Leafs fire GM Burke as new management makes changes

Can changes make Leafs more valuable?

Samson Okalow 0

(THE CANADIAN PRESS/Chris Young)

Toronto Maple Leafs GM and president Brian Burke has been fired by the board of Maple Leaf Sports and Entertainment. After taking the reins midway through the 2008-09 season Burke had failed to get the long-suffering but highly profitable team into the playoffs. The tough-talking GM was in the last year of a reported six-year US$18-million contract.

The move comes almost a year to the day after MLSE was jointly acquired by Rogers and BCE in a deal worth US$1.32 billion. The NHL had been in an owner-imposed lockout since the beginning of the 2012-13 season, but it has now ended with a tentative agreement on a new collective bargaining agreement. The official start for a shortened 48-game season is Jan. 19.

Dave Nonis, Burke’s assistant, has been appointed to take over as GM on a full-time basis. (Nonis also replaced Burke in 2004 as GM of the Vancouver Canucks.)

Since the league and players have a new collective bargaining agreement, it may be that Bell and Rogers were interested in pursuing a strategy with which Burke was unhappy. In particular, rumours abounded that the Leafs were interested in acquiring Canucks star goalie Roberto Luongo but that Burke was not interested. These questions were put to Tom Anselmi, executive VP and COO of MLSE, at a press conference announcing the changes but he refused to comment about any trade deals with Luongo. Luongo is among the best-paid goalies in the league and is in the second year of a 12-year, $64 million contract.

Analysts at TSN (which is owned by BCE) suggested management wasn’t a fan of Burke’s rough-edged “style” and wanted a more corporate approach. At the press conference Anselmi declined to pin the firing on any one issue, but seemed to verify that management style was a major factor. He said the management change “was more about leadership style and fit” and that it was “the product of a conversation that had been going on [since August].”

The MLSE’s six-person board that fired Burke includes George Cope and Nadir Mohamed, heads of BCE and Rogers’, respectively.

Between regularly incendiary appearances on programs like Sportsnet’s Prime Time Sports, Burke most famously got into a war of words with hockey icon Don Cherry after Cherry accused him of not having any Ontario-born players on the team and for trying to have him fired from his CBC gig.

Regardless of who is at the helm, it seems unlikely that on-ice performance will have any impact on the team’s profitability (ex-making the playoffs and the additional revenue that brings, of course). Neither fan support nor revenue took a hit after the previous lockout in 2004-05. Forbes recently valued the Leafs as the NHL’s most valuable franchise at US$1 billion with a league-leading EBITDA of US$81.9 million.

However, one analyst cautions MLSE against getting too smug.

Paul Swangard,  managing director, University of Oregon’s Warsaw Sports Marketing Center, points out that ownership makes money by being able to re-sell for a profit but that salability is based on expectations of rising future revenue. A team doing as poorly on the ice as the Leafs can’t be certain about that revenue. Says Swangard, “Someone will look at them and say ‘You haven’t won a title in 45-50 years. Why would we want to buy this franchise?’

“In the long run the Maple Leafs brand will be less valuable without re-instilling some of that winning tradition and that’s where the real economic equation comes into play.”

 

Note: Rogers Communications owns Canadian Business Online.

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