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Bruce Dowbiggin

Celebrity Owners– Fun, Yes, But The Equity Is Even Better

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In case you hadn’t noticed. Celebrity Sports Ownership is all the rage. When the Ottawa Senators were for sale Ryan Reynolds, Snoop and The Weeknd were all mentioned among the bidders (that eventually went to Montreal businessman Michael Andlauer). LeBron James now holds a minority position with Liverpool FC.

Jay-Z owns part of the Brooklyn Nets, Usher a piece of the Cleveland Cavaliers while Fergie of Black Eyed Peas fame also partly owns the Miami Dolphins. Gloria and Emilio Estefan, Marc Anthony, and tennis superstars Serena and Venus Williams are owners of pro sports teams. Famously, Elton John owned Watford FC, although he’s now just an honorary chairman.

And, of course, Reynolds and Rob McElhenney used a documentary TV series that showed their Welsh Wrexham soccer team promoted to the FA’s League Two. What’s the attraction?

Clearly a little PR is always a good thing. But sports team ownership has also become a lucrative equity play. As BMO reports, “The average compound annual growth rate since the last purchase price…  is 15 percent, a meaningful outperformance to the TSX and S&P.  Forbes estimates the Toronto Blue Jays are currently worth US$2.1 billion or roughly C$2.85 billion.

Based on recent sports franchise transactions, expansion fees and annual estimations of franchise values by Forbes Magazine, an $8 billion enterprise value is easily defendable for the Jays’ owners MLSE (who also own the Maple Leafs, Toronto FC and Argonauts).”

It’s the same across the major pro sports leagues. The estimated average franchise value in the NFL since 2013 is $5.1B with a compound annual growth rate (CAGR) of 16 percent; in the NBA it is $2.9B with a CAGR of 18 percent. For MLB it is $2.3B with a CAGR of 12 percent; the NHL is $1.0B with a CAGR of 11 percent; while MLS is $0.6B with a CAGR 21%.

But, BMO cautions, owning a sports franchise is considered “an equity investment strategy rather than a cash flow or income play.” In other words, don’t think that ticket sales and hot dogs are going to make you rich. (Although the NHL’s salary cap, which guarantees owners’ profits is a sweet deal.) The key is sports media which is thriving despite the move to cord cutting..

Sports media rights contracts have grown in tandem with franchise valuations. Not to be ignored in the advertising growth and viewer interaction is the bear knowns as legalized sports betting. Betting companies are flooding the airwaves with commercials while bettors tune in to watch how their selections work out. The casinos and online shops have replaced lower-paying traditional advertisers who’ve dropped off.

In Canada, league or team ownership of broadcast properties is still common. For that reason the real value of those broadcast rights is often opaque. (We had some irritated pushback from Rogers and Bell for writing on this tidy arrangement in the mid 2010s, forcing some limited disclosures). Rogers Sportsnet and TSN own (via MLSE) own a stable of teams in MLB, NHL, CFL and MLS. Good luck finding out what they pay themselves for media rights.

It’s more open in the U.S. Since the New York Yankees pioneered the YES network in 2002— sparking multiple imitators in other markets—the move in the U.S. has been away from outright ownerships of regional sports networks. A number of RSNs in the U.S. are either in bankruptcy or nearing it. Digital and network sources are now absorbing these sources. ESPN, via its owner Disney, is looking to find partners for its many broadcast properties as their bottom line in general has suffered.

Still, ESPN’s legacy business generates revenue and operating income of approximately $12.5 billion and $4.0 billion in 2023. It remains to be seen what new model emerges in the U.S. to answer cord cutting and the death of conventional TV. The NFL’s experiment on Monday, having two MNF games compete on separate networks is one experiment.

In Canada’s monopolistic market, “TSN/RDS penetration rates have declined at a quicker pace than ESPN over the past 10 years. ESPN penetration has dropped from 81 percent of U.S. households in 2013 to 56 percent in 2022, while TSN/RDS penetration has decreased from 89% of Canadian households in 2013 to 49 percent in 2022.

In addition, BMO admits that cord cutting is a thing. “SportsNet subscribers have decreased -23 percent to 5.8 million over the same period. Subscriber and advertising revenues are 60 percent and 40 percent of total revenue, respectively. Since 2017, TSN revenues have increased 13 percent. TSN subscribers have decreased -29 percent to ~7.8 million over the same period.”

But! In the last five years, TSN and SN have increased advertising revenues by 13 percent and 15 percent respectively. The same figure for the top five Canadian non-sports channels (collectively) is six percent. Thank you legalized wagering in Ontario. So who wouldn’t want a piece of this action, especially in Canada?

