By investing in Rogers Communications (TSX:RCI.B), you’ll be able to turn out to be a (very small) half proprietor of the Toronto Blue Jays. However do you have to? Motley Idiot advisor Jim Gillies walks you thru it. Desire to learn? There’s a transcript under.
Nick Sciple: I’m Motley Idiot Canada Senior Analyst Nick Sciple, and that is “The 5-Minute Main,” right here to make you a better investor in about 5 minutes. Right now, we’re discussing the Blue Jays’ return to the World Sequence for the primary time since 1993 and the way buyers can really personal a chunk of Canada’s baseball workforce.
My visitor as we speak is Hidden Gems Canada Lead Advisor, Jim Gillies. Jim, thanks for becoming a member of me.
Jim Gillies: Thanks, Nick. As a lifetime Blue Jays fan, very pumped about this.
Nick: I’m fairly positive all of Canada is aware of the Blue Jays are again within the World Sequence for the primary time since Joe Carter’s historic walk-off World Sequence-winning dwelling run, however fewer people in all probability know that the Blue Jays are owned by Canadian telecom big Rogers. What’s Rogers’s relationship to the Blue Jays and to Canada’s professional sports activities ecosystem as an entire?
Jim: Rogers IS Canada’s professional sports activities ecosystem, or not less than a very good chunk of it. Definitely in Toronto, they stunning a lot personal all the pieces. They personal the belongings, the groups. Rogers, in fact, owns the Blue Jays, who play within the Rogers heart, previously referred to as the Sky Dome.
All 162 video games a 12 months are broadcast on SportsNet, type of Canada’s model of ESPN, which is owned by Rogers. Rogers, in fact, sells the promoting for the sport in stadium, or in stadiums, in addition to over the air. In order that they personal the workforce, they personal the stadiums, they personal the media, distribution, promoting.
And in the event you’re watching this over your high-speed Web connection, both in your cellular gadgets or in your house, that’s in all probability additionally supplied by Rogers, the telecommunications guys. They’re the biggest participant in Ontario, one of many largest gamers in Canada.
The factor is, Nick, it’s not simply the Blue Jays.
Rodgers now additionally owns a controlling stake, 75%, in Maple Leaf Sports activities and Leisure, MLSE, which owns the Toronto Maple Leafs (probably the most helpful workforce within the NHL), the 2019 champion Toronto Raptors, the Toronto FC soccer workforce, the Toronto Argonauts of the Canadian Soccer League, in addition to the Leafs’ AHL (the minor league affiliate) the Toronto Marlies. It additionally owns the Scotiabank Area, which is the house of the Leafs and the Raptors; and BMO Subject, dwelling of TFC and the Argos, and the Coca-Cola Coliseum, dwelling of the Marlies. Most of those are all out there, not less than partially, through SportsNet, and people who aren’t on SportsNet are bought off to different carriers, so, for instance, the Leafs will dump among the rights to competing community TSN.
As a result of Rodgers has the media rights for the NHL via 2037, 2038. And I might maintain going, however principally the gist is, they form of personal Toronto sports activities, they usually personal most of Canadian sports activities as effectively.
Nick: That’s proper, if you concentrate on the crown gems, the Infinity Stones of Canadian sports activities, Rogers has accomplished the gauntlet. Buyers, rightfully although, have traditionally targeted on the telecom facet of the enterprise, which is far larger than the sports activities and media facet of the corporate. Nonetheless, the sports activities facet of the enterprise is rising. All indicators level to the corporate shopping for an extra 10% or 20% stake in MLSE in 2026, subsequent 12 months, after they have the choice to take action. Why would possibly now be an fascinating time to think about trying on the sports activities facet of the Rodgers portfolio?
Jim: So, investing in Rogers, which is a publicly traded firm on the TSX, it’s RCI.B is the ticker, investing in Rogers for the sports activities portfolio is form of problematic, as a result of even all the pieces I’ve simply described to you, and the breadth of all of it’s all in what they name the media division.
The media division accounts for between 12 and 14% of whole income for Rodgers. Which means, even when the Jays have an incredible 12 months — they usually did — and even when they win the World Sequence — they could — (assassin’s row for beginning pitching for the Dodgers and a few man named Otani, however) they usually managed to spice up revenues considerably, it’s nonetheless doubtless the media division solely caps out at about one-sixth of whole income.
And that’s in an aberration 12 months the place the Jays completed first and are going to the World Sequence. A 12 months in the past, they completed final, and revenues, we’ll say, had been decrease.
You didn’t have a troublesome time choosing up a ticket, I’ll put it that means.
However you additionally dwell in a world the place the worth of sports activities franchises is barely going up. Reside sports activities are helpful, proper? It’s one of many few issues we will watch in actual time, quite than simply having to Netflix it in three to 6 months, or no matter.
And so, hidden asset values aren’t at all times mirrored. You possibly can personal this stuff. And Rogers has been a horrible funding for a decade. It’s gone nowhere for a decade; the market’s greater than doubled. So, bluntly, I’ve no real interest in Rogers, the corporate, even with all their riches of the sports activities and the communication.
However that mentioned, there are rumblings that Rogers is considering spinning out the media division by itself as a publicly traded entity, much like MSG, which is the holding firm that owns the New York Rangers and Knicks.
These rumblings are overtly speculating on a spin-out or an IPO of a minority stake of the media division that, if absolutely valued, would increase substantial capital for Rogers. I’d be REALLY enthusiastic about proudly owning that
in the event that they do full that, and there’s in all probability no higher time. You need to strike the place the iron is sizzling? No higher time than after perhaps a World Sequence victory, and earlier than the Leafs do their newest, no matter choke job they’re going to do. So, I’d be searching for this within the subsequent few months, to be trustworthy with you, and I’d be very enthusiastic about it.
Nick: As sports activities followers, it’s time to maintain our eyes on the Jays within the World Sequence, and as enterprise and buyers, perhaps time to control what Rodgers is trying to do with its sports activities portfolio trying into the longer term. Jim, thanks for becoming a member of us for this version of “The 5-Minute Main.” For our viewers, need extra inventory concepts from us? Click on on the icon within the higher proper of our nook. Thanks for becoming a member of us, and we’ll see you subsequent time.
Jim: Thanks.
