Powerplay Of The Year: Rogers, BCE Buy Maple Leaf Sports For $1.3 Billion!

by Gaurav Kheterpal on December 12, 2011

Competition (or the lack of it) can do funny things. Do the ‘Big Three’ have too much of power? Does Canada suffer from a misguided federal government policy that has allowed Bell and Rogers to dominate and control the telecom markets in eastern Canada? Should they be barred from participating in the upcoming wireless auction spectrum? These are difficult questions to answer.

When it comes to Canada’s wireless industry, three is the magic number and that rule may soon be applicable to TV and online broadcasting segments. In a potentially game changing announcement, Bell and Rogers, two of Canada’s largest telecommunication companies announced Friday they have agreed to buy the NHL’s Toronto Maple Leafs and NBA’s Toronto Raptors in a billion-dollar deal.

Should this iconic announcement be viewed as a win for teachers and consumers? Will Rogers and Bell be able to turn around the misguided fortunes of Toronto sports fans and be able to produce teams that actually win? I’m afraid I have more questions than answers for now.

In one of the most high profile sports deals in North American history, Rogers and BCE have purchased a majority stake in Maple Leaf Sports and Entertainment from the Ontario Teachers’ Pension Plan for about $1 billion. The two wireless giants now own 37.5% of Canada’s largest sports conglomerate while Toronto businessman Larry Tanenbaum is the other prominent stakeholder with a 25% share.

To be honest, I was surprised to learn that the Ontario Teachers’ Pension Plan sold its 79.5 % stake in Maple Leafs Sports and Entertainment, barely two weeks after pulling the stake off the market. Though the stakeholders have been projecting this as a win-win situation for everyone – Ontario teachers will get about $1.32 billion for their pension fund, consumers get access to far more visual content on electronic devices and the teams get a much-needed financial boost, I’m certain that this is more about business than it is about sports.

The two wireless carriers claim the acquisition is a ‘strategic fit’ for adding content they can sell to subscribers on smartphones, tablets and computers. In that context, I strongly believe that there are no friends in the business world and there’s no doubt there are vested business interests at work here.

FWIW, Maple Leaf Sports & Entertainment Ltd. (MLSE) is one of hockey’s richest clubs globally and is widely regarded as the most profitable NHL franchises in the league. The club owns Maple Leafs, which have won the Stanley Cup championship 11 times and the National Basketball Association’s Raptors team. Maple Leafs also owns the Air Canada Centre, the home of the Maple Leafs and Raptors and a major concert venue.

To put things in perspective, Rogers is now a stakeholder in the Blue Jays, Leafs, Raptors, Marlies and Toronto FC. Therefore, it isn’t surprising that the Argonauts are now being projected as the odd one out.

Though Maple Leafs general manager Brian Burke says he’s unfazed by the new ownership, can this deal produce winning teams for Toronto sports fans? I’m skeptical, yet hopeful. What do you think? Please voice your opinion by leaving a comment.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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