UPDATE 2/26 No more extensions in LeBreton mediation, Heritage minister says

[LadyStanley]

31 Thoughts: Senators' Melnyk scrambling to save arena deal - Sportsnet.ca

Friedman on situation

Suffice it to say the NHL is unhappy (although neither commissioner Gary Bettman nor deputy commissioner Bill Daly would comment). It is unhappy for two reasons.

First, the Senators don’t need another kick to the solar plexus, especially with Erik Karlsson returning later this week. Even if the new arena gets built, the team wasn’t expecting to get there until 2022-23 — at the earliest. That means four seasons in Kanata no matter what happens.
...
The second annoyance is, according to multiple sources, some time in the past 11-18 months, Melnyk began raising concerns about another Ruddy development project, one Ottawans know as 900 Albert St. Depending on who you talk to, the new arena portion of LeBreton is budgeted to cost somewhere between $450-$600 million. That was to be financed through the condominium, retail and commercial sales of the project.

Our suspicions about Melnyk’s finances have everyone thinking he’s looking for a free arena, but this is Business 101. You won’t find too many people — including, I suspect, Ruddy himself — who would fund a project any other way. In Melnyk’s lawsuit, there is a report from a consulting group indicating the 900 Albert St. sales would negatively affect the LeBreton project, thereby jeopardizing the financing.

Robbing Peter to pay Paul?

 

[SunDancer]

Sounds like a pretext for relocation.

Last year Melnyk threatened to move the team if the fans didn't buy tickets and then his GM ensured that won't happen by dismantling the roster.

Now Melnyk can claim he's unable to secure a new arena to stay viable in the region.

Next step: find someone that will out bid local buyers.

 

[Melrose Munch]

Sounds like a pretext for relocation.

Last year Melnyk threatened to move the team if the fans didn't buy tickets and then his GM ensured that won't happen by dismantling the roster.

Now Melnyk can claim he's unable to secure a new arena to stay viable in the region.

Next step: find someone that will out bid local buyers.

It's sad

 

[NorthCoast]

Sounds like a pretext for relocation.

Last year Melnyk threatened to move the team if the fans didn't buy tickets and then his GM ensured that won't happen by dismantling the roster.

Now Melnyk can claim he's unable to secure a new arena to stay viable in the region.

Next step: find someone that will out bid local buyers.

Don't see how price after outbidding, plus relocation fee, is less than expansion fee. And assuming it's going to a much more viable market than Ottawa, why would the NHL want a team to move to said market instead of expansion?

 

[Melrose Munch]

Don't see how price after outbidding, plus relocation fee, is less than expansion fee. And assuming it's going to a much more viable market than Ottawa, why would the NHL want a team to move to said market instead of expansion?

Because it gains eyeballs in the US. And we don't know what the relocation fee will be.

 

[Tom ServoMST3K]

Getting bad jives from this situation.

almost an ASG situation?

 

[NorthCoast]

Because it gains eyeballs in the US. And we don't know what the relocation fee will be.

Huh?

Let's say the new market is Houston. How does moving the sens to Houston add more eyeballs that setting up a expansion team in Houston?

If I'm the NHL owners I want

1) Houston & Ottawa existing rev & 650 mil expansion fee

Vs

2) Houston, no ottawa, 150 mil relocation fee

 

[Mightygoose]

Not too mention Fertitta appears to be looking for a deal for a team so how would he outbid local interests?

As long as there is political motivation to build an arena, even with a new bidding process I believe the leauge will only entertain local suitors if Melnyk has to sell.

 

[SunDancer]

Don't see how price after outbidding, plus relocation fee, is less than expansion fee. And assuming it's going to a much more viable market than Ottawa, why would the NHL want a team to move to said market instead of expansion?

I think it would have to look something like the Hurricanes sale where Dundon bought 61% of the team and the reported value of the sale was $550 million. He's also been given the option to buy the remainder at an inflated price.

A relocation fee could be dressed up any way the league finds convenient ... just as it was in Thrashers sale.

Ottawa is vulnerable because Sens fans wouldn't stop watching the NHL if the team left but just revert back to supporting the Leafs or Habs. On the other hand a team in a city like Houston would be a big win for Bettman.

 

[SunDancer]

Huh?

Let's say the new market is Houston. How does moving the sens to Houston add more eyeballs that setting up a expansion team in Houston?

