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Ryan Szulc

One of these things is not like the others.

Sitting on a riser in Toronto's Air Canada Centre, in power suits with jackets open, are: Larry Tanenbaum, the chairman and part owner of Maple Leaf Sports + Entertainment; Nadir Mohamed, the CEO of Rogers Communications; and George Cope, the CEO of Bell Canada.

All three men are familiar faces to the murmuring rabble of sports and business journalists here on Dec. 9, representing outlets ranging from TSN to The Wall Street Journal.

In the fourth chair sits Jane Rowe, 52, without whom none of the others would be here—for it is this unknown woman who is responsible for the deal being announced today, the surprise sale of a controlling stake in MLSE to Rogers and Bell for $1.32 billion.

And it's Rowe who gives the opening remarks about Teachers' letting go of its signature holding. But when journalists dive in with questions, she's ignored. Not until about 20 minutes in is a query directed at Rowe: How much money did her employer, Ontario Teachers' Pension Plan, make from the sale? Attention then returns to the trio of titans.

It's a safe bet that if Jim Leech, Teachers' gregarious and well-known CEO, had been sitting in Rowe's chair, he would have been asked a lot more questions. Indeed, in the coming days Leech enjoys much of the credit for pulling off the MLSE sale, even though he's the first to say that it properly belongs to Rowe and her team.

Perhaps the press take cues about stature from the wrong place? After all, when Rowe and Cope shake hands after her speech, he's noticeably taller—even though he's sitting down and she's standing. Diminutive or not, as Teachers' head of private equity, Rowe presides over a $12-billion pool of capital and has the power to spend $200 million without so much as checking with her boss, Leech. She's very near the top of the power echelon on Bay Street and, with luck, she may become the first woman to get to the peak.

Leech knows it, Rowe knows it, and the other execs do too, even if the media don't: The MLSE announcement was the coming out of Sarah Jane Rowe.


"Okay, so the first thing I'll say is: New-fun-land," Rowe says, correcting my pronunciation of the name of her home province. I try again; it comes out Newfoundland. "No, New-fun-land," she says. I make two more efforts before sheepishly moving the conversation on. Rowe, I see, is not afraid of making you look foolish.

Yet she manages to do it gracefully. It comes naturally to a student of human nature, someone who has spent countless hours studying strangers' interactions in airports and other public spaces, and who has made a point of observing and learning from the behaviour of bankers and executives she's dealt with throughout her career on Bay Street. The result is a keen sense of what motivates people—a skill that's invaluable in tough negotiations. Rowe can press for change while remaining highly likeable.

She's also persistent. A couple of hours later, I say Newfoundland again. "No. New. Fun. Land. It's understand Newfoundland," she says.

It helps, I think to myself, that Rowe is disarmingly self-deprecating. How does she like public speaking? "I've. Learned. To. Embrace. It," she deadpans.

Truth is, she was tired, tense and nervous at the MLSE event, her press-conference debut. Later, she recalls the moment shortly afterward when she walked into MLSE's gargantuan Real Sports bar, which was rebroadcasting the event. Just then, her face splashed across the bar's celebrated two-storey-tall TV screen. "I've got to tell you, as a middle-aged woman, it's a big freakin' screen," she says.

It's difficult to believe that this woman, who shops in the petite section and exudes a sort of personal warmth rarely seen in people of her station, has struck fear into the hearts of executives who have found themselves on the other side of negotiations with her.

"She has strong negotiating skills, she's very straightforward, but she's also very pleasant to deal with," Leech says. "She's a Newfie with a great sense of humour."

And when she needs to be, she can be fierce.

Rowe grew up in the historic fishing town of Carbonear, the daughter of Augustus, a physician, and Bea, his war bride from London. Rowe says her mom—and many childhood summers spent in England—is the reason she doesn't have a strong Newfoundland accent.

Rowe is a big political name in Newfoundland, boasting both Liberal and Conservative wings that are related, if distantly. "Gus" belonged to the latter persuasion. When he became health minister in the government of Frank Moores in 1972, the family, including 12-year-old Jane, made the classic Newfoundland transition from bayman to townie.

After high school, Memorial University beckoned. Studying commerce, Rowe had an inkling she'd found her calling. "My first Finance 101 course, they're walking me through the concept of net present value, and I kind of went [here she launches into an impression of her younger self] 'Cool. That is so interesting. And, oh my god, like, you can just sit here and look at these different flows of money and decide which one actually has more value today or 10 years from now—that's so cool,' " she says. "I was hooked."

