The Ontario Teachers' Pension Plan has decided to keep its stake in the company that owns the Toronto Maple Leafs hockey team after an eight-month review.
Teachers' launched a review of its ownership stake in Maple Leaf Sports and Entertainment in March after it received inquiries from possible buyers.
“Teachers' has concluded this eight-month process with the decision to maintain its stake in MLSE, which has been and continues to be a very successful investment,” the pension fund said in a statement.
Maple Leaf Sports is a profitable company, with sports and real estate operations, but its major sports properties - the Leafs and Raptors of the NBA - face challenges in their businesses.
The Leafs are better this year but have not made the NHL playoffs in years and the Raptors are stuck in an NBA lockout that threatens to wipe out the entire season.
Teachers' increased its stake in the company to 79.5 per cent in September with the purchase of TD Capital Group's 13.5 per cent stake. At the time, it was thought the move was a step to streamline the sale of the pension fund's stake in the team.
Kilmer Sports, which is controlled by Toronto businessman Larry Tanenbaum, owns the remaining stake and holds a right of first refusal on any sale by Teachers'.
U.S. private equity firm Providence Equity Partners - the company behind the Yankees Entertainment and Sports Network - had expressed an interest in buying the 80 per cent MLSE stake.
Rogers Communications Inc. (TSX:RCI.B), which owns the Toronto Blue Jays baseball franchise as well as numerous media and telecom businesses, was also named as another possible bidder.
In addition to the Leafs, MLSE also owns the NBA's Toronto Raptors, the AHL's Toronto Marlies, the MLS's Toronto FC and the Air Canada Centre, as well as several media assets.
It's estimated MLSE is worth between $1.5 billion and $2 billion since the Leafs are a lucrative money maker in what has long been one of the best hockey markets in the world.
However, setting a market price on the sports company is not a science since a lot of the value in a franchise is based on whether the team will make the playoffs, which can produce huge revenues and fatter profits at the gate, merchandising and other sources.
The Leafs are playing better this year and could make the playoffs for the first time since 2003-2004.
As well, the NBA lockout - the first month of the season has already been cancelled as the union and owners fight over a new contract - has taken millions of dollars in revenues away from the Raptors, with no settlement in sight.
As well, a falling Canadian dollar would also lower the value of Maple Leaf Sports to an American buyer because the Canadian company generates its finances and operates in Canadian currency.
A dollar at par or above the value of the U.S. greenback makes Maple Leaf Sports more lucrative to American buyers. But the loonie has dropped to about 95 cents in recent weeks and could go lower.