If I'm the NHL owners I want

1) Houston & Ottawa existing rev & 650 mil expansion fee

Vs

2) Houston, no ottawa, 150 mil relocation fee

For sure but you're assuming expansion is an option. With Seattle coming in and bringing the league to 32, who knows when they'll expand again?

 

[SunDancer]

Not too mention Fertitta appears to be looking for a deal for a team so how would he outbid local interests?

As long as there is political motivation to build an arena, even with a new bidding process I believe the leauge will only entertain local suitors if Melnyk has to sell.

The problem for local suitors is they would need the money not only to meet Melnyk's ask but also to finance a new arena. Not impossible but no small feat.

 

[NorthCoast]

I think it would have to look something like the Hurricanes sale where Dundon bought 61% of the team and the reported value of the sale was $550 million. He's also been given the option to buy the remainder at an inflated price.

A relocation fee could be dressed up any way the league finds convenient ... just as it was in Thrashers sale.

Ottawa is vulnerable because Sens fans wouldn't stop watching the NHL if the team left but just revert back to supporting the Leafs or Habs. On the other hand a team in a city like Houston would be a big win for Bettman.

Atlanta was Vulnerable because the team was not profitable int he market and nobody wanted to buy and keep them there. That's not the case in Ottawa where the market is proven to be viable and there are other owners wanting to keep them there.

The NHL would not lose out on the Nat TV revenue, but what about the other 100 mil that the team generates every year.

But regardless, it's not about how you dress-up or structure the price...if an expansion team sell for 650 mil, Melnyk believes the sens are worth 650 mil. That's his asking price...plus relocation. This is not some situation where someone is going to get the team cheap from Melnyk like the thrashers, leaving a lot of money for relocation and a new stadium in the new market.

As I stated, it would literally be:

Ottawa Rev + New Market Rev + 650 Mil expansion

vs

New Market Rev + 150 Mil Relocation Fee (or smaller if you want because of Melnyks asking price but then this option gets even less appealing to owners)

This is a very simple decision for the NHL owners.

 

[MNNumbers]

I'm not sure it's quite that simple. It's my belief that the BOG will be happy to sit at 32 teams for a long while, and I think that's a good move.

Generally, to me, the equation goes:

HUGE FACTOR: We don't like to relocate teams.
Ottawa market has traditionally sold well and been supported well. Sure, we'd love them to have a new arena downtown, but it's not really necessary. We would prefer to keep the team in the market. This is not an economic decision by the BOG. It's a decision based on 'look' and 'continuity.'

OTHER FACTORS: Who is in a position to buy?
Really, there are only two other places under consideration: Quebec and Houston. Quite clearly, Quebec has an expansion bid on hold with the NHL, so they have put in a price which must have been worth considering. Houston has no such thing. Fertitta is of course interested, but is on record as being skeptical about the price.

Now, consider Melnyk's situation.....The league isn't going to force him out. For sure not. If the team is sold, it's because he goes broke. He isn't going to move the team himself, although the league couldn't stop him. But there is no place for him to move where he would do better than current. So, if anything happens...it's because he ran out of money. In that case, he has to get league approval for a sale. The league is in a position approve or disapprove any sale.

Thus, we come back to the original factor. The league would MUCH rather not relocate franchises. Thus, in any reasonable situation, the league will prefer an in market sale.

The ONLY way the team relocates is if no one wants to purchase the team (and probably CTC as well) and play in Ottawa. NO ONE....at a price of about 500M USD. If that happens, then there is a chance that they end up in Quebec. I believe, reading the tea leaves, that the league would approve that. A Canada to Canada move would not rankle anyone as much as any other move. In that case, you would likely see a very small relocation fee. The Quebec market is not that much better than the Ottawa market, if it's better at all. And, remember, the relo fee in the Winnipeg case was an artificial construct so that the league could claim a 170M sale, when Chipman/Thompson had committed to purchasing Phoenix for that. No one should attempt to read too much into that.

 

[Mightygoose]

The problem for local suitors is they would need the money not only to meet Melnyk's ask but also to finance a new arena. Not impossible but no small feat.

For sure there are 2 elements there. To me in comes down to the political will for the NCC to continue or restart the process that can lead to a new arena.

