Confirmed with Link: #MelnykOut Campaign - successfully raised 8K over this past weekend.

[Qward]

Let's say you own a business selling lemonade from the corner of your driveway.

I show up. I say, "Hey there, little fella, I would like to purchase one of your lemonades for $10 Million."

Then I say, "Hey there, little fella, your lemonade was so delicious that I'm going to give you a tip of $16 Million."


So did you just make $10M or $26M?

Your analogy is flawed.
the $10m is business revenue. The $16m is personal income.

The expansion fee went to the team in the form of revenue. Forbes does not count it as revenue since it was a one time event and not a normal source of revenue.

For your example to work, the guy would have to pay the kid $16m to set up another lemonade stand down the road because once he opens, the share of the market the boy gets is diminished.

 

[Micklebot]

So what are you saying is the Senators Operating income from last year was? 10 million, or 26 Million?

It's been a while since my university accounting courses, but operation income typically is intended to represent recurring profits, and specifically excludes one time revenues and expenses, so something like an expansion fee would normally not fit into it (unless your business model was specifically intended to rely on expansion fees I suppose). Think of the operating Income as a summary of core business activities only, even though revenues and expenses that fall outside your core activities still impact the profitability of the business. For example, if you crashed your delivery truck and insurance only covered half, that loss from the accident would not make it into the operating income as it is not an operating activity. This is important because when an investor is analysing the profitability of a company, presumably the loss from an accident is not predictive of future profits or losses, and while still important to know about, would not give any insight into how likely the business is do well in the future.

Simply put, operating income comes before net income. Net income typically takes into account additional expenses and revenues such as payments on debts, interest and one time payments such as lawsuits and in this case the expansion fee.

 

[Micklebot]

Let's say you own a business selling lemonade from the corner of your driveway.

I show up. I say, "Hey there, little fella, I would like to purchase one of your lemonades for $10 Million."

Then I say, "Hey there, little fella, your lemonade was so delicious that I'm going to give you a tip of $16 Million."


So did you just make $10M or $26M?

It's a little different than that, as tips are probably considered part of your operating activities. It would be more akin to you suing the lemonade stand across the street for infringing on your franchises regional rights and being awarded 16 million in the settlement. either way your net profit is 26 mil, minus any taxes debt payments ect (assuming that all your operating costs are covered by your other sales and you'd have broken even without that 10mil customer) but because the legal suit can't be expected to be a recurring theme, it wouldn't typically be considered an operational activity, and would be a post operating income adjustment to your net profit. At least, that's my unprofessional opinion.

edit: I missed @Qward's response, he did it more succinctly and better than I.

 

[coladin]

He started at 65 million and is over 150 million in debt because he hasnt managed it well.
because he hasnt managed it and used it like an ATM he has cashflow issues, because he has cashflow issues he cant sign players, expand his scouting staff, or front office personel. his debt leverage is considered very high for an NHL team - which of course is hilarious given the pittance he paid for the team.

he was given a gift, should have had a competitive advantage given the low cost and comparatively little debt and has managed it very poorly.

And your point is? Melnyk is not firing himself. Yeah, not a great owner, we all agree. But he ain't selling.

You and I don't know his financials. But I will tell you this, I would have heck of a better idea than many here if he hasn't managed it well. To my point, debt structure correctly is desirable, and refinancing is a must over the last 10 years. He has done it many times. I have done it many times. If you don't , you are going to lose a ton.

Debt leverage is inconsequential without knowing what it costs him. You know nothing Jon Snow.

 

[coladin]

i follow that you are willing to be slapped in the face any number of times and take it, do you handle all of your spending that way?
i guess i many of us just have a lower threshhold than you superfan.

25 years of 4 lower bowl tickets and suites and ive reached my limit, but according to you, no one really has the right to not go b/c.......because why?
have i not earned the right over 25 years to express my disgust or only on your say so?

