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December 9, 2011
Teachers’ MLSE Sale Perfectly Timed
The blockbuster deal to sell a 75 per cent stake in Maple Leaf Sports & Entertainment to Rogers and Bell Canada for more than $1.3 billion puts the Ontario Teachers' Pension Plan squarely at centre ice as analysts and observers try to figure out why the teachers are selling, and why now.
The teachers have made no secret of their desire to unload their majority stake in the highest-profile collection of sports interests in the country. They pulled their MLSE shares off the market barely two weeks ago after a fruitless eight-month search for a buyer. At the time, they said they simply didn't get the price they had been looking for, but the size of the deal suggests a deal with Rogers and Bell was already in play and the move was a negotiation tactic. Deals this size don't just materialize in a couple of weeks.
The reason for selling is simple: it's high time for the teachers to cash in. The plan bought its stake in MLSE 17 years ago for $180 million. With retirement rates expected to increase over the next few years, liquidity is the name of the game and there's no better means of achieving it than by selling off the jewel in the crown.
And that crown is a multi-studded affair. In addition to the Toronto Maple Leafs, privately held MLSE controls the National Basketball Association's Toronto Raptors, the Toronto FC Major League Soccer franchise, the American Hockey League's Toronto Marlies, the Air Canada Centre, BMO Field, LeafsTV and a range of real estate and television assets.
A Forbes Magazine report last week that named the Maple Leafs the most valuable NHL franchise — worth $521 million U.S. — reinforced the value proposition and accelerated the push toward a final deal. The teachers got their money out as the market value was peaking, while the broadcasters saw this as an opportunity to leverage their power in media and properly ownership to increase the relative value of the MLSE holdings.
All this comes as the fund faces an historic cash crunch. Its chief executive, Jim Leech, said earlier this year that the plan faces "systemic funding problems" due to shifting demographic trends. Longer life expectancies, low interest rates and continued economic uncertainty have all contributed to a funding shortfall that topped $17 billion in April 2011. The plan pays out $1.8 billion more annually than it takes in in contributions. Its sponsors, the Ontario Teachers' Federation and the Ontario government, are mandated to eliminate the gap by 2012.
Within this broader context, the teachers decided playing games had to take a back seat to cashing in
Companies:
BCE Inc
Rogers Communications, Inc.
Related Content
Pedestrians walk past the Maple Leaf Sports and Entertainment offices in Toronto on March 13, 2011. Reports say Bell Inc. and Rogers Communications Inc. are on the verge of a deal with the Ontario Teachers' Pension Plan to acquire about 80 per cent of MLSE. THE CANADIAN PRESS/Darren Calabrese
RELATED QUOTES
Symbol Price Change
BCE.TO 40.59 -0.01
RCI-B.TO 36.72 -0.23
TORONTO - The Toronto Maple Leafs have some new owners as telecom giants Rogers and Bell Canada are teaming up to buy a majority stake in Canada's biggest sports franchise company, Maple Leaf Sports & Entertainment, for about $1.3 billion.
The two companies, fierce rivals in the business of cellphone and Internet services, said Friday they will each pay current owner the Ontario Teachers' Pension Plan about $533 million for a 37.5 per cent chunk of the sports ownership company.
MLSE owns the Leafs of the NHL, the NBA's Toronto Raptors, Major League Soccer's Toronto FC, the Toronto Marlies of the AHL and the Air Canada Centre.
The heads of both Rogers and Bell declared the deal a victory for sports fans and one that will keep the company in Canadian hands. Both companies own broadcasting properties and are hungry for content to fill devices from living room TV sets to iPhones to computers.
"It will definitely bring fans closer to the action," George Cope, president and CEO of Bell Canada parent BCE Inc. (TSX:BCE.TO - News), said at a news conference.
"This is a perfect fit for Bell from a strategic perspective" as it dovetails nicely with the company's acquisition last year of the CTV television network and its TSN sports channel, Cope added.
"This investment fits squarely into our strategy of securing premium content and making it accessible to Canadians when, where and how they want it."
Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.
"MLSE offers some of the richest, most sought-after content in North America," said Rogers president and chief executive Nadir Mohamed.
"This investment will secure us access to this iconic brand and content It will keep ownership of MLSE in Canadian hands and that's an important point. It will substantially bolster Sportsnet and will complement our existing world-class portfolio of sports properties."
Through his company Kilmer Sports, minority owner Toronto businessman Larry Tanenbaum will increase his current 20 per cent stake in MLSE to 25 per cent.
The surprise deal came a few weeks after Teachers' announced it had given up trying to sell the stake in sports company, which it bought 17 years ago for $180 million. Shortly after that, Bell and Rogers (TSX:RCI-B.TO - News) stepped forward with a bid that met all of its original terms and conditions, Teachers' said.
"We are proud of this iconic company, in which we first invested in 1994," Jane Rowe, senior vice-president of Teachers' Private Capital said in a statement.
"It is second to none in the industry and has a very bright future. We believe that Bell and Rogers, with their MLSE partner Kilmer Sports, will deliver on the company's potential."
"We will continue to cheer for the teams and look forward to celebrating their success, but after the summer, from the sidelines," she added later at a news conference.
Tanenbaum will remain as chairman of MLSE and as a governor of the NHL, the NBA and Major League Soccer.
"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," Tanenbaum said.
