By investing in Rogers Communications (TSX:RCI.B), you can become a (very small) co-owner of the Toronto Blue Jays. But should you? Motley Fool advisor Jim Gillies will guide you through it. Would you rather read? Below you will find a transcript.
Nick Sciple: I’m Motley Fool Canada Senior Analyst Nick Sciple, and this is ‘The Five-Minute Major’, here to make you a smarter investor in about five minutes. Today we discuss the Blue Jays’ return to the World Series for the first time since 1993 and how investors can actually own a piece of the Canadian baseball team.
My guest today is Jim Gillies, Principal Advisor of Hidden Gems Canada. Jim, thanks for joining me.
Jim Gillies: Thanks, Nick. As a lifelong Blue Jays fan, I’m really excited about this.
Nick: I’m pretty sure all of Canada knows that the Blue Jays are back in the World Series for the first time since Joe Carter’s historic walk-off World Series-winning home run, but fewer people probably know that the Blue Jays are owned by Canadian telecom giant Rogers. What is Rogers’ relationship with the Blue Jays and with the Canadian professional sports ecosystem as a whole?
Jim: Rogers IS Canada’s professional sports ecosystem, or at least a big part of it. Especially in Toronto they own almost everything. They own the assets, the teams. Rogers, of course, owns the Blue Jays, who play at the Rogers facility formerly known as the Sky Dome.
All 162 games a year are broadcast on SportsNet, a kind of Canadian version of ESPN, owned by Rogers. Rogers obviously sells advertising for the match in the stadium, or in stadiums, but also over the air. So they own the team, they own the stadiums, they own the media, distribution and advertising.
And if you’re watching this on your high-speed internet connection, on your mobile devices or at home, it’s probably also being provided by Rogers, the telecommunications guys. They’re the biggest player in Ontario, one of the biggest players in Canada.
The thing is, Nick, it’s not just the Blue Jays.
Rodgers also now owns a controlling interest, 75%, in Maple Leaf Sports and Entertainment, MLSE, which owns the Toronto Maple Leafs (the most valuable team in the NHL), the 2019 champion Toronto Raptors, the Toronto FC soccer team, the Toronto Argonauts of the Canadian Football League, as well as the AHL of Leafs (the minor league affiliate), the Toronto Marlies. It also owns Scotiabank Arena, home of the Leafs and Raptors; and BMO Field, home of TFC and the Argos, and the Coca-Cola Coliseum, home of the Marlies. Most of these are all available, at least in part, through SportsNet, and those that aren’t on SportsNet are sold to other providers, so for example the Leafs will sell some of the rights to rival network TSN.
Because Rodgers has the media rights for the NHL through 2037, 2038. And I could go on, but the gist of it is, they kind of own Toronto sports, and they also own most Canadian sports.
Nick: That’s right, when you think of the crown jewels, the Infinity Stones of Canadian sports, Rogers has completed the gauntlet. However, investors have rightly always focused on the telecoms side of the business, which is much bigger than the sports and media side of the business. However, the sports side of the business is growing. All signs point to the company buying an additional 10% or 20% stake in MLSE in 2026, next year, when they have the opportunity to do so. Why might now be an interesting time to look at the sports side of the Rodgers portfolio?
Jim: So investing in Rogers, which is a publicly traded company on the TSX, it’s RCI.B is the ticker, investing in Rogers for the sports portfolio is quite problematic because even everything I just described to you, and the breadth of it all has to do with what they call the media division.
The media division accounts for between 12 and 14% of Rodgers’ total revenue. This means that even if the Jays have a great year – and they did – and even if they win the World Series – maybe they do – (despite the killer’s row for starting pitching for the Dodgers and a guy named Otani) and they manage to increase revenues substantially, it’s still likely that the media division only brings in about a sixth of total revenue.
And that’s in an aberration year where the Jays finished first and are going to the World Series. A year ago they finished last, and revenues were, shall we say, lower.
You didn’t have a hard time getting a ticket, I’ll put it this way.
But you also live in a world where the value of sports franchises is only increasing. Live sports are valuable, right? It’s one of the few things we can watch in real time, instead of having to put it on Netflix in three to six months, or whatever.
And so hidden asset values are not always reflected. You can own these things. And Rogers has been a terrible investment for a decade. It hasn’t gone anywhere in ten years; the market has more than doubled. So, bluntly, I have no interest in Rogers, the company, even with all their sports and communications riches.
But that said, there are rumors that Rogers is considering building the media division into a publicly traded entity in its own right, similar to MSG, the holding company that owns the New York Rangers and Knicks.
These rumors openly speculate about a spinout or initial public offering of a minority stake in the media division that, if fully valued, would raise significant capital for Rogers. I would REALLY be interested in owning that
when they do, and there’s probably no better time. Do you want to strike where the iron is hot? There’s no better time than after maybe a World Series win, and before the Leafs do their last, whatever chokehold they’re going to do. So I would be looking into this for the next few months, to be honest, and I would be very interested in it.
Nick: As sports fans, it’s time to keep our eyes on the Jays in the World Series, and as business people and investors, perhaps it’s time to keep an eye on what Rodgers wants to do with his sports portfolio as we look to the future. Jim, thanks for joining us for this edition of “The Five-Minute Major.” Want more stock ideas from us for our viewers? Click on the icon in the upper right corner of our corner. Thanks for joining us, and see you next time.
Jim: Thank you.
#Blue #Jays #World #Series #Buying #GoNowhere #Stocks #Buy