Still, it took the sage advice of a friend's father to steer her toward a career in business. "My friend's father said, Do you want to ask for the cheque or do you want to write the cheque? If you want to ask for the cheque, be a lawyer. If you want to write the cheque, be a businessperson.' " She packed her bags for Toronto and did an MBA at York University.

Post-graduation, and after stints at CIBC and Guarantee Trust, Rowe landed at Bank of Nova Scotia. It felt like home.

"I thought, 'Here's a bank that has an East Coast culture that works with my East Coast upbringing,'" she says. To outsiders, that may sound like a stretch—the bank founded in Halifax in 1832 does not give off much of a salt-sea air today—but to Rowe, Scotia was welcoming and inclusive, and offered the kind of environment where smarts and hard work get you further than family credentials.

In what would become a 23-year career at the bank, the young account manager rose rapidly to assistant general manager of workouts—the close-quarters business of remediating welching clients. Eventually Rowe became the co-head of a private equity fund at the bank. "I loved it, I loved it," she says—in particular, the thrill of hunting for gems to back in the hope of a big return.

But, as had happened before, her bosses pulled her to the next level somewhat against her will. In the aftermath of the tech bubble's burst, her skills were in demand, and Scotia asked her to become a senior vice-president and help sort out the bank's risks. She accepted the hot seat. "At that time, you met with the CEO every morning to review various exposures and credit risks," she says. With that experience behind her, "There's no room that I'm afraid to walk into any more. Because when you're being queried and challenged and have to articulate your thoughts on a daily basis to a CEO, a vice-chairman, a head of risk, you've got to bring your game to the table and you've got to deliver."

She did deliver, and was named CEO of Roynat Capital, a merchant bank within Scotia, and then to a key role in Scotiabank's bread-and-butter domestic personal lending business—as well as CEO of Scotia Mortgage Corp. "That put me into the executive management team, and that was pretty cool," she says.

Perhaps not surprisingly, Rowe shrugs off the idea that Canada's Big Five banks, which among them have yet to name a female CEO, have a bias against female executives. Yes, men and women network differently and might have different styles, she acknowledges. And, "you know, maybe once in a while you'd come across a jerk. But you can come across them anywhere," she says. "At Scotia, it was very much about your aptitude for the work. And if you clearly had the intellectual capital to contribute to the conversation, it didn't matter if you were an animal, mineral or vegetable."

Scotiabank CEO Rick Waugh acknowledges an industry inclination to relegate women to areas such as human resources and public relations. Rowe, he says, was a groundbreaker. "She, and several other women that we had in the executive management team, were instrumental in breaking a stereotype that they couldn't do things like credit."


But just as Rowe became one of the most senior people at Scotia, a series of tragedies shifted her focus to her personal life. In 2007, when she was a couple years shy of her 50th birthday, a number of her associates died suddenly—each of them also younger than 50. "It was freaky and it all culminated in about six months," she says. "And all of them from different things, from a brain aneurysm, to a small plane crash, to a freak fall. It was just odd. And I kind of went, 'Wow, life is short.'"

In a highly unusual move for someone of her rank, Rowe decided to take a year-long sabbatical to help her parents transition into an assisted-living building in Toronto, and to travel the world with her long-time partner, Tammy McBrien. The bank promised her that a job would be waiting for her upon her return.

So she and Tammy travelled to all seven continents. "Antarctica to Asia to Africa, saw it all," Rowe says. "Doing that was something that nobody can ever take away from me; it was awesome."

She had to kick back up into competitive gear upon her return, overseeing the credit side of retail lending, including workouts. "That is one of the toughest jobs in a bank," Waugh says. "You have to be tough, deliver tough medicine."

The file that earned Rowe her first moment of public attention was CanWest Global Communications Corp. Its spendthrift CEO Leonard Asper wrote lengthy, impassioned letters imploring her not to force the company to file for bankruptcy protection after it had fallen months behind on its debt payments. But Rowe was having none of it, and she shot back with concise rebuttals that became the talk of Bay Street. In one noted slapdown, she told Asper, "we remind you of the following facts: ...[the newspaper division of CanWest]is insolvent. It is plain and obvious that it cannot support its massive debt, and that a transaction will have to occur that fundamentally alters the balance."

And that is exactly what happened.

It was around this time that Teachers' head of private equity quit to start his own firm. "The phone rang, and it was a recruitment firm that had seen me at work on CanWest," Rowe recalls. "And they said, 'We've got this job at Ontario Teachers' in private equity. We know you've been at Scotia for 23 years, but would you think about it?'"

