A blockbuster deal to buy a majority stake in the Toronto Maple Leafs' parent company by BCE and Rogers Communications will create the most powerful sports broadcast empire in Canada, marrying both content and distribution.
The two telecommunications giants said Friday they planned to purchase a combined 75 per cent stake in Maple Leaf Sports and Entertainment from the Ontario Teachers' Pension Plan for $1.32 billion, with each company receiving a 37.5 per cent ownership.
Kilmer Sports, owned by Larry Tanenbaum, would also increase its stake to 25 per cent from 20.5 per cent.
"In our rapidly changing technology driven world, the one thing that hasn't changed is our love for sports and excitement for watching sports in this country," said George Cope, president and CEO of BCE, at a Friday press conference.
BCE and Rogers will each pay $533 million for their share, while Kilmer will pay the remainder.
The deal captures some of the most-watched sports in the country and the advertising dollars that come with it. But it really scores the big prize: the Toronto Maple Leafs, one of the most storied franchises in the National Hockey League.
The Leafs, the top money team in the league which Forbes estimates is worth $521 million, is owned by MLSE. It also owns the NBA's Toronto Raptors, MLS's Toronto FC, the Air Canada Centre and other assets.
Rogers Communications already owns the Toronto Blue Jays and the broadcast network Sportsnet, while Bell owns CTV, TSN, TSN2 and NHL Network Canada, along with sports radio stations across the country.
Bell is also a minority stakeholder in the Montreal Canadiens.
The deal that brought Rogers and BCE together to buy MLSE is unheard of in the business world, a senior editor of Forbes said following Friday's announcement.
"This is really breaking the mold. We saw this was a very popular move 10 or 15 years ago, you had teams like Disney, NewsCorp buying sports teams to hold on to valuable broadcasting rights, but a lot of those companies are getting out of sports," Kurt Badenhausen said.
"But for two competitors to come in and buy the team jointly, I mean, this is unprecedented," he said.
Badenhausen compared MLSE with legendary sports franchises like Manchester United and the New York Yankees.
"The Maple Leafs are valuable despite their lack of success on the ice," he said, adding that if the MLSE can get a team in the playoffs, it could increase the value of the purchase by another $40 million or $50 million.
It's expected there will be little change in the day-to day management of teams like the Leafs and Raptors, the new owners say, suggesting they'll step aside and allow the teams "go about the business of winning."
"We are extremely pleased with Larry Tanenbaum and his management team," Rogers president Nadir Mohammed said at the press conference.
"Job one is going to be having a stable ownership group," added MLSE chief operating officer Tom Anselmi.
He's widely expected to take the reins from outgoing president and CEO Richard Peddie, who leaves Dec. 31.
Although ownership under the Teachers' was considered stable, it hasn't always been a winning combination. The Leafs haven't made the playoffs in six years.
The blockbuster deal also brings together two fierce competitors in the communications business, but each company emphasized it's the sports fans who benefit.
"It will definitely bring fans closer to the action. You will have no reason to miss one minute or one second of any of these sports teams in the marketplace," Cope said.
"This investment fits squarely into our strategy of securing premium content and making it accessible to Canadians when, where and how they want it."
Cope also said BCE will maintain its investment in the Canadiens and will work with the league to accommodate any of its concerns.
Under the deal, Tanenbaum will remain chairman of MLSE and governor of the NHL, the NBA and MLS.
Tanenbaum said Friday he was excited about the new partnership with Bell and Rogers.
"I am proud this is a made-in-Canada deal that will bring resources and expertise to help us win on and off the ice, court and pitch," he said.
"This is a terrific path forward for our teams and our fans. It will ensure MLSE continues to make a positive impact in Toronto and across this great country of ours."
The transactions are expected to close in mid-2012 following league approval.
The Competition Bureau also said Friday that it intends to study the transaction.
The sale comes as a bit of a surprise, just weeks after Teachers' publicly announced its stake in MLSE was no longer for sale.
Jane Rowe, a senior vice-president with the OTPP, said the Bell/Rogers offer came forward one week after it closed an eight-month period of soliciting sales offers.
She described the deal as "comprehensive, firm" and meeting all the terms they required.
"We believe this agreement is great news for all parties involved," Rowe said on Friday.
Over the past month, a group led by former hockey superstar Wayne Gretzky was named as a potential buyer, as well as the U.S. private equity firm Providence Equity Partners – the firm behind the Yankees Entertainment and Sports Network.
Fans applauded the deal, hoping that the combination of the two media juggernauts could lead finally lead to playoff success while providing more exposure on all media platforms.
"As long as they are committed to building a winner hopefully more so than the pension plan, that's all I care about," one fan told CTV News.
Former Leafs captain Darryl Sittler also praised the deal and called for the cup to return to Toronto, something he was not able to do during his tenure with the team from 1970 to 1982.
"It's a great property to have and if they feel that they want to own then they will do a good job," said Sittler. "They have to bring a cup back to Toronto."
