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Lawsuit over LeBreton Flats settled between Capital Sports Inc. and Trinity Developments
Bruce Garrioch, Ottawa Citizen
Dec 12, 2022 • 35 minutes ago • 4 minute read
The Ottawa Senators confirmed Monday night a lawsuit launched by Capital Sports Management Inc. (CSMI) against former partners in the LeBreton Flats project has been settled.
“All the parties involved in this matter have reached an out-of-court settlement,” the club said in a statement before facing the Anaheim Ducks at the Canadian Tire Centre. “CSMI will not comment further.”
Though this news comes with the Senators looking for a new owner after the Melnyk family put the club up for sale last month, league sources have told this newspaper this lawsuit would have no effect on the transaction to bring in a new owner.
“The lawsuit wasn’t important and wouldn’t have stopped the sale,” a league source said Monday.
That’s because Eugene Melnyk launched the lawsuit for $700 million against John Ruddy through his company CSMI, which is a separate entity from the Senators. Trinity countersued for $1 billion and the two sides had been going through discovery in court for several months.
This does allow the incoming owner to have a clean slate when it comes to signing an agreement with the National Capital Commission for a new lease at LeBreton Flats. The NCC is hoping to have a deal in place for a new rink in place by the fall with the club’s new owner.
The Senators were given preferred bidder status by the NCC in June and have signed a memorandum of understanding to have a lease in place for a six-acre parcel of land to build a new arena to house the club.
The matter was scheduled to go to court after CSMI and the Trinity Development Group launched lawsuits against each other after a bid to redevelop LeBreton Flats fell through in 2018.
Melnyk wasn’t happy that Trinity’s John Ruddy had opted to build office towers at 900 Albert, across the street from LeBreton Flats while also being involved in the project. The two sides simply could not find common ground, and that’s when the deal was scuttled.
After Melnyk passed away following a lengthy illness last March, the two sides continued to do battle through lawyers. The trial would have been long and if it had gone to court may have dragged on for months, then both sides would have had to wait for a decision.
The reality is this lawsuit had become nothing more than a distraction.
Now, the focus will be solely on the sale of the franchise, not that many were paying attention to this lawsuit outside of a couple of media people, but it’s another piece of business done.
Deputy commissioner Bill Daly told reporters at the NHL’s board of governors meetings in Palm Beach, Fla. Monday that there has been plenty of interest from groups interested in purchasing the Senators from the Melnyk family.
“There seems to be significant interest, which is good,” Daly said. “(It) should be a healthy process.”
Daly said he’s not surprised there’s been so many groups investigate the possibility of purchasing the Senators. We’ve been told through this process that more than 20 groups have contacted New York-based banker Galatioto Sports Partners (GSP) which is running the sale process.
“Look, there’s a lot of interest in the franchise, which I think speaks highly of the league as an investment,” Daly said.
Last month, following the general managers’ meetings in Toronto, Daly told this newspaper that the league had received calls from interested parties.
Daly added: “Everybody knows what the rules of the game are, which is this team is staying in Ottawa and you’re looking to purchase this team and operating in Ottawa.”
This newspaper was first to report the new owner must also agree to build the rink at LeBreton Flats. The league has also encouraging any prospective buyer that Vancouver-born actor Ryan Reynolds should be brought in as a partner in the new ownership group.
There’s no formal update on the sale scheduled at this meeting. Commissioner Gary Bettman and Daly are planning to give the governors a glimpse of the process when matters concerning all the franchise’s are on the agenda.
Right now, interested parties are pouring through the club’s books using a website set up by GSP that opened in early December. In the coming weeks, potentials buyers will be asked to submit bids and sources have suggested there could be as many as five or six.
While Toronto billionaire Michael Andlauer, a part-owner of the Montreal Canadiens, is considered the frontrunner, he’s hardly alone in this process. We’re told Toronto real estate developers Michael and Jeffrey Kimel have also put together a significant partnership and there’s also the Canadian-based “mystery group” we were first to report about.
There’s also speculation Ruddy wanted the lawsuit off the table so he can partner with Andlauer but it’s not known if that’s reality.
But as a league source noted to this newspaper late Monday, let’s not forget the power that Bettman holds in the process.
That’s why many consider Andlauer to be the frontrunner. He’s already a member of the league’s board of governors and he’s in the process of trying to sell his share in the Canadiens.
“Remember (Bettman) picks the new owner,” the source said.
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