Teachers won?t sell MLSE

[cw]

Globe & Mail link
The Ontario Teachers? Pension Plan has decided not to sell its stake in Maple Leaf Sports and Entertainment Ltd., according to sources.

The pension plan has wrapped up an eight-month process during which it explored its options and has concluded that it wants to hold onto its 79.5-per-cent stake in MLSE.
...
Teachers? received and considered numerous offers for the sports franchise, sources said. But the pension fund is excited about the prospects for both the teams and the company. And it believes it can take actions that will help the Toronto Maple Leafs perform better, sources suggested.
..
Teachers? decided to put its stake on the block in March of this year to see how much it might fetch, after the pension plan received expressions of interest from potential acquirers. But Teachers? had always said that it would simply hold onto its stake if the ultimate bids didn?t live up to its expectations.

Not a big surprise.

If & when the economy improves and the new CBA is signed, that might be a better time to sell to maximize their return.

They could always turn around and buy a sports media company or two to further exploit that financial synergy.

 

[maplesyrup]

Timing is everything. Yeah, I'm not surprised either.

 

[Zee]

My sister in law is a teacher, I'm going to slap her this weekend.

 

[L K]

To be honest, I'm glad.  Show me ONE team that spends more money on their hockey operations.  What other organization has FOUR GMs in the front office?  What organization pays for their AHL team to be in the same city as the professional hockey team despite piss-poor attendance?    What other organization has a guy making 3.5M to play in the AHL because he wasn't good enough price-performance wise?  The Leafs have been at the cap every year.  What is this mythological owner going to do differently?  They have a large scouting staff, they make partnership agreements with teams in Europe (have had them in Sweden, Slovakia, Switzerland...), they have been in on college free agents, european free agents, and have signed guys in free agency in general.

Care the team into the playoffs?  If anything, you get a guy who buys a toy and decides that he needs to make hands-on decisions when he has no clue what he is doing.  Look at Buffalo, they got a new owner, and suddenly a quite savvy GM in Darcy Regier starts throwing around idiotic money.  Tell me that isn't the owner making decisions.

Missing the playoffs sucks and everything, but it has absolutely nothing to do with MLSE...oh, and those ticket prices aren't going anywhere with a new owner.

 

[cw]

Press Release
TORONTO (November 25, 2011): The Ontario Teachers? Pension Plan (Teachers?) today announced it is maintaining its ownership stake in Maple Leaf Sports and Entertainment (MLSE).

Following various unsolicited expressions of interest in MLSE, Teachers? and its advisors began a process in March of this year to review its ownership stake in the company.  Teachers? has concluded this eight-month process with the decision to maintain its stake in MLSE, which has been and continues to be a very successful investment.

With the acquisition in September of TD Capital Group?s 13.46% minority stake, Teachers? now owns 79.53% of MLSE.

Teachers? will not be commenting further on its decision.

With $107.5 billion in assets as of December 31, 2010, the Ontario Teachers' Pension Plan is the largest single-profession pension plan in Canada.  An independent organization, it invests the pension fund's assets and administers the pensions of 295,000 active and retired teachers in Ontario. For more information visit www.otpp.com

"various unsolicited expressions of interest in MLSE" may have triggered the exploration ...

 

[Guru Tugginmypuddah]

This is what you call an open market appraisal.

 

[cw]

We've seen many private/key NHL owners get into financial trouble:
Stavro (Leafs)
Hicks (Stars)
Del Biaggio (Predators)
Baldwin (Penguins - Baldwin's specialty was buying franchises with very little of his own money invested. For example, his actual cash investment in the Penguins was just $1,000.
Moyes (Moyes)
Bryden (Senators)
McNall (Kings)
Regas (Sabres)
Potter & Block (IRS -> 1975 Penguins bankruptcy)

Some claim that a private owner could do better. Facts are, a private owner certainly could do worse. Harold Ballard, anyone? Even Stavro, who was a fairly decent owner otherwise, had financial problems.

The one thing with the Teacher's at the helm is the Leafs are very unlikely to have their owner in financial trouble.

Beyond that, as LK says, there's been considerable money thrown at getting them the best assets - beyond spending to the cap.