The red flag in this surging equity market comes in the form of smaller Canadian NHL markets. The Senators sale for $950 suggests a healthy interest in owning, but the Sens sale was also tied into the new LeBreton Flats arena. Ownership or control of a Canadian arena means more than NHL games. It also includes revenue from concerts, rallies, monster-truck events etc.

Even with that can Andlauer produce a winner just two hours from the Montreal Canadiens market? Likewise, the Winnipeg Jets are desperately in need of a larger arena to replace the 15,321 Canada Life Centre. Having Canada’s richest man, David Thomson, as an owner is no guarantee of getting one. And should Thomson tire of being the saviour of a losing Jets hockey property, who in that market has C$1-2B lying around needed to fund the franchise properly?

Likewise, the Calgary Flames. Despite the political press conference this summer about as new agreement the arena that management promised by 2013 has still not seen a shovelful of dirt turned over. The latest gaffe was architect’s drawings for the rink being rejected by the NHL due to inadequate dressing-room space. Start again.

Should the rink not be available till 2025-26 will an evolving ownership group still be interested in shelling out the money to keep the Flames (and Stampeders, Roughnecks and Hitmen) operating in Calgary? And if they don’t, because losing sucks? While energy-rich Calgary has plenty of billionaires, few will want to risk the money needed to keep a competitive team in a small market.

Connor McDavid’s brilliance plasters over the same small-market crack in Edmonton. Yes, they have their new building, but can owner Darryl Katz fund the moves need to keep his stars and build a winner? Vancouver, owned by the Aqulini family, has a larger market base, but with Seattle Kraken just two hours away can they too write the cheques needed to create the first Stanley Cup winner since the Canucks entered the NHL in 1970.

If these Canadian markets do survive longterm it might have to be with foreign ownership. Certainly there is money to be made riding the equity train. But there also no guarantees that those carpetbagger owners might replicate the Montreal Expos and scoot to richer markets.

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Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster  A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s a regular contributor to Sirius XM Canada Talks Ch. 167. Inexact Science: The Six Most Compelling Draft Years In NHL History, his new book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org . His 2004 book Money Players was voted sixth best on the same list, and is available via http://brucedowbigginbooks.ca/book-personalaccount.aspx

BRUCE DOWBIGGIN Award-winning Author and Broadcaster Bruce Dowbiggin's career is unmatched in Canada for its diversity and breadth of experience . He is currently the editor and publisher of Not The Public Broadcaster website and is also a contributor to SiriusXM Canada Talks. His new book Cap In Hand was released in the fall of 2018. Bruce's career has included successful stints in television, radio and print. A two-time winner of the Gemini Award as Canada's top television sports broadcaster for his work with CBC-TV, Mr. Dowbiggin is also the best-selling author of "Money Players" (finalist for the 2004 National Business Book Award) and two new books-- Ice Storm: The Rise and Fall of the Greatest Vancouver Canucks Team Ever for Greystone Press and Grant Fuhr: Portrait of a Champion for Random House. His ground-breaking investigations into the life and times of Alan Eagleson led to his selection as the winner of the Gemini for Canada's top sportscaster in 1993 and again in 1996. This work earned him the reputation as one of Canada's top investigative journalists in any field. He was a featured columnist for the Calgary Herald (1998-2009) and the Globe & Mail (2009-2013) where his incisive style and wit on sports media and business won him many readers.

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Bruce Dowbiggin

Do It Once, Shame On You; Do It Twice, Shame On Me

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Now that the annoying Toronto Maple Leafs business (In Toronto The Leafs Always Fall In Spring ) is in the rearview mirror it’s time to turn Canada’s yearning eyes to… the Vancouver Canucks? Okay, the Edmonton Oilers are in the second round, too, playing the Canucks. But it’s the unlikely re-appearance of the Nucks, like some Ogopogo on skates, that commands the curious attention of Canadians.

While Edmonton may even win the Cup this year— should its forward-heavy strategy work better than it did for the Maple Leafs— seeing the team in blue and green re-emerge after eight seasons out of eleven with no playoffs— no postseason since 2020— has some intriguing side stories. It’s been bleak since the owner blew up his team in 2013 for fear of losing a few season-ticket holders.

Vancouver is the only Canadian team to go to Game 7 twice in the Finals since Montreal won the Cup in 1993. In 1994 it was defeat at the hands of Mark Messier and the Rangers. In 2011 it was the bastard, er… Boston Bruins who skated away with the Cup in seven. And, as everyone at HNIC reminds us, Calgary (2004), Edmonton (2006), Ottawa (2007) and Montreal (2021) all fell in the Final, too. But that’s it. Seven spins of the Plinko in 31 years.

