Analysis

Is Rogers really going to sell the Blue Jays? Don't bet on it

A report this week suggested Rogers may look to sell the Blue Jays. On paper, a move to cash in makes a bit of financial sense. But don't expect any curveballs with such a valuable property, Peter Armstrong writes.

Looking past romance of baseball, Rogers wants its shares to reflect value of its asset

The Blue Jays' value has soared as the team (and its pitchers) surged past expectations. (Tom Szczerbowski/Getty Images)

The math is pretty hard to argue with. Rogers bought the Blue Jays for a mere $165 million in 2000. Today the franchise is worth more than $1.6 billion. By any measure, that's a nifty return on investment. Rogers has made a bundle. Why not sell it now?

Speculation hit a fever pitch this week when Rogers' chief financial officer said this: "We're looking at ways to better surface values for the Blue Jays," Anthony Staffieri told a conference in New York. "[The Blue Jays have] become a very valuable asset for us that we don't get full credit for."

The quote sent both the business and sports worlds into a tizzy. Who would buy the Jays? What would they sell for? What would it mean for the team's prospects in 2018?

But it's worth taking a deep breath and looking at the whole story (or quote) for what it is. First of all, the full quote adds a pretty important caveat.

"To be clear," he said in the same breath. "There isn't anything imminent that we're about to announce, but we're certainly looking at the alternatives."

Fans cheer the team, not the owners. (Tom Szczerbowski/Getty Images)

This wasn't an announcement. Staffieri had been asked directly by a UBS analyst if it still made sense to own a sports team.

Staffieri — who has mused about selling off non-core assets in the past — initially responded that it does make sense. But he added there are other ways of getting sports content (for example, he mentioned Rogers's 12-year, $5.2 billion deal for the rights to NHL hockey).

Rogers issued a statement once speculation about a potential sale began to spread.

"We have terrific sports assets, including the Toronto Blue Jays, that have performed really well for us. As we have said, we would like to surface value and get credit for these assets in our overall company valuation."

So, what, precisely does it mean to "surface value"? One obvious way to surface value of an asset is to sell it. But the Rogers statement certainly implies Staffieri was merely trying to say the full value of the franchise isn't fully reflected in the Rogers share price. The company made it clear there are no plans, processes or timelines in place to sell the team.

Fans stream into the Rogers Centre. The team brought in revenue of $278 million US in 2017, according to Forbes. (Shutterstock / ValeStock)

Beyond the semantics, there are probably just as many arguments to sell as there are to keep the Blue Jays on the books.

Forbes says the team has annual revenues of $278 million US ($358 million Cdn). It values the franchise at $1.3 billion US ($1.68 billion Cdn). The team may have finished second last in their division, but it has the third best attendance of any team in Major League Baseball.

But these last years have been something of a historic anomaly. The Jays stunk up the American League for years, attendance was way down, and TV ratings were lagging too.

Today, even after a lousy season, the franchise is on a high, and its value has soared.

The Jays make up about three per cent of Rogers revenue, but the team gives the company an outsized halo, at least as long as the team is winning. Everyone loves the Jays when they're playing baseball in October. But does the corporate owner of a team get much credit for the good years?

The Ted Rogers statue that stands outside of the Rogers Centre was unveiled in 2013. (Mark Blinch/Reuters)

"Everybody hates the owners," says Howard Bloom of Business Sports News. "If the team wins, everyone loves the players. If the team loses, everyone blames the owners."

Bloom says if that irrational sporting maxim makes even a handful of customers choose a competitor over Rogers, it's an issue. Especially so when the Jays make up such a small fraction of the overall revenues.

On the other hand, he says Rogers needs content. Live sports is one of the very last bastions of traditional television. A large part of the value of the Jays is tied up in the fact that Rogers owns the whole enchilada: the stadium, the team and the broadcast rights. Individually, Bloom says the team isn't worth nearly as much.

"The Blue Jays [alone] can't make money," he told CBC News. "But it makes sense if you own the broadcast rights and everything else. Just to sell off one without the other? Good luck to Rogers."

Howard Bloom of Sports Business News discusses why it might make sense for Rogers to sell the Jays 4:47

Besides, Barry Schwartz, chief investment officer at Baskin Wealth Management, says live sports isn't just a buffer against changing consumer habits. He says sports programming is no longer just about watching a live game. "We're looking at sports as a brand where there's all sorts of ancillary forms of content that are emerging — you know, pre-game shows and fantasy sports," he told CBC News this week. And that gives broadcasters a firmer grip on TV and media not just today but in that unknown future of digital and over-the-top television consumption.

Jose Bautista and his famous bat flip rallied fans to the Blue Jays, if not necessarily to Rogers. (Tom Szczerbowski/Getty Images)

Baseball is a funny game though. The famous Billy Beane is quoted saying, "It's hard not to be romantic about baseball." Even the business side is touched by the romantic, ethereal, almost irrational sentiment tied up in the game.

Rogers's struggle is to tap into that sentiment, convert it into customers and count the money.

Like any asset, Rogers will most likely sell the franchise — once the gains to be had from selling the team outweigh what it's worth to the company's bottom line. Sure, there's more romance in a manager tinkering with the lineup or going to the bullpen in a late October game. But the owners deciding when to make their own moves is just as big and just as important a part of the game.

Follow Peter on Twitter @armstrongcbc

With files from the CBC's Meegan Read and Paul Haavardsrud