Each Leafs GM since Ballard has had a pretty good collection of financial support and assets provided to help them do their jobs. Relative to so many other teams, I won't complain about that.

 

[bustaheims]

Let's also not forget that MLSE represents about 1% of the OTPP's holdings. How much do people think they're honestly going to meddle with, what is to them, a fairly minor asset?

 

[cw]

CBC Friedman - 30 Thoughts
27. It's been reported many times that Larry Tanenbaum, who owns 20 per cent of the Maple Leafs' parent company, has the right of first refusal on any attempt to sell the Teachers' 79 per cent share. There is a point where his control dilutes. That point, however, is apparently far enough into the future that it won't affect this process.

Would OTPP care if Tanenbaum exercised that right or not? Why would they if they're selling? As long as they get their dough, and for that much dough it would have to be from a big player, why would they care?

I wondered of Tanebaum had enough dough to pull such a thing off. Turns out right now he's supposedly worth over a billion $ (about $100 mil less than Balsillie). So maybe he could get some folks together to exercise that right of first refusal if it was sold.

 

[cw]

Often, when a company sells, they look at changing their GM(s) (loyalty issues, etc). So this news secures Burke from that potential problem which right now, I also regard as good news.

 

[lamajama]

I tried, guys. I sent my cheque to them for $1.8 bil and stale dated it to 2001 by writing sloppy but they caught it. I figured I'd have the ship righted and the address changed on the front door (so they couldn't find me) before the bank sent the cheque back. Oh well.

 

[Kin]

What other organization has a guy making 3.5M to play in the AHL because he wasn't good enough price-performance wise?

The Rangers.

 

[Fanatic]

Damien Cox writes;

As it turns out, a buyer couldn't be found for MLSE.

Not at $1.5 billion or more. Not under current economic conditions.

So the nameless, faceless, championship-less mandarins of the Ontario Teachers Pension Fund, those people who have sponsored the wholly unsuccessful current era in Toronto hockey, basketball and soccer, will keep their stake in the sports conglomerate.

And nobody applauded.

The news, and a passionate-less statement, came from the Teachers this morning. No appreciative note to fans, or promises of increased efforts to win. Nothing, other than complimenting themselves on torontomapleleafs.com as "great owners." The fund calls MLSE a "very successful investment" but promised no other comment.

These suits just don't get it. Never have.

The pension fund has made lots of money owning MLSE, but despite hiring big names like Bryan Colangelo and Brian Burke, hasn't figured out ways to move its basketball and hockey properties into the elite of either the NBA and NHL. It can develop and open a good sports bar; winning games has never been something it has done well.

With more than $100 billion in assets, MLSE is but a small part of the pension fund's holdings, and Leaf fans need to understand that. Even under MLSE, the Leafs are only a part of the puzzle. In a generation, the hockey franchise has gone from being owned by a man who's sole interest was being the proprietor of the team to being owned by a corporate entity with only a passing interest in the needs of the hockey club.

 

[Guru Tugginmypuddah]

Damien Cox writes;

That is where I should have stopped reading. 

Come on Cox, seriously?  I have not seen one iota of evidence that MLSE being cheap has caused the Leafs or Raptors or FC to not be competitive.

 

[Kin]

Let's also not forget that MLSE represents about 1% of the OTPP's holdings. How much do people think they're honestly going to meddle with, what is to them, a fairly minor asset?

But, if I can take up the opposite side here, couldn't you argue that's really the issue here? Because the Leafs are so relatively unimportant to them financially they have a tendency to be hands-off owners. I know there's a general sense that you want hands-off owners in the sense that you don't want them making hockey decisions but I think it's fair to say that in most really successful sports franchises the owners, while not always playing a big role in the day to day of the club, were still big presences in the organization as the ultimate authority. The people who care about the success of the franchise and who ultimately held everyone accountable. The impression I typically get from MLSE is that so long as the team is generating a pretty steady revenue stream they genuinely don't give a damn about on-ice results which is hard to argue as it's pretty difficult for a pension fund to have a rooting or competitive interest in a hockey team.

