Maple Leaf Sports and Entertainment headquarters in Toronto on Sept. 18.Yader Guzman/The Globe and Mail
Back in March, Edward Rogers and Tony Staffieri headed to Bell’s offices in Toronto to meet with their full-time rival and part-time partner Mirko Bibic.
The leaders at two of the country’s largest telecom companies gathered to discuss a telecom issue, not their shared control of Maple Leaf Sports & Entertainment, the crown jewel of Canadian sports. However, midway through the meeting, Mr. Staffieri reset the agenda by sliding a single sheet of paper across the table to Mr. Bibic.
The sheet opened with a series of bullet points: Rogers’s RCI-B-T terms for the purchase of Bell’s BCE-T 37.5-per-cent stake in MLSE, owners of the NHL’s Maple Leafs, along with the NBA’s Raptors, CFL’s Argonauts and MLS’s Toronto FC. The proposal closed with a price for a business Bell and Rogers had acquired control of 12 years ago, in a purchase that valued MLSE at $2-billion.
The back story to Rogers’s bold move on Wednesday to cement control of sports in this country’s largest city by buying Bell’s stake for $4.7-billion – a deal that sets a new high-water mark in Canadian sports by valuing MLSE at $12.5-billion – is based on interviews with executives at both companies and their legal and financial advisers. The Globe and Mail is not naming these sources because they are not permitted to speak about the transaction.
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When they met in March, Edward Rogers, executive chair of Rogers, and Mr. Staffieri, its CEO, already knew Mr. Bibic, CEO of Bell Canada parent BCE Inc., was open to a deal. Mr. Bibic had first raised possibility of selling its MLSE stake to Rogers during a one-on-one call with Mr. Staffieri in late July, 2023, again while discussing an unrelated telecom issue. Intrigued and initially surprised, Mr. Staffieri came back to Mr. Bibic the following day to say Rogers was a willing buyer.
Mr. Bibic became a potential seller last summer because Bell wasn’t generating enough cash to cover its $3.5-billion in annual dividend payments to investors. The company borrowed to build 5G networks and upgrade its network to fiber from copper wires. It needed cash to pay down debt and cut interest costs.
Bell decided that selling assets such as sports teams to pay back $36-billion in loans was a far better option than cutting a dividend that Bell, one of the most widely held stocks in the country, boasted of boosting each year for 16 consecutive years. Rather than own the Leafs and Raptors, Mr. Bibic decided Bell would just as well be served by locking in the right to broadcast some of their games on its media platforms, including CTV and sports network TSN.
Bell and Rogers had preliminary talks on an MLSE sale in the fall of 2023. Mr. Bibic ended the negotiations, amicably, after a few weeks, explaining Bell’s priorities had shifted to other potential asset sales. In June, Bell raised $1-billion by selling the dominant telecom platform in Northern Canada, Northwestel Inc., to a consortium of Indigenous communities from Yukon, the Northwest Territories and Nunavut.
Bell executives paused negotiations on expectations that the value of MLSE would keep rising, as the NBA and other sports leagues struck lucrative new broadcast deals that included, for the first time, streaming services such as Amazon. Rogers shared this view. And as owners of baseball’s Blue Jays, Rogers had a strategy of creating a single platform containing all of Toronto’s major pro sports franchises.
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For a sense of how quickly valuations on sports teams are rising, look no further than the Raptors. In 1994, entrepreneur John Bitove and broadcaster Allan Slaight paid a record US$125-million expansion fee to launch the basketball team.
Since then, the cost of entry to the exclusive club of pro sports owners has skyrocketed. The NBA is projected to charge up to US$5-billion for expansion teams in cities such as Las Vegas and Seattle.
When, not if, the NBA taps new markets, the entry fees will be split evenly between the 30 existing team owners. Expansion alone will translate into a US$300-million-plus payout for MLSE.
Forbes estimates the Raptors, NBA champions in 2019, are now worth US$4-billion.