Hey , whatever floats your boat. Your money, your business. But you were not who Melnyk alluded to in his comments. But go ahead an lop yourself in with those who do not support the team. I guess you are easily offended. And by the way, what a miserable 25years you have had, eh? Cry me a river...

 

[coladin]

Owner threatens to move the team

Owner doesn't pay scouts

Owner does not respect his employees

Owner gets sued by employees.

Employees and long term icon of the team in front office leaves because of owner.



You: I don't understand why people do not renew their season tickets.


Any company that does that in the real world will suffer. To think that people do not care AND ESPECIALLY THAT THEY SHOULDN'T is absolutely mind blowing. Supporting a company that does that to its employees? No thank you. Pay your employees, respect them, give a good product and experience to the fans. That shouldn't be too much to ask for eh?

I'm sorry, but I missed the part of players playing poorly and no goaltending? You can't possibly be serious. If you cannot separate your hatred for the owner from the players on the team then that is on you. Erik Karlsson has nothing to do with your reasons. He just sacrifices his leg for the people of Ottawa, but but but I won't go because they allege the owner is a meanie. Got it.

So laughable, yet OSEG has lawsuits coming out of their asses still. Such hypocrisy.

 

[coladin]

No basis for this statement.

Did Eugenius Melnyk cause people not to buy 3rd round playoff tickets last year?

Did we spend close to the cap last year?

Were we going to spend close to the cap this year if **** panned out?

No no no Variable, they knew it was smoke and mirrors last year and saved their hard earned money because they read the tea leaves for the upcoming season. Pathetic.

 

[BondraTime]

 

[Deku]

I'm sorry, but I missed the part of players playing poorly and no goaltending? You can't possibly be serious. If you cannot separate your hatred for the owner from the players on the team then that is on you. Erik Karlsson has nothing to do with your reasons. He just sacrifices his leg for the people of Ottawa, but but but I won't go because they allege the owner is a meanie. Got it.

So laughable, yet OSEG has lawsuits coming out of their asses still. Such hypocrisy.

I'm not sure what your response has to do with anything he said? He wasn't even talking about the team's on ice performance.

 

[slamigo]

For example, if you crashed your delivery truck and insurance only covered half, that loss from the accident would not make it into the operating income as it is not an operating activity. This is important because when an investor is analysing the profitability of a company, presumably the loss from an accident is not predictive of future profits or losses, and while still important to know about, would not give any insight into how likely the business is do well in the future.

Crash a delivery truck eh? Now where have I heard that one before?...


Melnyk strikes deal to end legal dispute with OSC

 

[coladin]

I'm not sure what your response has to do with anything he said? He wasn't even talking about the team's on ice performance.

Exactly. The focus being shifted off he ice to the extent that it is right now is absurd.

 

[BatherSeason]

Exactly. The focus being shifted off he ice to the extent that it is right now is absurd.

Hate to tell you, but you are contributing to the focus in here being put off the ice. You are also equally responsible for keeping the focus off the ice.

 

[coladin]

Hate to tell you, but you are contributing to the focus in here being put off the ice. You are also equally responsible for keeping the focus off the ice.

Hmm. not really. Just stated how stupid and misguided it is that everyone here knows more stats about the people off it then the people on it. Get a grip people.

 

[BondraTime]

On turnaround, in a Simpsons kick

 

[Tnuoc Alucard]

Let's say you own a business selling lemonade from the corner of your driveway.

I show up. I say, "Hey there, little fella, I would like to purchase one of your lemonades for $10 Million."

Then I say, "Hey there, little fella, your lemonade was so delicious that I'm going to give you a tip of $16 Million."


So did you just make $10M or $26M?

Did the Senators hockey team generate the 10 million that Forbes say they did?

Did the NHL charge the VGK 500 million in expansion fees?

Does the 16 million expansion fee show up in the Forbes calculation for the Senators?

The NHL owners charge new expansion teams an expansion fee that is designed to compensate them for giving up a piece of the NHL pie (to the VGK), and making their smaller in the process, in perpetuity.

