A US Investment Firm might Buy MLSE
Old 11-16-2011, 09:14 AM   #1 (permalink)
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Default A US Investment Firm might Buy MLSE

Interesting stuff that sheds some light on the lockout as well.

the star

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Providence Equity Partners has inquired about Teachers’ stake in Maple Leaf Sports, a person familiar with the matter said, but it’s unclear whether it has made a formal offer.

Providence Equity’s interest comes at a time when marquee sports franchises are commanding more than $1 billion, making it increasingly difficult for wealthy individuals to purchase teams.

“Now it’s all about the financial play and the investment, not the emotion or getting into the locker room,” said Brian Cooper, a former Maple Leaf Sports executive, who is now president of S&E Sponsorship Group, a sports consulting company.
on the future direction of the franchise as a money-printing machine -

Quote:
Where Maple Leaf Sports stands to make more money is in broadcasting.

Industry officials say Maple Leaf Sports’ next big-picture investment could include folding Leafs TV and NBA Canada TV, both little-watched digital channels, into a regional sports network styled after Yankees Entertainment and Sports Network. YES Network, which started in 2002, broadcasts more than 130 New York Yankees games a year.

A pioneer in television sports, the YES Network also broadcasts games of the Yankees’ minor-league affiliates and replays of classic games, and it has shown a televised game in 3D.

Providence is one of the original investors in the YES Network. While the YES Network doesn’t release financial details, analysts have estimated its annual revenue as more than $435 million. The network itself is said to be worth $3 billion.

Others have followed the YES Network model. Time Warner in California is creating a regional sports network built around the Los Angeles Lakers, and the University of Texas recently created the Longhorn Network.

Rogers Communications has shown interest in purchasing MLSE for the same reasons that Providence would want to buy the company: to maximize TV profits. Rogers, which already owns baseball’s Blue Jays, has multiple publishing platforms, such as cable, radio and wireless, and has the institutional knowledge to start a sports channel like the YES Network.
on how team purchases get financed

Quote:
That MLSE has languished on the market has surprised some. But the debt markets are still reeling three years after the U.S. economic meltdown, which means it is more difficult for an investor to use borrowed money to pay the $1.5 billion that Teachers’ is believed to be asking for its stake.

“It used to be you could put up 10 to 15 per cent of a deal in cash and find a group to lend the rest,” said Larry Grimes, a Maryland-based sports investment consultant who has advised on the sale of Major League Baseball teams. “Today, the cash requirement is more like 35 or 40 per cent. That’s going to make you think twice.”
Quote:
According to internal financial statements obtained by the Star, MLSE estimated it would make a profit of $105 million this year on revenue of $477 million. It's unclear how much of that revenue comes from hockey. Forbes magazine recently estimated the Leafs generated $168 million last season, some $30 million more than the company made from the Raptors. Several analysts, however, say the gap between the Maple Leafs and Raptors’ revenue is even more pronounced than Forbes’ estimate, meaning a potential NHL work stoppage would be more damaging to the company.
Quote:
While Toronto casual sports fans might not have heard of Providence, which is based in Rhode Island, the company is both well known in sports circles and familiar to Teachers’.

The company manages more than $23 billion and has invested in more than 100 companies in 20 countries since it was formed in 1989.

It’s unclear whether Tanenbaum would match any offer for Teachers’ stake.

One person close to Tanenbaum said he would consider matching any offer to buy out Teachers’ and then file an initial public offering for Maple Leaf Sports, a move that would be both complex and controversial.

While such an offering would probably be wildly popular with investors, the NHL and the NBA would both probably oppose such a move because it would make public more of their internal financial information. But it’s unlikely that the leagues could do anything to stop a public stock listing.
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Old 11-16-2011, 10:44 AM   #2 (permalink)
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Interesting.
Regarding Tanenbaum, why would NBA even approve a sale that would lead to an IPO.
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Old 11-16-2011, 11:26 AM   #3 (permalink)
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some soccer teams have IPO's and I think F1 teams might as well
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Old 11-16-2011, 11:50 AM   #4 (permalink)
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That may be, but the NBA does not. NBA tries to keep team finances inside, it keeps team owners on a pretty tight leash, and it tries to control the valuations of the teams.
I'd be amazed if owners say yes to an IPO that includes any team.
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Old 11-16-2011, 12:49 PM   #5 (permalink)
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MLSE unlikely to end up in hands of U.S. equity fund - The Globe and Mail

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While officials at Maple Leaf Sports and Entertainment declined comment, banking sources familiar with the company dismissed the idea the parent of the Toronto Maple Leafs could wind up in the hands of a U.S. equity fund.

In the wake of a published report that Providence Equity Partners LLC, based in Providence, R.I., took a look at buying the 80-per-cent share of MLSE held by the Ontario Teachers Pension Plan, one investment banker who regularly handles deals with NHL teams said “it makes no sense to me” that Providence would actually make an offer.

Other sources questioned in the last couple of weeks say there is no apparent activity surrounding the Ontario Teachers shares, which were put up for sale last March.

There’s little sign of investment bankers in Toronto working for potential buyers, suggesting that the interest locally is tepid.

The investment banker who dismissed the notion of Providence buying control of MLSE said it also makes no sense for any financial institution or corporation to buy Teachers’ shares. The reason is that Teachers has always maintained it will not sell unless it receives the price it wants, a price that is estimated to be $1.8-billion now that the pension fund holds almost 80 per cent of MLSE.
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Old 11-16-2011, 01:03 PM   #6 (permalink)
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Thats fuckin' bullshit, hope this never happens.
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Old 11-16-2011, 01:46 PM   #7 (permalink)
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NNOOOOO, Sell it to Rogers instead, do not do it!!!!!!!
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