News Article: Lebreton project

[supsens]

Sure the deal is structured differently but that's what Melnyk is chasing: a considerable increase in the value of the franchise.

This isn't very mysterious.

I think the oilers were given a rink paid for mostly by other people. If the sens have to pay for it, all the massive debt will cancel out value increase. It might not even generate enough cash to pay itself off.

 

[Tnuoc Alucard]

Well at least Melnyk has a massive resevoir of good will built up with the City and general public to tap into...

Pretty sure the VAST majority of Senators fans put their support for the Franchise well above whatever they think of the current owner.

Owners come and go, but the Team remains, and Ottawa has rallied behind the team in the past, and will so again, if it ever comes to that ............ which I don't ever want to see.

Would you rather see the Senators and Melnyk as owner leave town, ans set up in another market, leaving Ottawa without a franchise ............ or would you support whatever it takes to keep the Senators franchise in Ottawa, no matter who the owner(s) is/are ............. Yes or No?

(I know you will not answer the question Yes or No)

 

[Engineer]

I think his point was that even with the carrot of the increased franchise value, Katz felt he had to corner the city into covering, what was it, about 60% of the cost of a new rink and the right to develop the commercial space around the rink.; it does make a difference if someone hands you 225m.

30,000ft level I tend to agree with the point that the reason for the sens to move downtown is not based on getting more concerts or more conventions, neither is a factor.

Franchise value probably goes, up, but if you don't plan to sell (as he insists on telling us, whatever) then that is nice, but it doesn't pay the bills. you can borrow against it I suppose, but loans have to be repaid and ticket price changes just aren't going to cover that.

There is a suggestion he wants the group to pay for his rink. could be true; nobody, anywhere, was excited about new condos, but a new fancy rink - that can really bring some heat to the project from a visibility/excitement standpoint.

Another suggestion is that he is looking for the right to develop around the rink - a-la Landsdowne. can be a factor too.

It does seem a little late in the game to not have had all of that settled with the very real risk that the NCC will just pull the plug and go with the other bidder.

Uncle Euge may be overplaying his hand.

Well let's be honest here, JD1 didn't make any points as per usual.

However, good analysis and I agree with what you've stated; however, Melnyk went into this process knowing that the city was not interested in funding the development of the arena. That surely makes a difference between the two scenarios, but it was one that Melnyk was aware of prior to his bid, coming back 3 years later and crying foul behind the scenes isn't a valid excuse at this juncture. I agree with you that he appears to be overplaying his hand, which is why there is now a 2 month count down.

 

[DaveMatthew]

Pretty sure the VAST majority of Senators fans put their support for the Franchise well above whatever they think of the current owner.

Owners come and go, but the Team remains, and Ottawa has rallied behind the team in the past, and will so again, if it ever comes to that ............ which I don't ever want to see.

Would you rather see the Senators and Melnyk as owner leave town, ans set up in another market, leaving Ottawa without a franchise ............ or would you support whatever it takes to keep the Senators franchise in Ottawa, no matter who the owner(s) is/are ............. Yes or No?

(I know you will not answer the question Yes or No)

I love the Senators, but no public money should go into a new arena. If that means the team moves, it'll suck, but the city will move on.

As you and Eugene himself always say, he owns the team. He should pay for the building his team plays in. The Senators are not a public good, and this city has far bigger problems and priorities.

 

[Sens of Anarchy]

 

[NorthCoast]

right...but look at the deal they have. ...it's quite different

Yes/no

Edmonton gave the Oilers 300 mil, but the oilers don't own the stadium.

Ottawa is giving the Sens the rights to Lebreton, which by proxy has provided the sens with leverage to get a piece of the condo sales, which will be 100-200 mil? I assume, but the Sens own the stadium.

Which is the better deal for the team?


Also, while the free money certainly makes up a huge part of Edmonton's value increase, they have seen revenue increases as well, as have most new stadiums in same/better location.

 

[Spartachat]

I love the Senators, but no public money should go into a new arena. If that means the team moves, it'll suck, but the city will move on.

As you and Eugene himself always say, he owns the team. He should pay for the building his team plays in. The Senators are not a public good, and this city has far bigger problems and priorities.

Seriously, if Melnyk wants a team so bad, he should just buy the cheaper Coyotes, which are up for sale. He has no attachment to Ottawa.