Private equity was her favourite part of the business, but one that banks were doing less of as the financial crisis took its toll. And Rowe was fairly certain that she had gone as high as possible at Scotiabank. "When you're one of the top 20 or 24 out of 68,000, really, that's pretty good," she says.

The head of private equity at Teachers' is a high-profile job—the very one that Jim Leech himself held before he became the CEO. For all pension funds, the asset class has become more important lately as they seek to reduce their reliance on turbulent stocks and bonds. Certainly it's a critical and growing component at Teachers', accounting for more than 10% of its portfolio. Teachers' 40-strong private equity team has invested in more than 300 companies, among them leading vitamin peddler GNC and the mattress maker Simmons. MLSE was one of its largest PE investments.

Part of Rowe's appeal to Teachers' was her solid understanding of many of the moving parts of the capital markets; another, says Leech, is that she was used to running a large team. "Obviously you are working in private equity, but you also have to play a role as a senior executive in Teachers' overall," Leech says. "Having a perspective and an understanding of what goes on in fixed income and in other areas of the business is a real asset when you're sitting at the table with your colleagues."

Despite Rowe's credentials, there was still some surprise at the hire, which took effect in October, 2010. "A lot of people said, 'Who is this?'" says an investment banker who has worked with her. "But I already knew who she was, and I said, 'Well, there's a new sheriff.'"


In the 17 years since Teachers' first invested in what was then Maple Leaf Gardens Ltd., ownership of the Leafs has become a defining characteristic of the pension plan. Indeed, when former Teachers' CEO Claude Lamoureux and former executive vice-president Robert Bertram accepted the Ivey Business Leader Award at a ritzy gala in 2007, the latter sported a Leafs jersey.

"It's an iconic holding," Rowe acknowledges. That said, a crucial element of her job is to constantly examine a $12-billion portfolio and determine whether the money that's tied up in some investments would be better spent elsewhere. Some 295,000 current and retired schoolteachers are counting on Teachers' to make these calls correctly.

Less than two months after Rowe took the job, the Toronto Star reported that Rogers had bid $1.3 billion for Teachers' 66% stake in MLSE, which, besides the Leafs and the Raptors, owns the Toronto FC soccer club, the 19,800-seat Air Canada Centre and three specialty TV channels—Leafs TV, NBA TV Canada and the all-soccer GOL TV Canada.

The relationship between Rogers and Teachers' dates back a long time, as does Rogers' rumoured interest in MLSE. Sources say there was no truth to the report that the communications giant had made a $1.3-billion bid. But it was sniffing around. And soon, so were many other prospective buyers, who called Teachers' to see if they could get in on the action.

Since it seemed clear that the pension plan might be able to fetch a good price for its stake, Rowe decided to test the waters, hiring Morgan Stanley to run an auction. If the bids didn't live up to expectations, she decided, Teachers' would hold onto its marquee possession.

There are, broadly speaking, three types of owners in the sporting world. The traditional ones are the jock sniffers—the rich guys who become owners so they can fly on their teams' private planes and pop champagne in the locker room. But Teachers' was at the front end of a shift that saw more franchises bought by institutional owners that are more concerned with making money than partying with athletes. The third group is where BCE and Rogers come in: media conglomerates and other interests whose businesses are directly bolstered by owning a team.

While Rowe started to explore her options, Toronto fans were debating whether a new deep-pocketed owner would be able to help the Leafs score. Rowe still can't get over criticism that Teachers' was not interested in the team's performance, which is most notable for being Stanley Cup-free since Confederation (or, to be fair, its centennial). The notion that Teachers' was not willing to spend on talent is so ingrained among some fans that one popular Leafs' blog is called .

"Did we not want them to win?" Rowe says. "That I find to be a very mind-boggling question. If a team makes it to the playoffs, it's a far more valuable team," she says. "Your fans are happier, your arenas are being filled more, your merchandise is being sold more, your food and beverages are being consumed more." As if to prove the mind-boggling theory, however, the final season of Teachers' ownership was, as of press time, as abysmal as ever for the Leafs, with fans successfully chanting for coach Ron Wilson's head.

