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MLSE: Too big to win? Add to ...

Upon entering Real Sports, the sports bar adjacent to Air Canada Centre, one of the first things you see is the icon of Canadian sporting greatness.

Your eyes having adjusted to the glare of massive television screens and accounted for the little black dresses on the wait staff, what next holds them is a life-sized replica of the Stanley Cup, backlit and shining, hockey's Holy Grail. And you think ... seriously? A sculpture of the trophy that has remained comically out of reach of the Toronto Maple Leafs for 43 years and counting? Unabashedly displayed in the entrance of the restaurant opened recently by the owners of the Maple Leafs?

It's the corporate equivalent of a tattoo that says, "Kick me."

Maple Leaf Sports and Entertainment Ltd. is the cash-churning colossus that owns the Toronto Maple Leafs, Toronto Raptors, Toronto FC, Air Canada Centre, Toronto Marlies, a pair of condominium towers, Real Sports and, soon, a gourmet restaurant. What MLSE touches usually turns to gold. Real Sports, for example, was recently recognized by ESPN as North America's best sports bar, a remarkable feat considering that it opened just two months ago.

"I didn't even know there was a contest," says Richard Peddie, MLSE's chief executive officer.

The company, owned by Ontario Teachers' Pension Plan (66 per cent), Larry Tanenbaum (20.5 per cent) and TD Capital Group (13.5 per cent), is a sports and entertainment success story that can only be measured in global terms. No other such Canadian enterprise approaches it, and just a handful of North American companies can match MLSE's brand reach and profitability - think the New York Yankees, Dallas Cowboys, Los Angeles Lakers.

"I'm a huge fan of theirs; I think they are fantastic," says Tim Leiweke, president and CEO of Anschutz Entertainment Group, the largest sports and entertainment company on the planet and owners of the Lakers, Los Angeles Kings, Major League Soccer franchises, and other teams, arenas and stadiums.

Since Teachers backed former owner Steve Stavro in a 1994 court fight to gain control of MLG Holdings, the valuation of the company has grown to an estimated $1.7-billion from $180-million in spite of the fact that on the fields of play, MLSE's teams are persistent, inveterate losers. The company that Peddie runs on behalf of Teachers' produces rivers of revenue - about $500-million annually, according to a source close to the company.

The contrast between the team's obvious business acumen and its failure at the business of winning is so vivid that it begs the question: Does one flow from the next? Does the objective of maximizing profit - certainly one goal of a professional sports franchise - compromise what fans would like to think is the other: winning games, making the playoffs and even bringing home the odd championship?

The rebuilding Maple Leafs, coming off a 29th-place finish in the 30-team NHL, look to be headed for a club-record sixth consecutive season out of the playoffs. Still, attendance averaged 19,260 last season, and to sit in platinum seats along the glass, people paid $1,317 a game for a pair. Forbes magazine estimated the value of the franchise at $470-million (U.S.) last year.

The Raptors of the NBA lost franchise player Chris Bosh to the Miami Heat this summer, forcing the team into yet another rebuilding phase. In 15 seasons the Raptors have advanced to the second round of the playoffs just once, and this season the team is commonly predicted to dwell close to the NBA cellar. The team drew 17,897 a game; to sit courtside in the front row, people paid $2,240 for a pair. Forbes valued the franchise at $386-million (U.S.).

Toronto FC of Major League Soccer has yet to make the playoffs in four seasons and just fired the general manager and fourth coach. Still, the soccer franchise, bought for $10-million (U.S.), is worth about $100-million now. BMO Field is sold out for nearly every home game, and MLSE just hiked season-ticket prices for 2011. To watch the team compete in a middling league, fans will pay more ($90.78, for a top ticket) than they would to see international superstars play for Manchester United in the English Premier League ($79).

Peddie is seated in a booth in Real Sports, having just given a tour of its countless amenities to a pair of visitors. And if a server seems not to recognize that she's bringing a plate of chicken wings - dipped in a buttermilk-based batter on the premises that morning - to her boss, he doesn't mind. But does he mind the losing?

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