June 18, 2018
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Leafs return to playoffs provides boon for Rogers, BCE

By Frederic Tomesco and Hugo Miller, Bloomberg

TORONTO — The Toronto Maple Leafs’ return to the National Hockey League playoffs for the first time in almost a decade has sent ticket prices soaring and signals Rogers Communications.’s purchase of the team with rival BCE Inc. is beginning to pay dividends.

The Leafs, the NHL’s most valuable club, meet the Boston Bruins in the first round of the playoffs Wednesday, their first postseason appearance since 2004. Team owner Maple Leaf Sports & Entertainment reacted by boosting ticket prices by 75 percent, with average prices on the resale market more than twice as high as the New York Rangers.

Rogers and BCE joined forces to buy control of Maple Leaf Sports for $1.29 billion in 2011 in a bet that owning the hockey club and its television rights would help to sell mobile phones and generate data revenue.

“They’ve made a big bet on content, so it certainly helps investor perception to have people getting excited about the Leafs in the playoffs,” said Stephen Gauthier, chief investment officer at Montreal-based Fin-XO Securities Inc., which manages about C$500 million, including Rogers shares. “Rogers is such a big company now in terms of revenue that a first-round playoff series isn’t going to have much of an impact. Still, it’s nice to have.”

The Leafs have an estimated value of $1 billion, $250 million more than the New York Rangers, Forbes magazine reported in its 2012 survey of team values. Operating income in 2011-12 amounted to $81.9 million on revenue of $200 million, even as the Leafs missed the playoffs for the seventh consecutive season, Forbes said.

That financial success hasn’t translated into on-ice wins: The Leafs haven’t captured the Stanley Cup since 1967. Since joining the NHL in 1917, Toronto has won 13 championships.

Even with that dry spell, the Leafs were such a sought- after commodity that neither BCE nor Rogers could bear to let the other own it outright. For BCE Chief Executive Officer George Cope, the deal to buy MLSE, which also includes the Toronto Raptors pro basketball team and the Toronto F.C. soccer franchise, was the culmination of a string of transactions to add fresh content that can be resold on smartphones, tablets and laptops.

BCE also has an undisclosed minority stake in the Montreal Canadiens, acquired in 2009. The Canadiens, winners of a record 24 Stanley Cups, meet the Ottawa Senators in a first-round series starting May 2.

Rogers CEO Nadir Mohamed isn’t content to own the Leafs. He spent C$167 million last year to buy Score Media, which specializes in smartphone content, and approved a spending spree to bring top baseball players, including Cy Young Award winner R.A. Dickey, to the Toronto Blue Jays team that Rogers also owns.

Tickets for the first two Leafs’ home games are sold out with no prices listed for possible future games on website ticketmaster.com. Tickets in the lower bowl sold for as much as C$1,377 and so-called “prestige” seats went for C$1,417, the Montreal Gazette reported April 27.

Toronto has the most expensive home playoff ticket on the secondary market, according to New York-based ticket-aggregator TiqIQ.

First-round home games of the Maple Leafs cost an average of $656.26 on the resale market, with no ticket costing less than $170, TiqIQ says. Seats for the Chicago Blackhawks are the next highest, averaging $389.58. Tickets at Madison Square Garden to see the New York Rangers, the NHL’s second most valuable franchise, average $308.22, TiqIQ data show.

Each home game generates at least C$2 million in income alone for teams such as the Maple Leafs and the Canadiens, said Bruno Delorme, a professor of sports marketing at Montreal’s McGill and Concordia universities. NHL players aren’t paid salaries during the playoffs, meaning that all ticket revenue flows to the teams’ bottom line, said Delorme. Salaries on average account for 60 percent to 70 percent of a team’s operating costs, he said.

“For the owners, the playoffs translate into pure profits,” Delorme said in a telephone interview.

BCE is “very happy to see four Canadian teams in the Stanley Cup playoffs,” Jean-Charles Robillard, a spokesman for the Montreal-based company, said in an email. Toronto and Montreal’s appearances in the playoffs “is good for our business and for our employee team, who are obviously big hockey fans. We’re looking forward to exciting playoffs.”

MLSE spokesman Jamie Deans didn’t return a message seeking comment on playoff ticket prices yesterday. Rogers CEO Nadir Mohamed and Rogers Media chief Keith Pelley were not available for interviews, said Patricia Trott, a company spokeswoman

Mohamed reiterated to reporters last week the importance of sports to the success of the Toronto-based company. It’s about “having premium content, sports, being in our case our wheelhouse and we’ll continue to execute on that,” he said.

The benefits of owning MLSE are measured in years, not single playoff runs, said Jeff Young, chief investment officer at NexGen Financial Corp, a Toronto-based firm which manages about C$1 billion and owns both BCE and Rogers shares.

Rogers has climbed 11 percent this year as BCE gained 10 percent, compared with a 1 percent decline for the Standard & Poor’s/TSX Composite Index

“These are long-term strategic plays,” said Young. “Over time you’d expect to see it manifested in a bunch of ways: clearly increased data use, increased attractiveness of their offering in Internet and wireless.”

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