The future of the Ottawa Senators

[DaveMatthew]

When, do you have a source?
Or just guessing?

Logical thinking?

Why would two twenty-somethings, with no other revenue generating business interests and no relevant experience, want to hang on to a small-market NHL franchise that, from a year/year operational standpoint, barely breaks even, has a large debt load, and will require a significant capital and time investments in the coming years to build a new building, either in Kanata or downtown? I'm sure Anna and Olivia are itching to dive into all that NCC red-tape head first!

Oh, and did I mention that the franchise also has a brand that's in shambles?

They could either deal with all of that, or, reportedly, sell it for upwards of $700M.

I tend to believe that they're smart people and will want to get as far away from the Senators as quickly as possible.

 

[Knave]

I think there are two very different things going on here regarding the potential new ownership.

1. Stability for the franchise - let’s face it, it can’t operate with <10 000 fans a game at league low prices.

2. A return to perennial close to cap spending. That means something between $150 mill. A Year in revenue or an owner losing $30+ a year.

I think new ownership is mostly about #1 … if any building opens in 3-5 years we are probably in the playoffs and spending … but that will be the peak, not the norm and easily justified in the short term with a new building etc.

I agree, I don't think they'll be a forever cap team just because of a downtown arena.

But a downtown arena I think makes them viable enough that they could spend close to the cap in good years, spend up to the cap if the GM thinks they can make a deep playoff push and then when we rebuild, we shed salary and bring in new players and repeat the cycle.

 

[Tnuoc Alucard]

I'm definitely getting valet. No way in hell I take LRT, especially in the dead of winter

The original ( and failed ) plan for a Lebreton Flats Arena, only had about 350 parking spots.... mostly for team staff, players and employees... when situated between two LRT Stations, and a number of bus routes, the need for acres of parking spots is not needed.

given the choice of paying less than $10 (round trip) on public transit vs the cost to park, more people would have used public transit...... I know I would have.

 

[jbeck5]

No not really …. All three ownerships had attendance and revenue problems here. Bryden to Geener was probably the sweet spot for the market with a newish building and generally inexpensive tickets combined with the novelty of us challenging for the cup.

3 years or so ago Geener linked spending to revenue. It was the move that prevented the team from going bankrupt again.

The market has changed and isn’t fuelled by $25 tickets anymore. Who ever owns this team will need to sell a lot of tickets to the general public without the benefit of strong corporate support. Tack on $20 to those $25 nose bleeds tickets for a swanky new downtown building too.


Every team gets local TV money, every team gets a share of league wide television revenues. The difference between a cap team and everyone else is fan gate revenue … and mostly ticket revenue from $4-500 a game club bell type seats.

Aren't all but 3-4 teams within 3-4 million of the cap?

You make it sound like there's the teams that can afford to spend, and then the teams that can't afford to spend...when in reality it's every team spends except for the few that have completely torn it down. Almost everyone spends to the cap when they aren't rebuilding.

 

[Micklebot]

with no other revenue generating business interests

I think we can presume all of Melnyk Sr.'s revenue generating interests were passed on to his daughters not just the team.

 

[Tnuoc Alucard]

It will be done before next season at the latest. As a fan of the team you should hope it happens before the offseason this is a pivotal period of time for this rebuild. Two cornerstones of the franchise are able to be extended. Maybe you dont want it to happen? The only reason I could see why is if you have some sort of personal agenda.

There are two realistic and strong buying groups at the table. The lenders dont want two 20 somethings carrying this type of debt load in something they have no experience in running. There were certainly stipulations in the 300 million dollar loan if Eugene were to pass.

wishful thinking...... you don't know what the "Lenders" want.... so stop pending you do. The two 20 year olds can just hire someone, or a management group to run the franchise for them, many pro sports franchises are not run by the owners.

If you're not planning on selling your house, and someone call you up to make an offer, unless they offer you some kind of crazy over the market offer, you're not selling.

Stop holding your breath, the two 20 year olds, if they end up being the owners after the estate is settled, they will decide what they want to do, not what you or anyone else is wishing them to do.

