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Rebranding the Toronto Raptors Part IV - Time for MLSE to Go?

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One of the reasons for the Toronto Raptors' financial success?  The Air Canada Centre...
One of the reasons for the Toronto Raptors' financial success? The Air Canada Centre...

Should MLSE get out of the sports' management business?  The HQ wonders if that's the best call for all involved...

During the last round of Forbes' NBA team valuations, the Toronto Raptors' ranked 10th in the league.

For a team that was coming off a second straight season of missing the playoffs, and heading towards a lovely 22 win affair, that's pretty damn good.

Considering that consistent playoff teams like Orlando and Portland finished below Toronto in the Forbes' rankings, that 10th place finish almost seems incorrect at first glance.  After all, how can a team that's made the playoffs only five times in its 16 year history, moving beyond the first round only once, have that high a value?

The bulk of the answer lies in off-court activities.

The success of the Air Canada Centre and major corporate sponsorships play a big role in the team's valuation, and the fact that the Raps are just one of 10 teams that generate over a million dollars on average in gate receipts helps.

Yes, despite the franchise's awesome .409 winning percentage, suckers like us keep coming back for more.

Not at the same levels as the Toronto Maple Leafs mind you, but it's hardly akin to watching the Hawks or pre-playoff Grizzlies when you're at the ACC.  Despite recent struggles the team still does quite nicely at the gate evidently.

However despite the team's financial success, something that trickles back into the coffers of Maple Leaf Sports and Entertainment, the on-court triumphs have as mentioned, been few and far between.

And not just for the Raps.

We're talking Leafs, and well, TFC as well.

Let's see...the Toronto Maple Leafs have not made the playoffs in the last seven years.  (Although one was lock-out induced.)  Prior to that, you have to go back to 2001 for the team to have gotten past the conference semifinals.

MLSE's foray into soccer?  Well that's resulted in zero playoff appearances in their five year history. it just me, or should MLSE be doing something other than owning/managing sports teams?  I mean, if you had a friend who was as successful at dating as MLSE was at fielding winning teams, wouldn't you tell him it was maybe time to try e-Harmony?  Or maybe get a cat?

I'd say that "it just ain't working," but maybe it's not meant to work.

I mean look at this description of the company:

Nowhere in that statement is there anything about a commitment to winning.

"Top quality sport and entertainment experiences to fans?"

Isn't that what Vince McMahon and the WWE do?

Of course I'm by no means the first to suggest that MLSE should stick to property management, something they've excelled at of late as evidenced by Maple Leaf Square and in particular, Real Sports Bar & Grill.  But a recent article by Malcolm Gladwell, he of "Tipping Point" fame, made me rethink this whole topic.  Especially in conjunction with our recent rebranding discussion.

Gladwell, in his debut piece for Grantland, discusses the bizarre concept of running an NBA franchise like a business because as he correctly points out, it's not one:

Basketball teams, of course, look like businesses. They have employees and customers and offices and a product, and they tend to be owned, in the manner of most American businesses, by rich white men. But scratch the surface and the similarities disappear. Pro sports teams don't operate in a free market, the way real businesses do. Their employees are 25 years old and make millions of dollars a year. Their customers are obsessively loyal and emotionally engaged in their fortunes to the point that - were the business in question, say, discount retailing or lawn products - it would be considered psychologically unhealthy. They get to control their labor through the draft in a way that would be the envy of other private sector owners, at least since the Civil War. And they are treated by governments with unmatched generosity. Congress gives professional baseball an antitrust exemption. Since 2000, there have been eight basketball stadiums either built or renovated for NBA teams at a cost of $2 billion - and $1.75 billion of that came from public funds.4 And did you know that under the federal tax code the NFL is classified as a nonprofit organization?5 Big genial Roger Goodell, he of the almost $4 billion in television contracts, makes like he's the United Way.    

As Gladwell notes, with the exception of the Mark Cubans of the world, most owners treat sports teams like toys, or more ego boost and hobby than actual portfolio additions of any type.

So where does MLSE fit into this?

The controlling share of the company is held by the Ontario Teacher's Pension Plan (just under 80%), so it's not like one single individual is throwing fans' money down the toilet.  (Although I'm sure the argument could be made by many fans that that's exactly what guys like Richard Peddie and Larry Tanenbaum are doing.)

So in some ways, you'd think fans would be better off.

No rogue owner writing threats in Comic Sans to former stars.

No Donald Sterling type creating a permanent black cloud over the team.

However the results speak for themselves.

As a friend of mine who observes sports from a distance acutely noted, "when things are that bad for that long, and that many different players and coaches have been cycled through, the only explanation for a team's lack of success has to be it ownership and management."

Those really are the last options.

From a top level perspective, this means the Ontario Teacher's Pension Plan then, and reportedly, they're looking to get out of the MLSE game.

I for one think that's probably a good thing.

Sure, the OTPP is hardly responsible for signing Hedo Turkoglu, but decisions by management that the OTTP signed off on in some way, did produce the results fans see year in and year out.

To me, to really start changing the culture of the Dinos, a rebrand starts at the top with ownership.

You see the impact owners like Cuban and Jerry Buss have on their respective clubs.  These owners aren't simply owning a team so that at parties they can use "hey, I'll introduce you to Kobe" as pick-up lines. They take a lot of pride in their on-court product, it's essentially an extension of their own business acumen.

Therefore instead of another giant corporation like Rogers swooping in and buying OTPP's controlling share in MLSE, ideally, a Cuban-esque leader would emerge here in TO.  If you want to get the franchise back on the right track, maybe pulling it out of the hands of owners who know little to nothing about basketball is a good start.

Or maybe put the team solely in the hands of fans like the Green Bay Packers of the NFL?

It's an interesting concept, although one that requires a good deal of discussion beyond this piece.

But it's an enticing idea isn't it?

Over 112,000 people own shares in the Packers and help decide on "a seven-member Executive Committee, elected from a 45-member board of directors...which directs corporate management, approves major capital expenditures, establishes broad policy and monitors management's performance in conducting the business and affairs of the corporation."

Hmmm...monitoring affairs of the corporation.

If those "affairs" including monitoring  things like the decision to give Jason Kapono a mid-level deal, I think moving to a Green Bay Raptors structure would be a pretty easy sell.