Rogers/Bell: Thinking About Afterthoughts

With all the oxygen in the Toronto sports conversation being taken up by upcoming changes in the world of our benevolent corporate overlords I thought I’d chip in with a typical bit of contrarianism.  In the TFC corner of this discussion, beyond trying to parse out what all this means for TFC’s chances of winning in the immediate future, a not insignificant part of the conversation has centred on the unexamined assumption that TFC isn’t really an important part of the deal.  I can’t say with confidence that such an assumption is incorrect, at least in terms of the valuation of MLSE the deal implies, but there’s something that needs to be challenged:

The "afterthought" narrative is being overstated.

MLS/TFC's current cash flow contribution to the overall MLSE portfolio is small potatoes right now and that's why the media isn't talking about it much in the context of the deal to buy OTPP's share of MLSE.  However, if the executives at Rogers and Bell have half a brain - and their already heavy involvement with two of the three Canadian MLS teams indicates that they do - then they understand that, with the groundwork that's been laid over the last decade, the sport best positioned to really have explosive growth (as a spectator sport) in North America over the next two or three decades is soccer.

Here's the thing: predicting the future is very difficult and generally something you should shy away from without including the largest amount of qualifiers possible.  If there's one thing that a solid study of history shows though it's that, most of the time, the "common sense" view of the future is too conservative.  Most people view the future solely through the lens of the present and can't imagine a future that's radically different from the present they're then experiencing.  Too often an accurate forecast of the future will seem fantastic if not outright impossible to the "level headed" of the present.  So, accepting that the possibility I'm about to present will seem outrageous, indulge me a little.

Imagine a world where, in 25 years, MLS is one of the top 5 or 6 soccer leagues in the world; suddenly, TFC isn't small potatoes.


Consider this for one second: the OTPP is ostensibly selling their share of MLSE because they believe that the growth potential of pro sports (and thus the valuation of their sports properties) has maxed out.  Most of the analysis of the Rogers/Bell joint deal has, correctly, concentrated on the synergistic potential latent in media ownership of Southern Ontario’s major pro sports franchises allowing those two companies the nearly exclusive potential to squeeze more growth out of those franchises.  What that ignores though is that there’s one sports property in the MLSE portfolio that, precisely because it is small potatoes, still has the potential to experience significant growth: MLS/TFC.  So, from this perspective, the very thing that makes TFC an afterthought now is precisely what makes it so attractive in the long term.  It gets even better though.

Soccer is a global game.  Compared to the worldwide growth potential of a league like the NHL I’d strongly suggest that the smart money is on soccer.  Again, imagine that world 25 years from now where MLS is taken seriously beyond its borders as one of the world’s top leagues.  Suddenly, MLS’s strategic position as a multilingual anglo/latino hybrid league, playing in multiple time zones located between Europe and Asia (and in sync with South America), in the world’s most wealthy nation that is THE nexus of global culture becomes of tremendous importance.  The key thing to understand is that as a league MLS does not have to become the dominant sports league in its domestic market to become a much bigger global phenomenon than most people can probably imagine.  As North American soccer fans we spend too much energy comparing our league to the Big Four North American pro team sports while looking enviously at the major European (and occasionally, depending on your heritage, Mexican and South American) leagues and their seemingly unattainable higher standard and prestige.  Here’s the thing though: just because Toronto FC will never surpass the Toronto Maple Leafs in the Southern Ontario and Canadian sports market doesn’t mean that one day it might not be an as, or more, important part of the MLSE portfolio.  The Toronto Maple Leafs will never sell many jerseys in China or have fans watching games late at night on internet streams (courtesy of Bell/Rogers) in cities throughout Africa.  Toronto FC on the other hand?  Again, it takes guts to imagine but it’s certainly not impossible.

The absolute best part for the new owners of MLSE though?  If they don’t want to they won’t even have to do the heavy lifting.  By acquiring the parent company of Toronto FC Rogers and Bell have entered into the partnership that owns MLS LLC.  Their new American partners are very committed to building the league’s brand already.  There is very big money, with significant existing media and sports portfolios, that is backing Major League Soccer.  While MLS will almost certainly never rival the NFL, probably not even MLB and the NBA, in its own domestic market I see no reason to believe that it can’t, long term, catch and surpass the NHL in the United States: demographics and climate just seem to be on MLS’s side.  Again, in terms of growth potential from the current position, my sense is that the smart money favours MLS over the NHL; our hockey loving mainstream media isn’t going to be the one that champions that point of view though so don’t expect to hear it from them.  Furthermore, if there are two things too often forgotten in discussions concerning the United States (because it’s so blatantly obvious) it’s that the United States is a very large and very wealthy country. Contrary to the hyper-ventilating of the alarmist media we’re inundated with I’d conservatively suggest that neither of those facts is likely to change significantly in the next 50 or so years.  So, combining the previous observations together, it’s easy to see why, over the next few decades, having a small piece of the future MLS pie might be much more valuable than having a big piece of the, relatively speaking, already maxed out NHL.

Really, if you want to talk afterthoughts I’ll point you in the direction of the CFL.  (Sorry CFL fans.  I think Canadian football is a great cultural institution in this country, won’t go away, and may even benefit from the deal but, long term, there’s really very little growth potential in a league that will never be popular beyond one wealthy but smallish country.   Even if it can break through in said country’s media capital that still puts it way behind a continental league playing a global sport like MLS.)

So what’s it all mean for TFC specifically?  That’s a lot harder to say.  My impression is that, for all their bumbling incompetence and lack of soccer savvy, MLSE really did have the objective of turning Toronto FC into one of Major League Soccer’s premier brands.  That normally takes winning and, even if they’ve been monumentally unsuccessful so far by and large,* there has only rarely been, most often in hindsight,** a lack of resources committed to that objective.  Will Rogers and Bell be inclined to continue that commitment?  I can’t really hazard a guess other than to say I don’t see why not.  And it’s not like you can’t read every other TFC commenters opinion on that question right now and form you own!  The safe bet seems to be that, because this is really just a change at the level two steps above TFC operationally, nothing much will change.  As always: we’ll see.

All this sounds impossible?  Check back in 25 years.

*Coming soon, I promise, a “how crap has TFC been” retrospective.

**And then I’ll get to Mo.