The Ontario Teachers’ Pension Plan is raising its stake in the company that owns the Toronto Maple Leafs in a move that could make it easier for the pension fund to sell its holding in one of Canada’s most valuable sports properties.
The fund said Tuesday it’s in advanced talks with TD Capital Group to buy its stake in Maple Leaf Sports and Entertainment, which also owns the NBA’s Toronto Raptors, the Air Canada Centre and other sports teams and assets.
Teachers, which has long controlled Maple Leaf Sports, said it has reached an understanding on the principal financial terms with TD Capital (TSX:TD), but did not say what they were.
Teachers’ has been exploring “strategic alternatives” regarding its ownership in Maple Leaf Sports and Entertainment including a possible sale of the company.
With a liability of billions of dollars on its books for f future pension benefits it must pay to retired Ontario teachers, the pension fund faces tough choices as it tries to maximize the value of its investments so its finances are sound.
It’s estimated the sports team operator could be worth between $1.5 billion to $2 billion since the Leafs are a lucrative money maker in what has long been one of the best hockey markets in the world.
Teachers paid $180 million in 1994 to buy into what became Maple Leaf Sports and holds 66 per cent of the company. TD owns just under 13.5 per cent.
Teachers’ president and chief executive Jim Leech said the TD agreement would streamline the sales process.
The deal would consolidate ownership of the MLSE the hands of two owners: Teachers’ and Kilmer Sports, which is controlled by Toronto businessman Larry Tanenbaum.
“Last year a number of people whispered interesting numbers in our ear and so we decided to put a process in place,” Leech said at the Bloomberg Economic Summit in Toronto.
“So well see if those numbers turn into reality and if they don’t its business as usual. Its a great asset. ”
Leech said enhancing the pension fund’s stake “reduces a number of variables” in the potential sale process, making it easier to attract buyers.
He said the fund is hoping to reach a decision on the sale by the summer. However, Leech declined to elaborate on who potential buyers might be or how much they might pay.
He said the decision on whether to sell will come down to the math.
TD said it has been a financial investor in MLSE.
“As with any financial investment, we are prepared to exit at the right time and on the right terms,” the bank said in a statement.
“We believe this proposed transaction affords us that opportunity.”
The deal will be subject to NHL and regulator approvals.
TD Capital Group holds a 13.46 per cent minority share of Maple Leaf Sports and Entertainment which also controls the NBA’s Toronto Raptors, the Toronto FC soccer franchise and the AHL’s Toronto Marlies. MLSE also owns the Air Canada Centre.
Teachers’ stake could increase to between 76.35 per cent and 79.53 per cent, subject to the MLSE shareholders’ agreement
Kilmer Sports holds about 20.5 per cent.
The Ontario Teachers’ Pension Plan administers the pensions of 295,000 active and retired teachers in the province.
With files from Sunny Freeman