The Toronto Maple Leafs at Scotiabank Arena in Toronto in March. Rogers is expected to take full control of Maple Leaf Sports & Entertainment, parent to the Maple Leafs and the Toronto Raptors.Chris Young/The Canadian Press
For sports fans, there are few experiences to match the passion of an NBA or NHL game in New York’s Madison Square Garden.
For investors, there are few frustrations to match the experience of owning shares in the teams’ parent company. The value of pro franchises like the New York Knicks and Rangers keeps rising, yet shares in Madison Square Garden Sports Corp. MSGS-N keep stubbornly going sideways.
The public market misfortunes of James Dolan, owner of New York’s storied franchises and executive chair at MSG Sports, are going to guide Edward Rogers as he sets the future course for Toronto’s major league sports franchises.
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New York Stock Exchange-listed MSG Sports is one of the few publicly traded pro sports platforms. It is an excellent proxy for the business Mr. Rogers will oversee once the executive chair of Rogers Communications Inc. RCI-B-T adds full control of Maple Leaf Sports & Entertainment – parent to Toronto’s Maple Leafs and Raptors – to the company‘s ownership of baseball’s Blue Jays and a national media network.
Rogers has the right to buy out MLSE chair Larry Tanenbaum’s 25-per-cent stake in the company by July, 2026, and is universally expected to exercise its option.
Once Mr. Rogers is calling the shots at a sports and media empire worth roughly $15-billion, he will have an opportunity to raise billions of dollars by selling a minority stake in the business. The company needs that cash to pay down debt and keep expanding its telecom platform.
Mr. Rogers will face the choice of either welcoming investors to take part in an initial public offering of the sports and media division, or selling stakes to fellow billionaires and private equity funds.
Investment bankers, who stand to pocket millions in fees from an IPO, are pitching hard for a spinout. Mr. Rogers is giving every indication he plans to welcome a few select partners to the sports ownership club.
Mr. Dolan, who like Mr. Rogers is heir to a cable company fortune, chose the IPO route. He spun out MSG Sports in 2020. The company’s stock market performance has lagged the value created by what athletes are doing on the Garden’s hardwood and ice.
This month, Citibank analyst Steven Sheeckutz launched coverage of MSG Sports with a report that showed the stock market valued the company at a 55-per-cent discount to the underlying value of its assets – two storied teams.
Over the past year, MSG Sports’s stock price rose by just 4 per cent. Over the same period, Mr. Sheeckutz estimated the value of the Knicks rose by 11 per cent to roughly US$7.5-billion and the Rangers jumped by 21 per cent to US$3.5-billion. Recent sales of the NBA’s Lakers and NHL’s Lightning set new highwater marks for team valuations in both leagues.
For public market investors, MSG Sports is a tough stock to love. As a rule, shareholders reward rising profits and dividends. Citibank predicted MSG Sports will lose money in 2026 and earn just US$5.5-million the following year. The stock doesn’t pay a dividend.
The discount to the teams’ value only vanishes if Mr. Dolan sells MSG Sports. While New York fans would applaud the move – the owner is famous for feuds with former players – Mr. Dolan has made it clear he plans to pass control to his kids.
Mr. Sheeckutz said there is a potential catalyst to narrowing the gap between what MSG Sports’ assets are worth and its lagging stock price. Citibank predicted Mr. Dolan will cash in on private equity fund interest in pro sports – which leagues have only recently approved – by selling minority stakes in the Knicks and Rangers.
Citibank’s logic is that MSG Sports shareholders need to be reminded that the company is benefitting from soaring broadcast revenues and labour peace. However, any transaction highlighting the Knicks or Rangers valuations will also demonstrate that public markets are the wrong home for pro sports franchises.
Rogers chief executive officer Tony Staffieri and his team don’t want to go to the trouble of selling a stake in the county’s most valuable sports franchises to create a stock that trades at a deep discount to the value of its teams.
Bay Street is clamouring for an IPO of Rogers’s sports holdings in the not-too-distant future. Mr. Rogers is more likely to ignore the bankers. Patient, private money that wants to back champions is a better owner of the Leafs, Raptors and Jays than public market investors focused on quarterly results.