By investing in Rogers Communications (TSX:RCI.B), you can become a (very small) part owner of the Toronto Blue Jays. But should you? Motley Fool advisor Jim Gillies walks you through it. Prefer to read? There’s a transcript below.
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’re discussing the Blue Jays’ return to the World Series for the first time since 1993 and how investors can actually own a piece of Canada’s baseball team.
My guest today is Hidden Gems Canada Lead Advisor, Jim Gillies. Jim, thanks for joining me.
Jim Gillies: Thank you, Nick. As a lifetime Blue Jays fan, very pumped about this.
Nick: I’m pretty sure all of Canada knows 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 folks probably know that the Blue Jays are owned by Canadian telecom giant Rogers. What’s Rogers’s relationship to the Blue Jays and to Canada’s pro sports ecosystem as a whole?
Jim: Rogers IS Canada’s pro sports ecosystem, or at least a good chunk of it. Certainly in Toronto, they pretty much own everything. They own the assets, the teams. Rogers, of course, owns the Blue Jays, who play in the Rogers center, formerly known as the Sky Dome.
All 162 games a year are broadcast on SportsNet, sort of Canada’s version of ESPN, which is owned by Rogers. Rogers, of course, sells the advertising for the game in stadium, or in stadiums, as well as over the air. So they own the team, they own the stadiums, they own the media, distribution, advertising.
And if you’re watching this over your high-speed Internet connection, either on your mobile devices or in your home, that’s probably also provided by Rogers, the telecommunications guys. They’re the largest player in Ontario, one of the largest players in Canada.
The thing is, Nick, it’s not just the Blue Jays.
Rodgers now also owns a controlling stake, 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 Leafs’ AHL (the minor league affiliate) the Toronto Marlies. It also owns the Scotiabank Arena, which is the home of the Leafs and the 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, via SportsNet, and those that aren’t on SportsNet are sold off to other carriers, so, for example, the Leafs will sell off some of the rights to competing network TSN.
Because Rodgers has the media rights for the NHL through 2037, 2038. And I could keep going, but basically the gist is, they kind of own Toronto sports, and they own most of Canadian sports as well.
Nick: That’s right, if you think about the crown gems, the Infinity Stones of Canadian sports, Rogers has completed the gauntlet. Investors, rightfully though, have historically focused on the telecom side of the business, which is much bigger than the sports and media side of the company. 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 option to do so. Why might now be an interesting time to consider looking 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 kind of problematic, because even everything I’ve just described to you, and the breadth of all of it is all in what they call the media division.
The media division accounts for between 12 and 14% of total revenue for Rodgers. Meaning, even if the Jays have an amazing year — and they did — and even if they win the World Series — they might — (murderer’s row for starting pitching for the Dodgers and some guy named Otani, notwithstanding) and they managed to boost revenues substantially, it’s still likely the media division only caps out at about one-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, we’ll say, were lower.
You didn’t have a difficult time picking up a ticket, I’ll put it that way.
But you also live in a world where the value of sports franchises is only going up. Live sports are valuable, right? It’s one of the few things we can watch in real time, rather than just having to Netflix it in three to six months, or whatever.
And so, hidden asset values aren’t always reflected. You can own these things. And Rogers has been a terrible investment for a decade. It’s gone nowhere for a decade; the market’s more than doubled. So, bluntly, I have no interest in Rogers, the company, even with all their riches of the sports and the communication.
But that said, there are rumblings that Rogers is contemplating spinning out the media division on its own as a publicly traded entity, similar to MSG, which is the holding company that owns the New York Rangers and Knicks.
Those rumblings are openly speculating on a spin-out or an IPO of a minority stake of the media division that, if fully valued, would raise substantial capital for Rogers. I would be REALLY interested in owning that
if they do complete that, and there’s probably no better time. You want to strike where the iron is hot? No better time than after maybe a World Series victory, and before the Leafs do their latest, whatever choke job they’re going to do. So, I’d be looking for this in the next few months, to be honest with you, and I’d 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 and investors, maybe time to keep an eye on what Rodgers is looking to do with its sports portfolio looking into the future. Jim, thanks for joining us for this edition of “The Five-Minute Major.” For our viewers, want more stock ideas from us? Click on the icon in the upper right of our corner. Thanks for joining us, and we’ll see you next time.
Jim: Thank you.