Rogers buys out Bell’s stake in MLSE (37.5%, US$3.5B)

[Voight]

one question I have is, will rogers transfer blue jays ownership into the MLSE umbrella

There are rumours Edward Rogers will actually transfer it into his own name and separate it from the corporation.

 

[Voight]

Chargers/Rams is a perfect example because they entered the LA market at the same time and had no recent fan loyalty to contend with (at least not from anyone under 50). By circumstance, the Rams got the early edge in the competition for fans, and that has very quickly translated into a completely one-sided relationship which will probably last as long as they’re both in LA. It was almost like a lab experiment to prove that the early bird gets the worm when it comes to brand loyalty in the sports market.

It’s the same reason that it will not ever matter what the Mets do, even if they win 10 championships in a row, most of the market will be thinking “wow, that’s 10 World Series in a row for the Mets, what does this mean for the Yankees?”

A new NHL team in Toronto would have the same dynamic, possibly even more exaggerated as the Leafs utterly dominate that market even moreso than any team could dominate NYC or LA.

It did help that the Rams were previously in LA, and for most of their history. Not to mention the franchise itself has been a lot more successful than the Chargers, so if you're picking a team tor out for from scratch, you're likely to go with the one that's had more on field success.

 

[aqib]

So look - I am NOT giving investment advise here.

Rogers doesn't seem like a good bet to short just because it's such a large market cap - $29 billion. If you're looking for a "short squeeze" you'd want a more thinly-traded stock.

For a "long short" I mean it's broadly a profitable company, and it doesn't appear to have any major issues covering it's debt payments right now.

If you want to get deep into the weeds it's debt seems broadly spread out over time.

Debt Securities - Rogers Investor Relations

investors.rogers.com

It has about three billion in debt due in 2025 - which it should be able to re-finance.

I think they're just more at risk of more medium term concerns. As I mentioned - the cable tv business looks extremely questionable. They haven't made the same kind of "fiber to the home" investments that Bell/Telus have (by the way I love my Telus fiber internet). instead trying to rely on 5g wireless home internet. And a sudden increase in interest rates would put them at risk of being able to re-finance their debt.

You always have to be careful with companies where you have a small group (family) that have special classes of stock that give them more voting rights.

 

[ORRFForever]

So look - I am NOT giving investment advise here.

Rogers doesn't seem like a good bet to short just because it's such a large market cap - $29 billion. If you're looking for a "short squeeze" you'd want a more thinly-traded stock.

For a "long short" I mean it's broadly a profitable company, and it doesn't appear to have any major issues covering it's debt payments right now.

If you want to get deep into the weeds it's debt seems broadly spread out over time.

Debt Securities - Rogers Investor Relations

investors.rogers.com

It has about three billion in debt due in 2025 - which it should be able to re-finance.

I think they're just more at risk of more medium term concerns. As I mentioned - the cable tv business looks extremely questionable. They haven't made the same kind of "fiber to the home" investments that Bell/Telus have (by the way I love my Telus fiber internet). instead trying to rely on 5g wireless home internet. And a sudden increase in interest rates would put them at risk of being able to re-finance their debt.

^ Great post! ^

 

[Yukon Joe]

You always have to be careful with companies where you have a small group (family) that have special classes of stock that give them more voting rights.

So on the one hand I totally agree - it should almost be scandalous that the Rogers family is able to control the company despite owning a minority of the total stock. That being said, multiple classes of shares has been a thing for a very long time, there are big advantages to being able to organize a company this way, and when you buy a Rogers Class "B" share you know what you're getting into.

That being said - none of that matters if you're going to short a stock. You can short non-voting shares just the same as voting shares.

 

[DuklaNation]

I'd expect them to spin the sports ownerships off into a separate company at some point when Tanenbaum is out of the picture.

 

[aqib]

So on the one hand I totally agree - it should almost be scandalous that the Rogers family is able to control the company despite owning a minority of the total stock. That being said, multiple classes of shares has been a thing for a very long time, there are big advantages to being able to organize a company this way, and when you buy a Rogers Class "B" share you know what you're getting into.

That being said - none of that matters if you're going to short a stock. You can short non-voting shares just the same as voting shares.

Ford was the some way. For a long time it was always trading at a discount relative to the other automakers.