The 16 million is not just compensation for last year, but for smaller piece of the NHL pie for the future years as well ....... and that's why it's not profit for one year.

 

[Tnuoc Alucard]

Eugene made 26 M last year and reduced the budget...so I'm going to say that's a firm no.

So you're right, and Forbes is wrong?

 

[Micklebot]

Exactly. The focus being shifted off he ice to the extent that it is right now is absurd.

If the performance on the ice was the driver, presumably attendance would have been fine last year. Further, presumably attendance this year would have started off strong because our record was actually pretty good through the first dozen or so home games. The reality is attendance hasn't really suffered as the year has gone on, it's been consistently poor. Granted, it was a bit better through the middle third, averaging around 15800 compared to 15200 in the first and last third, but the reality is 600 seats isn't the issue, it's the other ~1500

 

[Micklebot]

So you're right, and Forbes is wrong?

Forbes acknowledged that the teams all earned 16 mil in expansion fees in their right up, but kept it out of their operating income estimate because it's a one time revenue stream that doesn't fall under their normal operating activities. I can't believe you're still hanging on to this...

 

[Micklebot]

The 16 million is not just compensation for last year, but for smaller piece of the NHL pie for the future years as well ....... and that's why it's not profit for one year.

By this logic, relocation fees would be a part of operating income because they don't impact the piece of the NHL pie.

The reality is, as I already explained, the concept of operating income specifically excludes one time revenue streams that aren't considered part of a businesses normal activities. These types of revenues show up later in the net profits.

 

[coladin]

If the performance on the ice was the driver, presumably attendance would have been fine last year. Further, presumably attendance this year would have started off strong because our record was actually pretty good through the first dozen or so home games. The reality is attendance hasn't really suffered as the year has gone on, it's been consistently poor. Granted, it was a bit better through the middle third, averaging around 15800 compared to 15200 in the first and last third, but the reality is 600 seats isn't the issue, it's the other ~1500

Plus those under the tarp...but yeah, people felt the process were high in the playoffs, especially in Round 3. There are major issues in this market that hopefully can be corrected with Lebreton, but I don't think that will be the case. Here's to hoping it does.

 

[coladin]

Simply put, operating income comes before net income. Net income typically takes into account additional expenses and revenues such as payments on debts, interest and one time payments such as lawsuits and in this case the expansion fee.

And this warrants repeating because it didn't come from me, but I have been saying it all along. Operating income doesn't mean profit. To have operating income, shouldn't be too hard, but profit , we don't know how leveraged the team is.

 

[Micklebot]

Plus those under the tarp...but yeah, people felt the process were high in the playoffs, especially in Round 3. There are major issues in this market that hopefully can be corrected with Lebreton, but I don't think that will be the case. Here's to hoping it does.

There's no one catch-all to explain attendance, a move to Lebreton doesn't do anything to resolve issues with the on ice product, poor/lack of marketing, fan dissatisfaction with the owner, Phoenix issues ect. Some of those things may work themselves out at the same time though, so even if our attendance does rebound by the time we move it will be near impossible to prove any sort of causation.

The reality is attendance is declining in all the major sports, NFL, NBA, NHL, Nascar, MLB, at least last time I checked (admittedly, this was almost a year ago). How people enjoy sports seems to be changing, businesses can't rest on their laurels and expect fans to come. This isn't field of dreams.

 

[slamigo]

If the performance on the ice was the driver, presumably attendance would have been fine last year. Further, presumably attendance this year would have started off strong because our record was actually pretty good through the first dozen or so home games. The reality is attendance hasn't really suffered as the year has gone on, it's been consistently poor. Granted, it was a bit better through the middle third, averaging around 15800 compared to 15200 in the first and last third, but the reality is 600 seats isn't the issue, it's the other ~1500

