Larry Tanenbaum cutting stakes is no big loss for MLSE – losing never bothered them much anyway

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This week, former American soccer rest-home resident Gareth Bale had some words of comfort for future rest-home king Lionel Messi.

“It’s a lot more chilled [in North America],” Bale said of the part-time job he had with Los Angeles FC. “If you lose at Madrid, it’s like the world ended. … [North Americans] kind of accept losing a bit more. Like, there’s no consequence. You can’t get relegated.”

This is an obviously true statement. Like most obviously true statements these days, it caused a mild hysteria. Something along the lines of, ‘Losers, us?’

Yes. Losers, you.

This is one light in which we might view the news that Maple Leaf Sports & Entertainment chairman of the board Larry Tanenbaum plans to sell part of his minority stake in the company.

The Globe reported on Friday that Tanenbaum intends to sell 20 per cent of his holding – 5 per cent of MLSE in total – for US$400-million. That number values the company at US$8-billion.

So since a majority stake was sold to Bell and Rogers in 2011, the owners have nearly quintupled their money. And who among us could say they haven’t earned every nickel from the sweat of their very taught brows?

The Raptors won a championship and … well, that’s kind of it. But when considered in the continental sporting context, that’s not bad. Six-or-so billion bucks in increased value in exchange for one major title is better than the North American average.

The immediate reaction to Tanenbaum’s decision is that it diminishes the aspiration of the enterprise. That Tanenbaum represents the free-spending rebel fan alliance fighting the cheapskate telco empire that controls the company.

Tanenbaum certainly likes his sports more than the average bear. He’s a regular feature at the Raptors and Maple Leafs.

After games, he often sets up shop in the hallway that connects home and visitors’ locker rooms. Every passerby looks for an approving tilt of the head, and everyone must pass. It could only be more ‘lord of the estate surveys his chattels’ if Tanenbaum did it on horseback.

What’s he surveying?

Losers, for the most part. Lucrative losers.

As Bale points out, this is in the nature of North American sport. We may care about sports, but we don’t care about sports. Not the way they do just about everywhere else in the world.

Everywhere else, the pressure to perform is a non-negotiable. Nobody gives a damn about your injury problems or your maturation problems or your we-actually-don’t-know-what-we’re-doing problems. You got issues? Buy better players. You can’t buy better players? Sell the team to someone who can.

If you don’t win, you have to leave. Now. Don’t bother unpacking your desk. They’ll mail you the desk. Nobody wants a loser’s desk.

Take Bale’s example – Real Madrid. Probably the biggest sports operation in the world. Makes an absolute bucket load of money. Has won 22 trophies in the last 10 seasons, and has had eight managers over that same span.

Why the disconnect? Because while it won a lot of trophies, it didn’t win all the trophies. At Real Madrid, that’s unacceptable.

In North America, it’s not just acceptable. It’s standard practice.

Winning creates headaches. Sure, it’s fun as it happens. But then you have to do it again. Now everyone involved wants more money, and has more leverage on you, and starts saying wild things on a podcast you’ve never heard of because people are suddenly fascinated by whatever nonsense pops into their heads.

Meanwhile, you, the team owner, are not making appreciably more money. Your prices are already set. Your already outrageously overpriced $12 hot dog doesn’t suddenly become a $40 ‘championship’ hot dog.

Your TV deals are done. Whatever profit boost you do get is spread about the league through transfer payments.

When you lose, what happens? People are angry. They may never watch your team again. Then they do. They fill your arenas, buy your junk, say, ‘Next season for sure’ every year until the sun explodes.

Larry Tanenbaum plans to sell a stake of Canadian sports giant MLSE to pension fund OMERS

The prices you charged for your bad team last year cannot stay the same for the even worse team you field this year. They will increase. Because that’s what sports prices do – they go up. Forever.

So win, which is hard, and you make one amount. Lose, which is easy, and you make about the same amount. Tough choice.

When Bell or Rogers sell you a phone, it has to work. Otherwise, you’d return it. But they have found a consumer good – sports – that need never perform in order to make money. A team can remain in the beta stage forever, but cost as much as a finished product.

The real jewel in sports ownership – franchise valuations – benefits winners and losers alike. Yes, the Raptors’ valuation has shot up in recent years. So has the value of the Sacramento Kings.

The only variables on the franchise-value end of things are the size and gullibility of your market.

Do you live in a major metropolis filled with rich suckers? Then you’re in great shape.

Tanenbaum and his co-owners have wisely invested in just such a city. If they’d pulled the same act they’ve been pulling with the Leafs in, say, Barcelona or Istanbul, they’d have to move from their homes to the arena in an armoured column. But in this corner of the world, they are feted for trying.

In North America, there’s always a good reason you lost. Pick a buzz phrase. Some combination of “changing the culture,” “takes a toll,” or “stick with the process.”

Everywhere else, there is no reason. Managers don’t even try with the ‘I need a little time to get the players on the same page’ stuff. They just quit in the postseason presser before the mob can penetrate sub-parking level B.

So does Larry Tanenbaum beginning to disengage with MLSE mean something for the future prospects of the teams he supports, but has little say in running? No.

Would he and his co-owners prefer that all their teams won every year? Probably.

Are they okay with them losing manfully, remaining profitable, and avoiding controversies that could ooze up into the corner offices? Totally.

Is there any sort of ownership change that might alter this basic calculation? No. Not here.

In the future, maybe an artificial intelligence can take over MLSE and run it optimally. Fill its teams with likeable athletes who create a lot of viral content for cap-friendly salaries. Would this perfect team win? All the time, at the only place that matters to business owners who have no fear of losing their customers – at the bank.