News Article: Lebreton

[Big Muddy]

I don't think there's much of a risk or deterrent for Melnyk to submit his response to the NCC's Request for Information (RFI). Its not the formal RFP (Request for Proposal) stage yet which is the binding part of the process.

Owners (NCC in this case) are often fishing for ideas when they issue an RFI (Expression of Interest, whatever you want to call it), and its often a proof of feasibility exercise as well. Melnyk could sell the team to a new owner before the RFP is issued if he wants. It might be more attractive to the new owner if this were to occur. I'm just looking at if from different angles and hypothesizing.

 

[AchtzehnBaby]

This is interesting and I understand it with a used car but does lack of use really extend the life of a building? Other than the 'hardware' (HVAC, lighting, elevators, wiring etc...) how does a building's lifespan benefit from lack of use? I would assume the structural elements depreciate at a similar rate regardless of use, no?

All items you mentioned have been upgraded in one form or other: HVAC, lighting, elevators, and network wiring.

 

[Golden_Jet]

All items you mentioned have been upgraded in one form or other: HVAC, lighting, elevators, and network wiring.

Wasn’t it like 10-15 million in HVAC upgrades last year.

 

[Micklebot]

For all those who think a new arena at Lebreton is the way forward how can the 600M investment be recouped?

Seldom does a team end up footing the whole cost of a build, but right now is a pretty terrible time to try and build an arena. Gov't has run massive deficits due to the pandemic so they aren't likely to be overly generous, Construction costs have skyrocketed, and revenues from the team are down. Put a pin in the new arena conversation and come back to it when the context is a bit more favourable.

This is just a waste of time at the moment.

 

[Sweatred]

It would take about $35-40 million a year to pay off a new arena for 30 years. 2021 Melynk had a $30 million loss. Thats probably off about $80 million of revenue. This year is probably no better and could be worse. At best this team is a $115 million revenue team.

The Sens can't pay $80 for payroll, $40 for arena costs, and $50+ to operate the club off 9000 fans at league low ticket prices and $100 million of annual revenue propped up by league handouts.

 

[armani]

Wasn’t it like 10-15 million in HVAC upgrades last year.

All items you mentioned have been upgraded in one form or other: HVAC, lighting, elevators, and network wiring.

Any new arena won't be built overnight, there are so many questions to answer before the building/financing/ownership/timeline of new arena can even be established. But it's safe to assume the Sens are staying at the CTC for another 5 years, so those upgrades were necessary and don't necessarily shed much light on Lebreton interests.

 

[GCK]

Seldom does a team end up footing the whole cost of a build, but right now is a pretty terrible time to try and build an arena. Gov't has run massive deficits due to the pandemic so they aren't likely to be overly generous, Construction costs have skyrocketed, and revenues from the team are down. Put a pin in the new arena conversation and come back to it when the context is a bit more favourable.

This is just a waste of time at the moment.

Agreed. It was brought to the forefront due to the EoI deadline the NCC had. In reality there is not a single Arena or Stadium build in NA that doesn’t have a large development piece tied to it. So in the broader context of building a rink, regardless of location, what is the development play.

 

[DrEasy]

Melnyk is a visionary. Lebreton deal falls through and he enters a prolonged rebuild that reduces the wear on the building he's currently in, effectively adding 5 years of life on to a building that was nearing the end of its usefulness. The vision is unparalleled. Wait a minute! Unparalleled...success...5 years...holy shit!!! It's all connected! WOOOOOOOOOOOOOWWWWWWWW.

Fans too are reducing the wear by not going to the games! They're helping Melnyk save money!

 

[GCK]

It would take about $35-40 million a year to pay off a new arena for 30 years. 2021 Melynk had a $30 million loss. Thats probably off about $80 million of revenue. This year is probably no better and could be worse. At best this team is a $115 million revenue team.

The Sens can't pay $80 for payroll, $40 for arena costs, and $50+ to operate the club off 9000 fans at league low ticket prices and $100 million of annual revenue propped up by league handouts.

That’s why you need additional development to finance the building. No arena gets paid off via hockey related revenue only.

 

[BankStreetParade]

That’s why you need additional development to finance the building. No arena gets paid off via hockey related revenue only.

Or you wait until the 11th hour and hold the city, who haven't been very hospitable towards you, over a barrel with the threat of relocation unless public funds are allocated to the construction of a new facility. Knowing both parties in this, I'd say this is almost certainly the most likely outcome. The playbook of other cities is there to follow and I don't think Melnyk is one to shy away from those types of strongman tactics.

 

[Sweatred]

That’s why you need additional development to finance the building. No arena gets paid off via hockey related revenue only.

Why would Melynk want to make $500 million selling condos or whatever to then give that money to Ottawa hockey fans to pay for half their new arena ?

If he’s going to make all that money to subsidize the building I assume he’s going to keep it … or someone else can build the building and he can decide to rent the place 50 times a year …

 

[GCK]

Why would Melynk want to make $500 million selling condos or whatever to then give that money to Ottawa hockey fans to pay for half their new arena ?

