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November 2013 Report on Business magazine cover

November 2013 Report on Business magazine cover

Can Tim Leiweke save the Maple Leafs? Add to ...

You’ve had to fire a few people (15). How tough was it to come in and make those personnel changes?

As everyone knows, I like the subway here. I’ve done two games now where I’m in the subway going home, and it’s an unbelievably good opportunity to talk to people and hear what they’re thinking. So the other night, someone came up to me and said, “Oh yeah, you’re that mean guy firing everybody.” And I’m like, I’m really not that mean. I’m actually nice. I don’t go around trying to fire people. It’s not what I came here to do, nor what I like doing, by the way. I’ve been in this business 35 years, and I’ve never gotten used to that. But I do it. Because you have to. I feel bad for them. That said, I’m not going to be shy on making the decisions we need to make here. And I won’t compromise. Because the problem is, if I compromise once, that creeps right back into our culture. I’m anxious to get through this part of it. It’s not my favourite part.

What were you asked in the interview for the MLSE job?

I don’t think we ever went through a long interview. I think they understood who I was. For me, the most telling moment was when I went back to George and Nadir (16) and said, “We need a player to change the fortune of this soccer team. When I walk in your offices and tell you I could get David Beckham and it’s going to cost us $40 million, are you in?” And they told me, “We’re all in.” They didn’t think about it for a second. It was not what they asked me; it was what I asked them—and the answer they gave me.

This interview has been condensed and edited.

Footnotes:

1

The Leafs haven’t won the Cup since 1967, defeating the Montreal Canadiens in six games

2

MLSE’s estimated value: $2.25 billion

3

First playoff berth since 2004

4

Masai Ujiri left the Denver Nuggets to become Raps GM last May

5

Salary in Denver: $500,000 Reported salary in Toronto:$3 million

6

The team’s much-maligned logo

7

The Raptors have named Toronto hip-hop star Drake their “global ambassador”

8

He has 29.6 million likes on Facebook

9

Record since inception (as of Oct. 1):

50 wins

103 losses

66 ties

10

Leafs’ 2013 revenue: $200 million Operating income: $81.9 million

11

Toronto has 13 cups in total, if you also count the 1918 Arenas and the 1922 St. Patricks

12

In 2012, the Kings beat the New Jersey Devils in six

13

Lower bowl seats range from $150 to $1,500 for courtside, depending on the opponent. The Raptors ranked 13th of 30 NBA teams last year, with average crowds of 18,144

14

George Cope was named CEO of Bell in 2008, tasked with resurrecting a stumbling company that had been leaking market share to its rivals

15

Including TFC general manager Kevin Payne

16

Nadir Mohamed, outgoing CEO of Rogers Communications, which owns 37.5% of MLSE

Leiweke’s blueprint

Winning is nice, but Tim Leiweke is playing a higher-stakes game at Maple Leaf Sports and Entertainment. When Rogers Communications and Bell paid a combined $1.07 billion for 75% of MLSE, it wasn’t just to sell tickets and stream highlights to mobile devices. The real reason companies buy sports teams is to flip those assets down the road—at a much higher valuation—while enjoying the cash flow that comes along the way.

Prime sports assets have an uncanny ability to appreciate in value—particularly if you build assets around them. This is Leiweke’s forte. When he joined the Los Angeles Kings in 1996, they were a struggling hockey team at the end of the Gretzky era. Working for Denver billionaire Phil Anschutz, Leiweke built the Anschutz Entertainment Group (AEG) into a model for professional sports ownership—a constellation of properties that includes the Kings, the Lakers, the Galaxy and others. Built around them are assets and investments ranging from newly built stadiums to the L.A. Live entertainment campus, which churns out revenue from its hotel, restaurant and convention centre facilities. In 17 years, Leiweke oversaw the acquisition of more than 60 businesses, and AEG is now worth upwards of $8 billion (U.S.).

That’s why Leiweke has come to Toronto. It’s all about valuation and expansion. Already, there are rumours—true or not—that MLSE will buy the CFL’s Toronto Argonauts and renew the push to bring an NFL franchise to Canada.

Winning increases the company’s value, and Leiweke’s ambitious goal is to double MLSE’s by 2020—which means vRogers and Bell would be cashing a cheque for several billion. Not a bad return. That is why big companies buy sports teams.

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