MLSE sale: Wins expected to matter under new Rogers, Bell regime
Published on Tuesday July 31, 2012 Kevin McGran Sports Reporter
But just how much change — namely the safety of the jobs of Leafs GM Brian Burke, Raptors GM Bryan Colangelo and acting president Tom Anselmi — has yet to be determined.
“Whenever there’s a change in ownership, the executives are nervous,” said Richard Powers, assistant dean at the Rotman School of Business at the University of Toronto. “It all comes down to what kind of comfort level the new owners establish with the current management.”
The $1.3 billion transaction that will see the Ontario Teachers’ Pension Plan sell its majority stake of Maple Leaf Sports and Entertainment to BCE Inc. and Rogers Communications is expected to close by the end of the summer, perhaps even as early as Wednesday.
Powers said Rogers and Bell will put the heat on the Leafs and Raptors to become winning teams.
“Previous owners said they wanted to put winning teams out there. That was the one thing they’ve never done,” said Powers. “Under the new ownership structure, there’s a lot of incentive (to win).
“Winning teams increase viewership. That’s what drives their bottom line.”
The sale has been approved by Canada’s Competition Bureau, the NHL, the AHL, the NBA and Major League Soccer. All that remains is the CRTC and even that regulatory body isn’t much of a hurdle.
The CRTC is really only dealing with how to handle five specialty channels: Leafs TV, NBA TV, GolTV and two unlaunched services and has until Sept. 4 to render a decision.
“From that point of view, the sale is done,” said Norm O’Reilly, a professor of sports marketing at the University of Ottawa. “The money is probably already in trust and is just waiting to be transferred over.”
The CRTC has closed the file on the purchase, with eight groups intervening, mainly worried about competition. Competitors — like Telus and Cogeco — expressed concern that Rogers and Bell would unfairly use their power as content owners and providers to give themselves an economic advantage.
Rogers and Bell have jointly filed their response and don’t seem overly concerned, arguing concerns from their competitors either “fall outside the scope” of the CRTC’s consideration or are trying to “reopen” old arguments on policies already established regarding “vertical integration” on companies that both create and distribute television content.
Power suggested nothing the CRTC decides would surprise Bell or Rogers, or would cause them to change their mind about buying the Leafs, Raptors, Marlies, Toronto FC and Air Canada Centre.
Typically, when a large company purchases a smaller one, the smaller one’s current management structure would remain in place if the purchasing company is happy with its performance.
For MLSE, that’s a hard read. Economically, the pension fund managers created a powerhouse. But if wins and losses matter more, MLSE is a disaster.
“Under current management, the bottom line has been very positive,” said Powers. “The new owners have to maintain that and make improvements where they can. The real change, hopefully, will be on the ice and on the courts.”
That might mean good news for Anselmi, the organization’s executive vice president and chief operating officer and top man since Richard Peddie’s retirement. But it could be bad news for Burke and Colangelo.
“Tom, so far, has shown he can do the job,” said Powers.
It also may be that Rogers would be uncomfortable with a Bell guy taking the top job at MLSE, and vice-versa, leaving chairman Larry Tanenbaum, who’ll own 25 per cent of the enterprise at the deal’s completion, as the deciding vote.
“He hasn’t relinquished one bit of power in that whole organization,” Power said of Tanenbaum. “If anything, his position has been further solidified. He is the kingmaker and he likes current management.”
O’Reilly said fans might only see subtle changes, but also believes Rogers and Bell would change the focus to winning.
“Under the Teachers’ pension plan, this was an investment to generate resources to pay their pension,” said O’Reilly. “Now you have a syndicate of owners all that have vested interest in the teams being more successful.”
As for putting out a winning team, the heat is more on Burke than Colangelo, said Powers. Colangelo took over the Raptors in 2006. They won the Atlantic Division in 2007, but haven’t been back to the playoffs since 2008.
Burke took over the Leafs in 2008. The team hasn’t made the playoffs since 2004.
“I don’t know if it’s realistic for the Raptors to make the playoffs, but their performance is going to have to improve,” said Powers. “The deal bought Burke another year. If they (the Leafs) don’t make the playoffs this year, you know his head’s going to go.”