With NHL ensuring that only one of the two remaining Canadian clubs will advance after this round, the chances of a Canadian team making it eight Finals in 31 years are slim. So why not the team that plays at 10 PM ET all the time, the team that was predicted to be among the League’s worst this year. Your Vancouver Canucks. After all, it would be so perfect for the team from the home of loony politics to win the Cup.

Primary among them is the symmetry of the Hamas disturbances across the county today that recall the 2011 Canucks riot that followed the Game Seven loss by Alain Vigneault’s team. For those who don’t remember, the bitter loss fused overly refreshed Canucks fans with an element that had nothing to do with hockey on a warm summer night.

As the fans streamed away from the Rogers Centre and the open-air watch parties, the now-familiar masked balaclava-wearing, backpack toting radicals moved among them, whipping up the fans’ monumental disappointment with urges to vandalize and loot. Viewers saw an incongruous picture of these fifth columnists and fans in the team jersey becoming involved in the smashing of windows and setting of fires. Sure, Montreal had seen recent riots after Stanley Cups but there was little element of politics in the drunken behaviour.

Not Vancouver. Not in 2011. Seeing the random anarchists and looters on Granville and Robson Streets the question was, “Why were the cops and elected officials so unprepared?”

It was an unsettling conclusion to a season of so much good feeling in Vancouver, staining the memory of a gifted hockey team that simply ran out of healthy bodies. The most common reaction to the riots was “Who were those non-hockey people in the riot?” There were jokes about the instigators were 257 Daniel Sedins, 319 Henrik Sedins and 195 Roberto Luongos. But they fell flat.

Many were shocked to see so many anarchists, Marxists, radical climate freaks, petty criminals and psychopaths in their midst. Like the reaction to the Palestinian mobs waving Death To Jews and From The River to the Sea, the impact on average Canadians— the kind who watch hockey, not Mao, as a religion— was unsettling. The damages soared into the tens of millions as Vancouver’s looked at a burned-out downtown and asked, “What happened?”

Later investigations revealed a large contingent of the rioters came from as far away as the Pacific Northwest and California. This was an organized event. Again, how did so many people with evil intent get into the country? The answer to most of the questions was very Canadian. People thought it couldn’t happen here.

It’s what most are saying about the Hamas-inspired wave of crime and insubordination now on screens. Canadians have always been so liberal and self effacing. How did they end up branded by homicidal Hamas as supporting the murder of babies? Isn’t there supposed to be some pay-off for being kind and opening the doors to unchecked immigration from countries where terror and instability are the watchwords?

What is just as unnerving about the Palestinian intifada ugliness is the realization that, memories of 2011, the anti-Israel demonstrators represent  only a part of the mobs denying entry to Jewish students at schools or blocking traffic or defacing buildings with messages of hate. It’s clear that anti-capitalist nihilists are in equal numbers in the crowds, whipping up hapless coeds, grad-school nimrods and nutty professors with their messages.

Worse, the uniform tents, signs, chants and more across the continent are the products of donors linked to some of the most famous names in finance— Rockefeller, Gates, Soros.

Citizens are right to wonder how the toxic politics of the Middle East has fused with a bottomless pit of money to upend their capitalist society. And to realize that the liberal tenets of toleration and friendliness espoused by feckless politicians have only brought on this crisis.

And to think that most thought it all behind them after they’d cleaned up the broken glass and burned cars in 2011. As they say, do it once, shame on you. Do it twice, shame on me.

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster  A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s a regular contributor to Sirius XM Canada Talks Ch. 167. Now for pre-order, new from the team of Evan & Bruce Dowbiggin . Deal With It: The Trades That Stunned The NHL & Changed Hockey. From Espo to Boston in 1967 to Gretz in L.A. in 1988 to Patrick Roy leaving Montreal in 1995, the stories behind the story. Launching in paperback and Kindle on #Amazon this week. Destined to be a hockey best seller. https://www.amazon.ca/Deal-Trades-Stunned-Changed-Hockey-ebook/dp/B0D236NB35/

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Bruce Dowbiggin

It Gets Late Early These Days: Time To Bounce Biden & Trudeau?

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“Take out the papers and the trash, or you don’t get no spending cash.”

Whether you’re in the stock market or real estate the question of when to sell is paramount. When to dump a tanking investment or sell a house in a bad market is an art form. Hence the expression, Timing is everything.

For the incumbent governments in Canada and the U.S. the time has come to make that risky decision of when to fish or when to cut bait with their respective leaders.

In Canada the federal Liberals, still shacked up with the NDP in a common-law embrace, have been doing denial for an extended period since they used the Covid-19 lockdown to sneak out a minority government in 2021. As soon as voters awoke to the lockdown hoax they’d lived through— courtesy of Justin Trudeau— they began to abandon him as a marketable product.