 

[Yukon Joe]

I'd expect them to spin the sports ownerships off into a separate company at some point when Tanenbaum is out of the picture.

Why?

Rogers has owned the Blue Jays for a number of years. Instead I would tend to think they roll the Jays into MLSE (perhaps renaming it) once Tanenbaum is out of the picture.

There are some synergies in owning a team and a media company at the same time.

 

[DuklaNation]

Why?

Rogers has owned the Blue Jays for a number of years. Instead I would tend to think they roll the Jays into MLSE (perhaps renaming it) once Tanenbaum is out of the picture.

There are some synergies in owning a team and a media company at the same time.

Their corporate debt load is very high and they can still retain majority ownership in a separate entity. Its a no brainer from my perspective.

 

[CokenoPepsi]

The CFL did better in the ratings in the late 2000's and early 2010's. But everyone is down due to streaming.

No one has asked if Bell comes out of this alive, will they bid for an MLB team in Montreal? That would change things for everyone.

Very interesting thought.

Baseball in Montreal or Basketball in Vancouver.

The Blue Jays have a coast to coast following and Montreal has stadium issues, baseball has an aging fanbase and going up so close to the Jays would be tough


On the NBA side the Raptors do not have that type of success, they won a title 5 years ago but have done nothing since and Vancouver is quite far away from Toronto.

The fans who were kids when the Grizzlies left are now in their 30s.

 

[StreetHawk]

The fans who were kids when the Grizzlies left are now in their 30s.

Van fans would probably prefer Bell to come in and buy the Canucks, Rogers Arena (or build a new one), and bring back the NBA. But, that's a big price tag. $4 billion for nba team, $1 billion plus for Canucks, and hundreds of millions for arena. In around $6 billion USD. Rogers arena is fine, but the concourse is very tigh due to the viaducts, which are likely to come down. Not sure if the canucks would be granted to expand the footprint of the arena or whether the city has other plans.

 

[tarheelhockey]

The Chargers still make more money in LA than they would have in San Diego without having any stadium associated debt they would have if they had to pay for a stadium there. While Forbes isn't the end-all-be-all in terms of team finances but they have the Chargers ahead of Baltimore in income. So yeah being a second team in some markets can be more lucrative than being #1 in others. Would you rather own Ontario 2 or Arizona 1? The NHL admitted an NHL team in Hamilton would be top 5 in value.

That’s all great for the owner of the team — they get access to one of the biggest markets on the continent, gonna make lots of money for their own pockets, great for them.

But how does it make more money for the NFL as a whole? Instead of having 10M Rams fans you have 7M Rams fans and 3M Chargers fans. There are some gains, but they’re negligible compared to gaining an entire new market.

That’s a bad trade for everyone other than the Chargers owners. Their situation in SD became unsustainable and required a solution, but it’s not something the NFL would have done in a vacuum.

Same thing applies to the Toronto market. So you peel away Hamilton-area Leafs fans and turn them into [team name] fans. So what? From a leaguewide perspective it doesn’t move the needle much. Some gains in merch revenue during the honeymoon phase while everyone’s buying, some HRR from above-average ticket sales. The owners will do great and get rich, but the league as a whole sees little benefit.

I disagree on the Mets/Yankees. The Met were routinely outdrawing the Yankees in the late 80s/early 90s. This was despite the fact that American League counted tickets sold while the National League counted only fans actually in attendence. If the Mets had gone on a Yankees type run in the late 90s/early 00s while the Yankees spent a couple of decades mired in mediocrity the Mets would be the dominant team in town.

Again this stuff mattered in the 80s when local ticket sales were the major revenue driver. It makes no difference in the era of multibillion dollar TV contracts with (inter)national streaming. Again, you’re just switching the same set of eyeballs from one team to the other. From a marketing standpoint, the Yankees/Lakers/Leafs will always be the more lucrative brand which activates more interest at the national level, so there’s little to be gained by deliberately shifting the NYC audience to a weaker brand and cutting into the market strength of the Yankees “product”. Sure it might work out for a few years while the Yankees are down and the Mets are up, but that evens out when the opposite is true and would-be Yankees fans are ignoring baseball because the Mets suck.

 

[Yukon Joe]

Their corporate debt load is very high and they can still retain majority ownership in a separate entity. Its a no brainer from my perspective.

