The private equity arm of The Ontario Teachers’ Pension Plan, Teachers’ Merchant Bank, led the recapitalization of Maple Leaf Sports & Entertainment, and in the process, boosted its stake to 58% from 49 percent.
The deal gives the firm a majority stake in the company that controls both the Toronto Maple Leafs of the NHL and the NBA’s Toronto Raptors. MLSE also owns and operates the Air Canada Centre, which houses both the Leafs and the Raptors; two digital TV channels with hockey and basketball programming; and the St. John’s Maple Leafs, Toronto’s minor league affiliate.
Terms of the deal were not disclosed, although it was announced that TD Capital Group and Kilmer Sports were each able to increase their stakes as well, to 14% and 13%, respectively, while Bell Globemedia was able to join the fray, grabbing a 15% stake. The deal allowed former grocery store magnate Steve Stavro to walk away from MLSE, although he will continue to serve as the non-executive chairman on the board of directors until the end of June. Stavro had previously held a controlling 51% stake in the company. Jim Leech, senior vice president of Teachers’ Merchant Bank, said the deal still needs regulatory and league approvals before it can go through, and he expects the transaction to close in eight weeks. Published reports have indicated that Stavro would receive approximately $100 million from the sale of his stake.
With the recapitalization, Teachers’ Merchant Bank, which has been an investor in MLSE since 1994, will begin a new five- to seven-year plan for the investment, according to Leech.
Both the Maple Leafs and Raptors have consistently drawn high attendance. The Leafs have regularly filled the arena’s seats to capacity, even when they were among the worst performing teams in the league. So far this year, the team is drawing an average attendance of 19,201 spectators, which easily surpasses the league average of 16,284. The Raptors, meanwhile, have the fifth-best attendance in the NBA, despite their record of 16 wins and 36 losses (as of press deadline). Leech calls the Maple Leafs and Raptors “the two leading brands in Canada,” citing that the Leafs’ history and the Raptors’ status as the only Canadian basketball team in the NBA contribute to their respective popularity.
In moving forward with this investment, Robert Bertram, an executive vice president at Teachers’ Merchant Bank, quelled fans’ fears, saying, “We believe in the solid future of MLSE and its passionate commitment to developing championship teams. Winning is good business.”
Leech also noted that the ownership group may look to capitalize on Bell Globemedia’s involvement in the deal as well. Bell Globemedia, which itself is owned by BCE Inc. and the family of Kenneth Thomson, controls Canadian broadcaster CTV and daily national newspaper The Globe and Mail. The company also owns Canadian sports network TSN, and RDS, a French-language sports channel. “Their participation brings the potential for a good marriage, and there are clearly plenty of opportunities to grow with regards to the media aspects [that Bell Globemedia brings],” Leech said.