me2 said:
It took someone to start them, run up hundreds of million in debt, then write off all of the debt to make them viable. They were a lame duck. They couldn't have survived on their own without that debt write off. They needed a new arena to make money, but they couldn't make enough money from the new arena to pay for it. A good example of building your own arena not paying
Let me try to do a better job explaining what I was trying to say.
From my understanding, things were manageable when Bryden/Covanta were operating the team. They could make enough money to pay for it. Part of the value they got was its tax sheltering abilities which dont show in their statements well. We were small, disadvantaged, forever threatened to be moved to Portland, struggling for money, season ticket sales, fans, and respect, but not losing money overall on the investment in the team and its arena. Yes we lost players when they went over our salary cap, but the system allowed us a way to compensate for that and still improve.
Covanta went bankrupt because of a strange set of outside circumstances involving Enrons collapse and Osama Bid Ladens terrorism and nothing to do with NHL salaries. They were in a huge cash crunch. When they couldnt make their arena payment, Bryden used the part of the deal that said they must now pay up $200mil to get out of the deal for forfeiting payment. This action caused Covanta to go bankrupt. Bryden had little choice but to seize the opportunity to cause it. Not player salaries.
When Bryden owned the team, in spite of the operation apparently making $19mil in annual interest payments, the arena and team were still making a decent return, its prospectus was said to have suggested when trying to sell shares in its tax scheme to save the Sens. Of course the Sens had little chance of running a $45mil payroll with that kind of debt load and low ticket prices and sales. But Bryden came within inches of solving that one too. In the end, things unfolded exactly as Bettman said they would. In an orderly fashion. And proper ownership was finally attained. Through some very sophisticated dealings and thousand of legal documents (Melnyk said he had to sign, more than any other deal he had done), which should allow Melnyk to make out very well overall with the investment he made in the arena and team, especially after the CBA changes from which they have achieved major concessions from the players already, just as an opening gambit.
It probably was foolish granting Ottawa a team when they had no money and no arena. But an incredible group of people made it happen. And lookie-see. They were right. Look ma, no hands. This team has totally captured the city. And still had room to grow. It remains to be seen what Bettmans extortionist lockout and changes will do to that. Melnyk had average families willingly forking out a heck of a lot for tickets before.
Ottawa is by no means without struggles. We are a small market, and things will always be a challenge for us. We knew that when we got a team, what an uphill struggle it would be in a solid habs-leafs market, and all the doubters who would have to be overcome.
But we dont need the right to spend like Toronto or the Rangers. We just need to have a way to do it our way. And we do. Thanks Gary and Bob for last time. Make sure this is your focus when you do it again. You cant make us equal with Toronto. We will never be financially competitive with the Leafs. Right now, we dont need to be.
