Legacy, financial opportunity likely motivated Rogers for MLSE takeover: experts

TORONTO — Experts say rising team valuations and the desire to forge a legacy are likely at the heart of what motivated Rogers Communications Inc. executive chair Edward Rogers to bolster the company's portfolio of Toronto professional sports teams.

The company's $4.7-billion deal to acquire rival telecom BCE Inc.'s 37.5 per cent stake in Maple Leaf Sports & Entertainment will give Rogers a majority control of the Toronto Maple Leafs, Toronto Raptors, Toronto Argonauts and Toronto FC.

It's a move that plays into Rogers Communications' long-standing strategy to build out its sports empire, with the company already owning the Toronto Blue Jays and becoming the national NHL television rights holder a decade ago.

But the driving force behind the deal was Edward Rogers, said Richard Powers, a professor at the University of Toronto's Rotman School of Management.

"He's the top dog," said Powers.

"He's always wanted to be the decision-maker, and now he will be."

Edward inherited ownership of the Blue Jays following the death of his father, Ted, under whom the company bought the baseball team in 2000. Powers said that gave him "a taste of what it was like" to be a professional sports team owner.

"This consolidates the control of pretty much every professional sports team in the Toronto market under Edward Rogers and I think that was certainly what he was looking for all along," said Powers, adding his only surprise was how long Rogers' MLSE partnership with Bell-owner BCE lasted.

Rogers and Bell closed their deal to acquire equal ownership positions in MLSE in August 2012.

"The opportunity to control the entire market was, I think, something that he couldn't refuse," said Powers.

"He has always shown that he wants to be in charge."

In an interview with Sportsnet on Wednesday, Edward Rogers said he recognized "being involved with these teams is a public trust."

"We view that as a responsibility that we take very seriously," he said.

"We want to win as much as any of our fans."

Edward also noted his company had spent more than $14.5 billion over the last decade on sports.

"So it's a core business for us and this opportunity came about and it was one we felt fit immensely well with what we're doing and where we are going," he said.

Dave Heger, a senior equity analyst at Edward Jones, said there is probably an "ego benefit" to be realized for Edward that comes from the status and name recognition associated with owning pro sports teams in a major city.

He said that's on top of the financial attraction of teams like the Leafs and Raptors continuing to increase in value.

Forbes pegged the Leafs as the NHL's most valuable team at US$2.8 billion in its latest rankings released last December, up 40 per cent from 2022.

The Raptors, at US$4.1 billion, were the NBA's 10th most valuable franchise as of October 2023, up 32 per cent from the year before, it said.

It remains to be seen whether Rogers could further expand its share in MLSE beyond 75 per cent. Under their ownership agreement, Rogers and Bell reportedly had the right to buy out MLSE chairman Larry Tanenbaum, who owns the other quarter of the sports conglomerate, by July 2026.

"Will they look at combining the (MLSE) ownership plus the Blue Jays into some kind of standalone entity?" said Heger.

"It would certainly seem like it would be positioning them — now they're obviously the controlling owner and maybe the next step is to buy out Tanenbaum — to combine that together with the Blue Jays. That could make for attractive sports entity."

That prospect speaks to the legacy Edward now has a chance to leave on the Toronto sports scene, said Brock University sport management professor Michael Naraine.

While his father's statue continues to stand tall outside the Rogers Centre, Naraine said Edward has now attached his family's name to the entire men's pro sports market.

"It's a bit of an ego play and wanting to have a legacy asset," said Naraine, who described Edward as a "showman."

"Rogers is Toronto. Toronto is these sports teams, and Ed Rogers wants to have these four teams under his family's name."

Edward said Wednesday the company plans to continue investing in its teams and stadiums.

But the tricky part will be navigating decisions of how to allocate capital with so many clubs under Rogers' umbrella, said Powers.

He said that prioritizing funding for one team while another waits in line could risk upsetting fans.

The other threat to Edward's enduring sports legacy is one many other big names in the Toronto market have suffered from over the years: lack of success on the ice or field.

"If every major sports team under the MLSE banner now wins a championship, Edwards Rogers will be seen as a hero, but that's unlikely to happen," said Powers.

"There'll be a bit of a honeymoon period where people will see what changes they will make under Edward Rogers. If they're positive, he'll get the glory. If things don't improve, then he'll certainly be a lightning rod for criticism."

This report by The Canadian Press was first published Sept. 20, 2024.

Companies in this story: (TSX:RCI.B, TSX:BCE)

Sammy Hudes, The Canadian Press