THE BOOK--Playing The Percentages In Baseball

Monday, December 12, 2011

You’ve heard of teams merging? How about teams splitting?

By Tangotiger, 01:23 AM

About 30 years ago, the Minnesota North Stars and the Cleveland Barons merged into one team (as North Stars). Now, how about if you have a team, oh, the Toronto Maple Leafs, that is so hugely valued, and playing in the largest hockey market in the world, and so very under-served that it could easily support two NHL teams, that the co-owners decide to split the team into two?

As it so happens, the Ontario Toronto Pension Fund has sold the MLSE (owners of the Leafs, as well as the arena they play in) to Bell and Rogers (the equivalent of Verizon and Comcast). Having Bell and Rogers being co-partners in anything is quite shocking, but this fellow lays out the case for why it makes sense. And that is, have TWO teams in Toronto, with Bell owning one, and Rogers owning the other (Rogers also owns the Jays).

Bell is also a minority owner in the Montreal Canadiens. How Bell can exist as a minority owner to TWO teams is also quite a shock. So, who knows what kind of machinations are in place. Maybe Bell sells its new Toronto team to someone, and then splits Montreal into two as well (with co-owner Molson).

Anyway, fun stuff to follow for any sports fan.

• Other Sports • Hockey

#1 (see all posts) 2011/12/12 (Mon) @ 02:51

Not a problem for anyone to be a minority owner of two teams. AEG, for example, would like to have an NHL team in Kansas City, but it won’t be the LA Kings that it owns…

#2 (see all posts) 2011/12/12 (Mon) @ 09:33

I never thought of that! The Leafs wouldn’t object to another team in Toronto if *they* owned that team!

The split between Bell and Rogers means Bell can take one, and Rogers can take the other, but the current owners get all the economic benefit of the second team.

Geez, that just makes too much sense.

#3 Neil S (see all posts) 2011/12/12 (Mon) @ 10:07

On huuuuuuge problem, though: the name and history of the Leafs surely constitutes a substantial portion of their value. How would you decide which team gets to retain the name?

(There’s also the problem of the other minority owner, Larry Tanenbaum, but that’s a much less interesting discussion...)

#4 Tangotiger (see all posts) 2011/12/12 (Mon) @ 10:10

Neil: simple enough. Bell and Rogers negotiate.

#5 Bert (see all posts) 2011/12/12 (Mon) @ 11:18

@Tango I’m not sure there’s a reasonable deal to be made there. I honestly think Rogers would demand something like 2.5:1 on what they paid for their share plus some percentage of future revenues plus some massive concessions on the broadcast side, and I can’t see Bell going for something like that.

#6 Tangotiger (see all posts) 2011/12/12 (Mon) @ 12:30

Why would Rogers be the one that gets the Leafs necessarily?

This is the point!

Say that the Toronto market is split into 65/35, Leafs and newTeam. If BOTH Rogers and Bell wants the Leafs, then it’s NOT a fair split.

It’s the proverbial: I cut, you choose.

Imagine, Rogers decides on what the split is, and then Bell chooses whether it wants Leafs or newTeam.

Or, there’s a bidding for the Leafs, and the loser gets newTeam.

Rogers to Bell: I’ll give you 200MM$, you get newTeam.

Bell to Rogers: I’ll give you 225MM$, you get newTeam.

Rogers to Bell: I’ll give you 250MM$, you get newTeam.

And so on.

It can be done, easily.

#7 AaronGNP (see all posts) 2011/12/12 (Mon) @ 13:14

This is such a clever solution to relocating a team to an existing market, I’m surprised it hasn’t been done before.

Another option (aside from relocation) would be to actually split the team, 50/50, with some sort of bidding on the naming and history. Would put the league at 32 teams, meaning equal playoff chances for all. Of course, you’d still need to find a home for the Coyotes.

#8 Bert (see all posts) 2011/12/12 (Mon) @ 20:09

I didn’t realize we were working within a scenario where it was already determined that the split was going to happen and the parties just have to figure out the price. Certainly in that case your suggestion makes sense.

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THE BOOK--Playing The Percentages In Baseball

Monday, December 12, 2011

You’ve heard of teams merging? How about teams splitting?

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