Management Eugene Melnyk - Lawsuits, rants and more... Part Deux

[Wondercarrot]

If we were only talking about the construction of an arena your point would be far, far more salient. We're talking about the construction of an entire neighbourhood with approx. 4,000 residential units, 2 event centers and dozens of local businesses. So now none of that has any economic value? Absurd.

yes, agreed. You’re entire premise is absurd.
I’m not going to debate it with you because people with far more knowledge than you have already done the work in multiple studies. The science is settled as they say.
Unless of course you feel Ottawa has some incredibly unique series of circumstances which make their construction project incomparable. If you feel that’s the case I’m super excited to read all about it.

 

[BankStreetParade]

So... none of that will occure without a public money going to a downtown arena?

The reason there was 4000 residential units in the proposal is because a need existed. Developers will likely build residential units to meet that need regardless, be it at lebreton, or somewhere else in the city. Local businesses will pop up to support the increased needs too. The arena isn't what drives those residences and businesses, at least not entirely, so you need to isolate what proportion of new economic growth was driven specifically by the arena, and then weigh that against the opportunity cost of public funds going elsewhere.

I'm sure for example, had the NCC handed the lebreton lands over to developers not including an arena in their plans, we'd have a crapload of economic growth too, with no need for public funds. It's the impact of including an arena vs not including one that is relevant, not the impact of the businesses and residences that were in the original lebreton arena plans because that plot of land in and of itself creates a lot of opportunity for economic growth when offered up for development.

What does the city care about opportunity cost in this case? They are offering nearly nothing and are using this arena deal as a way to leverage the construction of an entire neighbourhood. Tell me what the opportunity cost is for someone who has to spend $750 million to $1 billion on the construction of a new arena that will lose significant value over time.

 

[Masked]

What does the city care about opportunity cost in this case? They are offering nearly nothing and are using this arena deal as a way to leverage the construction of an entire neighbourhood. Tell me what the opportunity cost is for someone who has to spend $750 million to $1 billion on the construction of a new arena that will lose significant value over time.

The city isn't leveraging anything. It's the NCC doing this.

 

[AchtzehnBaby]

yes, agreed. You’re entire premise is absurd.
I’m not going to debate it with you because people with far more knowledge than you have already done the work in multiple studies. The science is settled as they say.
Unless of course you feel Ottawa has some incredibly unique series of circumstances which make their construction project incomparable. If you feel that’s the case I’m super excited to read all about it.

It's completely asinine to think that there is no benefit to the city with a world class arena. It brings in loads of people from the sticks and beyond in to the city. Instead of driving to MTL or Toronto for big shows maybe Ottawa can get some real talent coming into town. All those folks coming into town to see a show or game would be able to stay at a nice local hotel, and get dinner in town. The employment locally would boom. There are huge economic returns outside of the arena owners. From OC Transpo to Uber.... from McDonald's to The Elgin Street Diner... From AirBnB to The Delta.

Hello economic impacts from a filled arena 3 or 4 days a week

We can have even more Leaf and Habs fans in town than ever!

Very little additional income, my ass.

 

[GCK]

It's completely asinine to think that there is no benefit to the city with a world class arena. It brings in loads of people from the sticks and beyond in to the city. Instead of driving to MTL or Toronto for big shows maybe Ottawa can get some real talent coming into town. All those folks coming into town to see a show or game would be able to stay at a nice local hotel, and get dinner in town. The employment locally would boom. There are huge economic returns outside of the arena owners. From OC Transpo to Uber.... from McDonald's to The Elgin Street Diner... From AirBnB to The Delta.

Hello economic impacts from a filled arena 3 or 4 days a week

Very little additional income, my ass.

I agree, the old tired argument is people will just spend their dollars somewhere else in the city. Unfortunately for this city those disposable dollars often get spent in Mtl, TO or other weekend getaways.

 

[Cosmix]

Wasn't lemieux owed a lot of money from the Pens and the only way he would get it is if he became the owner?

My recollection, which is quite fuzzy, was that the team owed Lemieux so much money, that they gave him ownership of much of the team stock because they did not have the cash to pay him.

