LeBreton Flats 2.0 (RendezVous LeBreton) | Cancelled

[FutureWickedCity]

He used strong-arm tactics to win the bid for his bland development proposal, and now he's musing about walking away from the project. Not impressed

[acottawa]

Originally Posted by daud

He moves to Quebec and he buys himself 10 years then he's in the exact same position. Long term, Quebec City is a poorer market than Ottawa and the NHL knows it.

I don't think Melnyk holds the cards to the degree he wishes. I think the fans and the NHL brass do. I personally believe there are at least 1 or 2 suitors eager to buy this team, keep it in Ottawa in conjunction with Lebreton development.

Further, I would add that his comments, as an owner of an enterprise that brings in 135 million from local residents per year do nothing to support his revenues and operations. If he's posturing for position with lebreton, he needs to learn to not throw his fans under the bus as a negotiating tactic instead of literally shooting his brand in the foot every time he talks.

Lemieux, Bettman, Daly all had positive commentary for the market, the process, the move downtown and I think he got zipped by NHL brass on Saturday.

I also think he is not happy about this NHL classic at all. He sees it as 1)ticket revenue that is not going to him (it goes to the league) and 2)additional revenue that is going to OSEG and not him

So, essentially he was a party pooper from the get go. He's a selfish, arrogant owner and his only shtick is bullying to get his way. The only loser to come of all this will be him.

PS: it still blows my mind that you can't buy seasons tickets online. Its 2017. Total marketing fail. He should start with that instead of putting a gun to his clients heads.

Quebec has a brand new arena, a potential deep-pocketed potential partner that wants the broadcast rights for its sports channel, a cooperative local government and fans that miss hockey and are willing to buy tickets. Both cities have tiny corporate sectors, so that is a shared problem (unlike Winnipeg or the Alberta teams). Ottawa has a much larger CMA, which would be the risk in any move, although Quebec probably has a larger hinterland.

The league pays the host team for the equivalent of a full house, so Saturday was his highest revenue game of the season. I think he is probably cranky that the government pulled the plug on the hill rink and then built a rink themselves (forcing him to deal with OSEG in the first place).

Ultimately it will be the league that will decide, but threatening to relocate is a core part of the business model of all professional sports leagues in North America (to extract resources from local government and the pressure fans to buy tickets), so if they're obviously forcing a team to stay in a marginal market against the owner's wishes (and without fan or local government support) it makes things more difficult for other owners.

The real question is how attached the NHL is to the Ottawa market, or whether they're more attached to the Ottawa market than other potential markets. Many contributors to this thread seem to think they are very attached to the market. I'm not so sure.

[phil235]

Originally Posted by acottawa

A 10M operating profit is probably a loss after debt servicing costs and taxes.

I don't think this is true. Forbes takes those things into account when they do their calculations. Also, don't forget that this team has a very lucrative regional TV contract with TSN that is not mentioned very often here, but has a huge impact on their bottom line. And TV ratings are still good.

Also, debt servicing is a bit of a red herring. Melnyk bought the team out of bankruptcy, so it had no debt. To the extent that he has massive debt at this stage, it's because he has used the team as collateral to finance his other money-losing business ventures. The fact that the debt relates to other ventures and not the team has been widely reported.

That said, I do agree. Ottawa people can have all the excuses they want for not going, but if attendance doesn't improve, the team is going to be a candidate for relocation.

[YOWflier]

Originally Posted by acottawa

The Nordiques thank you for your attitude

Anyone with this belief knows very little or nothing about NHL governance, relocation procedures, expansion procedures, and the the fees corresponding to each.

Wake me up when I should become afraid.

[YOWflier]

Originally Posted by acottawa

OSEG ...

Funny how I never mentioned OSEG. Why are you exactly?

[wingman]

I'm not a Sens fan; I moved here in 2001 with a favourite team intact. I have been to many games, it's such a privilege to have one of the major sport leagues in this city, and I attend with this in mind.

