Rogers Communications Inc. RCI-B-T is slowing discussions with potential investors regarding the possible monetization of its sports assets, an executive told investors last week, while the company considers how best to capitalize on those holdings and ease pressure on its balance sheet.
Earlier this year, Rogers executives signalled the company could potentially bring in minority partners by the end of 2025. The company is assessing whether it should spin out or sell a stake of its sports portfolio, which includes the Toronto Blue Jays and a 75-per-cent majority ownership of Maple Leaf Sports & Entertainment – the parent company to the Toronto Maple Leafs and Raptors teams.
However, at a Canadian Imperial Bank of Commerce investor conference last week, Rogers chief financial officer Glenn Brandt suggested the company could reverse the order of those deals, waiting until it has acquired the remaining 25-per-cent stake of MLSE before seeking third-party funds.
“What’s changed over the last three, four months, is we have time now to take out the minority before bringing in the outside investment” he said at the conference last Thursday.
The Toronto-based telecom and media company has recently been under pressure from credit raters to reduce its debt; bringing in an outside investor before buying the minority stake could have eased the hit to the company’s balance sheet. But Mr. Brandt said the company has been able to lower its leverage this year after a $7-billion deal to sell some of its backhaul, in addition to the sale of its data centres.
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Rogers has the right to buy the remaining 25-per-cent stake from Canadian businessman Larry Tanenbaum’s company, Kilmer Group, next July, and is widely expected to exercise that option. Pension fund OMERS holds a 20-per-cent stake in Kilmer.
Mr. Brandt said Rogers has raised the possibility of expediting that deal with Kilmer Group.
“We’ve talked with that minority partner as to whether or not there would be any interest in seeing whether or not we could negotiate something sooner, sometime between now and early July, or come early July,” he said.
“I don’t know if we’re weeks or months away from taking out the minority partner, and there’s no sense of wasting their time or energy on spinning things up until we have a sense of that timing,” Mr. Brandt said.
Kilmer Group did not respond to a request for comment.
The entirety of MLSE, combined with Rogers’ existing sports and media division, will be worth about $20-billion, Mr. Brandt said.
Once Rogers owns all of MLSE, he said, the intent would be to bring in private shareholders to invest alongside Rogers, allowing the company to ease up on capital deployment. The company has seen strong interest from institutional investors, he said, but added that the company could also choose to spin it out through an initial public offering.
Rogers gets leagues’ approval for BCE stake in Maple Leaf Sports & Entertainment
The valuations of privately held pro sports franchises have boomed in recent years, but the share prices of some of the small number of public companies that own them – such as New York Stock Exchange-listed MSG Sports – have traded at a deep discount to the value of their teams, analysts have said.
Rogers’ recent $4.7-billion deal with BCE Inc. for 37.5 per cent of its MLSE share suggests that Kilmer’s stake could be worth upwards of $3.1-billion.
In 2024, the Rogers sports and media division earned a total revenue of $2.48-billion and had $2.40-billion in expenses, resulting in adjusted earnings before interest, taxes, depreciation and amortization of $84-million. This represents a 3.4-per-cent profit margin, up from 3.3 per cent in 2023.
Once Rogers acquires the remaining stake in MLSE, Mr. Brandt said the company will seek cost synergies by consolidating executive offices. Through that move, Rogers also sees sponsorship and concert revenue opportunities, as it will then own or control through a partnership all of the significant live entertainment venues in Toronto – the Rogers Centre, the Budweiser Stage, Scotiabank Arena and the Coca-Cola Coliseum – Mr. Brandt said.
The company had $40-billion in long-term debt at the end of its second quarter in June, down $3.6-billion from the beginning of the quarter.