Bruce Dowbiggin
Celebrity Owners– Fun, Yes, But The Equity Is Even Better
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
No, Really. Carney Is An Outsider. And Libs Are Done
The recent appearance of Liberal-leader-in-waiting Mark Carney on the Daily Show has delighted a small segment of the Canadian voting pool and enraged a goodly part as well. During his nuzzle session with a highly uncritical Jon Stewart Carney announced that he was running to replace Justin Trudeau as Liberal leader and then prime minister for however long that lasts.
(If this distinction seems trivial we would recall that then-CBC vice president Kirstine Stewart once upbraided us for saying her actor husband was supporting Trudeau’s bid to be PM. A choleric Stewart said we’d got the story wrong. How so, we asked? He’s supporting him to be Liberal leader, she thundered. Not the PM. As if this were a distinction worth making.)
Back to Carney. To understand the gravity of his announcement on the Daily Show one must remember that for a generation of concussed Liberals and NDP hacks Stewart’s show from 1999 to 2016 was the Yankee Stadium of talk shows. In their estimation, Stewart was Reggie Jackson, mashing the fastball, while CBC’s At Issue panel was Jesus Ramirez, striking out on the curve in A Ball.
So for Stewart to grant time to an unknown Canadian banker who still thinks Greta Thunberg is relevant was intriguing. Or someone paid someone. In any event, the gotcha’ line from the chat was Carney, formerly governor of the Banks of Canada and the UK and now advisor to PMJT, repeating Stewart’s suggestion that he was the “outsider” in the race to succeed Trudeau.
For most sentient Canadians this was an epic humblebrag for the billionaire son of a former governor of the Bank of Canada whose wife does investment business with Trudeau eminence gris Gerry Butts. If Carney was an outsider what constituted an insider? It was to laugh.
Social media— that part not consumed by the visit of Alberta premier Danielle Smith and gadfly investor Kevin O’Leary to Mar A Lago— boiled with sarcasm and dismissal. Those wily Liberals aren’t going to fool us now, just as we are on the cusp of Pierre Poilievre taking power. No doubt Carney’s team— including PMJT— laughed in derision.
The Liberals culture club think that, if they could pass off Skippy as remotely capable, they can dress up Carney as an outsider for gullible Canadian voters.
But Carney may have accidentally have tripped over the truth. He is now an outsider. You see, the dotty Libs think the machine that selected/ elected Skippy in 2015 still works. CBC, G&M, Macleans, TorStar would decide the candidates and curate the process. Sadly for Butts, Telford and Skippy the Family Compact has been supplanted by social media both here and in the USA.
The turning point of Trump’s victory in the U.S. presidential race was him pivoting away from the staged debates and ponderous Sunday morning shows of legacy media toward not just podcasts by Joe Rogan but also those of under-30 stars such as Theo Von, Adin Ross and Lex Fridman, among many. The cred he gained from the Gen X demo helped him sweep the Dems away. Elon Musk breaking the DEMs censorship strategy on Twitter (now X) also sent a shot at Team Kamala that the game had changed.
While Canada doesn’t have as many counter-culture podcasts as the U.S., there are enough young voters ignoring Canada’s chattering class to bury the Libs under Carney or the rest of the Goof Troop. No one with a pulse and a vote under 50 buys the old rag bag. It’s over for guys as exciting as a carrot expecting to harvest younger Canadians. They’re playing to an empty hall with the bespoke Carney.
This ironic twist is that all this is lost on Woke nobs who brag about their hip sense of humour. Who follow Stewart and MSNBC’s Rachel Maddow to keep up with Trump Derangement. Who record SNL Update to hang on the sophomoric stylings of Michael Ché and Colin Jost. Who can recite extended bits from Curb Your Enthusiasm.
Now they are the punch line. The outrage over the Mar A Lago visit by Smith and O’Leary is a perfect example of their dissociative thinking. The staged pictures had “blood boiling” in many progressives. “@OrbitStudios Jan 13 So… Kevin O’Leary is arrested immediately for treason the next time he sets foot in Canada, correct? I’m absolutely being serious here.” And that’s a mild response.
These armies of Liberal bots fumed over the treachery of talking about the economy with the man about to become the U.S. president again. Awareness much? None of the howler monkeys reacted this way when heroes like PMJT and his cabinet burned clouds of carbon to lobby the eunuchs of WEF, EU and Davos in Europe. They were hot on selling out Canada to the globalist gang’s climate narrative, and they couldn’t get there quickly enough. Crickets from the bot community.
But this is different, of course. Sure. In the past their pals in the Ottawa Press Club could protect these hypocrisies, burying unfortunate stories by segueing to David Suzuki saving seals or Margaret Attwood decrying the medieval treatment of Canadian women in the 21st century.
But social media obliterated the insider game. So much so that Trudeau and his cabinet cronies began banning speech as fast as possible. But it’s too late. Like the ghost leg syndrome, the script to shove an unelected climate crazy into the PMO will seem real to the Libs. But don’t be fooled. The end is nigh for the old way. Just look at Stewart’s ratings to see just how dead it really is.
