News Article: Lebreton project

[Fandlauer]

If we would have sold the last 500 tickets to that Boston playoff game two years ago this never would have happened.

 

[Fandlauer]

Is the Ottawa Senators relocation plan on the verge of collapse? - The Globe and Mail

Ruddy’s group certainly has the backing of local business leaders. In an Oct. 11 letter sent to NHL commissioner Gary Bettman, and provided Thursday to The Globe and Mail, a spokesperson said he represented “a large number of concerned leaders in law, banking and finance, real estate, building and trades, labour, construction, information technology, tourism and hospitality, First Nations, philanthropy, public opinion, science, health care, government, the media – all sectors that make up the foundational leadership of Canada’s National Capital Region.”
Calling themselves the Capital Built Task Force, they told Bettman they “wholeheartedly endorse” the project as well as the Senators moving downtown. They expressed, however, “serious concerns over the intentions of Senators’ owner Mr. Eugene Melnyk, and whether he in fact is committed to moving the team downtown.”
They even provided a survey undertaken by Abacus Data in which 60 per cent of responding Ottawans would support “NHL commissioner Gary Bettman and the NHL getting involved to ensure the project moves ahead on time.”
Bettman responded on Oct. 23, thanking them for the letter but saying, “While I cannot speak for the Senators (only Eugene Melnyk can), I am always happy to chat with concerned constituents. Please feel free to call.”

 

[JD1]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

 

[Spartachat]

Is the Ottawa Senators relocation plan on the verge of collapse? - The Globe and Mail

Oh yeah! Well Melnyk has the backing of numerous HFBoard posters! So there.

 

[Sensung]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

And yet other superior businessmen want to complete the deal.

What is Melnyk's alternative?

 

[Spartachat]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

He probably just expects the land value to appreciate over time given its central location.

 

[L'Aveuglette]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

Wouldn't call you a shill, but Melnyk should absolutely hire you as a replacement for Rudkowski(or wtv his name is). What a beauty of a spin job.

 

[JD1]

And yet other superior businessmen want to complete the deal.

What is Melnyk's alternative?

I'm not suggesting he has one...I'm saying this deal doesn't fund a 600M arena

 

[OgieO]

“While I cannot speak for the Senators (only Eugene Melnyk can), I am always happy to chat with concerned constituents. Please feel free to call.”

Translation: I can't write what I want to say but we can speak "off the record" over the phone...

I hope this leads to a sale. I can't/won't get my hopes up, but hopefully we're at the breaking point.

 

[JD1]

And yet other superior businessmen want to complete the deal.

What is Melnyk's alternative?

if you can lay out the math Sensung. ... go for it

 

[Sensung]

I'm not suggesting he has one...I'm saying this deal doesn't fund a 600M arena

The ROI is in the increase in the value of his asset, plus the money to be made off of the land deal.

 

[JD1]

“While I cannot speak for the Senators (only Eugene Melnyk can), I am always happy to chat with concerned constituents. Please feel free to call.”

Translation: I can't write what I want to say but we can speak "off the record" over the phone...

I hope this leads to a sale. I can't/won't get my hopes up, but hopefully we're at the breaking point.

I hope it leads to a sale too and it may well be a breaking point... I just can't get my head around how that arena gets funded...the incremental revenue from Kanata to Lebreton won't fund that rink... maybe if you have a condo developer that owns the team that's willing to accept lower ROI on a larger deal but even that gets thin

 

[JD1]

The ROI is in the increase in the value of his asset, plus the money to be made off of the land deal.

ya that all sounds good Sensung but it unfortunately isn't the way it works

the arena needs to be built and it costs money to do that. there isn't enough money in the deal to do it

what money made off the land deal are you referring to?

 

[Sensung]

if you can lay out the math Sensung. ... go for it

Your assumption is wrong.

Why does the deal have to fund the arena completely?

The ROI to Melnyk is also in the increase in the value of the Sens.

 

[Masked]

Honestly though, after this latest development, pardon the pun, how can anyone stand behind this organization?

Well you don't want to stand in front of it lest you start getting your shoulders rubbed and then randy things start working their way lower...

 

[Knave]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

From the value of a toy for billionaires in a professional sports franchise increasing. He bought it cheap over a decade ago. If he can sell with a brand new arena in the heart of the city... the value of the team has gone way up over time. An arena downtown that can host an anchor tenant and major concerts and events is attractive as well. It may not play well with a traditional ROI sheet but look around at what sports franchises sell for.

And while you may have your model: two bids with major investors in construction thought enough of the value of land and condos within walking distance of downtown to join or submit a bid.