If he’s going to make all that money to subsidize the building I assume he’s going to keep it … or someone else can build the building and he can decide to rent the place 50 times a year …

Melnyk can’t build condos.

 

[Loach]

Melnyk can’t build condos.

I saw concords and then condors. I thoughts grapes or plane, then who breeds condors?

 

[Beech]

Seldom does a team end up footing the whole cost of a build, but right now is a pretty terrible time to try and build an arena. Gov't has run massive deficits due to the pandemic so they aren't likely to be overly generous, Construction costs have skyrocketed, and revenues from the team are down. Put a pin in the new arena conversation and come back to it when the context is a bit more favourable.

This is just a waste of time at the moment.

yes, but favorable economics may not coincide with favorable on ice product.

Brady and mates do appear to be on the cusp of FYOUS. Given natural progression, it may be limited to 5 years. Chabot and others will age out, or want out due to financial demands and so forth. They may put a pin in it today, what would they do next year at this time if the team is in fact in the upper 1/3 of the league? The bandwagon will burst thanks to overcrowding.

If the next window is in 3 years, you risk being somewhat out of phase with the on-ice success. This team keeps missing windows.

Window 1) the 06-08 cup era.
Window 2) the 11-15 Karlsson, Hambergular, Alfie era.
Window 3) is now

 

[JD1]

I don’t think it can, without investors, and likely much more than $600 million now, with how costs have been increased the last 2 years.

How does having more investors recoup the cost of the building. 1 investor or 20 doesn't change the economics. 100% financed you pay finance charges. 100% funded, you have return on investment investor expectations

 

[Ice-Tray]

I think that the builder of the arena has to see some money making avenues outside the arena, like casino, hotel, development property.

Not sell condos to fund an arena that doesn’t do anything but depreciate, for a hockey team that breaks even at the cap, best case scenario, while you sit back and watch everyone around you benefit financially from your team and venue.

There has to be ongoing financial incentives, to become lynchpin of a new entertainment district. I bet a casino and hotel would get it done.

It’s just the reality.

 

[PlayersLtd]

All items you mentioned have been upgraded in one form or other: HVAC, lighting, elevators, and network wiring.

For sure, so those things that can be upgraded have been upgraded as you would reasonably expect.

I thought you were insinuating that lack of use preserves the structural elements, the things that typically are cost prohibitive to upgrade, or at least have diminishing returns and typically result in end of life for a building. So I was curious if there was some engineering logic to lack of use = longer lifespan for those things (foundation, roof, concrete slabs, columns, weatherproofing etc...), an equation I've never heard of before and I thought you were hinting at.

 

[AchtzehnBaby]

For sure, so those things that can be upgraded have been upgraded as you would reasonably expect.

I thought you were insinuating that lack of use preserves the structural elements, the things that typically are cost prohibitive to upgrade, or at least have diminishing returns and typically result in end of life for a building. So I was curious if there was some engineering logic to lack of use = longer lifespan for those things (foundation, roof, concrete slabs, columns, weatherproofing etc...), an equation I've never heard of before and I thought you were hinting at.

it was a little sarcasm, about lack of ticket sales.... Get it now?

 

[Tuna99]

Seldom does a team end up footing the whole cost of a build, but right now is a pretty terrible time to try and build an arena. Gov't has run massive deficits due to the pandemic so they aren't likely to be overly generous, Construction costs have skyrocketed, and revenues from the team are down. Put a pin in the new arena conversation and come back to it when the context is a bit more favourable.

This is just a waste of time at the moment.

Should of built when he had the chance.

 

[GCK]

Should of built when he had the chance.

He never had the chance.

 

[Golden_Jet]

How does having more investors recoup the cost of the building. 1 investor or 20 doesn't change the economics. 100% financed you pay finance charges. 100% funded, you have return on investment investor expectations

More investors means , one can actually build the arena, as it sits now, Melynk can’t do it with his funds.

 

[Micklebot]

More investors means , one can actually build the arena, as it sits now, Melynk can’t do it with his funds.

Unless the arena build will turn a profit on its own in a reasonable time frame, why would 3rd parties invest? If financing this was the only issue, the previous deal wouldn't have fallen through.

Just an arena isn't enough these days, the arena is a loss leader to access or inflate returns of other development opportunities,

 

[Tuna99]

He never had the chance.

Let me rephrase it so your more comfortable with the alphabet I use:

Should of taken the chance to build it when it was there

 

[GCK]

Let me rephrase it so your more comfortable with the alphabet I use:

Should of taken the chance to build it when it was there

I think you are missing the point. It was a doomed pursuit as soon as two major A-holes partnered.

 

[Tuna99]

I think you are missing the point. It was a doomed pursuit as soon as two major A-holes partnered.

hey man, the chance was there, he won the bid, if he can’t get his stuff together you can blame everyone else but he’s the guy that said downtown was essential to the club and then said it wasn’t, and said he wanted and arena and then said he didn’t and said downtown was essrial to grow the fan base then said he’ll never leave Kanata - you buy seems confused about what he wants