The plan is to finance the arena through in large part condo sales in LeBreton. Melnyk's issue stems from Trinity's plan at 900 Albert which could saturate the market - an allegation not proven yet.

I think any new buyer (even through a partial sale) would have to the developer in Lebreton as well. Hence runner up bid included investors that wanted to buy the Sens too. This keeps it the development team and arena under one umbrella as opposed to 2.

Would love to be a fly on the wall at the BoG meeting next week as I'm sure this will a big discussion. #1 question I think to Melnyk is if this form of Lebreton dies what is his plan moving forward? I doubt the board would be happy with him winging it.

 

[CartographerNo611]

Barbados Senators

 

[Korpse]

The ONLY way the team relocates is if no one wants to purchase the team (and probably CTC as well) and play in Ottawa. NO ONE....at a price of about 500M USD.

And given that there has been interest to buy the Senators for at least a couple of years now with it's peak being a recent as this past June, I don't see that interest going away anytime soon. Not with the cloud of uncertainty that looms over Melnyk.

 

[Melrose Munch]

Huh?

Let's say the new market is Houston. How does moving the sens to Houston add more eyeballs that setting up a expansion team in Houston?

If I'm the NHL owners I want

1) Houston & Ottawa existing rev & 650 mil expansion fee

Vs

2) Houston, no ottawa, 150 mil relocation fee

There's more people in that other market. Not saying it would be Houston, And again, we don't really know what the expansion fee would be imo. We're forgetting that many people think the NHL doesn't want to go past 32 teams. I disagree with that, but it's the thinking of some.

 

[NorthCoast]

There's more people in that other market. Not saying it would be Houston, And again, we don't really know what the expansion fee would be imo. We're forgetting that many people think the NHL doesn't want to go past 32 teams. I disagree with that, but it's the thinking of some.

If the league is capped at 32 and is open to letting viable markets lose their teams so long as they go to bigger TV markets, and they are willing to manipulate the relocation fee as necessary to make sure it is financially appealing to the larger market....then okay, this whole discussion is mute because then yes, all the small markets (Ottawa, Winnipeg, Calgary, Columbus, Buffalo) will be moved to larger TV markets in the US.

But then the league better get busy, because it's going to be hard getting any smaller market to help with a new stadium if they have no assurance that the team is going to stick around, even if it's viable.

 

[Melrose Munch]

If the league is capped at 32 and is open to letting viable markets lose their teams so long as they go to bigger TV markets, and they are willing to manipulate the relocation fee as necessary to make sure it is financially appealing to the larger market....then okay, this whole discussion is mute because then yes, all the small markets (Ottawa, Winnipeg, Calgary, Columbus, Buffalo) will be moved to larger TV markets in the US.

But then the league better get busy, because it's going to be hard getting any smaller market to help with a new stadium if they have no assurance that the team is going to stick around, even if it's viable.

I don't disagree, we'll see.

 

[CHRDANHUTCH]

If the league is capped at 32 and is open to letting viable markets lose their teams so long as they go to bigger TV markets, and they are willing to manipulate the relocation fee as necessary to make sure it is financially appealing to the larger market....then okay, this whole discussion is mute because then yes, all the small markets (Ottawa, Winnipeg, Calgary, Columbus, Buffalo) will be moved to larger TV markets in the US.

But then the league better get busy, because it's going to be hard getting any smaller market to help with a new stadium if they have no assurance that the team is going to stick around, even if it's viable.

how exactly are Buffalo and Columbus small markets, north, and since when does Ohio State University play in Canada, if that's Columbus

 

[NorthCoast]

how exactly are Buffalo and Columbus small markets, north, and since when does Ohio State University play in Canada, if that's Columbus

sorry, initially I had written small canadian markets...and forgot to edit out "moved to the us" when I edited out Candian to add Buffalo and Columbus.

I simply went off a couple list of largest tv/media markets in the US. Buffalo and Columbus were not in the top 32.

 

[NorthCoast]

I'm not sure it's quite that simple. It's my belief that the BOG will be happy to sit at 32 teams for a long while, and I think that's a good move.

Generally, to me, the equation goes:

HUGE FACTOR: We don't like to relocate teams.
Ottawa market has traditionally sold well and been supported well. Sure, we'd love them to have a new arena downtown, but it's not really necessary. We would prefer to keep the team in the market. This is not an economic decision by the BOG. It's a decision based on 'look' and 'continuity.'