 

[Tnuoc Alucard]

Logical thinking?

Why would two twenty-somethings, with no other revenue generating business interests and no relevant experience, want to hang on to a small-market NHL franchise that, from a year/year operational standpoint, barely breaks even, has a large debt load, and will require a significant capital and time investments in the coming years to build a new building, either in Kanata or downtown? I'm sure Anna and Olivia are itching to dive into all that NCC red-tape head first!

Oh, and did I mention that the franchise also has a brand that's in shambles?

They could either deal with all of that, or, reportedly, sell it for upwards of $700M.

I tend to believe that they're smart people and will want to get as far away from the Senators as quickly as possible.

you make some good points..... but I don't think the two twenty year olds are your typical young 20 year olds...... they've grown up with the franchise, and have allegedly expressed interest in hanging on to the franchise, albeit before their father passed......... I suspect they will take everything into account, and decide what is best for them on their own timeline........... with new revenue (gambling) streams coming into play, they and their consultants will discuss the various options, near term and long term.... and decide on a course of action that they decide works for them..................

 

[bert]

wishful thinking...... you don't know what the "Lenders" want.... so stop pending you do. The two 20 year olds can just hire someone, or a management group to run the franchise for them, many pro sports franchises are not run by the owners.

If you're not planning on selling your house, and someone call you up to make an offer, unless they offer you some kind of crazy over the market offer, you're not selling.

Stop holding your breath, the two 20 year olds, if they end up being the owners after the estate is settled, they will decide what they want to do, not what you or anyone else is wishing them to do.

The only wishful thinking is on your end. Which is inexplicable if you are actually a fan of this team. Just like I knew of how horribly he treated people around him because I have been exposed to first hand knowledge of people that had to experience it. I also have been exposed to some of the current details of the scenario.

Now to the bolded, if you think this is the same thing as selling a house you are clearly unfamiliar with the magnitude of this type of scenario. This league has revenue sharing, it has 31 other teams that are tied to the ownership of this team. They have television deals that are shared etc. This team was run by this owner thats the thing... This owner had to leverage the appreciation of the asset against itself for other business ventures. There were absolutely stipulations in those loans that hinged on his ability to own and run these business's.

Lastly like most of your post you are equating this to personal preference as you are now emotionally involved in this conversation. This is not based on my feelings this is based on understanding normal business practices.

 

[Sweatred]

Aren't all but 3-4 teams within 3-4 million of the cap?

You make it sound like there's the teams that can afford to spend, and then the teams that can't afford to spend...when in reality it's every team spends except for the few that have completely torn it down. Almost everyone spends to the cap when they aren't rebuilding.

Sometimes … MTL tore it down and spent $15 million less than the cap on nearly double the Sens Revenue a few years back. They pocketed zillions and no one called them out …

Most teams draw enough revenue to cap out and stay within +/- $10 million of profit/loss. That magic number is around $140 or so. $80 for payroll, cheating a bit at $60 for operations.

 

[DaveMatthew]

I think we can presume all of Melnyk Sr.'s revenue generating interests were passed on to his daughters not just the team.

From what I understand, there aren't any significant other businesses. There's the horse farm, and the beauty products, but neither is substantial (compared to the Senators).

It's one of the reasons why things went downhill post-Biovail. Unlike many owners, Melnyk didn't have another business that could subsidize his hockey team. The Ottawa Senators, and Capital Sports & Entertainment, were his primary money generating ventures.

 

[jbeck5]

Sometimes … MTL tore it down and spent $15 million less than the cap on nearly double the Sens Revenue a few years back. They pocketed zillions and no one called them out …

Most teams draw enough revenue to cap out and stay within +/- $10 million of profit/loss. That magic number is around $140 or so. $80 for payroll, cheating a bit at $60 for operations.

The new national and local tv deals make it very easy to hit those numbers...look, we didn't have fans for a while and the cap is still going up.

 

[branch]

Garrioch works for post media.

