TORONTO - A three-horse race has emerged in the battle to gain majority control and ownership of Maple Leaf Sports and Entertainment Ltd.
Now, let the bidders declare themselves privately to the investment firm of Morgan Stanley, if they haven’t already.
According to numerous sources with some understanding of the possible future transaction, the Ontario Teachers’ Pension Plan is looking to hit a financial home run with the sale of its 66% share in the Maple Leafs, Raptors, the Air Canada Centre and other lesser properties, including Toronto FC, the Toronto Marlies and the gold mine sports bar, Real Sports. The Teachers’ have done extremely well with their equity investment in MLSEL and are now looking to determine if they can cash out with at least $1.3 billion for their share in Canada’s most prominent sporting company.
Two major media players, Rogers’ Communications and Bell, owners of the most significant sporting networks in the country, are expected to bid against each other for the Teachers’ shares.
The only possible other suitor is board chairman, Larry Tanenbaum, who owns right of first refusal on the shares that are officially in play, and has to make the determination himself whether he wants to take full control and can get banking support to get full control of a company that has both thrilled and frustrated him during his long-term involvement at MLSEL.
“Anybody who says they know what’s going on in this deal is not telling the true,” said an insider, close to MLSEL. “The fact (that the shares are for sale) is absolutely accurate. But for anyone to say this person has an edge, or that person has an edge, the truth is, they don’t have a clue. At this point, no one does.
“The thing about this deal is, even the people who know, don’t know,” the source said.
The battle between Rogers and Bell has been expected for some time now. For the Teachers’ it’s like putting your house up for sale and then hoping there’s an auction with multiple bidders.
Any deal will be complicated for a couple of reasons. One, with right of first refusal, Tanenbaum would have to be willing to work with whomever purchased majority control. Two, the Teachers’ have a fiduciary responsibility to sell to the highest bidder. They represent their constituency. Friendship or business relationships can’t take on any real significance in trying to make the best deal possible.
And just where Tanenbaum sits on all this, is uncertain. At this stage, he isn’t commenting. He is more likely to sit back, see what emerges, and then decide in which direction he wants to proceed.
Those who know Tanenbaum wonder whether he has the stomach — or the willingness — to live through more years of the personal heartache that has gone along with owning the Leafs and the Raptors. At one point in time, he would have desperately attempted to take majority control of the company and its sporting properties. But Tanenbaum, now officially a senior citizen, may not want to take one such onerous debt, or new partners of his choice, in order to come up with more than $1 billion for absolute control of MLSEL.
“It’s all pretty unknown,” said another source. “To me, it’s going to come down to either Bell or Rogers. And the only thing I know about that is, if they’re in charge, Bryan Colangelo and Brian Burke won’t have carte blanche to operate their franchises the way they have it now. And I know those companies will be asking questions like: Why do we have the highest paid general manager in the NBA and why do we have the highest paid general manager in the NHL and have two teams that aren’t very good?”
The Teachers’ may be picking the perfect time to be getting out, other sources insist. The company may never be worth more than it is today.
Wins and losses aside, MLSEL has had a string of financial successes, which includes the value of the Maple Leafs, the surprising strength of their soccer team and a run of sound real estate investments.
“This whole thing is typical Teachers’,” said the source. “You know what happens with MLSEL, they make their money. What do the fans get out of all this? As usual, nothing.”