That remains my biggest problem with MLSE as the owners of the club and I think it's manifested itself every now and then with pretty damaging results. JFJ had all but traded the ACC for magic beans before he got fired, they stood by pretty passively while the new CBA bargained away the team's real competitive advantage and I think there's been a tendency to hire people who come in and say "Don't worry about a full-scale rebuild, we can maintain an acceptable level of competitiveness while we build" which I don't think has been in the interest of the club long-term.

I have my own personal issues with the way the team is run these days that may not be universal (I'm going to try and be delicate and fail here but I often think I could use a kiss and some more flattery before they get right to screwing me) but I think those are side issues. I think a good owner really just has three responsibilities, they've got to fund the team well, they've got to be a passionate and effective advocate for the club's interests in league meetings and they've got to have a presence in public and private as the ultimate authority of the franchise who not only holds people accountable but sets a standard of excellence for the club.

I think, on those three criteria, MLSE is one for three so far.

 

[bustaheims]

Come on Cox, seriously?  I have not seen one iota of evidence that MLSE being cheap has caused the Leafs or Raptors or FC to not be competitive.

Seriously. While I can't speak for the Raptors or TFC, as I don't really follow either of them, there's plenty of evidence against the theory that the OTPP have caused MLSE to cheap out on the Leafs. I mean, the Leafs have one of the highest paid front office teams, one of (if not the) largest groups of scouts, have been pressing against the cap ceiling in all but one season since it was introduced, sacrifice income with the Marlies for the good of the team and so on. When you really take a look at things, the Leafs pretty much have free rein when it comes to cash and management has been able to do whatever they feel they need to for the good of the team.

 

[riff raff]

It's frustrating, and lazy "journalism" from Cox to fall back on the 'corporate entity' ownership as the reason for the Leafs' lack of success.

Both L K and cw have pointed this out: what is it that Leaf ownership should have done (presumably by a single owner) that hasn't been done as the team is currently constituted?  Spending money? Hiring a high profile GM?

Where is the evidence of profit over wins? They spend money - sometimes unwisely.

I find it ironic that Cox wrote a book (with Gord Stellick) on the Leafs ('67: The Maple Leafs, Their Sensational Victory and the End of an Empire) that, in its opening chapters describes in great detail how individuals (Ballard, Smythe) stripped the Leafs of assets in order to maximize their own profit.

In other words, he knows what that looks like and this isn't it.

 

[Deebo]

Wasn't the "man who's sole interest was being the proprietor of the team" the same guy who nixed a contract with Wayne Gretzky?

 

[riff raff]

Wasn't the "man who's sole interest was being the proprietor of the team" the same guy who nixed a contract with Wayne Gretzky?

Yes because of personal money flow problems.

 

[Kin]

We've seen many private/key NHL owners get into financial trouble:
Stavro (Leafs)
Hicks (Stars)
Del Biaggio (Predators)
Baldwin (Penguins - Baldwin's specialty was buying franchises with very little of his own money invested. For example, his actual cash investment in the Penguins was just $1,000.
Moyes (Moyes)
Bryden (Senators)
McNall (Kings)
Regas (Sabres)
Potter & Block (IRS -> 1975 Penguins bankruptcy)

Fair enough. Here's another list though:

Jeremy Jacobs(Boston)
Rocky Wirtz(Chicago)
Mario Lemieux(Pittsburgh)
Mike Ilitch(Detroit)
Henry Samueli(Anaheim)
Peter Karmanos(Carolina)

Now, there's a reasonable pattern there and it extends backwards too. Bill Davidson, Tom Hicks(who, financial issues aside, did win a Cup), Illitch again. I think you'd probably have to go back to '96 to find a club owned in a similar situation to the Leafs that won the cup(depending on how you want to look at the Devils situation).

Edit: I also think this holds true for other sports. The most successful Baseball franchises(Yankees, Red Sox, Cardinals), basketball franchises(Dallas, LA), Football franchises(Pittsburgh, New England) and even EPL franchises(Chelsea, Man United) have easily identifiable owners who are deeply invested in their franchises.

Oddly enough I think this argument would kind of mirror the team-building argument we've had ad nauseum here where the committed passionate owner is like the full-scale rebuild that can succeed or can fail and the faceless corporate behemoth is the build while competing MOR extravaganza we've seen to date.