So it's not just some anonymous hf boards poster here. You're saying dozens of people, many who have made fortunes in construction are all wrong.

 

[GCK]

I'm not suggesting he has one...I'm saying this deal doesn't fund a 600M arena

I am not as versed in the revenues a building generates but i wondered how this would work. I assumed Some arena would come from the developers in order to include an arena w/ team in the bid. I also assumed Melnyk would try holding taxpayers hostage. There must be sufficient ROI as new arenas and stadiums are built all the time.

Let’s just be glad this came up before they finalized the deal, maybe this precipitates a sale to either the rest of the RVL group or the Devcore group.

 

[GCK]

The ROI is in the increase in the value of his asset, plus the money to be made off of the land deal.

What money would Melnyk make on the rest of the project ?

 

[Sensung]

ya that all sounds good Sensung but it unfortunately isn't the way it works

the arena needs to be built and it costs money to do that. there isn't enough money in the deal to do it

what money made off the land deal are you referring to?

It could work multiple ways. Just because it doesn’t work for Melnyk’s “use other people’s money, assume zero risk, pile up debt and then blame fans for not making every part of my business holdings make money”scheme, that doesn’t mean that other businessmen couldn’t find a model that works for them.

The fact that other groups are willing to buy the team from Melnyk and take over his portion of the deal proves that your analysis is flawed.

 

[Fandlauer]

We also have to realize Mr. Melnyk has a dedicated fanbase in Kanata to think about.

 

[BonkTastic]

I'm not surprised by this at all. This project, from the point of view that it funds an arena and Melnyk makes a ton of money, has never made financial sense to me

It's a 4B deal. that seems to be the oft quoted number. If the entire project returned a 15% profit then it funds the arena minus any type of NPV assessment. The research I've done doesn't show condo projects returning 15% and even if this particular deal did....all of that return is not Melnyk's.

The money doesn't add to me.

I don't see the incremental revenue from a downtown arena being anywhere close to sufficient to fund the project. And if the revenue cannot fund it then there's an equity injection required and I don't see the ROI on that equity injection.

There seems to be this overwhelming view that Melnyk makes a boatload on this but I don't see where it comes from. it will not come from a massive increase in arena rentals. there are only so many arena rock shows touring at any point in time and we're not losing out on 50 dates a year because our rink is in Kanata. If we're talking hockey revenues increasing the only way that happens is with increased ticket prices and that brings in to question whether the market can absorb the increase.

personally I don't see the windfall. and before I get jumped on for saying so....I'm not coming out with this opinion as a result of this week...I've expressed this before.

you can't spend 600M on something without an ROI model and that model would need to consider the opportunity cost on the 600M. I don't see it making sense without public investment. that's not to say public investment makes sense, just that private investment does not.

if anyone wants to layout some numbers that shows it all making sense please do.

and for those that want to throw out a whack of LOLs and call me a "shill"... I'm qualified to be involved in building this type of ROI model so before you make a "shill" type comment, consider whether your career would get you hired to produce this kind of ROI model

Melnyk apparently wants other people to pay for the entirety of the arena for him. How does THAT make any financial sense to anyone else involved in the deal?

If we're going to talk about "finances not making sense in this deal", then let's put this at the top of the list in permanent marker, hilighted, circled in red with glitter-ink arrows pointing to it.

 

[BonkTastic]

We also have to realize Mr. Melnyk has a dedicated fanbase in Kanata to think about.

"Mr Melnyk remains loyal to the dozens of Stitttsville Senators fans who have supported him throughout his ownership. To turn his back on them would be an insult to the great relationship this organization shares with... I don't know, how many people would go see an Econoline Crush reunion tour? Like, that many people".

 

[Sensung]

What money would Melnyk make on the rest of the project ?

Melnyk is to get a portion of the condo $.

He’d also make money off the increase in the number of events run at Lebreton and the increase amount he could charge for the arena rental for those events.

 

[JD1]

Melnyk apparently wants other people to pay for the entirety of the arena for him. How does THAT make any financial sense to anyone else involved in the deal?

If we're going to talk about "finances not making sense in this deal", then let's put this at the top of the list in permanent marker, hilighted, circled in red with glitter-ink arrows pointing to it.

I'm not professing to know what Melnyk is or isn't looking for in the deal

what I am saying is I cannot land on a business deal where this thing makes sense in terms of funding a 600M arena.

 

[GCK]

Melnyk is to get a portion of the condo $.

He’d also make money off the increase in the number of events run at Lebreton and the increase amount he could charge for the arena rental for those events.

Why in the world would he get condo dollars ? Did you read this somewhere, I’d be shocked, other than some arena funding by the developers which I would hope would be minimal.