"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."
Teachers’ MLSE Sale Perfectly Timed
The blockbuster deal to sell a 75 per cent stake in Maple Leaf Sports & Entertainment to Rogers and Bell Canada for more than $1.3 billion puts the Ontario Teachers' Pension Plan squarely at centre ice as analysts and observers try to figure out why the teachers are selling, and why now.
The teachers have made no secret of their desire to unload their majority stake in the highest-profile collection of sports interests in the country. They pulled their MLSE shares off the market barely two weeks ago after a fruitless eight-month search for a buyer. At the time, they said they simply didn't get the price they had been looking for, but the size of the deal suggests a deal with Rogers and Bell was already in play and the move was a negotiation tactic. Deals this size don't just materialize in a couple of weeks.
The reason for selling is simple: it's high time for the teachers to cash in. The plan bought its stake in MLSE 17 years ago for $180 million. With retirement rates expected to increase over the next few years, liquidity is the name of the game and there's no better means of achieving it than by selling off the jewel in the crown.
And that crown is a multi-studded affair. In addition to the Toronto Maple Leafs, privately held MLSE controls the National Basketball Association's Toronto Raptors, the Toronto FC Major League Soccer franchise, the American Hockey League's Toronto Marlies, the Air Canada Centre, BMO Field, LeafsTV and a range of real estate and television assets.
A Forbes Magazine report last week that named the Maple Leafs the most valuable NHL franchise — worth $521 million U.S. — reinforced the value proposition and accelerated the push toward a final deal. The teachers got their money out as the market value was peaking, while the broadcasters saw this as an opportunity to leverage their power in media and properly ownership to increase the relative value of the MLSE holdings.
All this comes as the fund faces an historic cash crunch. Its chief executive, Jim Leech, said earlier this year that the plan faces "systemic funding problems" due to shifting demographic trends. Longer life expectancies, low interest rates and continued economic uncertainty have all contributed to a funding shortfall that topped $17 billion in April 2011. The plan pays out $1.8 billion more annually than it takes in in contributions. Its sponsors, the Ontario Teachers' Federation and the Ontario government, are mandated to eliminate the gap by 2012.
Within this broader context, the teachers decided playing games had to take a back seat to cashing in
Companies:
BCE Inc
Rogers Communications, Inc.
Related Content
Pedestrians walk past the Maple Leaf Sports and Entertainment offices in Toronto on March 13, 2011. Reports say Bell Inc. and Rogers Communications Inc. are on the verge of a deal with the Ontario Teachers' Pension Plan to acquire about 80 per cent of MLSE. THE CANADIAN PRESS/Darren Calabrese
RELATED QUOTES
Symbol Price Change
BCE.TO 40.59 -0.01
RCI-B.TO 36.72 -0.23
TORONTO - The Toronto Maple Leafs have some new owners as telecom giants Rogers and Bell Canada are teaming up to buy a majority stake in Canada's biggest sports franchise company, Maple Leaf Sports & Entertainment, for about $1.3 billion.
The two companies, fierce rivals in the business of cellphone and Internet services, said Friday they will each pay current owner the Ontario Teachers' Pension Plan about $533 million for a 37.5 per cent chunk of the sports ownership company.
MLSE owns the Leafs of the NHL, the NBA's Toronto Raptors, Major League Soccer's Toronto FC, the Toronto Marlies of the AHL and the Air Canada Centre.
The heads of both Rogers and Bell declared the deal a victory for sports fans and one that will keep the company in Canadian hands. Both companies own broadcasting properties and are hungry for content to fill devices from living room TV sets to iPhones to computers.
"It will definitely bring fans closer to the action," George Cope, president and CEO of Bell Canada parent BCE Inc. (TSX:BCE.TO - News), said at a news conference.
"This is a perfect fit for Bell from a strategic perspective" as it dovetails nicely with the company's acquisition last year of the CTV television network and its TSN sports channel, Cope added.
"This investment fits squarely into our strategy of securing premium content and making it accessible to Canadians when, where and how they want it."
Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.
"MLSE offers some of the richest, most sought-after content in North America," said Rogers president and chief executive Nadir Mohamed.
"This investment will secure us access to this iconic brand and content It will keep ownership of MLSE in Canadian hands and that's an important point. It will substantially bolster Sportsnet and will complement our existing world-class portfolio of sports properties."
Through his company Kilmer Sports, minority owner Toronto businessman Larry Tanenbaum will increase his current 20 per cent stake in MLSE to 25 per cent.
The surprise deal came a few weeks after Teachers' announced it had given up trying to sell the stake in sports company, which it bought 17 years ago for $180 million. Shortly after that, Bell and Rogers (TSX:RCI-B.TO - News) stepped forward with a bid that met all of its original terms and conditions, Teachers' said.
"We are proud of this iconic company, in which we first invested in 1994," Jane Rowe, senior vice-president of Teachers' Private Capital said in a statement.
"It is second to none in the industry and has a very bright future. We believe that Bell and Rogers, with their MLSE partner Kilmer Sports, will deliver on the company's potential."
"We will continue to cheer for the teams and look forward to celebrating their success, but after the summer, from the sidelines," she added later at a news conference.
Tanenbaum will remain as chairman of MLSE and as a governor of the NHL, the NBA and Major League Soccer.
"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," Tanenbaum said.
"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."
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