It was reported back in October that Rogers is considering selling the Blue Jays. Andrew Willis of the Globe’s Report On Business wrote that “After Rogers management sat down with analysts in New York last month, Citibank published a note that said Rogers brass is earmarking cash from asset sales for paying down debt, buying back shares and boosting dividends.” He added that “Coming out of the same meeting, UBS pumped out a report detailing how Rogers’s management planned to deal with the taxes that would come with selling the Jays and Cogeco shares.”
“Speculation on Rogers’s plans for the Jays and the Cogeco stake has swirled for years. But the arrival of a new CEO with a reputation for a laser focus on wireless and cable operations and the steady drumbeat for asset sales from the analysts has got the hedge-fund crowd sniffing around,” Willis explained.
Well, now according to a report from Natalie Wong of Bloomberg, which comes our way via the Globe and Mail, those notions have moved beyond the realm of speculation.
Rogers Communications Inc. is considering selling assets such as baseball’s Toronto Blue Jays and a stake in media company Cogeco Inc. to free up capital for other investments, Chief Financial Officer Tony Staffieri said.
. . .
The company has said before that it’s exploring ways to get more value from its portfolio of assets, including the Jays, but Staffieri’s comments Tuesday were more specific. Rogers still wants rights to sports programming but doesn’t have to own a team to have that, he said, pointing to the company’s 12-year deal with the National Hockey League.
The idea of Rogers selling the Jays is a very welcome one to a whole lot of Blue Jays fans. I might go as far as to say that it would be welcomed by every single Jays fan living, dead, or otherwise. And long term, I certainly would love to see an owner less concerned with maximizing operating profit, and happy to think more about winning, secure in the knowledge that the constant rise in franchise equity will make their investment a success almost no matter what.
But during the sale, as the company tries to make the club as attractive as possible to potential suitors, what might that mean for payroll?
Could Rogers be reluctant to allow the Jays to spend this winter, with a view to a sale? Could they scuttle a potential Josh Donaldson extension, make a mid-summer sell-off more likely, or thwart plans to be competitive in 2019 by reducing payroll later on?
I mean, we’ve long known that Rogers’ whims seem to have a tangible impact on how the Jays do business. In fact, just back in October, Mark Shapiro told Future Blue Jays that when fans will start to see some of the significant and much talked-about upgrades to the Rogers Centre is “up to Rogers – where it fits in the hierarchy of their capital needs” — a comment that, among others in the interview, led to the author’s observation that “inferring from his body language and comments about dealing with the folks at 333 Bloor St East, [the company divesting themselves of the team] might be a welcome development for Shapiro.”
Yes, that’s more reason to feel good that they might be moving this way, but if the money suddenly dries up this could become a very different offseason. If the Jays don’t have the twenty-odd million dollars it’s believed they have in order to help upgrade their roster, it gets quite difficult to see the club being able to upgrade enough to meet even their modest goals for 2018.
Now, the fact that the Jays extended Marco Estrada back in September, that they were reportedly looking hard at Dee Gordon in July, and that there haven’t yet been any rumblings about the club looking to move salary, probably means that these sorts of worries are unfounded. But until we get a better sense of what’s going on — and clearly, if Staffieri is speaking publicly about selling the team, something is going on — this stuff has no choice but to be seen lurking in the background of everything the team does.
And the other thing, of course, is… who do they sell the team to? It is spectacularly easy to dislike Rogers, but for all the shit they rightfully take when it comes to this team, they they’ve taken the team — with much encouragement from MLB’s recent CBAs, which have phased them out of revenue sharing, and the league’s lucrative US TV deals — from a $70 million payroll in 2011 to $163 million last season. In fact, in his Winter Meetings primer for BlueJays.com, Gregor Chisholm suggests it could go as high as $170 million in 2018.
That’s honestly not bad. And I’m not so sure how many eccentric billionaires would be lining up to buy the team. Even if there are, one need only to look at MLB’s most recent ownership change, down in Miami, to see how easily a situation can seemingly go from bad to worse.
Then again, as I wrote the last time this came up, MLSE is certainly an intriguing option.
From getting a chance to properly auction off their broadcast rights, to not having every financial decision floated through the prism of an army of stockholders, there is a lot to like about the idea of the Jays no longer being controlled by a publicly traded company — and no chance that the club might move from what’s one of the great markets in the game. Even if the Jays were to be purchased by a jointly-owned venture like MLSE — of which Rogers and Bell own 37.5% each, with the remaining 25% belonging to Larry Tanenbaum’s Kilmer Sports Inc. — that would seem to be quite preferable to the current setup. As Dave “the Hammer” Shoalts wrote for the Globe and Mail in 2015, an accounting rule known as the “equity accounting method” means that ” the profit or loss of any majority-owned asset such as the Blue Jays has to be included in Rogers’ earnings before interest, taxes, depreciation and amortization (EBITDA), which can directly affect the company’s share price,” but that “publicly traded companies can combine the profits or losses of any subsidiary companies in which they own less than a 51-per-cent interest and keep those results separate from their annual EBITDA.”
In plain terms, to crib the examples Shoalts used then, MLSE can go and spend big on Mike Babcock, Lou Lamoriello, and a state-of-the-art practice facility for the Raptors without those big outlays of cash affecting Rogers’ or BCE’s bottom in in the same way that it would if the Jays were to ramp up their budget to sign a top tier free agent. “According to a source familiar with the finances of both Rogers and BCE,” Shoalts wrote, “if Rogers were to sign [David] Price for $30-million a season, then that $30-million would have to come from the budgets of other Rogers Media companies.”
It would be interesting to see where MLSE would take the Jays, payroll wise, given that the Leafs can really only do so much beyond their capped payroll, but I’d sure as hell be interested in seeing.
And with these, the strongest rumblings yet that Rogers is serious about selling the Jays, more than at any point in the evil empire’s seventeen years of ownership, it feels like it just might really be happening. I guess we’ll see…