Stanley Cup or no, Teachers' and the other part-owners of MLSE are widely recognized for having built a very profitable company. "I think that putting the Raptors and the Leafs together certainly was a coup, and it worked out very well, and making sure the arena [the ACC]was built where it is instead of having two arenas certainly worked out very well," says Claude Lamoureux. MLSE also brought Major League Soccer to Toronto, developed a condo and retail complex near the ACC, and, crucially, created specialty TV channels.

It was those channels and the right to broadcast games that especially attracted the likes of BCE and Rogers. In the not-so-distant future, it seems, we will all be watching TV on our cellphones. One of the best ways to make money from that trend, as George Cope sees it, will be to own the right to broadcast live contests—from sports games to beauty pageants—that people don't want to PVR.

As the prospective bidders were assembling their strategies, one of Rowe's first major decisions in the auction process was to buy Toronto-Dominion Bank's 13.46% stake in MLSE. That move meant that the only other owner left was Larry Tanenbaum, a member of Toronto's monied elite with broad ties across the sporting world.

Being the chairman of MLSE has been a large part of Tanenbaum's life, and of his image, since 2003. He began in the pro sports game by trying to bring an NBA team to Toronto in the early 1990s, and invested in a predecessor to MLSE in 1996. The chairman's post meant he finally was living the dream—he became a governor of the NBA, the NHL and Major League Soccer.

Tanenbaum is soft-spoken in person, and he shies away from the media spotlight. But sources say he pulls no punches when it comes to business deals. The man tasked with protecting Tanenbaum's interests is Dale Lastman, a son of former Toronto mayor Mel Lastman. As co-chair of Goodmans LLP, the younger Lastman is one of the country's most powerful and successful lawyers. And, according to many people who have dealt with him, he is also one hell of a negotiator. (Tanenbaum declined to be interviewed for this article.)

The team at Teachers' knew from the get-go that the tough-minded Tanenbaum camp could be a major impediment to a sale if it chose to be—a deal-breaker, in fact. Teachers' bought TD's stake in MLSE to gain a bit more clout at the bargaining table.

The discussions about MLSE were sensitive for TD, since it has major media and communications clients. It also did not want to find itself in a dustup between Teachers' and Tanenbaum. Thus even though the MLSE investment was not especially large or strategic for the bank, chief executive Ed Clark got personally involved in the conversations with Rowe and her colleagues.

Rowe would not comment on any specifics about the negotiations. The transaction may have looked like a power move to outsiders, but she says that Teachers' bought TD's stake simply so prospective buyers would only have to reach agreements with two owners, not three. Said bidders now found themselves vying for a 79.53% stake in MLSE, as opposed to two-thirds.

As the first round of bidding got under way, Teachers' received a decent amount of interest: from at least one private equity fund, various communications firms, wealthy individuals, even average Canadians who tried to pool their money. But no one involved in the process will say exactly how many bids came in.

What is clear is that, before long, Teachers' got a big surprise. One source says that the first time the pension plan's officials learned of the joint Rogers-BCE bid was when they went to a meeting in Nadir Mohamed's office—and George Cope walked in. Leech told the duo it was a "cute move."

Cute or not, there were still hurdles to surmount, not the least of which were: (a) the duo was bidding significantly below what Teachers' considered to be the value of its stake, and (b) BCE and Rogers still had to strike a final deal with Tanenbaum, who wanted to bolster his rights at MLSE.

What followed were many late nights and tense discussions. Teachers' would not budge on price. BCE and Rogers made it clear to Tanenbaum that they were most interested in the right to broadcast games to their cellphone customers and could not brook any interference from a co-owner on that fundamental.

While Teachers' and TD had been essentially on the fence about whether to sell or hold their stakes, Tanenbaum was adamant about his position. Not only did he want to remain chairman, he wanted more control over the company.

In November, eight months after the auction process began, BCE and Rogers still hadn't met Teachers' price and Rowe had run out of patience. Teachers' put out a press release saying game off: It had decided to keep its stake in MLSE. And word started spreading that it had a "plan B" for MLSE.

Rowe, who won't say what "plan B" was, insists Teachers' wasn't playing bargaining games. "We were pretty transparent," she says. "We took it off the market because we thought enough is enough, we need to get on with life. [MLSE CEO]Richard Peddie's going to be retiring shortly [see Exit Interview, page 64] we have big issues we need to deal with, the NBA was in the throes of their strike, so we thought in fairness, on behalf of everybody in this process, let's move on."

