Grange: MLSE stuck in neutral
Old 09-28-2011, 06:24 PM   #1 (permalink)
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Grange: MLSE stuck in neutral

Teachers has steadfastly refused to comment on the process as has Larry Tanenbaum, the construction magnate who owns the remaining 20.5 per cent of the business as well as a right of first refusal on the Teachers’ shares.

He has told those close to him that he has no plans to sell his share, signaling that any buyer would likely have to reach an understanding with him before closing with Teachers.

Failing that, Tanenbaum has the right make his own deal for Teachers’ shares, a process that wouldn’t begin until Teachers brought a deal to him and he rejected it.

So far the only transaction has been the pension fund buying up the 13.5 per cent share that belonged to TD Bank. That deal closed earlier this month for between $243- and-$283.5-million, according to sources, reflecting a $1.8-to-$2.1-billion valuation for the entire business.

What stage that process is at is unknown, though late last month a source told me that there were multiple bidders looking at the possibility of purchasing Teachers’ interest.

"The dynamic you’ve got are buyers who don’t want to bid against themselves and a seller who doesn’t want to sell unless they get the price they want," said an investment banker with experience in the sale of sports franchises. "It’s tough to make a deal in that environment."

Adding to the challenge is that if MLSE is not bought by a media company seeking content, it is an unwieldy and expensive property to get swept up as a rich man’s toy.

"One of the things that make it difficult to sell is that a traditional buyer of these properties is an ego buyer, but the ego buyer of the Leafs may not be the ego buyer for the Raptors," said the Bay Street insider with ties to MLSE. "The other thing is, if you’re an NBA ego buyer, do you want Toronto?"

The possibility remains that the business stays in the hands of the Teachers for longer than expected. Given that it generates a reported $100-million in profits on revenues of $500-million, they’re in no rush.

"They’re the farthest thing from a distressed seller," said the investment banker.

Which means that Toronto sports fans – starved for playoff success on the ice, floor and field under Teachers' watch – may have to be prepared settle for more of the same in the ownership suite.

At least for now.
Logic suggests that the potential suitors would include Rogers Communications Inc. (which owns Sportsnet) and BCE Inc.’s Bell Media (owners of TSN) given MLSE’s rich trove of live sports programming.

Similarly it makes sense that the two media giants – should they be interested – play a waiting game.
Grange column: MLSE sale stuck in neutral - WAP
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Old 09-28-2011, 07:08 PM   #2 (permalink)
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Both bidders need to come up with new channels - say TSN3 and SportsnetFU - on which they can air Raptors and Leafs games that most Torontonians will not be able to see.
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