With five years to procrastinate, however, they indulged their radical agenda of climate and culture rather than address how they might be re-elected with Trudeau and his Quebec-dominated cabinet. They blew black holes in Canada’s debt load. There was a PR strategy to label Pierre Poilievre as a mini-Trump. And to buy up the floundering legacy media sources before there 2025 vote.

But for the most part the Liberals still saw Happy Ways where the mainstream saw an intellectual lightweight tilting at every Woke windmill. Since 2021 the polls have shown a steady erosion to the point where they see a Conservative majority— maybe even super-majority— if an election were called today.

Now all governments get tired over time. The biggest complaint about Stephen Harper from the talking classes in 2015 was the sense of fatigue he projected to Canadians who want their PM to be a rock star. But the collapse in Trudeau’s support has come via other very serious underpinnings from corruption (Lavalin, ME Charity, Chinese influence) to entitlement (the Carbon Tax, deficit).

However you see these issues they have led to the point where Liberals, more than half of whom will lose in the next election, must decide if they want to go to Davy Jones locker on the HMCS Skippy. Many of them will qualify for federal pensions if they hold on to the bitter end with Trudeau in October of next year. So he has that assurance of support. But if he is punted by the party he resurrected in 2010, who will succeed him? The taint of Trudeau on his most loyal sycophants will disqualify anyone in cabinet from being taken seriously for the top job.

Outside the immediate junta, names like Mark Carney— former Bank of Canada head— and deposed justice minister Jody Wilson Raybould have been put forward. The problem for anyone aspiring to replace Trudeau is they will have to face his fanatical loyalists in the PMO who’ve slapped down any pretenders so far.

The most recent forlorn hope for Trudeau was that the Federal Budget might calm the waters. Running up the deficit to perilous numbers with a menu of profligate policies to slake the restless NDP was going to force Poilievre on the defensive. So were limp attacks such as this from Trudeau cabinet pal Marc Miller.

For a brief fortnight the polling seemed to stabilize. But now more recent polls show that Trudeau’s popularity bottom was not a bottom at all, just a transfer station en route to the Marianas Trench of politics. Leaving the question of who and when as the only measurables in the equation. How much runway does he deserves and how much his successor gets are the operative problems when Liberals spend the summer in their ridings.

Meanwhile Joe Biden’s faint hope of putting his opponent in jail before the November election has done nothing to move his polling. If anything the prosecution of Donald Trump as he runs against Biden in 2024 is seen as a distinctly underhanded tactic by many outside the MSNBC mouth breathers.

While polls are a mugs’ game, the news that Biden trails Trump in all seven of the swing states he needs to be re-elected has sent shock through Team Obama, which runs the Democratic Party at the moment. There are a lot of sinecures and cushy salaries at risk here. The addition of Robert Kennedy Jr. to the presidential ballot in key states like California is further diluting the DEMs base. While RFK Jr. draws from both parties it’s expected he’ll hurt Biden most.

As if that wasn’t enough the recent pro-Palestine occupations by students and paid agitators is seen as a referendum on Biden’s support for Israel among the fanatical left-wing base of the DEMs. And polls indicate the effect has been disastrous.

Unlike the Liberals who have time to effect a palace coup, the DEMs are up against the clock with their convention coming in July. While he still plays to the Hollywood and Wall Street donors, the general public sees Biden getting more decrepit by the day. His persona as a pleasantly dazed crossing guard has worn thin.

While replacement scenarios have dogged Biden since his election (saved only by the utter dislike for his VP Kamala Harris) the party pros are talking about one last pierce of theatre: letting Biden take the nomination in July, replace Harris with a star candidate like Michelle Obama or Tom Hanks and have Biden then take a knee for health reasons.

Let the untainted replacement take on Trump, who produces a puke-in-your-mouth reaction with half the American electorate. A squishy Obama/ Bill Clinton replacement could rout Trump in a debate and bring single white women and blacks/ latinos back home to the DEMs. Seems like a longshot?

This is the party that orchestrated at least four separate legal assaults on Trump, coincidentally in the year of the election. Don’t under-estimate their chicanery. And while they  didn’t pay off the media as Trudeau has done, they don’t need to. They get the love for free.

Give them credit if they do, because doing nothing is a ticket to four years of The Don.

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster  A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s a regular contributor to Sirius XM Canada Talks Ch. 167. Now for pre-order, new from the team of Evan & Bruce Dowbiggin . Deal With It: The Trades That Stunned The NHL & Changed Hockey. From Espo to Boston in 1967 to Gretz in L.A. in 1988 to Patrick Roy leaving Montreal in 1995, the stories behind the story. Launching in paperback and Kindle on #Amazon this week. Destined to be a hockey best seller. https://www.amazon.ca/Deal-Trades-Stunned-Changed-Hockey-ebook/dp/B0D236NB35/

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