OK, so you talked about spinning ownership into a separate company.

There's two ways they can do that - privately, or publicly. Privately you're inviting some wealthy investor to come in and buy a minority ownership in the team. So that's certainly possible - except why are you trying to buy out Tannenbaum if you're just selling a chunk to someone like him?

Or you can do it publicly - that is you list shares on the stock market. You can certainly do the same voting shares trick that Rogers has done with itself - so this is where you can sell even a majority of the teams and still maintain control.

The thing is though almost no teams are publicly owned. The only example in hockey was the Florida Panthers, which was publicly owned for a few years until sold and went private. The problem is that as a public company you have to be very open and transparent about your financial statements, which leagues don't seem to like.

 

[tarheelhockey]

It did help that the Rams were previously in LA, and for most of their history. Not to mention the franchise itself has been a lot more successful than the Chargers, so if you're picking a team tor out for from scratch, you're likely to go with the one that's had more on field success.

That’s why it’s such a great case study. Neither organization had an immediate history in the market, so they were more-or-less equal in terms of not having a built in STH base, media presence, anything like that. But the Rams had a beloved brand and the better team, and within a couple of years that translated to a wildly one-sided relationship where if someone says they’re a Chargers fan the natural and honest response would be “… why?”

 

[Golden_Jet]

That’s why it’s such a great case study. Neither organization had an immediate history in the market, so they were more-or-less equal in terms of not having a built in STH base, media presence, anything like that. But the Rams had a beloved brand and the better team, and within a couple of years that translated to a wildly one-sided relationship where if someone says they’re a Chargers fan the natural and honest response would be “… why?”

Go bolts, big fan here.

 

[aqib]

That’s all great for the owner of the team — they get access to one of the biggest markets on the continent, gonna make lots of money for their own pockets, great for them.

But how does it make more money for the NFL as a whole? Instead of having 10M Rams fans you have 7M Rams fans and 3M Chargers fans. There are some gains, but they’re negligible compared to gaining an entire new market.

That’s a bad trade for everyone other than the Chargers owners. Their situation in SD became unsustainable and required a solution, but it’s not something the NFL would have done in a vacuum.

Same thing applies to the Toronto market. So you peel away Hamilton-area Leafs fans and turn them into [team name] fans. So what? From a leaguewide perspective it doesn’t move the needle much. Some gains in merch revenue during the honeymoon phase while everyone’s buying, some HRR from above-average ticket sales. The owners will do great and get rich, but the league as a whole sees little benefit.




Again this stuff mattered in the 80s when local ticket sales were the major revenue driver. It makes no difference in the era of multibillion dollar TV contracts with (inter)national streaming. Again, you’re just switching the same set of eyeballs from one team to the other. From a marketing standpoint, the Yankees/Lakers/Leafs will always be the more lucrative brand which activates more interest at the national level, so there’s little to be gained by deliberately shifting the NYC audience to a weaker brand and cutting into the market strength of the Yankees “product”. Sure it might work out for a few years while the Yankees are down and the Mets are up, but that evens out when the opposite is true and would-be Yankees fans are ignoring baseball because the Mets suck.

No one was against LA getting 2 teams more than I was. (I also thought St Louis got screwed big time and the Rams shouldn't have been allowed to leave since they had an offer to build a new stadium which neither the Raiders or Chargers had) However, Chargers tickets are significantly more affordable than Rams tickets so there are people who go to Chargers games that wouldn't have been able to.

One big difference between the Chargers and an NHL team in Hamilton is that the Chargers play in literally the same location as the Rams. Whereas the Hamilton would largely be drawing from places where people wouldn't be able to get to Leafs games on a regular basis.

My point with the Yankees/Mets is that its due to the Yankees being more successful. In the 80s when the Mets were one of the better teams in baseball and the Yankees were mediocre to bad the market was different. If you swapped their records from 95 to now the Mets would be the dominant team and people would be saying that New York is a National League town (something they said when the Yankees couldn't draw flies and were talking about moving to Jersey.

If local ticket sales don't matter than they don't need to be putting teams in any particular market anyway. You could just have hub cities like the new USFL did. Just have a bunch of rinks in one place and you can name the teams after whatever cities you want.

