Leafs deal a revenue-lockout for BCE, Rogers
Each could lose up to $50M per quarter in first season as owners
New York – BCE Inc. and Rogers Communications Inc. have the most to lose from the National Hockey League lockout as revenue dries up from their newly acquired Toronto Maple Leafs franchise, the most profitable among 30 teams.
The two companies completed the $1.32-billion purchase of Maple Leaf Sports & Entertainment Ltd. last month and may lose a whole season from the disruption. While the team hasn’t won the Stanley Cup since 1967, the franchise had revenue of $193 million and operating profit of $82 million last year, tops in the league and almost double that of its closest competitor, the New York Rangers. Montreal-based BCE also owns a minority stake in the Montreal Canadiens, which has won more Stanley Cups than any other team and is third in the league in profit and revenue.
“If all teams were like the Leafs, making stinking amounts of money, we wouldn’t have this problem, so certainly Rogers’ and BCE’s pain is greater than those owners whose teams are marginal,” said Iain Grant, president of the Seaboard Group, a Toronto-based telecommunications research firm. Rogers and BCE, Canada’s No. 1 and No. 2 wireless carriers, respectively, face lost ticket, merchandising and television advertising revenue if the season doesn’t begin on Oct. 11 as planned. The league has already scrapped exhibition games that were scheduled for September.
BCE and Toronto-based Rogers have been adding sports teams and specialty broadcasters to provide content for smartphones, iPad tablets, computers and digital televisions. BCE chief executive George Cope spent almost $8 billion in cash and debt over the past two years buying media companies, including CTV, which owns the TSN network and Maple Leaf Sports, to feed his four-screen strategy.
Cope’s plan is designed to capitalize on the sport’s iconic position in hockey-obsessed Canada. TV viewership of Sidney Crosby’s gold-medal-winning goal in overtime against the U.S. at the 2010 Winter Olympics was the biggest TV audience in Canadian history, peaking at 22 million in a country of 34.5 million people. Cope has said the surge in Canadian wireless data traffic after the Crosby goal convinced him the four-screen plan was the right approach.
The lockout may cost BCE and Rogers $25 million to $50 million a quarter each, said Graydon Ebert, who specializes in corporate and commercial law at Barriston Law LLP in Barrie, Ont. BCE and Rogers each acquired a 37.5-per-cent stake in Maple Leaf Sports on Aug. 22 and together control the company, which also owns the Toronto FC soccer team.