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The Globe and Mail

Teachers' tell NHL they have no plans to sell MLSE stake

The Ontario Teachers' Pension Plan Board has no immediate plans to divest its majority stake in Maple Leaf Sports and Entertainment, and National Hockey League commissioner Gary Bettman was told as much on Wednesday, sources say.

Still, the Teachers group could sell its shares to Rogers Communications or another company in the near future. A source connected to MLSE said Rogers approached the Teachers Pension Plan several months ago. A second source speculated Rogers made another approach to Teachers more recently.

An NHL executive said, "There is legitimate interest on the potential buyers' side [Rogers] but not so much on the potential sellers' side. So at this point, it's not going anywhere."

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"[Rogers]would love to own it, but I think the pricetag is too high. There's not many people who can afford $1.3 billion."

Teachers paid $180-million in 1994 to buy into what became MLSE, which owns the Toronto Maple Leafs, Raptors and FC soccer franchises, and Air Canada Centre. With a 66% stake in the company, Rogers could reap $1.3 billion or more from the sale.

Minority owner Larry Tanenbaum has first right of refusal on the Teachers shares.

One NHL governor said he was not aware of Teachers plans, but expected to hear more at Monday's board of governors meeting in Florida.

Meanwhile other unidentified sources inside the NHL told the Globe and Mail that they aren't convinced the deal is off.

"I think they want to sell," one NHL source said of the Teachers. "They've always wanted to sell. It's nothing new. They're a fund. They've made their money, and they're ready to move on."

If Teachers is interested in selling now, it would need the NHL's approval to show the books of the Toronto Maple Leafs to potential buyers.

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Bettman established stricter rules about team sales in the wake of the William (Boots) Del Biaggio scandal in 2007, when it was discovered the would-be part-owner of the Nashville Predators received loans to buy his share of the NHL team from then-Predators owner Craig Leipold and AEG, which owns the Los Angeles Kings. Before prospective buyers can look at a franchise's financial books, they must first be vetted by the NHL's board of governors.

Speculation that Teachers is looking to sell its MLSE stake is growing because the pension plan is confronted by a shortfall between revenues and future payments to retiring Ontario teachers. Members of the plan were informed this fall the immediate gap is $17.1-billion. The plan established a "sustainability working group" to begin addressing the shortfall by 2012.

The current NHL labour agreement also expires in 2012 though an additional season would be played if there is no new deal. The NHL governor and a former Leafs employee suspected Teachers may not have the appetite for the next round of collective bargaining agreement talks, and another possible labour interruption.

Meanwhile, next season there is potential for an NBA labour disruption which would affect the Toronto Raptors.

The Teachers Pension Plan regularly assesses whether to hold or sell assets. MLSE's steady growth in value means it is not a candidate to be sold at this time, a source said.

"They will hold on to MLSE as long as it is doing better than the rate of increase [in value]of anything else they can find," the source said.

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A U.S.-based sports investment banker with knowledge of the Canadian sports landscape said "it makes perfect sense" for Rogers to buy Teachers shares. "It's a better fit for them than anybody else, including anybody in the States."

Staff writers Matthew Sekeres, Eric Duhatschek and Jeff Blair contributed to this report.

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