 

[Sensung]

Pretty sure the VAST majority of Senators fans put their support for the Franchise well above whatever they think of the current owner.

Owners come and go, but the Team remains, and Ottawa has rallied behind the team in the past, and will so again, if it ever comes to that ............ which I don't ever want to see.

Would you rather see the Senators and Melnyk as owner leave town, ans set up in another market, leaving Ottawa without a franchise ............ or would you support whatever it takes to keep the Senators franchise in Ottawa, no matter who the owner(s) is/are ............. Yes or No?

(I know you will not answer the question Yes or No)

I would rather the Sens move than see Eugene in control.

Lebreton will be built and it will have an NHL franchise.

This is a good market with a POS owner. I'd love to see what deep pocketed owners with extensive experience in entertainment business could do in Lebreton.

 

[Do Make Say Think]

I think the oilers were given a rink paid for mostly by other people. If the sens have to pay for it, all the massive debt will cancel out value increase. It might not even generate enough cash to pay itself off.

Again, this is about "why would Melnyk want to go ahead with this".

None of us here are privy to any real information about the deal but we know what happens to teams that get new arenas, their valuation jumps. That's why Melnyk is trying to get this done. Asking about numbers just muddies the picture: he wants what he owns to be worth more and he's going about it the only way he knows how to do business. The man is a tool who made his fortune as a con artist and everyone is well aware of how unreliable and not trustworthy he is.

 

[GrantLemons]

Nothing new in there. Eugene Melnyk takes the Donald Trump approach to negotiating. He's a grifter, plain and simple.

At this point, who knows what his end-game is.

He doesn't have the financial capital to develop a new arena in Lebreton.
He doesn't have the financial capital to re-locate the team.
He doesn't want to take on partners.
He's told everyone that he's bleeding money in Kanata and has had to strip the organization to the bone.
He's told everyone that he won't "underwrite a hockey team with money that he's made from a lifetime of hard work in other industries".

So what's the plan? Continue to take-on debt to fund the losses of a ****ty NHL team?

I don't know, maybe he just wants to spite the entire city, but none of the things he's doing benefit him. It's mind-boggling.

It's almost like he went into the whole thing knowing he didn't have the means nor want to actually pay for the arena, and was just hoping that he could squeeze a deal out of Trinity or the city with them footing the majority of the bill for the arena. That obviously hasn't happened, and we're just left with a guy who has absolutely no plan, and no one left around him for counsel.

There is no logical end to this story that doesn't involve him selling the team.

 

[JD1]

Yes/no

Edmonton gave the Oilers 300 mil, but the oilers don't own the stadium.

Ottawa is giving the Sens the rights to Lebreton, which by proxy has provided the sens with leverage to get a piece of the condo sales, which will be 100-200 mil? I assume, but the Sens own the stadium.

Which is the better deal for the team?


Also, while the free money certainly makes up a huge part of Edmonton's value increase, they have seen revenue increases as well, as have most new stadiums in same/better location.

sure I'll agree with revenue increases but sufficient increases to deal with the 600M?

re your point about increases in value....absolutely historically that's true.....will they continue to increase way beyond inflation into the indefinite future? idk. there has to be a saturation point.

 

[Tundraman]

Yes/no

Edmonton gave the Oilers 300 mil, but the oilers don't own the stadium.

Ottawa is giving the Sens the rights to Lebreton, which by proxy has provided the sens with leverage to get a piece of the condo sales, which will be 100-200 mil? I assume, but the Sens own the stadium.

Which is the better deal for the team?

Also, while the free money certainly makes up a huge part of Edmonton's value increase, they have seen revenue increases as well, as have most new stadiums in same/better location.

Ottawa doesn't own Lebreton. The federal govt expropriated the land in the 60's so the NCC controls it. As far as I can read there is no freebie the Group" has to buy the land from the NCC at market value and the only "concession" I believe is that they will deduct the cleanup cost from the purchase price. Startup costs are enormous unless the NCC is willing to forego any interest and take payments after money from the sale of condos starts rolling in. IMO Melnyk has little liquid cash so building the arena would have to trail the condo sales by quite a bit so Melnyk collects enough of his share to afford a build. If Melnyk goes 1st on borrowed money against the team and current arena he could go bankrupt in a year.

