Tuesday, June 24, 2008

Time for Teachers to retire from Leafs



A reader asked me to comment on an issue he was quite passionate about, Maple Leafs Sports and Entertainment and specifically the Ontario Teachers Pension Fund majority ownership. Is it time for a single owner?

Anywhere I've been in Canada, people have two extreme reactions to Toronto. I love it or I hate it. I've yet to meet someone who is indifferent to the home of the Leafs. It's not the wrath of Toronto I'm worried about though, it's the teachers. The more I looked into it, this "Fund" is a powerful group. If I go missing... haha.

Getting back to the point, yes, I believe a single owner would help get Leaf Nation back to the land of June parades. January 5, 2008 there was an article in the Toronto Star regarding the interest of Toronto born billionaire Alex Shnaider in purchasing MLSE. A quote from that article, by Rick Westhead, caught my eye and I'd like to begin there.

When asked about the possible sale of MLSE, Teachers Spokesperson Deborah Allen would obviously not comment specifically, but commented when selling assets in general, "we look at things like re-investment risk. If we sell we have the cash that has to be re-invested somewhere else. And that opens us up to risk."

In other words, when we have a cash cow like MLSE, why on earth would we get rid of it? MLSE forecasted a profit of 83 million dollars in 2007 and by 2011, that number rises to 105 million. What other business is so ingrained in the hearts of it's customers. The "Fund" will continue to grow off of your pain Leaf Nation. It's not fair to the fans. The unfortunate thing for Toronto fans is that the hockey club would never be sold separately. In the previously mentioned article, Investment Banker Rob Tillis put the price of 1.5 billion for MLSE as a starting point if the Teachers fund were to sell. Forbes lists Shnaiders net worth at 1.8 billion.

The Teachers fund owns 58% of MLSE. On their web site a fact sheet states they are allowed a majority of Board members but "choose not to". CTV Globe Media owns 15% of MLSE. Now we get to the math. The Teachers own 20% of CTV, so they do have a majority on the Board because they can influence the direction of the second biggest share holder. Add TD Capital, an investment fund to the mix at 14% and what you have is a complicated ownership group that needs to protect it's assets, rake in loads of money and makes bland corporate decisions.

I'm actually starting to enjoy having Cliff Fletcher in Toronto again. At least he's rattling the cages a little. Nothing happens in a hurry in Toronto. Many questioned the timing of the Paul Maurice firing. MLSE's response; that was when our meeting had been planned for. Some things require immediate attention. Can't you call emergency meetings? A single owner can put his, or her personality into their team. Look at what Eugene Melnyk has done for the Senators or George Gillette in Montreal. The Molson Company became neglectful of the Habs after the '93 Cup win, the team was a mess. Gillette realizing the historical value of a franchise like Montreal, has revived the organization and they are on their way to more success.

For years the Leafs have been as much a part of Canada as Maple Syrup. The current ownership group doesn't seem to understand that. When we discuss a team like the Toronto Maple Leafs, we are talking about more than a hockey team. We are talking about an important part of Canadian history , culture and identity. Eaton's was practically built on mail order Leaf sweaters. We are also talking about the most important franchise in the NHL. The city that is home to the Hockey Hall of Fame. It is in the best interests of the League to have the current group sell their shares to an individual who has hockey in their heart and on their mind.

Right now MLSE's priority is padding the bank account. What will their profits soar to now that they are "rebuilding" and going younger? Here's the chance to spend down to the 40 million dollar cap minimum and add another 16 million to the coffers. How many more years will they ask loyal Leaf fans, who bleed blue and white, to pay top dollar for their rebuilding project? How many more times will they say wait till next season?

MLSE is now kicking the tires, thinking of purchasing a soccer team in the British Premier League. If they think they can treat British soccer fans the way they have continually broken the hearts of Leaf Nation... well, they shouldn't plan any vacations to England.

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