Bell sells its Maple Leafs shares, but keeps its Canadiens shares (for now)

A bombshell in the hockey world this morning: Bell (Cell Canada Enterprises/BCE Inc) announced that it had sold its stake in Maple Leaf Sports And Entertainment (MLSE Inc) for $4.7 billion. The accounting transaction will be completed next summer if all the leagues involved approve it.

The scoop comes from Scott Soschnick (Sportico).

SCOOP: Rogers Acquires 37.5% Maple Leaf Sports Stake From BCE for $3.5Bhttps://t.co/SY7KBYyKGA via @sportico @kbadenhausen

– Scott Soshnick (@soshnick) September 18, 2024

You have to understand that MLSE is the Maple Leafs, Raptors, Argonauts, Toronto FC, Marlies and a few other smaller-order sports franchises. It’s also a few amphitheatres in Ontario’s capital…

BCE owned 37.5% of MLSE, which means the parent company is now valued at $12.5 billion. The Maple Leafs alone are worth $2.8 billion, according to the latest calculations by Forbes magazine. They are the most expensive team in the entire NHL…

Rogers (75%) and Larry Tanenbaum (25%) now own all the Toronto franchises listed above.

The Ontario Teachers’ Pension Plan (Teachers’) was once the principal owner of MLSE, but sold its stake (nearly 80%) for $1.32 billion in 2011.

So we have a formula where Rogers owns Toronto’s big sports teams, while in Montreal, it’s more diversified: Geoff Molson and his partners (Groupe Habs) are the majority shareholders of the Canadiens, with Bell as a minority partner. The Alouettes are owned by Pierre-Karl Péladeau and the Montreal CF by the Saputo family.

Just under two years ago, the presence of a Saudi investment fund caused quite a stir among Geoff Molson’s partners…

What does this Toronto sale mean?
There are several ways to read this news.

1. Since Bell has secured its broadcasting rights to Raptors and Maple Leafs games (regional rights) for the next 20 years, one might think that the company is thinking of abandoning its shareholding in sports teams to concentrate on the media sphere (content broadcasting, content creation, etc.), while continuing to provide TV and mobile/Internet services.

If that’s the case, you’d think BCE would also eventually sell its stake in the Habs…

2. Owning teams in several cities and leagues may have become too complex – or non-strategic – for BCE. Focusing on the Montreal Canadiens might make sense to BCE shareholders. Broadcasting the Canadiens rebuilding series – linked to the possibility of seeing Habs games broadcast exclusively on Crave in 2026-27 – could indicate a very Montreal strategy for Bell…

3. With the media crisis raging right now, raising such a large sum(cash flow) could help sustain the company during the crisis and/or reinvest it elsewhere, to better adapt to the post-media revolution.

However, BCE’s figures are still very good; the company has forecast net earnings of over $2 billion in 2023.

4. It’s safe to assume that, with NHL national rights – and regional rights in Quebec – up for renegotiation for 2026-27, BCE has realized one fact: it’s going to be expensive. Very expensive!

The company may have said to itself that it’s going to bet big and try to scoop it all up – which will take a lot of cash flow – in an attempt to eliminate its nemesis from the picture. Québecor is still sending arrows at Bell in its most recent ads, and the conflict between the two companies is not yet over at the CRTC. Bell and Rogers have worked – and will continue to work – together, Rogers and Québecor work together… but Bell and Québecor, it’s always been more complicated!

Is Bell preparing a forward to take the wind out of Québecor’s sails (TVA Sports)?

Mirko Bibic mentioned the term financial flexibility this morning in the official press release issued by BCE.

I get the impression that this mega-sale is also a warm-up for something else. Something that will make a lot of sense when disclosed in 2025, like…