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Toronto Raptors guard Jose Calderon, Toronto Maple Leafs right winger Phil Kessel and Toronto FC defender Dan Gargan. (Frank Polich/Reuters, Frank Gunn/CP and Mike Cassese/Reuters)
Toronto Raptors guard Jose Calderon, Toronto Maple Leafs right winger Phil Kessel and Toronto FC defender Dan Gargan. (Frank Polich/Reuters, Frank Gunn/CP and Mike Cassese/Reuters)

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The Rogers-Leafs deal explained Add to ...

Jim Sheppard, Executive Editor, globeandmail.com: Globe reporters and columnists will be taking reader questions today on the reports that Rogers Communications Inc. is in talks to buy Maple Leaf Sports and Entertainment, owner of the Maple Leafs, the Raptors and Toronto FC, from the Ontario Teachers' Pension Plan.

Submit your questions via the comments on this article. Our editors will pass them on for answers or comment from our Business and Sports staff.

Then, check back throughout the day for updates.

Kevin Sutton posted this comment on our main article on the reported deal: I'm a little curious as to why Teachers would sell such a cash cow?

Boyd Erman, Streetwise columnist: It depends how you define cash cow. While MLSE brings in a lot of cash, it's believed that the cash generally stays in the company to invest in growth plans. Not much goes out the door to shareholders, Teachers included. They have to be content with the rising value of their equity in MLSE.

But these days, Teachers is in a position where it has to deal with a funding shortfall. The plan pays out more in benefits to retired teachers every year than working teachers contribute.

So, the ability to lock in the gain in MLSE's value and redeploy the cash from a sale into assets that generate more dividends day-to-day might be an attractive proposition.

Keep in mind though that at the moment, we don't know how keen Teachers is to sell. Only that they're talking.

Michael Grange, Sports columnist, in his blog First Up: The reported price -- $1.3-billion -- for Teacher's 66-per-cent stake seems cheap for a business that generates just south of $500-million in revenue annually.

According to sources close to MLSE, NFL teams - a league where teams actually make profits - are valued at about 3.5 times revenue. On that math a $1.8-billion price tag for the whole operation and $1.3-billion for Teachers stake seems sensible.

But . . . Teachers is not desperate to sell a business that generates steady cash flow, so there will have to be a considerable premium paid by any purchaser. I'd be surprised if that premium doesn't push the overall value of the company well over $2-billion.

Brown Ottawa: Rogers will have a better understanding of what makes a successful brand as opposed to those diabolically profiteering teachers.

Iain Marlow, Telecom Reporter: Teachers isn't in the business of managing companies. It makes strategic investments.

Rogers executives certainly know how to run a successful company. If they buy and control MLSE, they would presumably bring their own acumen to that business.

Whether that would involve changes to brand management, in terms of marketing or advertisements or reputation, is anyone's guess.

Bruce Dowbiggin, Sports columnist: The brand is being maxed out already _ short of winning something. The missing link is sports intelligence. Rogers hasn't shown any more smarts here than does MLSE. They're too sensitive to media. Make Bob McCown the GM of all the teams. He runs them now through his radio show.

Mr. Right: It's a perfect acquisition for Rogers. Sports is the only appointment TV left and they can blur the lines between content provider and distributor, and push the envelope with the CRTC.

Anti-Consensus: If Rogers does this deal, the angle is probably based on a long-term view that they can offer live games on the wireless side of their business exclusively. So if you have a Rogers cellphone or an iPad/Playbook/Galaxy with Rogers 3G, then you will be able to watch the game live with these devices. On the cable side, there probably won't be any noticeable differences. In other words, Rogers will negotiate with Bell and others so that viewers across Canada can see the games regardless of who the cable operator is. The key thing here is that Rogers will control the content.

Bruce Dowbiggin, Sports columnist: Precisely. Rogers (and other carriers) understand that consumers are doing an end-run around bricks-and-mortar carriers. They must control the next generation of distribution and content via streaming . Thus, the phone/ iPad etc. play for Rogers. And the deals with the Western NHL clubs for their rights that go 10 years (Edmonton, Calgary) and five years (Vancouver). Sports is the only appointment TV left and the networks covet them.

Stephen Brunt, Sports columnist wrote in today in Rogers-MLSE deal makes too much sense: There's no denying the logic of such a move is impeccable. . . .

All [existing Sports]revenue streams have been pretty much maxed out now. It is actually becoming harder and harder to lure fans out of their homes, away from their high def (and soon enough, 3D) televisions, and into the rinks and stadiums, while at the same time conventional, advertiser-driven network television is in decline.

Sports ownership still has great vanity value - owning the most popular team in town can instantly turn a rich nobody into a rich somebody - but it is no longer the goldmine it once was, except for those who control the information pipelines.

With all distribution technology pretty much equal these days, with the lines between television and the Internet and mobile blurring (and well on the way to being erased) it's all about what you have to put in that pipe, to differentiate you from other guys, with the other pipe.

Sports in that context is a particularly attractive commodity, because its audience (even in a pick-and-choose culture) is remarkably loyal, tuning in for game after game, season after season. And because live sporting events really are best viewed live, they are close to PVR-proof and the perfect product for handhelds.

TriB: What would this deal mean for the broadcasting of Leafs, Raptors and TFC games? Will CBC, TSN and LeafsTV/RaptorsTV be left out in the cold while Rogers broadcasts all the games on Rogers One, forcing people to pay for the specialty channel? Or are Leafs and Raptors TV part of MLSE and would therefore come under the control of Rogers as well?