 

[tarheelhockey]

No one was against LA getting 2 teams more than I was. (I also thought St Louis got screwed big time and the Rams shouldn't have been allowed to leave since they had an offer to build a new stadium which neither the Raiders or Chargers had) However, Chargers tickets are significantly more affordable than Rams tickets so there are people who go to Chargers games that wouldn't have been able to.

One big difference between the Chargers and an NHL team in Hamilton is that the Chargers play in literally the same location as the Rams. Whereas the Hamilton would largely be drawing from places where people wouldn't be able to get to Leafs games on a regular basis.

My point with the Yankees/Mets is that its due to the Yankees being more successful. In the 80s when the Mets were one of the better teams in baseball and the Yankees were mediocre to bad the market was different. If you swapped their records from 95 to now the Mets would be the dominant team and people would be saying that New York is a National League town (something they said when the Yankees couldn't draw flies and were talking about moving to Jersey.

That’s just it, though — if Chargers tickets are available at a discount, they’re not reaping the benefits of being a big market team. It would be just as well for them to have a smaller market to themselves, selling tickets at more or less the same price they are in LA, while also removing the competitive dynamic with the Rams.

Sticking with LA, another example of this is the Clippers. If we look at gameday revenue per fan, the Clippers are for practical purposes a mid-market team which falls right at the NBA revenue average. At that point, why not just locate them in an actual mid-market? It would change nothing about their upside (they’ll never be the Lakers, revenue-wise) and it might actually protect them from total irrelevance when things aren’t going well. And, importantly, they wouldn’t be splitting the LA market. The Lakers would simply scoop up more fans and become an even more dominant brand as the sole rep for LA.

Back when revenue was all about selling tickets, there was at least an argument that doubling the number of seats in NY or LA or Toronto would double the revenue. But in 2024, two things are evident:

1) It’s not about tickets, it’s about TV. Splitting a major market doesn’t add eyeballs, it just divides them. And importantly, it detracts from the national brand of the established team which has sole command of its region and a large national audience (think Dallas Cowboys, Boston Red Sox, Toronto Maple Leafs). There’s no TV upside to doing this, whereas there is an upside to adding a new market and expanding the broadcast footprint.

2) As noted above, the weaker team does not actually double gameday revenue, because they’re forced to compete on cost. So they actually have a de-escalating effect on ticket prices for the other team. In the big picture, nobody gains from this other than the owner of the weaker franchise.

If local ticket sales don't matter than they don't need to be putting teams in any particular market anyway. You could just have hub cities like the new USFL did. Just have a bunch of rinks in one place and you can name the teams after whatever cities you want.

That runs counter to the entire point about brand loyalty being the core product in pro sports. Fundamentally, major league sports is about national brands and minor league sports is about local brands. A team which has no national OR local resonance isn’t going to be of interest to a significant portion of the market.

 

[Yukon Joe]

There are rumours Edward Rogers will actually transfer it into his own name and separate it from the corporation.

Sorry just saw this.

Despite the Rogers Family Trust having voting control over Rogers, Ed Rogers simply can't do that. He can't just transfer the Jays to his own name.

The Class "B" shareholders do not have voting rights over day to day management issues of Rogers - but that doesn't mean the controlling shareholder can just screw them over either.

The Blue Jays are worth roughly $2 billion dollars. Let's say that Ed Rogers proposed that Rogers sell the Blue Jays to him, personally, for 1 dollar. Let's also ignore the fact that the shares of Rogers Ed controls aren't owned by him, but rather through a family trust.

In order for that transaction to be approved it would need to be approved by a majority of the board of directors of Rogers. Because though it would personally benefit Ed Rogers, it would also need to be approved by a committee of independent directors (that is - directors not connected to Rogers).

Even if the independent committee approves the transaction though it's transferring a $2 billion dollar asset out of the company at way less than market value. In order to avoid any shareholders lawsuit best practices would be to arrange a vote of the Class "B" shareholders - even though they don't normally get a vote. If the company gets a "majority of the minority" then it could still go ahead.

Now such things can happen - Elon Musk arranged for a massive bonus package to be approved by Tesla shareholders even though a lot of people thought the value was insane. In that case though Musk basically threatened that if it wasn't approved he wouldn't be involved in Tesla anymore. I'm not sure Class "B" shareholders of Rogers have the same affection for Ed Rogers.