OTHER FACTORS: Who is in a position to buy?
Really, there are only two other places under consideration: Quebec and Houston. Quite clearly, Quebec has an expansion bid on hold with the NHL, so they have put in a price which must have been worth considering. Houston has no such thing. Fertitta is of course interested, but is on record as being skeptical about the price.

Now, consider Melnyk's situation.....The league isn't going to force him out. For sure not. If the team is sold, it's because he goes broke. He isn't going to move the team himself, although the league couldn't stop him. But there is no place for him to move where he would do better than current. So, if anything happens...it's because he ran out of money. In that case, he has to get league approval for a sale. The league is in a position approve or disapprove any sale.

Thus, we come back to the original factor. The league would MUCH rather not relocate franchises. Thus, in any reasonable situation, the league will prefer an in market sale.

The ONLY way the team relocates is if no one wants to purchase the team (and probably CTC as well) and play in Ottawa. NO ONE....at a price of about 500M USD. If that happens, then there is a chance that they end up in Quebec. I believe, reading the tea leaves, that the league would approve that. A Canada to Canada move would not rankle anyone as much as any other move. In that case, you would likely see a very small relocation fee. The Quebec market is not that much better than the Ottawa market, if it's better at all. And, remember, the relo fee in the Winnipeg case was an artificial construct so that the league could claim a 170M sale, when Chipman/Thompson had committed to purchasing Phoenix for that. No one should attempt to read too much into that.

Agreed.

I just don't see a scenario where the price is palatable for Quebec but not for any buyer in Ottawa, considering that DevCore already inquired in the sens at around 450 million.

 

[Mightygoose]

Senators owner Melnyk losing popularity with both fans and politicians - Sportsnet.ca

Interesting article not just on the content but where it's coming from.

Sportsnet (Rogers) who holds the national contract and at times act as the league's (collective owners) mouthpiece and generally tows the party line. and posting an article that is negative towards the owner in this case.

Maybe I'm reading too much into it, but I will disagree with the headline about the present tense 'losing popularity'.

 

[Glacial]

sorry, initially I had written small canadian markets...and forgot to edit out "moved to the us" when I edited out Candian to add Buffalo and Columbus.

I simply went off a couple list of largest tv/media markets in the US. Buffalo and Columbus were not in the top 32.

IIRC, Columbus is right around there (32), below Cleveland quite a bit, but above Cincinnati. Buffalo is at or just under 50th.

 

[DowntownBooster]

If the league is capped at 32 and is open to letting viable markets lose their teams so long as they go to bigger TV markets, and they are willing to manipulate the relocation fee as necessary to make sure it is financially appealing to the larger market....then okay, this whole discussion is mute because then yes, all the small markets (Ottawa, Winnipeg, Calgary, Columbus, Buffalo) will be moved to larger TV markets in the US.

But then the league better get busy, because it's going to be hard getting any smaller market to help with a new stadium if they have no assurance that the team is going to stick around, even if it's viable.

The league isn't forcing any teams to leave their market for a larger one. In fact, the league has worked very hard to keep all teams in their current locations. Sometimes that may require lining up new ownership when the current owner wants to sell. However, if an owner wants to maintain ownership of their team but move it to another market, then that's a different issue altogether and something the league has not needed to address since Gary Bettman became Commissioner. The last time a relocation of that sort occurred was when Norm Green moved the North Stars from Minnesota to Dallas following the 1992-93 season.

The NHL made no suggestion to Peter Karmanos to sell the Hurricanes to someone in Houston instead of selling it to someone that would keep the team in Raleigh. They also won't do anything that will result in the Coyotes moving from Arizona to Houston. That's not to say that a team won't someday relocate to Houston but it doesn't appear that it will occur because the NHL is trying to make it happen.

The NHL can still work toward increasing their American tv audience even without being in certain U.S. markets like they do in Canada. Just as hockey fans in Saskatchewan and Atlantic Canada watch the NHL without having their own team, the same can occur in the U.S. in such places as Portland and Kansas City, etc. Having a team isn't a prerequisite for watching a certain sport. No one can tell me there are no NFL fans in Idaho or Nebraska simply because they don't have their own team or that there are no NBA fans in Cincinnati or Pittsburgh for the same reason.

There is no reason for small market teams to relocate if they are successful in their market no matter which league they are a part of.