Telecom giants Rogers Communications Inc. RCI-B-T and BCE Inc. BCE-T are challenging billionaire Larry Tanenbaum’s planned sale of a stake in the parent company of hockey’s Toronto Maple Leafs and basketball’s Toronto Raptors to a pension plan, the first skirmish in what could be a multiyear battle for control of a sports empire.
Last month, Mr. Tanenbaum notified Rogers and BCE, the parent company of Bell, that he planned to raise $400-million by selling a 20-per-cent stake in a family-controlled holding company, Kilmer Sports Inc., to the Ontario Municipal Employees Retirement System pension plan. Kilmer Sports owns 25 per cent of Maple Leaf Sports and Entertainment, and Mr. Tanenbaum is MLSE’s chairman. Rogers and Bell evenly split the remaining 75 per cent through a jointly owned holding company.
Bell and Rogers sent a joint letter this week to Mr. Tanenbaum in which they raised questions about the proposed sale, according to two sources familiar with the matter, neither of whom described the companies’ concerns in detail. The Globe and Mail is not identifying the sources because they are not authorized to speak for the companies.
Spokespeople for Mr. Tanenbaum, OMERS and Rogers all declined to comment Wednesday. BCE did not respond to a request for comment.
MLSE owns Toronto’s professional hockey, basketball, soccer and Canadian Football League teams. The planned transaction with OMERS values the sports company at $8-billion, meaning Mr. Tanenbaum’s MLSE holding would be worth $2-billion. Mr. Tanenbaum, aged 78, told Rogers and Bell he wants to sell to OMERS as part of his estate planning.
Rogers and Bell first invested in MLSE in 2012. They acquired their majority stake for $1.32-billion. As part of the transaction, the two telecom companies negotiated the right to purchase Mr. Tanenbaum’s MLSE shares in 2026, at a price to be determined. Industry experts and analysts predict Rogers and Bell will eventually buy out Mr. Tanenbaum, and that neither telecom company will allow its rival to control MLSE.
The Globe previously reported that Mr. Tanenbaum’s deal with OMERS puts a higher valuation on his MLSE stake than Rogers or Bell anticipated, according to sources at both telecom companies. It also complicates MLSE’s ownership structure ahead of the potential buyout of Mr. Tanenbaum.
Both Rogers and Bell use their ownership of sports teams to build their brands and promote their wireless and wireline services. Both telecom companies have seen the value of their stakes in MLSE more than triple over the past 11 years, and both have also done well on other sports investments.
Rogers owns 100 per cent of its other pro franchise, Major League Baseball’s Toronto Blue Jays. The telecom company’s founder, Ted Rogers, acquired the team 23 years ago for US$112-million, and paid another $25-million to buy its stadium, the Rogers Centre. Last winter, Rogers spent $300-million on a renovation that added new bars and social space meant to draw younger fans. Forbes magazine now values the Jays at US$2.1-billion.
Bell holds a minority stake in the National Hockey League’s Montreal Canadiens. The team is controlled by brewery heir Geoff Molson and plays in the Bell Centre. Mr. Molson acquired the franchise in 2009 for $575-million. Forbes now values the Canadiens at US$1.85-billion.
The showdown over ownership of MLSE is playing out at a time when valuations of pro sports teams are soaring, in part because of rising revenues from broadcasters and gambling. Broadcast fees are up as traditional television networks compete with streaming services such as Amazon for rights to games that grab a stable, affluent audience.
Gaming revenues at MLSE took off after Ontario legalized sports gambling in April, 2022. Within days, MLSE signed a partnership with PokerStars and FanDuel, businesses owned by Dublin-based Flutter Entertainment plc, the world’s largest sports betting service.
In recent months, NHL and National Basketball Association franchises have changed hands for record amounts. The NBA’s Phoenix Suns sold for US$4-billion in December, while the NHL’s Ottawa Senators fetched about US$950-million when transport billionaire Michael Andlauer purchased the team earlier this month.