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U.S. private equity firm interested in Maple Leaf Sports&Entertainment

The Hockey News

The Hockey News

TORONTO - Price is likely the sticking point as the Ontario Teachers' Pension Plan continues to shop its stake in the parent company of the Toronto Maple Leafs hockey team, an expert said Wednesday.

"Because this a money generating asset, they're under no pressure, I would assume, to sell," said Norm O'Reilly, a professor of sports business at the University of Ottawa.

"I'm sure, like any equity, they would have their eye on what they would turn around and do...they would want to see that it made sense or else why sell."

U.S. private equity firm Providence Equity Partners, the company behind the Yankees Entertainment and Sports Network, has expressed an interest in the Teachers' 80 per cent stake in Maple Leaf Sports&Entertainment.

A person familiar with the situation told The Canadian Press on Wednesday that Providence, which has investments focused on media, communications and education investments, has been involved in the sales process.

O'Reilly said it is unlikely Providence is alone in its interest in MLSE.

"This is an asset that generates a really good return on investment," he said.

Officials for Providence, Teachers' and MLSE declined to comment.

In addition to the Leafs, Maple Leaf Sports and Entertainment also owns the NBA's Toronto Raptors, the Air Canada Centre and other sports teams and several media assets including Leafs TV, NBA TV and GOL TV, a sports channel entirely dedicated to soccer.

Among its many investments, Providence owns a minority stake in the YES Network, a sports and entertainment television network that broadcasts the New York Yankees, the New Jersey Nets and other professional and collegiate sports teams.

Providence was also a member of the Teachers'-led consortium that tried, but failed to buy BCE Inc. (TSX:BCE), parent of Montreal-based telecommunications company Bell Canada.

Rogers Communications Inc. (TSX:RCI.B), which owns the Toronto Blue Jays baseball franchise as well as numerous media and telecom businesses, has been named as another possible bidder for MLSE.

Teachers' raised its stake in MLSE to roughly 80 per cent earlier this year when it acquired a stake previously held by TD Capital Group. Terms of the deal for the bank's roughly 13.5 per cent stake were not available.

Kilmer Sports, which is controlled by Toronto businessman Larry Tanenbaum, owns the remaining stake and holds a right of first refusal to match any sale offer under a shareholder agreement.

The move by Teachers' to acquire the TD stake was expected to help streamline the sales process for Teachers' entire stake in the company.

It's estimated the sports team operator could be worth between $1.5 billion and $2 billion since the Leafs are a lucrative money maker in what has long been one of the best hockey markets in the world.

Teachers paid $180 million in 1994 for its stake in what would become Maple Leaf Sports.


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