Eight months after placing its majority stake in Maple Leaf Sports and Entertainment out on the open market, The Ontario Teachers’ Pension Plan has ended the sale process, with experts and academics suggesting a simple reason why: the asking price was too high.
While the sale price was never made public, the value of the company that owns the Air Canada Centre, the Toronto Maple Leafs and the Toronto Raptors has been estimated at somewhere between $1.4-, and $1.8-billion. A spokesperson for the pension plan said the group plans to maintain ownership of MLSE indefinitely, but would not discuss why the sale process was ended.
“We’re not discussing that at all,” OTPP communications director Deborah Allan said on Friday. “All we’re saying is just helping people to remember that, when we made the announcement last March, there had been a number of people come to us. And so it was incumbent upon us to do a formal review, and there was never any commitment at that time that we were selling.”
The pension plan owns 79.53% of MLSE.
“The primary reason (it did not sell), based on some of the things I’ve heard in the industry, is that the expectations of the price by the prospective seller was significantly higher than the value that the qualified buyers felt comfortable with,” said Marc Ganis, president of Chicago-based consulting firm SportsCorp. “And there’s a reason why there’s a gap, and that is because this is a performing asset for the Ontario Teachers’ Pension Plan. It is generating a quite significant annual cash return for them.”
Just how much revenue MLSE has generated has never been made public, because it is a private company. It has recently been suggested the company drives more than $600-million in annual revenue.
“Most sports franchises here, if you can get close to what the price is, I think most owners who would be otherwise inclined to sell would probably sell,” said Michael Cramer, a former president of the Dallas Stars who is now director of the Texas Program in Sports and Media at the University of Texas.
“There’s a real shortage of people who are able to pony up the money, especially when you’re talking about a sale of this price and with this many assets … this is not a distressed asset, by any means, and you can’t say that for most of the NHL, or actually a good portion of the NBA.”
It is not known how many potential buyers might have kicked the tires before Teachers’ withdrew its stake.
“There are only a few crown jewels in sports, and the Maple Leafs are one of them,” said Wayne McDonnell, associate professor of sports management at the Tisch Center at New York University. “It’s a franchise that hasn’t won the Stanley Cup in quite a few decades, and it’s a very attractive thing to say you’re the owner who brought the Stanley Cup back to Toronto.”
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