The other way is for Ed Rogers to agree to pay fair market rate for the Leafs. You'd have to go through some independent evaluation of what that is, but there's ways of doing that. That would avoid having to put it to a shareholder vote. But Ed's estimated net worth is only $3 billion, most of which is Rogers stock (and almost all of that is tied up in a family trust, but we're ignoring that). In order for Ed Rogers to personally buy the Jays he'd need to liquidate most of his Rogers stock (which is the Class "A" voting stock), thereby quite possibly giving up control over Rogers. Or he'd have to put up most of his Rogers stock as collateral against massive loans - which risks the same thing.

 

[DuklaNation]

OK, so you talked about spinning ownership into a separate company.

There's two ways they can do that - privately, or publicly. Privately you're inviting some wealthy investor to come in and buy a minority ownership in the team. So that's certainly possible - except why are you trying to buy out Tannenbaum if you're just selling a chunk to someone like him?

Or you can do it publicly - that is you list shares on the stock market. You can certainly do the same voting shares trick that Rogers has done with itself - so this is where you can sell even a majority of the teams and still maintain control.

The thing is though almost no teams are publicly owned. The only example in hockey was the Florida Panthers, which was publicly owned for a few years until sold and went private. The problem is that as a public company you have to be very open and transparent about your financial statements, which leagues don't seem to like.

Private. Public is for higher cash needs and pumping up equity values.

 

[aqib]

That’s just it, though — if Chargers tickets are available at a discount, they’re not reaping the benefits of being a big market team. It would be just as well for them to have a smaller market to themselves, selling tickets at more or less the same price they are in LA, while also removing the competitive dynamic with the Rams.

Sticking with LA, another example of this is the Clippers. If we look at gameday revenue per fan, the Clippers are for practical purposes a mid-market team which falls right at the NBA revenue average. At that point, why not just locate them in an actual mid-market? It would change nothing about their upside (they’ll never be the Lakers, revenue-wise) and it might actually protect them from total irrelevance when things aren’t going well. And, importantly, they wouldn’t be splitting the LA market. The Lakers would simply scoop up more fans and become an even more dominant brand as the sole rep for LA.

Back when revenue was all about selling tickets, there was at least an argument that doubling the number of seats in NY or LA or Toronto would double the revenue. But in 2024, two things are evident:

1) It’s not about tickets, it’s about TV. Splitting a major market doesn’t add eyeballs, it just divides them. And importantly, it detracts from the national brand of the established team which has sole command of its region and a large national audience (think Dallas Cowboys, Boston Red Sox, Toronto Maple Leafs). There’s no TV upside to doing this, whereas there is an upside to adding a new market and expanding the broadcast footprint.

2) As noted above, the weaker team does not actually double gameday revenue, because they’re forced to compete on cost. So they actually have a de-escalating effect on ticket prices for the other team. In the big picture, nobody gains from this other than the owner of the weaker franchise.



That runs counter to the entire point about brand loyalty being the core product in pro sports. Fundamentally, major league sports is about national brands and minor league sports is about local brands. A team which has no national OR local resonance isn’t going to be of interest to a significant portion of the market.

The Chargers got the stadium for free in LA, whereas they would have had pay for one in San Diego. San Diego had many chances to put an offer together and refused to do so. There was a ballot issue in 2016 after the deal with the Rams was agreed to and everyone knew "this deal fails we're leaving" and they still said no. Yes they probably would have been better off had they picked another market. Maybe they could have picked Vegas and let the Raiders have LA (just to screw with the Rams) or become the San Antonio Chargers to get back at Jerry Jones for backing the Rams. Or become the Toronto Chargers, etc.

Yes their tickets are a discount to the Rams. However, they have seemed to be building a fan base. You can see now its not majority visiting teams fans anymore.

Set NFL aside because its a once a week thing and people drive long distances for an NFL game. That's why the Cardinals were fine in Glendale but the Coyotes weren't. In the cities that are big enough to support to MLB/NHL/NBA teams you have accessibility as an issue. More often than not the teams serve different parts of the metro area. Yankees drew from Manhattan, Bronx, Westchester while the Mets drew from Queens, Brooklyn, and Long Island.

