Blue Jays serve up lesson for advisors

Blue Jays serve up lesson for advisors

Blue Jays serve up lesson for advisors Rogers Communications paid $112 million in 2000 for 80% ownership in the Toronto Blue Jays. In the playoffs for the first time in 22 years experts suggest its value today is $1.5 billion providing strong support for putting clients into sports-related investments.
 
“The Blue Jays are more valuable in Rogers Communications’ hands than any other ownership group by virtue of the company owning the team, the ballpark, the radio and TV channels where the games are broadcast, and bringing it all under one umbrella,” Peter J. Schwartz, a presidential research scholar at New York University who specializes in professional sports team valuations told Bloomberg. “The way it’s all packaged, they’re really in an advantageous position.”
 
Before advisors rush to put their clients into Rogers’ stock it’s important to remember that the Blue Jays renaissance barely registers on the company’s top-line revenue. In addition, the Canadian dollar’s lost 25% of its value in the last three years reducing the impact of the team’s resurgence.
 
Not to mention there are other sports-related stocks that might make better pure-play investments such as Madison Square Garden, Manchester United or even Nike and Under Armour.
 
In September MSG spun-off its media business into a separate public company from its sports teams (New York Knicks, New York Rangers) and entertainment properties (Madison Square Garden and Radio City Music Hall). Together the two businesses have a market cap of $5.8 billion.
 
When MSG was spun-off from Cablevision back in 2010 its market cap was approximately $2.2 billion, considerably less than the market cap today, and much less than the analyst valuation of $6.7 billion. Assuming this valuation an investor would have achieved an annualized return of 25% over the past five years, better than Rogers’ annualized return from the Jays.
 
And you can easily sell MSG’s stock.
 
But you could have done even better with Nike and Under Armour who achieved annualized returns of 26% and 55% respectively over the same period.
 
Who says sports doesn’t pay.