps a little more likely. TSN is owned in majority by CTVglobemedia and in minority by The Entertainment and Sports Programming Network (ESPN).
An interesting sidenote: the OTPP is a minority owner (25 percent) of CTVglobemedia.
Without having any Toronto sports games to broadcast, or in a best case scenario, a limited and unappetizing selection of Toronto sports games to broadcast—TSN is likely to suffer greatly, since they only broadcast in Canada. With TSN currently ready to launch its own sports radio station on AM1050 in one month's time, a Rogers monopoly of the Toronto sports scene could totally devastate TSN.
But, could a Rogers monopoly be good for the city of Toronto and its fans?
If MLSE has proved one thing, it is that the Toronto Maple Leafs are able to single-handedly support other franchises financially, most notably the Toronto Raptors.
When owning multiple franchises, it would be very simple to ensure that strong franchises could help support weaker ones in times of need. Could season ticket holders for the Toronto Maple Leafs also find themselves owning seats for the Toronto Blue Jays and the Toronto Raptors?
Empty seats are bad for television, and Rogers is all about televising the games. Toronto fans might find that by purchasing a ticket for one team, they might get free tickets to empty seats of another team that is struggling at the gate.
It is not as crazy as it sounds, there will be a certain acceptance of a justification for paying a higher ticket price on the game people want to see, because you are getting a free ticket to another sporting event in compensation.
So, not only does the company make a better return on that first sale, which was guaranteed in any event, they fill up that empty seat for television, and grab more money at the concession stand.
With better television, peer pressure starts to set in on the city. Everyone will want to go to baseball games or basketball games because they see everyone else doing so. With the extra revenue that is now generated on those franchises, more and better money can be invested into players on those teams.
With high fan attendance, bigger payrolls and intense media coverage, Rogers could then hope to market Toronto as a premier sports city, luring bigger-name free agents into town and onto those previously struggling franchises.
Everyone wins, or at least that is how Rogers would hope everyone sees it.
That sort of vision would be incredibly ambitious, to put it mildly. Toronto has made its own reputation as a Toronto Maple Leafs town, with a lot of fair-weather fans for other sports—meaning they could care less about hockey or any other sport, unless it is the Leafs or a Toronto franchise that it is fashionable to be supporting because they are winning.
Who would you like to see become the majority owner of MLSE?
Rogers would obviously like to make all of the Toronto franchises winners, and hopefully keep them winning for a long enough period of time that the fair-weather fans breed permanent, die-hard fans, turning Toronto from a city that thinks it supports sports to one of the real premier sports towns in the world.
It would be hard to do, and something I am not certain that anyone could pull off, but also something that I think would make a lot of Torontonians happy and proud—especially because it would eliminate the NFL’s largest concern about putting a franchise into Canada’s biggest city.
If Rogers were to acquire control of MLSE, I would be shocked if it was not the first step in a plan on bringing the NFL into Canada under the same umbrella. I can only imagine what the average Toronto sports fan might think of Rogers at that point.
When you consider what Rogers could then offer in its media packages to the citizens of Toronto, especially with the technology found in the modern smart phone, it could be a dream come true for the real sports fans.
Of course, it could also be an incredible gamble for the Toronto sports fan.
At any rate, Rogers will have a lot of competition in the bidding for these shares. If nothing else, Bell Canada Enterprises, who is the largest media competitor of Rogers in the Toronto market, and who is a minority owner of CTVglobemedia, will almost certainly ensure that Rogers is not able to purchase these shares for anything less than top dollar.
For the Toronto sports fans, if nothing else, it should give us something to argue about if the Leafs fall out of the playoff race.
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