What I hear when I hear Melnyk speak is that he is not willing to go this alone. Again, this is just me, and I do agree his message is nowhere near clear, but what I take from it is this:

- fans, if you are willing to do your part (put your asses in the seats), support the team through the good and the bad, I will do my part and spend as much as I can. BUT, if you (as fans) do not do your part, I am not in a position to foot this bill on my own. I need your support (read money) in order to be able to give the team the resources it needs to be a winner. So, the reason there is a skeleton staff, and not spending to the cap and whatever else that could be done is because he feels the community is not carrying its half. I feel what he is saying is that he is paying for what he can, and if you want anything more you have to support the team (with attendance, merch, etc).

Again, I do agree that the way he shares his message is wrong, but I feel he is only being honest.

So, if the people are not willing to go, then you won't have a winner for the most part. I am sure the team will luck into some great draft picks and have a winner on a budget at some point, but that will not lead to a perennial contender.

[daud]

Originally Posted by acottawa

Quebec has a brand new arena, a potential deep-pocketed potential partner that wants the broadcast rights for its sports channel, a cooperative local government and fans that miss hockey and are willing to buy tickets. Both cities have tiny corporate sectors, so that is a shared problem (unlike Winnipeg or the Alberta teams). Ottawa has a much larger CMA, which would be the risk in any move, although Quebec probably has a larger hinterland.

The league pays the host team for the equivalent of a full house, so Saturday was his highest revenue game of the season. I think he is probably cranky that the government pulled the plug on the hill rink and then built a rink themselves (forcing him to deal with OSEG in the first place).

Ultimately it will be the league that will decide, but threatening to relocate is a core part of the business model of all professional sports leagues in North America (to extract resources from local government and the pressure fans to buy tickets), so if they're obviously forcing a team to stay in a marginal market against the owner's wishes (and without fan or local government support) it makes things more difficult for other owners.

The real question is how attached the NHL is to the Ottawa market, or whether they're more attached to the Ottawa market than other potential markets. Many contributors to this thread seem to think they are very attached to the market. I'm not so sure.

all valid points. I think the interview and his comments really underscored that he is having some challenges or is being forced to make some decisions he doesn't want to make to push the Lebreton project forward.

[acottawa]

Originally Posted by ac888yow

Funny how I never mentioned OSEG. Why are you exactly?

It is the only potential buyer anyone has mentioned (here or in the media). If you're aware of another local buyer or an external buyer that would want to keep the team in Ottawa then feel free to name names.

[Lakeofthewood]

Originally Posted by daud

all valid points. I think the interview and his comments really underscored that he is having some challenges or is being forced to make some decisions he doesn't want to make to push the Lebreton project forward.

I don't know if its just posturing to get a better deal for Lebreton, but he can't seriously believe he would lose attendance / season ticket holders if they move downtown? He was quoted once or twice in the article implying that losing Kanata fans is a big deal to him.

Like he's aware there are 800,000 other people in Ottawa that don't live in Kanata right?? And SOME of those people maybe, just maybe, don't like travelling an hour plus each way to games?

[daud]

Originally Posted by Lakeofthewood

I don't know if its just posturing to get a better deal for Lebreton, but he can't seriously believe he would lose attendance / season ticket holders if they move downtown? He was quoted once or twice in the article implying that losing Kanata fans is a big deal to him.

Like he's aware there are 800,000 other people in Ottawa that don't live in Kanata right?? And SOME of those people maybe, just maybe, don't like travelling an hour plus each way to games?

The Kanata stuff was bizarre. He's on record in Toronto radio again whining that the arena is in the middle of nowhere; he pretty much had an orgasm when Rendezvous won the bid so the comments about a love in for Kanata have to be either posturing or backtracking because of negotiation issues.

He talked about retrofitting the stadium in Kanata-this to me says something isn't to his liking in these lebreton negotiations and he wants options. I bet the money talk involves him ceding some control.

Somethings up and the timing of that Liam McGuire article with all this buzz is noteworthy.

