Winning is nice, but Tim Leiweke is playing a higher-stakes game at Maple Leaf Sports and Entertainment. When Rogers Communications and Bell paid a combined $1.07 billion for 75% of MLSE, it wasn’t just to sell tickets and stream highlights to mobile devices. The real reason companies buy sports teams is to flip those assets down the road – at a much higher valuation – while enjoying the cash flow that comes along the way.
Prime sports assets have an uncanny ability to appreciate in value – particularly if you build assets around them. This is Leiweke’s forte. When he joined the Los Angeles Kings in 1996, they were a struggling hockey team at the end of the Gretzky era. Working for Denver billionaire Phil Anschutz, Leiweke built the Anschutz Entertainment Group (AEG) into a model for professional sports ownership – a constellation of properties that includes the Kings, the Lakers, the Galaxy, and others. Built around them are assets and investments ranging from newly built stadiums to the L.A. Live entertainment campus, which churns out revenue from its hotel, restaurant and convention centre facilities. In 17 years, Leiweke oversaw the acquisition of more than 60 businesses, and AEG is now worth upwards of $8billion (U.S.).
That’s why Leiweke has come to Toronto. It’s all about valuation and expansion. Already, there are rumours – true or not – that MLSE will buy the CFL’s Toronto Argonauts and renew the push to bring an NFL franchise to Canada.
Winning increases the company’s value, and Leiweke’s ambitious goal is to double MLSE’s by 2020 – which means Rogers and Bell would be cashing a cheque for several billion. Not a bad return. That is why big companies buy sports teams.