 

[JD1]

It's almost like he went into the whole thing knowing he didn't have the means nor want to actually pay for the arena, and was just hoping that he could squeeze a deal out of Trinity or the city with them footing the majority of the bill for the arena. That obviously hasn't happened, and we're just left with a guy who has absolutely no plan, and no one left around him for counsel.

There is no logical end to this story that doesn't involve him selling the team.

that might be pretty close to the truth

 

[GCK]

I would rather the Sens move than see Eugene in control.

Lebreton will be built and it will have an NHL franchise.

This is a good market with a POS owner. I'd love to see what deep pocketed owners with extensive experience in entertainment business could do in Lebreton.

Correction.

This is a mediocre market with a POS owner.

It can work with Lebreton and excellent ownership but the challenges are real.

 

[IpsoPostFacto]

Well let's be honest here, JD1 didn't make any points as per usual.

However, good analysis and I agree with what you've stated; however, Melnyk went into this process knowing that the city was not interested in funding the development of the arena. That surely makes a difference between the two scenarios, but it was one that Melnyk was aware of prior to his bid, coming back 3 years later and crying foul behind the scenes isn't a valid excuse at this juncture. I agree with you that he appears to be overplaying his hand, which is why there is now a 2 month count down.

yep; there is no political will to have the city fund any of this and no matter what anyone thinks of Watson, he has proven to be excellent at reading which way the wind is blowing.

my absolute guess is that Euge figures he can pressure Ruddy into help to pay for a rink, provide more kickback on the rest of the project, hand over rink side development, or a little bit of all of it and if Ruddy doesn't play ball he can try the same thing with the other group.

it sure would be nice to have them downtown. it has more cachet and the visuals on t.v with the river and parliament in the background would be awesome. plus, I can walk to games - at least in the fall and spring.

do it for IpsoPostFacto!!!!!!!!

 

[NorthCoast]

sure I'll agree with revenue increases but sufficient increases to deal with the 600M?

re your point about increases in value....absolutely historically that's true.....will they continue to increase way beyond inflation into the indefinite future? idk. there has to be a saturation point.

Montreal is already worth 1.5 bil. You don't think Ottawa can come close to that in 20 years.

- 2 New CBA's
- 4 Potential Olympics (or World Cups)
- 2-3 Nat. TV Rights negotiations
- 1-3 Franchise Expansions
- Sports Gambling Integration
- Ongoing increase in advertising rates for live entertainment

Maybe there is a saturation point, but there is a lot of options on the table for owners to keep this going, and they don't seem like the types to leave money on the table.

 

[Do Make Say Think]

that might be pretty close to the truth

It strikes me as incredible that you didn't consider this first.

 

[DaveMatthew]

Pretty sure the VAST majority of Senators fans put their support for the Franchise well above whatever they think of the current owner.

Owners come and go, but the Team remains, and Ottawa has rallied behind the team in the past, and will so again, if it ever comes to that ............ which I don't ever want to see.

Would you rather see the Senators and Melnyk as owner leave town, ans set up in another market, leaving Ottawa without a franchise ............ or would you support whatever it takes to keep the Senators franchise in Ottawa, no matter who the owner(s) is/are ............. Yes or No?

(I know you will not answer the question Yes or No)

If Melnyk is not capable or willing to fund an arena at Lebreton, why would he all of a sudden be able to build an arena in another city? If he wants a handout, which big city is going to give him one for an NHL franchise?

Quebec City might seem like an option, but they have a building that someone else owns and Melnyk has been pretty crystal clear about not wanting to play in someone else's rink or bring on a partner.

And that's not even considering the costs associating with moving the team. There'd be a hefty expansion fee plus load of capital required to set up an operation somewhere else (re-branding, marketing, ticket sales, support staff hiring, etc).

I guess if Melnyk really want to spite the city he could try selling to someone who would move the team, but the NHL has final approval on sales and they've always prioritized local ownership groups, even in "struggling" markets.

His only options are Lebreton and Kanata, and he doesn't seem to like either of them. What's he going to do?

"The Senators and Melnyk as owner leaving town and setting up in another market" isn't a realistic scenario.

 

[IpsoPostFacto]

Yes/no

Edmonton gave the Oilers 300 mil, but the oilers don't own the stadium.

Ottawa is giving the Sens the rights to Lebreton, which by proxy has provided the sens with leverage to get a piece of the condo sales, which will be 100-200 mil? I assume, but the Sens own the stadium.