I would say that last year the on ice performance was related to attendance. It was the perception of the boring system that was keeping people away. The entire league was complaining about how Ottawa was making the playoffs boring. There were some lively debates about whether or not Boucher's system was too boring to watch. Whether those views were accurate or not is a separate debate. My guess is that the perception of boring hockey was enough of a downward drag on the team to lower attendance. Couple that with a lack of marketing acumen and the word of mouth that often drives ticket purchases was decidedly negative. I'm not saying that that is correct or that the hockey was indeed boring. What I am saying is that most people I talked to didn't want to spend a lot of money to watch a Boucher coached team. Also, I would add that most people in my circles were pretty much convinced that the other shoe would drop soon and Ottawa would be out of the playoffs. Who really was imagining that the team would make it to the ECF? Again, these were all perceptions that drove a negative narrative. The question I would ask is could the marketing of the team countered that? Was there any way that the Sens could have overturned that narrative with clever marketing? Because the hockey wasn't that boring. And it ended up being pretty exciting.
As for the Fall, I believe that it takes a little while to build momentum at the start of a season and for people to think about hockey again. In September/October the weather in Ottawa was really, really nice. But as soon as the team started to build momentum, they went on that trip to Sweden and then started losing. When the team had a chance to rebuild momentum with the outdoor game, Melnyk sabotaged it with his ill timed comments. It's like the past 10 months has been a comedy of errors for this club and the gutting of the staff levels within the Senators most certainly did not help.

 

[Tnuoc Alucard]

Nov 21, 2016

Senators' attendance nosedives amid troubled season


April 28, 2017

Scanlan: No shortage of theories on Senators' attendance issues


May 12th, 2017

Senators Attendance Numbers Baffling, But There is Hope

 

[Micklebot]

I would say that last year the on ice performance was related to attendance. It was the perception of the boring system that was keeping people away. The entire league was complaining about how Ottawa was making the playoffs boring. There were some lively debates about whether or not Boucher's system was too boring to watch. Whether those views were accurate or not is a separate debate. My guess is that the perception of boring hockey was enough of a downward drag on the team to lower attendance. Couple that with a lack of marketing acumen and the word of mouth that often drives ticket purchases was decidedly negative. I'm not saying that that is correct or that the hockey was indeed boring. What I am saying is that most people I talked to didn't want to spend a lot of money to watch a Boucher coached team. Also, I would add that most people in my circles were pretty much convinced that the other shoe would drop soon and Ottawa would be out of the playoffs. Who really was imagining that the team would make it to the ECF? Again, these were all perceptions that drove a negative narrative. The question I would ask is could the marketing of the team countered that? Was there any way that the Sens could have overturned that narrative with clever marketing? Because the hockey wasn't that boring. And it ended up being pretty exciting.
As for the Fall, I believe that it takes a little while to build momentum at the start of a season and for people to think about hockey again. In September/October the weather in Ottawa was really, really nice. But as soon as the team started to build momentum, they went on that trip to Sweden and then started losing. When the team had a chance to rebuild momentum with the outdoor game, Melnyk sabotaged it with his ill timed comments. It's like the past 10 months has been a comedy of errors for this club and the gutting of the staff levels within the Senators most certainly did not help.

Idk. If Boucher's boring system was the issue, attendance probably would have started off strong and faded as we learned what his system was all about. But last year, first 10 home games were even worse than this years averaging 15069 per game. The next 10 were a touch better at 16260 compared to this year's 15883. The last twenty home games were averaging ~17700. It's pretty typical for sales to improve as the games mean more, so no surprise that our team's attendance was better in the second half last year, and isn't likely to be seeing that improvement this year.

On ice product certainly impacts attendance, but in my estimation, the issues existed before the on ice product was known to be an issue (either because we were boring, or because we sucked).

I do think the idea of hope drives ticket sales though, so the perception that the other shoe would drop probably hurt matters. It doesn't help that coming off a successful season, we were perceived as to have made our team worse by losing methot and not replacing him via UFA or trade. We basically were seen to have stood still, lost a key piece, and were coming in with injury question marks for Karlsson and Brassard, so that may have hurt things. The marketing nightmare that is the tarp probably didn't help either.