Rogers moves to turn its 75% stake in MLSE into a multi-sport franchise powerhouse worth $16.5bn
Rogers Communications Inc. is on track to transform its recently acquired controlling stake in Maple Leaf Sports & Entertainment (MLSE).
The stake could turn into a multi-sport franchise valued at over $16.5bn, according to an analysis by National Bank Financial, as reported by Financial Post.
The report suggests that Rogers could spin off MLSE through an initial public offering (IPO) after acquiring a 75 percent stake in the company. This follows a deal to purchase BCE Inc.’s 37.5 percent share for $4.7bn.
The transaction values MLSE, which owns the Toronto Maple Leafs, Raptors, Toronto FC, Argonauts, and other properties such as Scotiabank Arena and NBA TV, at $12.5bn.
Adam Shine, a telecom analyst, expects this valuation to rise when Rogers integrates its own sports assets, including the Toronto Blue Jays, Rogers Centre, and Sportsnet.
Shine stated, “We can debate the EBITDA multiple used to determine the value for Sportsnet, but the combination of the Blue Jays and Sportsnet could total $4bn,” based on financial data from sources like the CRTC, Forbes, and Sportico.
Shine believes that an IPO of these combined assets could increase their value beyond $16.5bn, though this is likely a few years away.
The BCE deal is expected to close next year, and in 2026, Rogers will have the option to purchase the remaining 25 percent stake held by Larry Tanenbaum’s Kilmer Group, under the MLSE shareholders' agreement.
Once Rogers secures full control, it is anticipated that they will consolidate their major sports and media properties under MLSE.
Shine’s analysis estimates that a combined MLSE, with Rogers’ additional assets, would generate $2.07 billion in revenue and $300m in EBITDA, representing a margin of 14.5 percent.
While the valuation implies multiples of eight times revenue and 55 times EBITDA, Shine expects these figures to decrease over time due to synergies in revenue and costs.
He compared MLSE’s valuation to that of other major sports franchises, such as Madison Square Garden Sports, which trades at over five times revenue and 48 times EBITDA, and the Atlanta Braves, which trades at 11.5 times revenue and 66 times EBITDA.
While an IPO remains a possibility, some analysts, like Jérome Dubreuil from Desjardins Securities, see significant value in the MLSE deal for Rogers even without a public offering.
“The deal with BCE is an excellent valuation point by itself, probably more reliable than any other scenario I could come up with,” Dubreuil noted.
He acknowledged, however, that the lack of transparency regarding MLSE’s financials makes it difficult to assess whether the deal will enhance Rogers’ net asset value.
Dubreuil compared the situation to “a close call at the blue line that has been under review for 10 minutes.”
He further noted that while investors may place more value on Rogers’ stake in MLSE, some may argue that the company is committing additional capital to an asset the market has historically undervalued.
Rogers’ shares rose 42 cents to close at $54.42 on Friday, giving the company a market capitalization of $29.5bn. Dubreuil maintains a buy recommendation on Rogers, with a target price of $70 and an above-average risk rating.
As Rogers explores how to manage its expanded sports portfolio, analysts like Shine believe the company will avoid increasing leverage by bringing in private investors. Some projections suggest Rogers could reduce its stake in MLSE to just over 51 percent while maintaining a controlling interest.
Shine outlined two potential scenarios: MLSE could acquire the Toronto Blue Jays and related assets from Rogers, or Rogers could transfer the Jays to MLSE in exchange for a larger equity share.
“The latter would be preferable if subsequent dilution was to naturally occur in an IPO of MLSE,” Shine explained.
Vince Valentini, a telecom analyst at TD Securities, also anticipates that Rogers may bring in partners who could later list part of their holdings. In this scenario, Rogers would use the proceeds to pay for its acquisitions and gain more recognition for its sports holdings.
Valentini suggested that Rogers could buy out BCE and Kilmer for US$5.8bn, integrate the Blue Jays, valued at US$2.4bn, and then sell 49 percent of the combined MLSE assets to private investors for US$5.75bn.
This would leave Rogers with 51 percent control of the entity, which would own Toronto’s top sports franchises and have the potential for a public listing.
Valentini argued that this approach would give Rogers flexibility in structuring the ownership of its sports properties and simplify negotiations.
For example, the Blue Jays could be incorporated into MLSE without having to negotiate with BCE over the team’s value, while a private investor could buy a stake without worrying about Rogers and BCE agreeing on terms.
