This article was originally published in Maclean's Magazine on September 11, 2000
Rogers Buys Blue Jays
When Ted Rogers was a boy, attending exclusive Upper Canada College in Toronto's wealthy Forest Hill neighbourhood, he didn't play baseball. As an infant, he'd lost the sight in one eye and had no depth perception. But he was a fan and he rooted for the city's minor-league team, the Maple Leafs. The club was owned by Jack Kent Cooke, a local millionaire who in the 1940s also owned radio stations and magazines. Today, as it happens, Rogers lives in the Forest Hill house that Cooke once called home. His cable and wireless communications conglomerate, Rogers Communications Inc., owns radio stations and magazines. And last week, Rogers, now 67, bought the Toronto Blue Jays baseball club.
Cooke eventually went on to become a high-powered major-league sports figure in the United States, owning the NHL's Los Angeles Kings, the NBA's Los Angeles Lakers and the NFL's Washington Redskins. Rogers, too, wants to own more sports teams. "This city deserves an NFL team," he told reporters last week. He doused speculation he wants hockey's Maple Leafs and basketball's Raptors - or even the Jays' home, the SkyDome - but he indicated he is eyeing other franchises. Yet that's where the similarities stop between a 21st-century communications baron and an old-style sports mogul. Cooke, who died in 1997, didn't hold on to his media assets and he left Canada to develop his sports enterprise south of the border. Rogers fully intends to remain in communications and in Canada. His vision encompasses a massive sports-entertainment-communications empire with plenty of cross-pollination - the buzzwords are convergence and bundling - among the parts.
The Blue Jays deal, one of the summer's worst-kept secrets, gives Rogers Communications an 80-per-cent interest in the ball club - a money-losing franchise that has been on a downward slide since 1993, when Joe Carter hit his unforgettable, take-it-all home run and skipped around the bases, clinching the Jays' second straight World Series title. After that euphoria, the team, along with the other major-league clubs, was confronted with the players' strike and the subsequent cancellation of the 1994 World Series. Since then, the Jays have struggled with stratospheric players' salaries in ever-more-expensive U.S. dollars, slack enthusiasm from the fans and benign neglect from its Belgium-based owner, beermaker Interbrew SA, which acquired the Jays when it bought Labatt Breweries of Canada in 1995. Last year, the team lost about $8 million, which wasn't too dreadful compared with 1998's losses of more than $40 million. For that, Rogers is paying $112 million (U.S.) - about $165 million - in stock and cash.
The payroll factor is a double-edged sword. The clubs that pay the highest salaries have the highest costs, but in general they have also ended up as winning teams - and it's easy to sell tickets and the potentially lucrative broadcast rights for a winner. In 1993, the Jays' payroll was among the highest in the league, at $65 million. This year, at $71 million, it was mid-range between the lowly Minnesota Twins' $23 million and the lordly New York Yankees' $136 million. Neither Rogers nor Paul Godfrey, the Jays' new president and chief executive, would say how much new money they'll pump into the team, but they did vow to bring back its glory days. "We didn't buy the team to skimp on replacing the light bulbs," Rogers said.
It's not quite right to say Rogers' ambition is to turn the Blue Jays into a profit-making machine, not that he'd be unhappy about that. What does matter is what the franchise will contribute to the other Rogers businesses - which include cable service, wireless phones, television and radio stations, video rentals, Web sites and magazines (among them Maclean's). Rogers, which delivers cable TV to 2.2 million homes, wants to put baseball up as one of the options. In the lingo, the Jays provide the content for the Rogers pipelines. But Rogers isn't thinking only about the obvious connections. "Do you know that on your wireless phone you're going to be able to have in a few years the Blue Jays, right here," he said, holding up a cellphone. "You're going to be able to see them on video." He's also keen on the idea of selling Jays tickets along with, say, cable TV and wireless services - bundling - "all on one bill."
Rogers freely admits he is taking a page from foreign media conglomerates, which are becoming more and more involved in sports. "Those companies can help sports and sports can help those companies," he said. He offered as an example News Corp., Rupert Murdoch's media giant, which owns the Los Angeles Dodgers baseball team and the Fox network. Time Warner Inc., where Rogers' friend Ted Turner is vice-chairman, is another model, owning baseball's Atlanta Braves and basketball's Atlanta Hawks, and broadcasting games on networks Turner originally established. Walt Disney Co., owner of the ABC network, holds Anaheim, Calif.'s Angels baseball team and the Mighty Ducks of hockey. "It seems to make sense if you are in our business to be assembling," said Rogers. "It's part of the entertainment-communications group of activities, for Disney or Murdoch or ourselves."
Rogers has one important hurdle to jump before his plan is complete: he wants to gain control of the specialty channel Sportsnet. Last March, the Canadian Radio-television and Telecommunications Commission ordered the CTV network to sell its 40-per-cent share in Sportsnet because it had acquired the competing TSN sports channel. Around the same time, Rogers' main rival, Montreal-based BCE Inc., took over CTV. BCE has a year to unload the holding in Sportsnet, and Rogers, which already holds 30 per cent, has the first right of refusal to buy it.
Rogers says his company "deserves" to own the channel, and feels BCE is taking its time. But buying it is not the issue. The CRTC frowns on such concentration of TV control. "We have a problem having a cable carrier owning a specialty channel," said CRTC spokesman Denis Carmel. To get Sportsnet, Rogers will comply with whatever the CRTC wants. "As far as I'm concerned," he said, "they can write the details and I'll sign the cheque. I want to make this happen."
Rogers told Maclean's he's wanted to buy the Jays "for years." But it was only last April that he got serious, and contacted Albert Gnat, a Rogers director. "Ted called me one afternoon and said, 'Do you know anyone involved in the ownership?' " Gnat recounted. Gnat phoned his friend Allan Chapin, a New York City lawyer who sits on Interbrew's board and was the Jays' chairman, and Chapin flew to Toronto. A breakfast meeting was convened at Rogers' house, beside his indoor pool, and the process was launched. They thought they'd have a Jays deal later the same month, maybe in May. "We were naïve," Gnat said. "Like in any transaction, there were a few hiccups."
There could be more hiccups before Rogers has the conglomerate he's seeking. He will have to brave analysts who say he's getting overstretched and off focus. The CRTC may throw up roadblocks. But Rogers, like Jack Kent Cooke in another time, is sure he has found a way to make big-league sports pay off.
Facts about the Toronto Blue Jays:
Estimated 1999 loss: $8 million
1993 attendance: 4.1 million
1999 attendance: 2.2 million
2000 attendance so far: down 15% from '99
Total payroll this season: $71 million
New York Yankees payroll: $136 million
Maclean's September 11, 2000