Powers believes the new board of MLSE, which will feature representatives from Rogers and Bell replacing those who represented the pension fund, will focus the organization on winning.
“This is all about content,” said Powers. “Winning content is better than losing content.”
“Whenever there’s a change in ownership, the executives are nervous,” said Richard Powers, assistant dean at the Rotman School of Business at the University of Toronto. “It all comes down to what kind of comfort level the new owners establish with the current management.”
The $1.3 billion transaction that will see the Ontario Teachers’ Pension Plan sell its majority stake of Maple Leaf Sports and Entertainment to BCE Inc. and Rogers Communications is expected to close by the end of the summer, perhaps even as early as Wednesday.
Powers said Rogers and Bell will put the heat on the Leafs and Raptors to become winning teams.
“Previous owners said they wanted to put winning teams out there. That was the one thing they’ve never done,” said Powers. “Under the new ownership structure, there’s a lot of incentive (to win).
“Winning teams increase viewership. That’s what drives their bottom line.”
The sale has been approved by Canada’s Competition Bureau, the NHL, the AHL, the NBA and Major League Soccer. All that remains is the CRTC and even that regulatory body isn’t much of a hurdle.
The CRTC is really only dealing with how to handle five specialty channels: Leafs TV, NBA TV, GolTV and two unlaunched services and has until Sept. 4 to render a decision.
“From that point of view, the sale is done,” said Norm O’Reilly, a professor of sports marketing at the University of Ottawa. “The money is probably already in trust and is just waiting to be transferred over.”
The CRTC has closed the file on the purchase, with eight groups intervening, mainly worried about competition. Competitors — like Telus and Cogeco — expressed concern that Rogers and Bell would unfairly use their power as content owners and providers to give themselves an economic advantage.
Rogers and Bell have jointly filed their response and don’t seem overly concerned, arguing concerns from their competitors either “fall outside the scope” of the CRTC’s consideration or are trying to “reopen” old arguments on policies already established regarding “vertical integration” on companies that both create and distribute television content.
Power suggested nothing the CRTC decides would surprise Bell or Rogers, or would cause them to change their mind about buying the Leafs, Raptors, Marlies, Toronto FC and Air Canada Centre.
Typically, when a large company purchases a smaller one, the smaller one’s current management structure would remain in place if the purchasing company is happy with its performance.
For MLSE, that’s a hard read. Economically, the pension fund managers created a powerhouse. But if wins and losses matter more, MLSE is a disaster.
“Under current management, the bottom line has been very positive,” said Powers. “The new owners have to maintain that and make improvements where they can. The real change, hopefully, will be on the ice and on the courts.”
That might mean good news for Anselmi, the organization’s executive vice president and chief operating officer and top man since Richard Peddie’s retirement. But it could be bad news for Burke and Colangelo.
“Tom, so far, has shown he can do the job,” said Powers.
It also may be that Rogers would be uncomfortable with a Bell guy taking the top job at MLSE, and vice-versa, leaving chairman Larry Tanenbaum, who’ll own 25 per cent of the enterprise at the deal’s completion, as the deciding vote.
“He hasn’t relinquished one bit of power in that whole organization,” Power said of Tanenbaum. “If anything, his position has been further solidified. He is the kingmaker and he likes current management.”
O’Reilly said fans might only see subtle changes, but also believes Rogers and Bell would change the focus to winning.
“Under the Teachers’ pension plan, this was an investment to generate resources to pay their pension,” said O’Reilly. “Now you have a syndicate of owners all that have vested interest in the teams being more successful.”
As for putting out a winning team, the heat is more on Burke than Colangelo, said Powers. Colangelo took over the Raptors in 2006. They won the Atlantic Division in 2007, but haven’t been back to the playoffs since 2008.
Burke took over the Leafs in 2008. The team hasn’t made the playoffs since 2004.
“I don’t know if it’s realistic for the Raptors to make the playoffs, but their performance is going to have to improve,” said Powers. “The deal bought Burke another year. If they (the Leafs) don’t make the playoffs this year, you know his head’s going to go.”
Powers believes the new board of MLSE, which will feature representatives from Rogers and Bell replacing those who represented the pension fund, will focus the organization on winning.
“This is all about content,” said Powers. “Winning content is better than losing content.”