Which is the better deal for the team?


Also, while the free money certainly makes up a huge part of Edmonton's value increase, they have seen revenue increases as well, as have most new stadiums in same/better location.

I totally missed who owns the rink in Edmonton. just looked it up and assuming accurate:

total project @614m. rink, some fancy glass covered thingie in front of the rink to hang out in, and a connection to the transit system.
city paying 313m; retains ownership and will lease back to oilers.
team paying 166m. some in cash, but most is in the form of rent payments. promise to keep team in town for 35 years. The team retains all revenue from the operation of the building.

that actually looks like a pretty sweet deal if accurate, but I don't know much - if I did, I would buy the sens and mismanage it.

 

[NorthCoast]

that might be pretty close to the truth

Agree with GrantLemons.

Regardless of build/sell, having a realistic and affordable (not to Melnyk but someone else) price for Lebreton for the team helps his price just like having a player signed helps their value.

 

[NorthCoast]

I totally missed who owns the rink in Edmonton. just looked it up and assuming accurate:

total project @614m. rink, some fancy glass covered thingie in front of the rink to hang out in, and a connection to the transit system.
city paying 313m; retains ownership and will lease back to oilers.
team paying 166m. some in cash, but most is in the form of rent payments. promise to keep team in town for 35 years. The team retains all revenue from the operation of the building.

that actually looks like a pretty sweet deal if accurate, but I don't know much - if I did, I would buy the sens and mismanage it.

It's a very sweet deal.

Kind of like getting a condo builder to pay for your new stadium for you just because the person he wants to lease the land from will only give it to him if he builds you a stadium.

But he doesn't want to pay for it all up front, so he asked you to manage, let's say 166m of it, on your own, assuming that you can borrow the money and pay it back over time as new revenue comes in to cover the loan costs.

 

[foggyvisor]

Looks to me like the next two months are a big game of chicken between Ruddy and Melnyk. Melnyk is hoping Ruddy will cave in and make financial concessions vs see his proposal get binned by the NCC.

Maybe Melnyk has a plan B to sell/partner with Devcore should RDL die in January?

Plan A - Ruddy caves and RDL goes ahead. Arena gets built and Sens move.

Plan B - RDL dies and Melnyk partners with or sells to Devcore. Arena gets built and Sens move.

Plan C - Melnyk invests the 25-35 million he once quoted into CTC upgrades and the sens are a perennial cap-floor team.

 

[IpsoPostFacto]

It's almost like he went into the whole thing knowing he didn't have the means nor want to actually pay for the arena, and was just hoping that he could squeeze a deal out of Trinity or the city with them footing the majority of the bill for the arena. That obviously hasn't happened, and we're just left with a guy who has absolutely no plan, and no one left around him for counsel.

There is no logical end to this story that doesn't involve him selling the team.

yep. it's the classic bait and switch. Euge is like the car dealership when you agree with the rep on the price of a new car and then they walk you into the business office where they want to sell you the extended warrantee, fabric protection, rust proofing, and tire insurance.

Seinfeld.

 

[Knave]

It's not that surprising when you look at the architect of the deal for the Senators organization Cyril Leeder who is gone. Tom Anselmi(?) was brought on to see things through after Cyril Leeder was let go... now he resigned and is also gone.

I'm guessing Melnyk and the Senators Organization are in pretty rough shape and not positioned for a major build. They're likely turning to the other partners in this development project and are getting told off.

It's likely Cyril Leeder had a reasonable plan agreed to by everyone. Tom Anselmi tried to follow it up before realizing it was a giant shitshow.

 

[supsens]

Yes/no

Edmonton gave the Oilers 300 mil, but the oilers don't own the stadium.

Ottawa is giving the Sens the rights to Lebreton, which by proxy has provided the sens with leverage to get a piece of the condo sales, which will be 100-200 mil? I assume, but the Sens own the stadium.

Which is the better deal for the team?


Also, while the free money certainly makes up a huge part of Edmonton's value increase, they have seen revenue increases as well, as have most new stadiums in same/better location.

I read they gave the city 19 million, they then will lease the building for 4 million a year for 35 years. They will be in charge of the building and make money of every venue in the building. The city will give them 2 million a year in advertising.

So for two million a year they get the building the naming rights and any profits that can be made on the side. You might say that is better then owning it.