 

[AchtzehnBaby]

My recollection, which is quite fuzzy, was that the team owed Lemieux so much money, that they gave him ownership of much of the team stock because they did not have the cash to pay him.

Mario Lemieux Took Control Of Penguins As A Businessman, Not A Savior

Now, here's where the deferred wages come into play for Lemieux. Basically, in bankruptcy there are two different types of creditors: the secured creditor and the unsecured creditor.
A secured creditor has some sort of interest in specific property of the debtor and, if the debtor fails to keep up with payments, can take that property back. A perfect example of a secured debt is the remaining money owed on an auto loan. Stop paying and the creditor's going to take your car.
If you're an unsecured creditor, you don't have that kind of leverage. An example of this is a credit card company. If you stop paying off your credit card, there's not much the company can do beyond harass you for the money, screw up your credit report or decide to waste money pursuing a judgment that they still wouldn't be assured of collecting on.

Now, in a Chapter 11, after about two months pass, any money owed to an employee as salary becomes unsecured debt. So, the estimated $20-30 million that the Penguins owed Lemieux? He could've been forced to settle for as little as 10-20 percent of that.

But Mario had a plan. That $20-$30 million still has value to the company and, if possible, they'd love to avoid bankruptcy. What if he could apply the millions he was owed towards purchasing the team and keeping it out of bankruptcy? It was a risky plan, for sure, and additional funding would be needed to get it off of the ground. That's where supermarket mogul Ron Burkle entered the picture.

Lemieux did not, to public knowledge at least, intend to purchase the Penguins until it became apparent that he might not receive much of what he was owed. There is nothing wrong with that -reacting to the threat of loss is only natural. But Lemieux purchased the Penguins with the motivations of a businessman, not a messiah.

 

[Wondercarrot]

It's completely asinine to think that there is no benefit to the city with a world class arena. It brings in loads of people from the sticks and beyond in to the city. Instead of driving to MTL or Toronto for big shows maybe Ottawa can get some real talent coming into town. All those folks coming into town to see a show or game would be able to stay at a nice local hotel, and get dinner in town. The employment locally would boom. There are huge economic returns outside of the arena owners. From OC Transpo to Uber.... from McDonald's to The Elgin Street Diner... From AirBnB to The Delta.

Hello economic impacts from a filled arena 3 or 4 days a week

We can have even more Leaf and Habs fans in town than ever!

Very little additional income, my ass.

How richly ironic.
You, a guy for whom if something is even obviously implied, demands to see exact quotes or it’s all made up lies/people projecting what they want to see regardless of how clear the causation - is now offering up nothing other than a little fairy tale of how you imagine things. This despite the many fact based studies done on exactly this subject.

Is there an emoji for removing the laughter tears at the corner of my eyes?

I’m all for a downtown stadium, think the city should chip in in some fashion, it’s good for a variety of civic development reasons but I’m not foolish enough to think that it’s some panacea for city finances.

 

[Cosmix]

Mario Lemieux Took Control Of Penguins As A Businessman, Not A Savior

Now, here's where the deferred wages come into play for Lemieux. Basically, in bankruptcy there are two different types of creditors: the secured creditor and the unsecured creditor.
A secured creditor has some sort of interest in specific property of the debtor and, if the debtor fails to keep up with payments, can take that property back. A perfect example of a secured debt is the remaining money owed on an auto loan. Stop paying and the creditor's going to take your car.
If you're an unsecured creditor, you don't have that kind of leverage. An example of this is a credit card company. If you stop paying off your credit card, there's not much the company can do beyond harass you for the money, screw up your credit report or decide to waste money pursuing a judgment that they still wouldn't be assured of collecting on.

Now, in a Chapter 11, after about two months pass, any money owed to an employee as salary becomes unsecured debt. So, the estimated $20-30 million that the Penguins owed Lemieux? He could've been forced to settle for as little as 10-20 percent of that.