The spike in the value of teams reflects soaring sport broadcasting revenues, fuelled by the realization that live sports are one of the few programs guaranteed to draw an audience, and competition for content from streaming platforms. A generation back, hockey was something we watched on Saturday night on CBC. Now viewers take in games at a time of their choosing, on TVs, laptops or cellphones supported by Rogers and Bell.
In April, Rogers struck a deal to sell Monday night NHL games to Amazon, part of a strategy to increase viewership and recoup the cost of a blockbuster 12-year, $5.2-billion Canadian broadcast deal the telecom company signed with the NHL. It expires after the 2025-2026 season.
In July, the NBA raised the bar on broadcast contracts by announcing a US$77-billion, 11-year deal for the U.S. market with three partners, including streaming service Amazon. The deal replaced a US$24-billion, nine-year deal with three conventional TV networks.
In an interview Wednesday, Mr. Staffierri said the soaring prices for sports franchises reflects basic supply and demand. “There are just 30 NBA teams and 32 NHL teams, and there is a long list of people who want to own one of those franchises,” he said.
By sliding that term sheet across the table in March, Mr. Staffieri wanted to force Bell to revisit the logic for owning MLSE.
It worked.
After scanning the sheet, Mr. Bibic had two responses. He told the Rogers executives their offer was too low. And he questioned whether Rogers, which was also committed to paying down loans after borrowing to buy Shaw Communications Inc. for $20-billion last year, could afford to buy MLSE.
Mr. Staffieri assured Bell’s CEO that between planned asset sales – Rogers is auctioning real estate and its data centres business – and the $3-billion in cash the company generates annually, financing the MLSE deal would be straightforward. Rogers plans to offset part of the purchase price by selling stakes in its sports business to wealthy individuals or institutional investors.
Mr. Bibic walked away from the March meeting with Rogers’s term sheet and came back a few weeks later with a counteroffer for MLSE that included a higher price. In June, just before the new NBA broadcast deal was announced, Mr. Bibic told Rogers the two sides were close to an agreement and set an August deadline to conclude a deal.
The telecom executives beat Bell’s deadline. On Aug. 19, Mr. Bibic and Mr. Staffieri put their signatures on a printout of a two-page PowerPoint slide prepared by Bell, containing terms of the deal. Lawyers fleshed out the agreement over the past month.
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In addition to $4.7-billion in cash, Bell kept the rights to a slate of Raptors and Leafs games for the next 20 years, at market rates. Credit rating agency Moody’s said the MLSE sale is “credit positive” for Bell, while the purchase doesn’t affect its ratings on Rogers debt.
To complete the MLSE deal, Bell and Rogers need approvals from sports leagues and two regulators, the Competition Bureau of Canada and the Canadian Radio-television and Telecommunications Commission. The two telecoms expect to close the transaction by the middle of 2025. At that point, Rogers will own 75 per cent of MLSE and chairman Larry Tanenbaum and his minority partner pension plan OMERS will own the remaining 25 per cent.
In July, 2026, Rogers has the right to buy Mr. Tanenbaum’s stake. Both Rogers and Mr. Tanenbaum declined to comment on their plans when the Bell deal was announced. Mr. Tanenbaum has long been the face of Toronto sports, sitting close to the action at games. However, a passing of the torch is, at most, two years away.
“Larry’s been our owner for my whole time here and he’s been amazing, the way he treats everybody, from players to coaches to staff,’ said Toronto Maple Leafs captain Auston Matthews in an interview on Wednesday. “I’m sure with this new ownership group it will continue to turn along, and they’ll do everything in their power to support the players.”
From the moment Rogers acquired its stake in MLSE in 2012, Edward Rogers’s goal has been to acquire control of Toronto’s major league teams. Wednesday’s agreement with Bell brings that target in sight. Mr. Rogers is a low-key sports fan – prone to being on his phone while in the stands – and buttoned-down in comparison to his fiery father, company founder Ted Rogers, who died in 2008. Buying out Bell, however, is the latest demonstration that his ambitions match those of his dad.