The Ontario Teacher's Pension Plan Board is interested in selling its share of MLSE and Rogers Communications has long been interested in acquiring equity in the entity that owns the NHL's Toronto Maple Leafs, NBA's Toronto Raptors and MLS's Toronto FC.
But multiple sources say the two sides are nowhere near completing a deal that would see the communications giant take over the Teacher's Fund's 66 per cent share of MLSE, which also owns the Air Canada Centre and produces annual profits of between $60--$70 million.
“They owe it to every last pensioner to get every last dollar plus (minority partner) Larry Tannenbaum has the right of first refusal,” said a source in the banking industry. “So how do you do a deal without him? I think it's got to be a long way from being done.”
That opinion was backed up by several sources in the business and sports business communities. And while first-hand knowledge of the talks between the two sides was hard to find, no one disputed Rogers interest in MLSE or that the Teacher's Fund is willing to sell.
One source said the Teacher's Fund has been exploring a sale for “more than a year.”
“We knew there was some activity there but had no idea (about a potential buyer),” said a source. “There clearly was something going on but it was vague.”
Several reports on Wednesday said that Rogers Communications are in negotiations to buy the Teacher's majority share, which would give it controlling interest in the company that owns the NHL's Toronto Maple Leafs, the NBA's Toronto Raptors, the AHL's Toronto Marlies and MLS's Toronto FC, along with the Air Canada Centre and the rights to BMO Field.
Rogers already owns MLB's Toronto Blue Jays, the Rogers Centre and all-sports stations Rogers Sportsnet and The Fan 590.
But while no one believes the two sides are in the late stages of deal-making, a potential marriage between the two sides does make sense.
“If I had to list three or four potential buyers, (Rogers) would have been at the top of the top,” said a source. ”It's a natural because everyone is trying to shore up their media for the next 10 or 20 years so it makes total sense for Rogers to look that up because there's no better property in Canada.”
One Toronto-based source said he had heard during the summer that Rogers was working on a major sports acquisition. Another said Rogers had discussed possibly a merger with MLSE in the past but those talks became stalled when it became difficult to put a value on Rogers Sportsnet, the company's all-sports television network.
If Rogers were to own the Leafs, it would give them rights to all Toronto Maple Leaf games that are not part of the league's national packages. So while the majority of Leaf games would presumably air on Rogers Sportsnet, the team would not disappear from CBC or TSN altogether.
One source said the Teacher's Board was motivated to sell based on its belief that they have tapped the potential from MLSE including from real estate, ticket sales and broadcast revenues and that there are “no easy signs of revenue growth.”
Forbes Magazine has repeatedly pegged the Leafs as generating the NHL's highest revenue, pegged last fall at $119 million.
What Rogers' possible ownership of MLSE might mean to hockey fans is hard to say. While the Teacher's Board may have had a hand in steering the team's direction in the past, general manager Brian Burke was given complete independence when he took the job two years ago.
“You're moving from an owner that was all about financial generation for a fund, while Rogers has a little more identity in tying their products to the team,” said University of Ottawa sports business professor Norm O'Reilly. “So you can see the success of the team is more tied to that ownership group.”
“But if the Leafs are for sale, maybe someone else could come in an individual who could buy the team independently, that would be the dream scenario for fans.”
A banking source said the immediate affect of news about a potential Rogers-MLSE deal may be more potential buyers coming out of the woods.
“It's one of the most valuable groupings of assents in North America,” said the source.
Rogers said Wednesday that there is "no change to our current relationship" with Maple Leaf Sports and Entertainment.
"We have a successful, long-standing sponsorship and broadcasting arrangement with MLSE," Rogers said in a statement. Sports is an important part of Rogers and we're always in discussions with companies to enhance the sports content we offer our customers. There's no change to our current relationship with MLSE. As to the specifics, we don't comment on rumour or speculation."
A source said he believed the reported sale price of $1.3 billion for Teacher's 66 per cent share made sense.
“You look at what Montreal sold for and then I think you put a real premium on the Leafs,” said a source. “You've got an NBA team that's worth $350 million so with the hockey team you're almost at a billion there. With the rest you get to ($1.3 billion for 66 per cent) pretty quickly.”