But Mario had a plan. That $20-$30 million still has value to the company and, if possible, they'd love to avoid bankruptcy. What if he could apply the millions he was owed towards purchasing the team and keeping it out of bankruptcy? It was a risky plan, for sure, and additional funding would be needed to get it off of the ground. That's where supermarket mogul Ron Burkle entered the picture.

Lemieux did not, to public knowledge at least, intend to purchase the Penguins until it became apparent that he might not receive much of what he was owed. There is nothing wrong with that -reacting to the threat of loss is only natural. But Lemieux purchased the Penguins with the motivations of a businessman, not a messiah.

I think you added the details to my fuzzy recollections.

 

[AchtzehnBaby]

How richly ironic.
You, a guy for whom if something is even obviously implied, demands to see exact quotes or it’s all made up lies/people projecting what they want to see regardless of how clear the causation - is now offering up nothing other than a little fairy tale of how you imagine things. This despite the many fact based studies done on exactly this subject.

Is there an emoji for removing the laughter tears at the corner of my eyes?

I’m all for a downtown stadium, think the city should chip in in some fashion, it’s good for a variety of civic development reasons but I’m not foolish enough to think that it’s some panacea for city finances.

Good to see we are in agreement. All good.

 

[BankStreetParade]

yes, agreed. You’re entire premise is absurd.
I’m not going to debate it with you because people with far more knowledge than you have already done the work in multiple studies. The science is settled as they say.
Unless of course you feel Ottawa has some incredibly unique series of circumstances which make their construction project incomparable. If you feel that’s the case I’m super excited to read all about it.

There have been studies about building entire neighbourhoods that include a sports stadium? Or there are studies about the isolated economic impact of building a sports stadium? Because those are two totally different thing. Might be hard to tell when you purposely want to miss the point though.

 

[Laphroaig]

I get a little sick of speculating about which billionaire might buy the Sens and get a new stadium built. I know it's not going to happen in my lifetime but sometime in the future it would be great to see all professional sports teams community owned. There would be far less resistance to public funds being used for arenas and I'd argue that there would be more fans in the seats. It may be a pipe dream but the Green Bay Packers are a very successful community owned sports franchise. Besides I really dislike billionaires and billionaire wannabees like Melnyk.

 

[BankStreetParade]

The city isn't leveraging anything. It's the NCC doing this.

Approvals are required by both the city and the NCC however the NCC's approval is typically more of a formality than anything else.

 

[BankStreetParade]

I get a little sick of speculating about which billionaire might buy the Sens and get a new stadium built. I know it's not going to happen in my lifetime but sometime in the future it would be great to see all professional sports teams community owned. There would be far less resistance to public funds being used for arenas and I'd argue that there would be more fans in the seats. It may be a pipe dream but the Green Bay Packers are a very successful community owned sports franchise. Besides I really dislike billionaires and billionaire wannabees like Melnyk.

It's a super idea and they've implemented it very well in the Bundesliga, for example.

I will say it might be tough to pull it off in Ottawa though. How much would you have to secure to purchase the team? Let's say you came up with a sale figure of $500 million and let's say the fans wanted to own 51% of the team with another group of wealthy investors owning the rest. You would need to raise $255 million in "equal shares" with a cash out option so you'd probably need another 2-3% in a bank account to be able to pay out anyone who would like to withdraw their share. How many people do you think you could get at, say, $500 each? Because you need about 520,000 people to purchase that bond at that price to come up with 51%.

 

[Masked]

There have been studies about building entire neighbourhoods that include a sports stadium? Or there are studies about the isolated economic impact of building a sports stadium? Because those are two totally different thing. Might be hard to tell when you purposely want to miss the point though.

So you haven't even looked into the studies on the topic? Why are you trying act like an expert when you're just willfully ignorant on the topic

 

[Masked]

Approvals are required by both the city and the NCC however the NCC's approval is typically more of a formality than anything else.

If approvals are just a formality why was there an entire bidding competition held by the NCC on the topic to approve the winning bidder?

 

[AchtzehnBaby]

I agree, the old tired argument is people will just spend their dollars somewhere else in the city. Unfortunately for this city those disposable dollars often get spent in Mtl, TO or other weekend getaways.