Stephen Brunt, Sports columnist, in today's Rogers-MLSE deal makes too much sense: Rogers understood at least some of that when it bought the Toronto Blue Jays. Even without winning, even without filling the stadium, the franchise has great value in the 162-games of programming the Jays provide for Rogers radio stations and their all-sports television network.

What they understand now is the sports content stranglehold buying a controlling interest in MLSE would provide, at a time when the use of handheld technology is exploding.

Already, in addition to the Jays, Rogers has a significant investment in regional NHL hockey rights, and is a partner with its major rival Bell/CTV in the Olympic broadcast consortium (which owns the 2012 Games, and is the prohibitive favourite to win the rights for the 2014 and 2018 Olympics). By adding the Leafs, the Raptors and Toronto FC to their portfolio, they would become the largest sports media company in North America, control the single most-attractive sports brand in the country, and would be in a strong position to challenge CTV and TSN for national NHL broadcast rights, which are scheduled to become available in 2014. Content from those sports properties could be spun out through all of the Rogers platforms.

(TSN still controls rights to the highly-rated Canadian Football League, and will no doubt work hard to extend that deal before it expires. Rogers might yet counter by becoming partners in an National Football League franchise in Toronto, as has long been speculated, though NFL ownership, because its teams don't control their own television rights, provides no content bonanza.)

Southcoaster: Hopefully, they will put all the Leafs games on pay-per-view and online, then charge CBC a fortune for any access to Leafs hockey. CBC would not be able to afford the Leafs and would have to carry Ottawa, Montreal or other games. The country would no longer be subjected to the weekly grind of having to watch Toronto on Saturday night. Everybody wins. Oh, except the Leafs.

Bruce Dowbiggin, Sports columnist: Having sold them already, the Maple Leafs don't control the distribution of their national or regional TV rights at the moment. So moving properties around the dial is moot till the next contract due in 2013.

Then it will depend on who pairs with whom in obtaining the next rights package. CBC is vulnerable without a partner, but Scott Moore going to Rogers could help them forge an alliance. One thing for sure is the NHL will want to encourage multiple bidders in Canada.

Stripping Toronto out of any national deal would only pirate the value of the entire product. You could see CBC hang onto Saturday nights but lose their playoff rights.

Queensreader: I think this means more pay-per-view Leafs games and even less opportunity for the true fans to watch their team. Tickets are barely affordable as is and soon we won't even be able to watch them on TV without subscribing to some overpriced Rogers package.

Bruce Dowbiggin, Sports columnist: See above. The NHL has a vested interest in keeping national games on over-the-air or basic cable for now. Even with the growth of Internet streaming, the distribution for the rest is not equal to CBC's conventional reach. Perhaps if the technology proves out, this could be an issue in five years. By then, most people will have the technology. For now, tech recidivists will get their Leafs fix.

JCTO: What has Rogers done for the Blue Jays? Traded any decent player whose contract is even a bit higher than average. Refused to sign free agents, except for journeymen. The Jays keep planning for the long run, because that means in the short run you don't have to spend very much. The only problem is the fans have tuned out after 16 years of mediocre baseball.

No wonder Rogers likes MLSE. The Leafs make money no matter how mediocre they are, and no matter for how long (try 43 years)!

Bruce Dowbiggin, Sports columnist: Everyone praises MLSE for its "savvy" management in never giving Toronto fans a winner. It's a myth as they've left a lot of money on the table. While MLSE has maxed its real estate plays, its sports properties forgo millions by not making playoffs or winning championships. The problem in sports is too many advertising and marketing boys are making sports calls. Just because you know how to maximize the logo doesn't mean you know how to maximize winning championships. Look at MLSE or the Flames, who have a mediocre publisher calling the hockey shots.

The Whiz: We need an independent crazy rich guy who loves the city and the teams, and wants to see them win and will spend to get it done. A Steinbrenner of Hogtown. It is clear that trading draft picks and hauling in one season wonders or bad attitudes from other teams will not get the job done.

Bruce Dowbiggin, Sports columnist: As above, the problem is having Richard Peddies involved on the sports side, advising owners on whom to hire and fire when it's above their pay grade. They go for the sexy hire -- Burke, Colangelo -- because they don't have the intel to know the next Ken Holland or Theo Epstein. Rogers went the nostalgia trip hiring Beeston 20 years after his shelf date. Look at how the Canucks hired Mike Gillis, a former agent, to run their organization.

AppleZaus: In my opinion, this is akin to a market monopoly. Rogers would have complete control over MLSE and be able to dictate many things.

Iain Marlow, Telecom Reporter: A cable company would be no stranger to extracting concessions and advantages based on its complete dominance of a regional market. Rogers has already moved the Jays from its regular Sportsnet cable channel to Sportsnet One, which angered other distribution companies like Bell, who then had to negotiate for it (and presumably charge their own subscribers more).

But it's hard to really know what the definition of a sports "monopoly" would be.

In practical terms, the telecom regulator could ding Rogers for making MLSE grant "undue preference" to the cable company, but this stuff applies only to traditional platforms like TV and not to the platforms everyone's thinking of, such as online and wireless.

If Rogers' competitors, such as Bell, think they're getting a raw deal, they could always lodge a complaint with the Competition Bureau, arguing that Rogers was engaging in anti-competitive behaviour. But the former is a murky area, given that wireless is unregulated, and the latter is probably something akin to a Hail Mary.

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