[acottawa]

Originally Posted by phil235

I don't think this is true. Forbes takes those things into account when they do their calculations. Also, don't forget that this team has a very lucrative regional TV contract with TSN that is not mentioned very often here, but has a huge impact on their bottom line. And TV ratings are still good.

Also, debt servicing is a bit of a red herring. Melnyk bought the team out of bankruptcy, so it had no debt. To the extent that he has massive debt at this stage, it's because he has used the team as collateral to finance his other money-losing business ventures. The fact that the debt relates to other ventures and not the team has been widely reported.

Operating profit is profit before taxes and debt servicing. Since Forbes is a business magazine I assume they use the standard definition. I also assume the revenue from TV was included in the revenue in the Forbes chart. However, hockey is still heavily dependent on gate (compared to other sports)

Do you have a link indicating the debt came from other ventures? It was my understanding the initial purchase was leveraged.

[YOWflier]

Originally Posted by acottawa

It is the only potential buyer anyone has mentioned (here or in the media). If you're aware of another local buyer or an external buyer that would want to keep the team in Ottawa then feel free to name names.

Stay tuned.

[acottawa]

Originally Posted by daud

Somethings up and the timing of that Liam McGuire article with all this buzz is noteworthy.

I agree he was enthusiastic about Lebreton earlier. I wonder if they just ran the numbers (cost of arena infrastructure, what the NCC wants, what the city is offering, what developers are willing to pay for lots) and they don't work.

[phil235]

Originally Posted by acottawa

Operating profit is profit before taxes and debt servicing. Since Forbes is a business magazine I assume they use the standard definition. I also assume the revenue from TV was included in the revenue in the Forbes chart. However, hockey is still heavily dependent on gate (compared to other sports)

Do you have a link indicating the debt came from other ventures? It was my understanding the initial purchase was leveraged.

I stand corrected. Forbes does report operating profit, so it would not include taxes or interest on debt.

It's funny, I can't find working links to any of the articles written by Travis Yost on the subject. About 4 years ago, he did an in-depth analysis of Melnyk's financial dealings, and basically drew the link between the Sens' refinancings and a series of failed business ventures of Melnyks. I'll put the link up if I can find one that works.

The reality is that we will never know for sure, as the Sens and their related entities (the arena, SSE etc.) are privately held. I think there is very little doubt that Melnyk has made several times his money on the franchise value, but as for operating profit/loss, that is a tougher one to say for sure.

[acottawa]

Originally Posted by phil235

It's funny, I can't find working links to any of the articles written by Travis Yost on the subject. About 4 years ago, he did an in-depth analysis of Melnyk's financial dealings, and basically drew the link between the Sens' refinancings and a series of failed business ventures of Melnyks. I'll put the link up if I can find one that works.

The reality is that we will never know for sure, as the Sens and their related entities (the arena, SSE etc.) are privately held. I think there is very little doubt that Melnyk has made several times his money on the franchise value, but as for operating profit/loss, that is a tougher one to say for sure.

This article from around the time of the lockout indicates that the team had lost $94M cumulatively at that point and the debt was $150M and that half of the initial purchase was leveraged.

http://www.ottawacitizen.com/sports/...118/story.html

[phil235]

Originally Posted by acottawa

This article from around the time of the lockout indicates that the team had lost $94M cumulatively at that point and the debt was $150M and that half of the initial purchase was leveraged.

http://www.ottawacitizen.com/sports/...118/story.html

Yeah, I saw that one. It indicates that the team is claiming to have lost that amount of money, though again, there is no way to corroborate that. That amount includes interest on debt payments and capital expenditures on the arena, so it is not an operation loss.

I think it is also important that the team does not give comparable figures for the related businesses like the arena etc. It's pretty easy to move profits and losses between related entities.

If half of the original purchase was leveraged, that means that he started with a debt of just north of $60 million. That jumped by $90 million in 12 years, which was the crux of the Yost article. His conclusion was that Melnyk was using the Sens to bankroll other businesses that weren't faring well.

