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.