As far as the Clippers go, Steve Ballmer had been part of the group trying to bring the NBA back to Seattle. When he bought the Clippers he was asked if he would move them to Seattle. He said that would be "value destructive" so clearly he saw staying in LA as more lucrative than moving to Seattle.

The problem with the "second teams" is that in each case (Nets, Mets, Jets, White Sox, Angels, Clippers, Chargers) is that the second team has almost always been poorly run. Only the Nets/Knicks are even close in terms of playing performance and that's because both of them have been a joke.

 

[tarheelhockey]

As far as the Clippers go, Steve Ballmer had been part of the group trying to bring the NBA back to Seattle. When he bought the Clippers he was asked if he would move them to Seattle. He said that would be "value destructive" so clearly he saw staying in LA as more lucrative than moving to Seattle.

“Value destructive” suggests he’s thinking in terms that aren’t necessarily related to the league’s best interests so much as to lining his own pockets — namely, staying in LA meant Ballmer got to own an arena instead of being a tenant to the City of Seattle. It’s fair logic from the owner’s perspective, but in a vacuum it seems like a no-brainer that the NBA would rather make LA purely Lakers territory while re-igniting the Seattle market, rather than split Los Angeles and abandon Seattle.

The problem with the "second teams" is that in each case (Nets, Mets, Jets, White Sox, Angels, Clippers, Chargers) is that the second team has almost always been poorly run. Only the Nets/Knicks are even close in terms of playing performance and that's because both of them have been a joke.

I think there’s a reason this pattern is so pronounced. A first-rate owner is not going to want to play Washington Generals in their own market, they’re going to go after the household name franchise which can print money and open doors to other business partnerships. Again, the second teams are basically mid-market franchises in disguise, which is a bad business proposition when you think about the price tag involved. It’s like buying a very expensive knock-off brand… a sign of someone who’s spending money conspicuously but not intelligently.

 

[rojac]

People are talking about spinning the sports teams off into a separate company. Is that necessary? Isn't MLSE already a separate company? In fact, I think for the Jays to be moved under MLSE, MLSE woukd need to buy the Jays from Rogers.

 

[aqib]

“Value destructive” suggests he’s thinking in terms that aren’t necessarily related to the league’s best interests so much as to lining his own pockets — namely, staying in LA meant Ballmer got to own an arena instead of being a tenant to the City of Seattle. It’s fair logic from the owner’s perspective, but in a vacuum it seems like a no-brainer that the NBA would rather make LA purely Lakers territory while re-igniting the Seattle market, rather than split Los Angeles and abandon Seattle.




I think there’s a reason this pattern is so pronounced. A first-rate owner is not going to want to play Washington Generals in their own market, they’re going to go after the household name franchise which can print money and open doors to other business partnerships. Again, the second teams are basically mid-market franchises in disguise, which is a bad business proposition when you think about the price tag involved. It’s like buying a very expensive knock-off brand… a sign of someone who’s spending money conspicuously but not intelligently.

Ballmer had to be the a tenant in Staples Center (or whatever it's called now) for 10 years and then spent $2 billion to build a new arena and $400 million to buy the Forum just to get MSG off his back. Pretty sure Seattle would have let him build whatever he wanted if he moved there.

 

[Mike Jones]

Does the league consider this an ownership change that needs to be approved by the BOG people?

 

[tarheelhockey]

Ballmer had to be the a tenant in Staples Center (or whatever it's called now) for 10 years and then spent $2 billion to build a new arena and $400 million to buy the Forum just to get MSG off his back. Pretty sure Seattle would have let him build whatever he wanted if he moved there.

I dunno, I’m not at all versed in Seattle politics but it would be surprising if the city invested over a billion in renovating Key (may as well call it a new build) and attracting an NHL franchise only to have a private party swoop in with an NBA team and build an even bigger arena as a direct competitor. I’m not saying it couldn’t happen, but it would be a crazy scenario.

Seems much more likely that if he were willing to relocate the Clippers, the city would have simply included him in plans for the Key rebuild and given the usual sweetheart incentives to get an additional team in there.

I’d love to have been a fly on the wall in Ballmer’s office as all these events played out. There must have been a million scenarios on the table and a lot of twists and turns we’ll never know about.