Oh really? I had no idea

 

[jbeck5]

From what I understand, there aren't any significant other businesses. There's the horse farm, and the beauty products, but neither is substantial (compared to the Senators).

It's one of the reasons why things went downhill post-Biovail. Unlike many owners, Melnyk didn't have another business that could subsidize his hockey team. The Ottawa Senators, and Capital Sports & Entertainment, were his primary money generating ventures.

Wasn't he back in biomed with covid? I thought I remember hearing his capital grew a lot in 2020 because of covid?

 

[DaveMatthew]

wishful thinking...... you don't know what the "Lenders" want.... so stop pending you do. The two 20 year olds can just hire someone, or a management group to run the franchise for them, many pro sports franchises are not run by the owners.

It's funny. Two months ago, the Ottawa Senators apparently didn't make enough money to hire a President of Hockey Ops or a more experienced GM. Now, all of a sudden, there's enough revenue to hire an entire management group to run the organization!

Are these people going to work for free?

 

[Tnuoc Alucard]

The only wishful thinking is on your end. Which is inexplicable if you are actually a fan of this team. Just like I knew of how horribly he treated people around him because I have been exposed to first hand knowledge of people that had to experience it. I also have been exposed to some of the current details of the scenario.

Now to the bolded, if you think this is the same thing as selling a house you are clearly unfamiliar with the magnitude of this type of scenario. This league has revenue sharing, it has 31 other teams that are tied to the ownership of this team. They have television deals that are shared etc. This team was run by this owner thats the thing... This owner had to leverage the appreciation of the asset against itself for other business ventures. There were absolutely stipulations in those loans that hinged on his ability to own and run these business's.

Lastly like most of your post you are equating this to personal preference as you are now emotionally involved in this conversation. This is not based on my feelings this is based on understanding normal business practices.

well let me suggest you start a poll/thread.
some of the options could be - team sold outright asap - team partially sold - team sold this year-team sold next year .....

I don't see much of anything happening this calendar year, especially if the WJC gets awarded to Ottawa.

 

[branch]

you make some good points..... but I don't think the two twenty year olds are your typical young 20 year olds...... they've grown up with the franchise, and have allegedly expressed interest in hanging on to the franchise, albeit before their father passed......... I suspect they will take everything into account, and decide what is best for them on their own timeline........... with new revenue (gambling) streams coming into play, they and their consultants will discuss the various options, near term and long term.... and decide on a course of action that they decide works for them..................

Run a small market sports team in the Tundra, or pocket $350M and slink off into the sunset. Hmmmm

 

[Tnuoc Alucard]

It's funny. Two months ago, the Ottawa Senators apparently didn't make enough money to hire a President of Hockey Ops or a more experienced GM. Now, all of a sudden, there's enough revenue to hire an entire management group to run the organization!

Are these people going to work for free?

could well have been more than enough money..... but the unwillingness of the owner to spend that money..... if the Daughters decide on retaining ownership, they would more than likely hand over day to day operations to a team president, which has been done before...Roy Mlakar ring any bells?

 

[DaveMatthew]

you make some good points..... but I don't think the two twenty year olds are your typical young 20 year olds...... they've grown up with the franchise, and have allegedly expressed interest in hanging on to the franchise, albeit before their father passed......... I suspect they will take everything into account, and decide what is best for them on their own timeline........... with new revenue (gambling) streams coming into play, they and their consultants will discuss the various options, near term and long term.... and decide on a course of action that they decide works for them..................

Well, that's not really true. We haven't heard a peep from Anna or Olivia... ever. Outside of attending a couple of charity events each year (the kid's skate and gala), they've never been around the team in a public way.

The only suggestion we have is from Garrioch, who said that Melnyk told him, back in 2017, in Sweden, that he wanted the team to stay in his family "for generations".

A lot has changed since 2017. And Melnyk was well known for making big, grandiose statements that he never stuck to.

Personally, I think the radio silence from the Melnyk family (and Gary Bettman) speaks volumes. Typically, if the plan is to carry on owning the team, that's made public very quickly (see what happened when Wirtz or Illitch died). Nobody from his family was even at the game where his life was celebrated.