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. His new book Deal With It: The Trades That Stunned The NHL And Changed Hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org. You can see all his books at brucedowbigginbooks.ca.
Bruce Dowbiggin
Think U.S. Hockey Model Works Best? Guess Again
Canadians are still lamenting the pasting Team Canada absorbed at the World Junior Championships in Ottawa, won by the USA. Out of the medals, beaten by Latvia and Cechia, among others. There’s talk about the ongoing problems of the development system and the people at Hockey Canada.
Yes, Canada’s top eligible players (Macklin Celibrini, Connor Bedard) are in the NHL and unavailable to the team. And the massive feeder system— prospects spread out over the CHL, Junior A and NCAA— is inefficient at best. But the talent window is definitely narrowing.
As we wrote in August of 2021, “The hockey pipeline is full of young men whose fathers could give them a hockey education but who also knew many of right people to tap into. The sophisticated training and arduous diet regimes are getting more like Tom Brady and less like Gump Worsley. And they’re expensive— even in Howe’s home nation of Canada which honours its roots.”
What might be of interest is that people in the development system of American hockey are similarly distressed about the problems of developing players in their country. Cost, bureaucracy and the sheer time commitment for families is breaking a lot of people. “This discipline and access is reflected in the United States where the boom in hockey participation is resulting not in farm boys and rink rats but in privileged sons and daughters of highly paid NHL stars getting an inside track on making the league or the Olympics.”
Topher Scott of The Hockey Think tank.com has posted about what he sees in American hockey culture. “I’ve talked to so many people in youth hockey about how to change the toxic culture – and it’s tough hearing so many good people saying they can’t do it the way they want (the right way) because everyone else is doing it the other way (the business way) and if they don’t do it that way they’ll lose their club.
I’m calling BS. If you are involved in youth hockey, please listen to this clip. And if you are a person of influence wherever you are at, stand tall and don’t cater to the crazy. The only way we’ll see positive change is if people of influence in youth hockey areas, who know better, go against the grain and lead the change.”
The comments on his post are familiar in the burgeoning hockey system that now has roots in most states in the U.S. “Such a scam to charge these families 5/6k in dues per year and then pay another 10/20/30k in travel expenses.”
—“It’s an arms race and you are not going to stop that. Make it fun for the other 90% of kids and families that aren’t part of the arms race.”
—“This system beyond broken. Organizations telling some kids In the contract we have the right to put you on the lower team, as we may find other players to replace you, along w/ we are flying players in to play.”
—“U14 has kids who live in central USA playing on east coast teams. Nj pa and ny loaded w aaa programs, many refuse to play each other because of rankings”.
—“…the hockey culture DOES not like disruptors- they are a THREAT to exposing bad things & bad people. Loss of power, control, money & damaging adult egos trumps what is best for kids.”
—“I find it unbelievable that travel hockey programs demand kids miss Fri and Monday school days to play wraparound weekend tournaments 5X/yr or risk being thrown off the team. Its gotta stop!”
Scott and his X followers are describing the same issues affecting hockey in Canada where a number of financial and social changes have created a system dominated by clubs, agents, schools and ambitious parents. The image he presents of the overbearing parent— in concert with team officials— who are stage managing a child’s progress is familiar. One that dictates needing to take out a mortgage to create a young hockey star.
As we have written recently, the NCAA decision to now allow players with service in the CHL to play at the U.S. college level has accelerated the meat grinder of development hockey in Canada. Again, delusional parents are now demanding that their child have extra ice time and a prime spot on a team so as to qualify for a pro career. Adding to the pressure is the NIL program now radically restructuring college sports in the U.S. After winning the rights to name, likeness and image in the U.S. Supreme Court athletes can now be paid millions in some cases to attend a certain school or transfer through the “portal” system,.
While NIL has not hit hockey as dramatically as other sports, it’s just a matter of time till schools wanting the next Connor Bedard to attend their school will be tossing alumni and sponsor money to over-18 prodigies. Parents seeing this will re-double efforts at the minor level to get their child on the prospect track, paying vast amounts for training and travel.
One problem in Canada, as mentioned, is the vast network of teams demanding players on the men’s side. For prospects to star on the first line or in goal there must be others to play on the third line or be a seventh defenceman. This creates a meat grinder. While clubs sometimes level with parents about ice time there are plenty who are in denial, hoping their son or daughter can still cash in on the riches in the NHL from the fringes of the roster.
Some of this has been alleviated by scholarships for players depending on their years in the system. Canadian University hockey is full of 22-26 year olds using their CHL grants to pursue education. But there are many who simply melt away to play in minor pro leagues across the country and in Europe.
In the long run this may make the CHL an elite league for under 18 players or those who can’t manage the scholastic record to switch to NCAA. The NHL likes the longer CHL schedule with its pro model, but there is much to be said for a prospect growing at an academic institution, broadening their horizons.
But, as always, parents will follow the money and the dream— even if they’re unattainable.
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. His new book Deal With It: The Trades That Stunned The NHL And Changed Hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org. You can see all his books at brucedowbigginbooks.ca.
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