You are right, local people may not spend more, but there will be a small increase in spending around town as people do head out for drinks downtown after a game, if they can get transit home. Around CTC, this has really never happened. In terms of disposable income for Ottawans, I hope that changes in time. One study I read was $100m per year for the local economy from Lebreton Flats. Other studies said more... and yes, lots said otherwise.

The influx of tourists going to a game will increase tenfold. Why? Because they are staying downtown.

Ease of access.

Where it lands maybe in between. We can’t use a study from a big city where the arenas or other large venues existed before. Ottawa is quite unique. They need a big downtown indoor venue. It is very obvious. It will happen. It’s in the cards.

 

[Micklebot]

I wonder how valuable 80 events a year at a downtown rink is to the light rail system and the city of Ottawa. It is a predictable revenue stream

Most of the users likely have monthly passes so the added value is likely limited.

What does the city care about opportunity cost in this case? They are offering nearly nothing and are using this arena deal as a way to leverage the construction of an entire neighbourhood. Tell me what the opportunity cost is for someone who has to spend $750 million to $1 billion on the construction of a new arena that will lose significant value over time.

Lebreton was going to, and will get developed with or without a rink, so no, the city wasn't leveraging a construction of an entire neighborhood out of a rink, if anything they were doing the opposite, using a highly desirable plot of land to leverage an anchor attraction. Had they said no to Rendezvous back in 2015 Claridge was among the 4 groups shortlisted as was another group led by focus equities. All four of the shortlisted groups were pitching residential and commercial development.

What is important from the cities and the public's perspective in this context is how much added value is there to having a rink vs no rink and if it's worth subsidizing one if the others didn't require subsidizing. Study after study seems to show limited upside economically speaking of building a sports venue, so you're left with civic pride to justify tax dollars.

 

[Micklebot]

You are right, local people may not spend more, but there will be a small increase in spending around town as people do head out for drinks downtown after a game, if they can get transit home. Around CTC, this has really never happened. In terms of disposable income for Ottawans, I hope that changes in time. One study I read was $100m per year for the local economy from Lebreton Flats. Other studies said more... and yes, lots said otherwise.

The influx of tourists going to a game will increase tenfold. Why? Because they are staying downtown.

Ease of access.

Where it lands maybe in between. We can’t use a study from a big city where the arenas or other large venues existed before. Ottawa is quite unique. They need a big downtown indoor venue. It is very obvious. It will happen. It’s in the cards.

When the Lakers and kings moved from the Forum in Inglewood to the Staples center, Inglewood actually saw an increase in economic activity. Who wants to go shopping when all the streets are congested with people going to the game, I guess. It's easy to postulate that there will be all these economic boons from having a team, or moving the team downtown, but life is more complicated than that, and it's the second order effects that get overlooked.

There will be winners (local bars and restaurants) from a move downtown to be sure, but imo if you are publicly financing sports venues for the economic gains, you're doing it for the wrong reason, and quite possibly in for a disappointing end result.

 

[Nac Mac Feegle]

It's completely asinine to think that there is no benefit to the city with a world class arena. It brings in loads of people from the sticks and beyond in to the city. Instead of driving to MTL or Toronto for big shows maybe Ottawa can get some real talent coming into town. All those folks coming into town to see a show or game would be able to stay at a nice local hotel, and get dinner in town. The employment locally would boom. There are huge economic returns outside of the arena owners. From OC Transpo to Uber.... from McDonald's to The Elgin Street Diner... From AirBnB to The Delta.

Hello economic impacts from a filled arena 3 or 4 days a week

We can have even more Leaf and Habs fans in town than ever!

Very little additional income, my ass.

And the same amount of Ottawa fans spendign thier money in Montreal, Toronto, Buffalo and Detroit when the Sens play in those arenas.

In the end, the money in and out is close to equal. That's why economists for years have bene saying money into pro sports doesn't really add much to the local economy overall. You have to remember, it's spending disposal income that is already here...instead of that money going to the theater or restaurants, that money goes to buying a ticket to a sporting event. Growing an economy is about new revenue streams, not redistributing the money that is already here.


