Three Kings of MLSE (Left to Right) - George Cope (BCE), Nadir Mohammed (Rogers Communications), Larry Tanenbaum (MLSE) Photo Courtesy of MARK BLINCH/REUTERS
What happens when the crown jewel of Canadian Sports goes up for grabs? Kinnon Yee returns with analysis on what kind of deal this "big deal" is.
Sure, it's divided by two, but it's a heck of a lot of cash.
When Rogers and BCE fork over that money, I wonder how much good or bad will this mega-conglomerate is going to generate from the public? I know some pitch forks are already out (people around that I've talked to have more or less fallen in the negative side of things) but as I sit and write, I think that there's really not going to be a lot of change - except for one interesting exception.
For one, neither Rogers nor BCE are going to withhold the Raptors from spending money on players. Neither will they allow them to go over the cap level. With this new collective bargaining agreement, there's such a punitive luxury tax that it makes little difference who owns the Raptors. On the other hand, since teams must spend at least 75% of their cap, what's going to be essential in making sure that the Raptors are competitive is management - something that this new conglomerate has said will not change at least in the foreseeable future.
Of course, that's not to say that in one and a half year's time, that Mr. Colangelo automatically gets a new contract, but for now, nothing's going to change.
What about seat prices? Well the good thing about having such large media corporations owning MLSE is that they have other business that can help leverage against the changing costs of running a sports franchise. I'd expect both Bell and Rogers to come up with some ingenious ways to tie in their wireless systems into the arena as an example.
Maybe this will help with our channel surfing situation. (Yup, I can hear your laughter from here.)
So if I think that for the most part, we're going to see status quo, why did Rogers and BCE buy out the Teacher's Pension Plan's stake in MLSE?
Well, it pretty much comes down to locking down media content. With both companies dedicated towards delivering unique experiences to their customers, having exclusive sports content for their wireless customers and cable/satellite subscribers is a must. Neither BCE nor Rogers wants to be locked out of content and Rogers has had a lot of experience already leveraging the Jays and spinning them off into
However, there's a forgotten man in the middle who just might have gained a lot of power as a result of this deal.
I'm talking of course of Larry Tanenbaum.
With his 25% share in the company, Larry Tanenbaum has suddenly become a very important man in MLSE. With the 75% divided between BCE and Rogers, Larry Tanenbaum now holds the power to break any deadlock between the two giant companies.
For example, if Rogers wants to increase their allotment of Raptors games on Sportsnet and it comes down to a tie-breaking vote, who is going to hold all the marbles?
In very much like our recent minority government, Larry Tanenbaum holds the swing votes in the new conglomerate and while it's tough to say how he'll play that out in the future, a lot of the divisive issues that may arise between the two other media partners will come down to how Tanenbaum feels.
Yup, the man in the middle holds all the keys to the new MLSE.
Disclosure: Kinnon Yee is employed by Rogers Communications in his day job and owns Rogers stock.