In any event, Teachers' press release kick-started negotiations. Within days, Rogers, BCE and Tanenbaum struck a deal that met Teachers' asking price. As a result, the telecom giants are set to get their grail of broadcast rights; and Tanenbaum not only remains chairman of MLSE, but he also managed to increase his slice of the pie from 20.5% to 25%. And as for Teachers', it will make a fivefold return on its investment when the deal closes this summer, subject to league and regulatory approval. Forbes called it "the Greatest Sports Deal in History" because it showed sports franchises can be as rewarding to clear-eyed investors as they are to jock sniffers. Best estimates indicate Teachers' made a cool billion on MLSE.

Sources suggest that the road to the deal was smoothed by a move that Rowe made early on—she let it be known that she wasn't certain Tanenbaum and the chairmanship of MLSE were such a great fit. After all, when Teachers' looked around its portfolio, most of the companies in which it had stakes were run by industry experts, not wealthy scions. (Tanenbaum, whose family wealth comes from the construction business, is the chairman of a private equity fund in which he's a major investor, Kilmer Capital Partners Ltd.)

No outright threat was ever made to Tanenbaum, and a source close to him is adamant that the MLSE chairman was not aware that his position would be on the line should Teachers' decide to carry on as an owner of the company.

Rowe is not about to resolve this question. "We're not going to talk about that," she says. "Because, you know what, it's moot. The reality is Rogers and Bell and Kilmer got together after we made our announcement of taking the asset off the table, and they put forth a compelling bid."


With that deal a wrap, the hunt for value resumes. Teachers', after all, has a projected long-term shortfall. "You need to find lots of great high-quality investments that are going to create excellent returns over time," Rowe says. Indeed, the very day of the MLSE announcement, Teachers' made another deal, one that attracted much less notice: It teamed up with an American private equity firm to take Blue Coat Systems Inc. private.

Blue Coat, a specialist in Internet security, has lately been accused of abetting the al-Assad regime's bloody clampdown on dissent in Syria. This may not sit well with Teachers' membership, which was vocally opposed to their plan's investment in teacher-bashing Toronto Sun Publishing Corp.

If Teachers' was going to be guided by sentiment, however, it wouldn't have sold MLSE. And there are few companies out there without ethical liabilities. Finding future paydays that come without too much political grief will be just one more challenge for Sarah Jane Rowe of Carbonear.


LIVE LONG AND PROSPER (AND INCREASE YOUR CONTRIBUTIONS, OK?) Ontario schoolteachers' longevity puts their plan in bind

Jane Rowe's problem at Ontario Teachers' Pension Plan is that schoolteachers live too long. Actuarially speaking, that is.

All pension plans are squeezed between increasing life expectancy rates and the lousy returns commonly experienced in an era of low interest rates and unpredictable stock markets. But compared to her counterparts at other plans such as the Canada Pension Plan Investment Board, Rowe faces more pressure to find stellar investments that generate big returns in the next decade or two. For this, she can blame schoolteachers for being a healthier lot—fewer smokers, more of an "apple a day" mentality—than many other professions. They are also more likely to be female. Those two factors help explain why schoolteachers live longer than the average population, and why Teachers' is forecasting shortfalls between the assets in hand and the payouts due over the next 70 years.

Thus, teachers will likely have to pay higher contributions (indeed, those rates have already increased) and/or accept reduced benefits. Strong investment returns can obviously help to close the gap. But the flip side is that the plan can't afford to have major investments crater.

And hiking contribution rates can only do so much of the job. In 1970, there were 10 working members of the plan for every pensioner. Today there are fewer than two working teachers for each pensioner. And a teacher who retires today is expected to collect a pension for about 30 years—four years longer than the average number of years they worked. Pensioners don't share the cost of resolving funding shortfalls; that's up to their younger colleagues and the plan.

In comparison, the situation at CPPIB looks downright rosy. It is not expected to have to increase contributions from the employed for the next 70 years. The fund won't have to start tapping its investment income until 2021. "They're at a different spot in the pension plan life cycle," Rowe explains. "They're what we call an 'immature' plan—they're still collecting a lot more than they have to pay out. We're the mature pension plan at this point, so we actually pay out more than what we're receiving in contributions."


SPORTING VALUES In worth, MLSE teams well back in global pack

Manchester United The world's most valuable team is estimated to be worth $1.86 billion

Dallas Cowboys Are a close second at $1.81 billion

New York Yankees $1.7 billion

Washington Redskins $1.55 billion

Pittsburgh Steelers $996 million

Los Angeles Lakers $643 million

Toronto Maple Leafs $521 million (the highest value for an NHL team)

Toronto Raptors $399 million