I'd imagine that everything has already been decided. Melnyk's passing wasn't sudden. I think the wheels are already in motion on a sale, and have been for a while, and it's not going to be drawn out in the media. It'll be like other NHL team sales. It'll just show up on TSN as a done deal one morning.

 

[Masked]

Oh really? I had no idea

That's okay. I don't think Bruce knew either.

Assen na yo!

 

[DaveMatthew]

could well have been more than enough money..... but the unwillingness of the owner to spend that money..... if the Daughters decide on retaining ownership, they would more than likely hand over day to day operations to a team president, which has been done before...Roy Mlakar ring any bells?

Sure, they could. I don't think they will, nor do I think the commissioner wants them to.

 

[Dan Patrick]

Well, that's not really true. We haven't heard a peep from Anna or Olivia... ever. Outside of attending a couple of charity events each year (the kid's skate and gala), they've never been around the team in a public way.

The only suggestion we have is from Garrioch, who said that Melnyk told him, back in 2017, in Sweden, that he wanted the team to stay in his family "for generations".

A lot has changed since 2017. And Melnyk was well known for making big, grandiose statements that he never stuck to.

Personally, I think the radio silence from the Melnyk family (and Gary Bettman) speaks volumes. Typically, if the plan is to carry on owning the team, that's made public very quickly (see what happened when Wirtz or Illitch died). Nobody from his family was even at the game where his life was celebrated.

I'd imagine that everything has already been decided. Melnyk's passing wasn't sudden. I think the wheels are already in motion on a sale, and have been for a while, and it's not going to be drawn out in the media. It'll be like other NHL team sales. It'll just show up on TSN as a done deal one morning.

Regarding the bolded they could just sell 95% of their stake in the team, (partial) ownership would stay in the Melnyk family for generations and they get to walk away with hundreds of millions of dollars while we get a new majority owner. Problem solved.

 

[Sweatred]

The new national and local tv deals make it very easy to hit those numbers...look, we didn't have fans for a while and the cap is still going up.

I think it was Friendman who pegged the revenue from a Sens game a $400 000 (before the attendance pause). At 41 games that's about $16.5 million assuming we had fans for all games.

The leafs are something like $3-4 million a game or $120-160 million before playoffs.

So yes, with TV, league subsidies, and our ticket base we can fund a payroll off $65 million and lose money.

 

[Golden_Jet]

From what I understand, there aren't any significant other businesses. There's the horse farm, and the beauty products, but neither is substantial (compared to the Senators).

It's one of the reasons why things went downhill post-Biovail. Unlike many owners, Melnyk didn't have another business that could subsidize his hockey team. The Ottawa Senators, and Capital Sports & Entertainment, were his primary money generating ventures.

Sold the horse farm and I assume the 500 horses. Has the Beauty products like you mentioned, and Neurolign Technologies.

 

[Golden_Jet]

I think it was Friendman who pegged the revenue from a Sens game a $400 000 (before the attendance pause). At 41 games that's about $16.5 million assuming we had fans for all games.

The leafs are something like $3-4 million a game or $120-160 million before playoffs.

So yes, with TV, league subsidies, and our ticket base we can fund a payroll off $65 million and lose money.

Your numbers are off.
Your 16.5 million is Canadian dollars if Friedman is accurate,
The Leafs bring in about 90 million US in gate revenue.
Playoff teams lose around 40% to revenue sharing, and the rest comes from the top 10 earners.
Interesting the Leafs lost 32 million US last year according to Forbes.

Also remember 50 % of all revenue goes to player salaries.

 

[DueDiligence]

so… find an owner than wants to stay away, lose $20-40 million a year and if they make the playoffs (50% chance) …. fans may go?

As a side note, most “deep pocketed” owners in the league don’t dig into their own pockets any more or less than our ownership has. A few do, and the majority don’t.

But if a new owner is willing to invest in the team first and show fans they are serious then I am quite confident attendance rates and revenue will rise. Short term pain for long term gain.