Toronto Raptors guard Kyle Lowry receives his 2019 NBA championship ring from Larry Tanenbaum, chairman of Maple Leaf Sports & Entertainment, before playing the New Orleans Pelicans in Toronto on Oct. 22, 2019.Frank Gunn/The Canadian Press
Maple Leaf Sports & Entertainment chairman Larry Tanenbaum is getting far too much practice at making decisions under pressure.
Last spring, the owner of the National Basketball Association’s Toronto Raptors stayed calm and cool when gunshots rang out during his outdoor speech at the team’s victory celebration. This week, Mr. Tanenbaum led the unprecedented move to get ahead of a global pandemic by suspending games in three major professional sports leagues, first as chairman of the NBA’s board of governors, which cancelled games late Wednesday, then as one of 31 National Hockey League governors and an owner of Major League Soccer’s Toronto FC, when both leagues suspended play on Thursday.
There is no playbook for a shut down that translates into at least $2-million a game in lost revenues on basketball and hockey at MLSE, which Mr. Tanenbaum co-owns with telecom companies Rogers Communications Inc. and BCE Inc. Along with the financial hit, the teams are dealing with disappointed fans, broadcasters left scrambling for content and advertisers without audiences. While Mr. Tanenbaum was unavailable for comment Thursday, fellow NBA owner Mark Cuban put events in perspective.
“This is much bigger than basketball,” said Mr. Cuban, after his Dallas Mavericks played the last NBA game for the foreseeable future on Wednesday night. The outspoken technology executive, who has been fined repeatedly in the past for public criticism of NBA calls, fully supported shutting down the season. “This is not a situation where you fake it till you make it, or try to sound or act important. The NBA has hired people with expertise in those areas,” Mr. Cuban said. “I think the NBA made the right decision.”
TSN, the radio and TV sports network owned by BCE, sounded the same sort of support for team owners. In a statement Thursday, TSN spokesman Rob Duffy said the broadcaster agreed with the leagues’ decisions to suspend games as pro sports comes to grips with COVID-19. Mr. Duffy said the network is taking direction from local health authorities when it comes to the safety of its production crews and “we remain in close discussions with our advertising partners as the situation unfolds.”
Financially, pro sports owners are one group who can take the pain of a pandemic. The majority of North American teams are owned by deep-pocketed entrepreneurs or large companies. Empty arenas will have little impact on their net worth or bottom line. Mr. Tanenbaum made his fortune as a private equity investor in construction and cable television, and came to sports out of passion rather than for profits.
While Rogers has extensive holdings in the entertainment industry – along with the MLSE stake, the company owns baseball’s Toronto Blue Jays and radio and television stations – the division’s results have minimal impact on the bottom line. Rogers’ entire media unit only accounted for 13 per cent of the company’s $15.2-billion in sales last year, and just 2 per cent of the company’s $6.2-billion in earnings before interest, taxes, depreciation and amortization (EBITDA).
Montreal-based Quebecor Inc. is also a major broadcaster, but in announcing financial results on Thursday, chief executive Pierre Karl Péladeau said: "This [COVID-19] situation is not expected to have a material financial impact on the corporation, although our sports and entertainment segment could be impacted if the situation worsens in Quebec.” At Quebecor, cable and cellphone businesses generated $1.8-billion of EBITDA last year, compared to $7-million of EBITDA from sports and entertainment.
Rather than playoff wins and championships, professional sports owners may set the tone in coming weeks for the way they deal with the unexpected human consequences of a major health crisis. After Wednesday’s game, Mr. Cuban said Dallas’s NBA team was taking steps to ensure arena employees, many of whom are hourly workers, receive financial support during the shutdown. Mr. Cuban said: “This is a pandemic, a global pandemic, where people’s lives are at stake and I’m a lot more worried about my kids and my mom who’s 82-years-old, and talking to her and telling her to stay in the house, than I am about when we play our next game.”
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Andrew Willis