December 18, 2023

Calgary accountant suggests IPO to finance team in Montreal

By Danny Gallagher

Canadian Baseball Network

A certified public accountant and Montreal Expos fan from Calgary has an interesting concept to help raise funds to bring a team back to Montreal which lost the Expos to Washington following the 2004 season.

Wayne Kennedy said prospective Montreal franchise owner Stephen Bronfman or someone else should look at his idea of an IPO as baseball contemplates the possibility of securing expansion bids from cities soon, possibly in 2024.

“Initial Public Offerings (IPOs) are the only way to do it,” Kennedy said in an interview. “Stephen Bronfman should take note. Interest from Japan and the United States alone would probably fund it. As a baseball fan, would you not like to own shares in an MLB team? I know I would.”

Kennedy estimates that the total cost of a new franchise with the expansion fee, setting up a minor-league system, a new ballpark and other expenses would be $4-billion “with at least 50% in US dollars.”

So how does an IPO work? It involves the stock market. It offers shares of a private corporation to the public in a new stock issuance for the first time. The IPO allows a company to raise equity capital from public investors.

“I would expect an IPO would be sold out in short order with the team’s fan base would be larger than any other team except the Yankees and Dodgers,” Kennedy said. “Think of the jersey sales worldwide. Stephen Bronfman and his partners could have 50% plus 1% control and the rest of the shares would be bought by Quebecers, Americans, Japanese and throughout the rest of Canada.

“Unfortunately in Canada recently, sports team owners want to own the franchise and all that goes with it but not necessarily pay the full cost for it. To be a critic of my own suggestion, Quebecers may not like their team being owned in part by individuals and corporations outside of Quebec.

“In the recent Calgary arena deal, the corporations and the people who can afford to buy major-league franchises do not like to put up all their money to have 100% control, but they want 100% of the control and the revenue.”

Kennedy thinks Bronfman or whomever would set up an investment company to bring the Expos back. Then with the approval of Major League Baseball, the investment company goes public with an IPO. Shares of the company are sold during the IPO and the money raised goes to the company to fund operations. At the same time, the shares get listed on a stock exchange and are now free to be bought and sold by retail investors throughout the trading day.

Part of the IPO means opening up the company’s books for public scrutiny for the first time. Publicly listed companies are required to file financial reports on a regular basis.

The companies are required to provide extensive disclosures about their business and future plans.

The idea of going public with financial records may not be to a company’s liking but Kennedy’s idea is certainly worth a look.