Melnyk's personal wealth seems to have increased significantly in the past couple of years. A good part of that is likely the team, as it is his most significant asset.

[acottawa]

Originally Posted by phil235

If half of the original purchase was leveraged, that means that he started with a debt of just north of $60 million. That jumped by $90 million in 12 years, which was the crux of the Yost article. His conclusion was that Melnyk was using the Sens to bankroll other businesses that weren't faring well.

I'm no forensic accountant, but if the cumulative loss was 94 million over a decade it would seem reasonable to me that the debt of the business would go up by about that amount.

[ars]

Using HockeyDB's numbers here: http://www.hockeydb.com/nhl-attendan...h.php?tmi=7328

I put together a list of all the Sens seasons, their attendance, their rank in the league in terms of attendance numbers and the result of the season.

92-93 10485 22/24 Missed Playoffs
93-94 10300 26/26 Missed Playoffs
94-95 9879 26/26 Missed Playoffs
95-96 13252 22/26 Missed Playoffs
96-97 15377 22/26 Quarterfinal
97-98 16750 12/26 Semifinal
98-99 17219 10/27 Quarterfinal
99-00 17508 9/28 Quarterfinal
00-01 17793 10/30 Quarterfinal
01-02 16919 15/30 Semifinal
02-03 17198 14/30 East Final
03-04 17758 13/30 Quarterfinal
05-06 19474 5/30 Semifinal
06-07 19372 5/30 SC Final
07-08 19821 3/30 Quarterfinal
08-09 18949 7/30 Missed Playoffs
09-10 18269 12/30 Quarterfinal
10-11 18378 11/30 Missed Playoffs
11-12 19356 6/30 Quarterfinal
12-13 19408 6/30 Semifinal
13-14 18109 14/30 Missed Playoffs
14-15 18247 16/30 Semifinal
15-16 18085 17/30 Missed Playoffs
16-17 16744 21/30 East Final
17-18 15228 26/31

Some key events that may have affected attendance and/or team spending(if you see anything I missed, feel free to let me know):

October 8, 1992 - Sens play their first game in the NHL at the Ottawa Civic Center(~10k capacity)
1993 - Rod Bryden becomes Chairman and Governor
January 17, 1996 - Sens play their first game at the Corel Center(now CTC)
02-03 - Owner Rod Bryden plagued with bankruptcy concerns
August 26, 2003 - Eugene Melnyk purchases the team and the arena
June 30, 2007 - Eugene Melnyk retires as Chairman and CEO of Biovail
December 1, 2010 - Eugene Melnyk starts divorce proceedings(Divorced with his wife shortly thereafter)
13-14 - Alfredsson signs with the Red Wings
February 24, 2016 - Phoenix Pay System goes live

Just looking at the attendance numbers, Ottawa is a fairly strong market and were in the top half of the league's attendance for 15 seasons straight. The past couple of seasons have been an anomaly since attendance numbers really haven't been this bad since the 96-97 season, and it really does coincide with the introduction of the Phoenix Pay System.

It doesn't help that the team has been really inconsistent for the better part of a decade now. Since the SC finals appearance, they've made the playoffs in consecutive years only once.

[phil235]

Originally Posted by acottawa

I'm no forensic accountant, but if the cumulative loss was 94 million over a decade it would seem reasonable to me that the debt of the business would go up by about that amount.

Sure, if you buy that they are actually losing $10 million per year, then it does line up. There are definitely lots of observers that don't buy it.

There are many ways to account for revenue that would change that number dramatically. For instance, the loss includes money spent to upgrade the arena. Why is that a team operating expense?

The arena is a separate entity that was bought for a fraction of its value, and that has no debt servicing. A more lucrative naming rights deal was signed for the arena a couple of years back - is that revenue part of the Sens stream, or is it in the arena revenue? What rent does the team pay to the arena? Etc. Until someone from the organization comes out and says the the team and the arena/other related entities are losing $10 million per year, I am skeptical that is the real number.

[User Name]

Maybe hockey is boring?