In recent investor meetings, Rogers executives have described their sports teams as 'hidden assets,' said Bank of Nova Scotia analyst Maher Yaghi in a report on Monday.Fred Lum/The Globe and Mail
Rogers Communications Inc., a company long known for corporate drama, is finding a way to keep nail-biting tension confined to its unique collection of Toronto sports teams.
On Monday, the family-controlled telecom announced the purchase of face-of-the-franchises Larry Tanenbaum’s 25-per-cent stake in Maple Leaf Sports and Entertainment for $4.35-billion. Chief executive officer Tony Staffieri called the transaction “a defining moment for Rogers.”
Rogers now has a hammerlock on sports in the country’s largest city, as sole owner of the NHL’s Maple Leafs, NBA’s Raptors, MLS’s Toronto FC and CFL’s Argonauts, along with baseball’s Blue Jays and the Sportnet network that broadcasts what advertisers consider the only remaining must-see TV.
The sale played out with all the excitement of ordering a pizza.
After this spring’s court challenge from executive chairman Edward Rogers and his siblings to Mr. Tanenbaum’s fees as an executor in matriarch Loretta Rogers’ estate, and Mr. Rogers’s public battle for control of the company with those same siblings five years ago, the orderly transition is a tribute to all involved.
What’s equally telling is the telecom’s methodical approach to welcoming minority investors into a sports and media platform that Rogers values at $25-billion.
Mr. Staffieri has been fielding inquiries from a long list of potential partners, including billionaires, private equity managers and sovereign funds, since Rogers acquired Bell parent BCE Inc.’s stake in MLSE in September, 2024. That purchase valued the platform at $12.5-billion.
Potential investors figured Mr. Staffieri would be quick to welcome partners at an attractive valuation, as Rogers scrambled to pay down debt taken on to buy out Bell and fund the 2023 acquisition of Shaw Communications Inc.
Mr. Staffieri opted to be patient. That worked to his advantage.
Over the last two years, sports valuations continued to soar because of rising broadcast fees and the relative scarcity of teams that can offer extremely wealthy individuals the thrill of sitting in an owner’s box. Buying out Mr. Tanenbaum put a $17.4-billion price tag on MLSE.
Mr. Staffieri also opted to be discerning about partners. That also worked out well.
Saudi Arabia’s Public Investment Fund made an early inquiry about Rogers sports assets, offering to put up to $4-billion into the business, according to three sources involved in the process. The Globe and Mail is not naming the sources because they are not permitted to speak publicly for the companies.
Rogers acquires remaining stake in MLSE from Kilmer Sports for $4.35-billion
The Saudi fund is among the world’s largest institutional investors, with roughly US$910-billion of assets. Its executives approached Rogers after making a splash in sports by funding LIV Golf, the sources say. Rogers declined to engage.
Until recently, having the Saudi fund as a backer would be seen as a seal of approval. That view changed this spring, when some of the world’s top golfers realized the wealth fund is run by a fickle sovereign, Crown Prince Mohammed bin Salman Al Saud.
In April, the Public Investment Fund pulled its support for LIV Golf after committing US$5-billion, putting the league’s existence in doubt. That’s the kind of unreliable partner Rogers is best off avoiding.
Rogers has the luxury of time as it reviews bidders on its sports assets, a process that will require approval from all the pro sports leagues.
Credit rating agencies are giving the company up to a year to sell minority stakes and pay down debt, including loans taken on to buy out Mr. Tanenbaum. The MLSE purchase needs league approvals and is expected to close by the end of the year.
As Rogers shops a stake in its teams to institutions such as pension plans, it will point to the tidy return that the Ontario Municipal Employees Retirement System made on its indirect 5-per-cent stake investment in MLSE, a purchase made in November, 2023.
OMERS bought in for $547-million and can look forward to exiting for about $870-million, or close to a 60-per-cent return.
In recent investor meetings, Rogers executives have described their sports teams as “hidden assets,” said Bank of Nova Scotia analyst Maher Yaghi in a report on Monday.
Selling a stake in the Leafs, Raptors and Jays at the value implied by the purchase of Mr. Tanenbaum’s stake “would validate the asset base, provide a deleveraging lever, and make a narrower holdco discount hard to dismiss,” Mr. Yaghi said.
Telecom stocks have struggled to win over investors for the past two years, as share prices went sideways because of falling immigration and increased price competition in the cellphone market.
Buying full control of MLSE, then selling stakes in its sports business with minimal fuss and sky-high valuations would win back fans at Rogers.