Rogers buying MLSEL no slam dunk

STEVE SIMMONS, QMI Agency

, Last Updated: 7:34 PM ET

TORONTO - After all the speculation, noise and blaring headlines, it appears to be business as usual at Maple Leaf Sports and Entertainment Ltd.

There will be no imminent sale of the Maple Leafs, Raptors and the Air Canada Centre to Rogers Inc.

There may, in fact, be no sale at all — not that it would change anything for the struggling hockey and basketball teams.

This is not the first time, nor will it be the last time a story such as the one reported Wednesday in the Toronto Star make its way to print. There have, in fact, been others in the past. But a bevy of sources Wednesday, from inside MLSEL, inside Rogers, and inside the sporting industry, indicate there is “nothing of consequence going on” that would see a $1.3 billion sale to Rogers of shares in MLSEL owned by the Ontario Teachers Pension Plan.

Not that the Teachers’ would be adverse to selling. That may be where this complicated story began and rocked the industry Wednesday. There has been, within the Pension Plan, a split for a while over the state of their 66% share in Maple Leafs Sports. Some believe it’s time to sell. Some want to hold on to what has been an excellent investment for the Fund. It may have been in the Teachers’ best interest to have the story out that their shares are in play — possibly to encourage a bidding war for their majority ownership of this powerful sports corporation.

And one fact that’s been quietly presented in all of this: MLSEL chairman Larry Tanenbaum holds the right of first refusal on all MLSEL shares he doesn’t own. The Teachers’ can’t sell their shares without first offering them to Tanenbaum, the construction magnate.

One source indicated the Teachers’ have approached Rogers, BCE Inc., Tanenbaum and some wealthy American investors with the hopes of creating a bidding war of sorts for their shares.

But mostly, Wednesday was a day of denial across the board.

Tanenbaum wasn’t available to comment and his assistant said all questions must go to MLSEL.

“We have no knowledge of any discussions,” Rajani Kamath, the MLSEL head of corporate communications said in a release. “If there are any, it would be an ownership matter and I would refer you to speak with the Ontario Teachers Pension Plan.”

The Pension Plan spokesperson added: “It’s our policy to neither confirm nor deny such stories,” said Deborah Allen.

The Rogers people weren’t a whole lot more helpful: “There’s no change to our current relationship with MLSEL. As to specifics, we don’t comment on rumour and speculation.”

Even those who normally would comment on rumour and speculation weren’t necessarily commenting Wednesday or even offering direction of any kind. One source, who is party to almost everything within MLSEL and is normally quick to dispel inaccurate stories about the company, did not say anything about Wednesday’s Star report. Which likely indicates the Teachers’ shares are up for sale but there may not necessarily be a suitor at this time.

Most people historically have misunderstood or misrepresented the Teachers’ stake in MLSEL. Years ago, a Teachers’ board member explained it to me this way: It is purely an equity investment.

You buy in at one price and sell out at another.

They didn’t take money or profit out on a regular basis: “We set a financial target,” the source said. “If we hit the target, we keep the shares. If our value goes below where we have valued the company, then we sell. This has nothing to do with how the Leafs or Raptors do necessarily, the decision to sell would not be based on emotion. It would be based on the actual valuations involved.”

There has also been some speculation that Rogers would greatly benefit in some way by owning all the major sports properties in Toronto. A television source indicated the opposite could be true: “Rogers has owned the Blue Jays for years and where has it gotten them?” the source said. “Is Sportsnet any bigger? Are the Blue Jays any better off? Are Rogers selling more cable because of it. I don’t think so.”

Years back, when Ted Rogers was still alive and was a neighbour of Tanenbaum, the two used to talk a lot about the future of sports ownership in the city. And they used to kick ideas back and forth — about the business sense it made for one person to control the major sports properties in the city.

But in 2006, Rogers said: “I haven’t got that kind of money,” when asked about having $1 billion to invest in an National Football League team. “Rogers Communications is certainly not prepared to spend a billion dollars...”

If they didn’t have the money four years ago with the ambitious Mr. Rogers still alive and unafraid of debt, why would they have the money now?

For Leaf fans and Raptor fans, nothing is about to change either way. They are owned by a dispassionate bottom-line organization now. There is no indication a stake by Rogers, assuming that ever happens, would be any different. One piece of news that does link to the Teachers’ is the announced retirement of MLSEL president and CEO Richard Peddie, who has clearly represented the Teachers’ interests over the years. Peddie’s departure may well be linked to the intent of sale by the Teachers’. But Peddie won’t officially be gone until next year at this time.

It may take the Teachers’ that much time — and longer — to find a buyer willing to come up with more than $1 billion for their stake in MLSEL.


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