Rogers Buys Out Bell In MLSE Shakeup: What Does It Mean For Fans?
There is an old joke that Canada has two seasons. Summer. And the months when the Toronto Maple Leafs lead the nightly Canadian sports networks. Perhaps it’s not that bad, but for those who don’t live in southern Ontario it often feels that way.
The reason, some said, for this Buds obsession was that both TSN and Rogers Sportsnet were part owners of the team through Maple Leaf Sports & Entertainment, a business giant created in 2011 when the warring telcos took equal percentage shares in MLSE (Larry Tanenebaum took the final 25 percent, now 20 percent after selling a share to The Ontario Municipal Employees Retirement System.)
At the time the merger of Bell (TSN) and Sportsnet (Rogers) was compared to Twitter and Facebook deciding to partner. Such was the rivalry that many predicted it wouldn’t last. But it did—if you don’t include Stanley Cups. Until this past week when it was announced that, if approved, Rogers will buy out Bell’s stake in MLSE, leaving it with 75 percent ownership. The process should close next year.
Rogers also has an option to buy out Tanenbaum next year, giving it complete control of the Leafs, Raptors, Argos (CFL), Toronto FC (MLS) and Toronto’s ScotiaBank Centre, among other baubles. (The new Toronto WNBA team is owned by Tannenbaum and several partners.)
Why the deal? Why now? Despite the huge national audience for the NHL, NBA and MLB, the component parts are said to be underperforming in a time when equity in sports franchises is soaring. Rogers’ national NHL TV contract is a significant drain on revenues. The Blue Jays’ flopping in the standings has left them a “stranded money-losing team” whose value isn’t fully reflected within Rogers. The Raptors are now also-rans.
Bell’s debt rating was downgraded to one notch above junk in August by Moody’s Investors Service. While not to the point of selling pencils there’s a thought that packaged as a group under one owner, the teams will now be more lucrative and, possibly, lead to an IPO in the future.
What does it mean for sports fans? For now, not much change. TSN is getting a 20-year agreement to get 50 percent of the regular-season Leafs and Raptors games. So it will have an NHL/ NBA presence until April. (It also has regional Montreal Canadiens rights.) TSN also has a strong NFL, tennis and golf presence. Rogers will have the existing property rights for the NHL playoffs as well as regional interests in Vancouver, Calgary, Edmonton and Ottawa. Plus its existing monopoly on the Blue Jays broadcasts.
Bell is reportedly interested in cutting its property inventory and concentrating on “5G, cloud and enterprise solutions”. TSN says it remains the prime media backer of the CFL, even though it no longer has an ownership position. Mediocre Toronto FC remain an add-on with a niche audience. As NHL national rights holder, Sportsnet (using CBC as a cutout) will still be the major outlet for postseason hockey. It’s also the exclusive home of the Blue Jays and there MLB postseason.
What does it mean in business terms? Despite the apparent cordiality of the deal, there is a fly in the ointment should digital companies such as Amazon, Prime, Apple, YouTube or Disney decide to bid on the primo national NHL broadcast rights packages. Already big leagues such as NFL, MLB and NBA have hived off packages to these outfits. Could they drive the price past Rogers’ comfort zone?
All this begs the question of what happens to the Raptors, Argos and Toronto FC which have fallen from their hip status of years prior. It’s well known that Rogers execs aren’t fond of Raptors president/ GM Masai Ujiri. Will they get the love in the C suite to bid on the top basketball contracts? Ditto Toronto FC, a pet project of Tanenbaum’s. It competes nationally with other Canadian teams. Will it have an ally in the front office?
If there is an ally it will have to be the peripatetic new CEO Keith Pelley who returns to Canada from running the European PGA Tour after stints running TSN, Rogers Sportsnet, the 2010 Winter Olympics and the Toronto Argos. Pelley knows all the broadcast and sports players firsthand from his prior gigs. He’s seen as an innovator but he also has good friends in the traditional sports leagues.
The one certainty is that cable and satellite packages will not decrease in price. Nor will ticket prices as pro sports continues to stretch the boundaries on how much people will pay for tickets (still a key revenue for NHL owners). And, for those wondering, the chances of leading newscasts with a Maple Leafs practice will be remain very strong for the future.
Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster A two-time winner of the Gemini Award as Canada's top television sports broadcaster, he’s a regular contributor to Sirius XM Canada Talks Ch. 167. His new book Deal With It: The Trades That Stunned The NHL And Changed hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org . His 2004 book Money Players was voted sixth best on the same list, and is available via brucedowbigginbooks.ca.