Now, I am not against a new arena at all. I desperately want the Flats to happen. But let's not gloss over the economics of pro sport to do it.

 

[GCK]

And the same amount of Ottawa fans spendign thier money in Montreal, Toronto, Buffalo and Detroit when the Sens play in those arenas.

In the end, the money in and out is close to equal. That's why economists for years have bene saying money into pro sports doesn't really add much to the local economy overall. Yau have to remember, it's spending disposal income that is already here...instead of that money going to the theater or restaurants, that money goes to buying a ticket to a sporting event. Growing an economy is about new revenue streams, not redistributing the money that is already here.

Now, I am not against a new arena at all. I desperately want the Flats to happen. But let's not gloss over the economics of pro sport to do it.

That is not always true. Rather than buy a couple half season tickets to the Sens I would likely be spending the money on a couple weekends in TO to see a play or Raptors game and a weekend in NYC, Boston or Philly to see a sporting event. I would not be spending that 4500.00 here, not to mention the drinks and meals pre and post.

 

[Sweatred]

Most of the users likely have monthly passes so the added value is likely limited.

Any source to back up that claim? Most people I know who work downtown hold a monthly parking pass. I think the % of people who a) hold a transpo pass and b) have season tickets or tickets would be much smaller than the “most” you suggested.

 

[Micklebot]

Any source to back up that claim? Most people I know who work downtown hold a monthly parking pass. I think the % of people who a) hold a transpo pass and b) have season tickets or tickets would be much smaller than the “most” you suggested.

I saw the stat quite a few years back so i don't have it in hand, but it was from OC transpo themselves.

Fair point about sth more likely to not be bus riders in general, but are those guys going to use the train now or continue to find alternate ways of getting there like uber or taxis.

It's also possible the ratios have changed since the new train line fiasco started. The numbers i saw were from before that headache started, though by the time an arena could be built one would hope that is sorted out.

 

[JD1]

And the same amount of Ottawa fans spendign thier money in Montreal, Toronto, Buffalo and Detroit when the Sens play in those arenas.

In the end, the money in and out is close to equal. That's why economists for years have bene saying money into pro sports doesn't really add much to the local economy overall. You have to remember, it's spending disposal income that is already here...instead of that money going to the theater or restaurants, that money goes to buying a ticket to a sporting event. Growing an economy is about new revenue streams, not redistributing the money that is already here.


Now, I am not against a new arena at all. I desperately want the Flats to happen. But let's not gloss over the economics of pro sport to do it.

Economics is one of those "sciences" where the conclusion of a study is predetermined based on the disposition of the economist. You won't ever see a study from a left wing economist that advocates using public money for anything other than a left wing cause. I kind of take a lot of these studies and throw them out with the bath water as a result.

But your point about growing an economy is valid. You'd need to assess how a downtown arena drives tourism. Whether it results in additional money being spent. You'd need to look at business travel and ask whether the downtown arena will result in additional dollars being spent by the traveler is real.

Personally I have been to games in Vancouver, Winnipeg, Toronto and Montreal while on business travel. Probably 10 in total. Spent a whack of money on it too. I'd imagine we get very little of that type of spend here, it's just too damn complicated to attend a game for an out of towner without transport. That's obviously not a make or break level of spending, but tourist and business traveler spending is real and it's money this city doesn't currently capture.

 

[JD1]

I saw the stat quite a few years back so i don't have it in hand, but it was from OC transpo themselves.

Fair point about sth more likely to not be bus riders in general, but are those guys going to use the train now or continue to find alternate ways of getting there like uber or taxis.

It's also possible the ratios have changed since the new train line fiasco started. The numbers i saw were from before that headache started, though by the time an arena could be built one would hope that is sorted out.

The STH crowd and the public transit crowd are different crowds. It's not most, i suspect it is very few. Of course that's my own personal experience. I know many transit pass holders and many STH holders, I just don't know anyone that is both.

And speaking as a suburbanite, i would take a train to a downtown event like bluesfest or a game.