Ottawa Senators for sale (upd: sold to Michael Andlauer)
- Thread starter DaveMatthew
- Start date
LadyStanley
Registered User
Report: Toronto billionaire Michael Andlauer reaches deal in principle to buy Senators
Canadiens part-owner Michael Andlauer has reportedly won the bidding war for the Sens franchise.
sports.yahoo.com
Yesterday's podcast (32 Thoughts or Jeff Marek show) Friedman indicated that one sticking point was that the daughters wanted some $$ to cover the capital gains they'd have to pay, paid by buyer.
Masked
(Super/star)
An even bigger problem would be transit. The two cities have separate transit organizations with limited connectivity between them.
Assen na yo!
LadyStanley
Registered User
Gatineau based support was practically non-existent when they were downtownish at the start of the franchise. They will not support the team. And Ottawa people will largely not go to the Gatineau side except for Toronto games. The rub of it is, its not much longer to get to the current location from downtown as it would be to get to the Gatineau side driving. And if you are east/south end, it is probably quicker to get to Kanata than Gatineau on week days. One of my workmates bikes to work downtown from fairly close in Gatineau as its a ten minute bike ride or 45 minute car commute during rush hour.
The commute at 6PM from the far east end of the city (Orleans) driving to either Lac Leamy Casino (good spot to build on the Gatineau side, 3KM from Ontario) and Kanata are exactly the same (google directions)
And if you look at the LRT in 3 years, it will be much much easier regardless of downtown or staying in Kanata.
Howard Beale
Registered User
- Apr 7, 2010
- 3,288
- 100
Do you mean the Ottawa Senators used to play near downtown? What location was that at?
In their first 3 years they played in Landsdowne Park by the Rideau Canal
Tom ServoMST3K
In search of a Steinbach Hero
Landsdowne. Did their first 3 years there, but not the greatest attendance, 94% capacity in a 10400 seat arena by season 3. It was just hard to get to from the Queensway, and support from Gatineau, the east end and downtown was relatively low. The majority of support, especially corporate support came from the south and west ends. Thats why they built where they did when a downtown location (i.e. Lebreton) was not in the cards.
Realistically attraction in Ottawa is all about being on the Queensway. Of what I'd call the 5 major malls, all but Rideau center are right on the Queensway. To me the perfect spot is adjacent to the Baseball Diamond. Direct access to the Queensway, on the LRT line. Even though its a bit eastish, that spot would be a major draw
So we say everytime a team is bought
And 600M for the new arena? Big underestimation IMHO. Calgary is 800M + 400M for surrounding improvements. The Edmonton arena was ten years ago and was ~500M with another 125M for surrounding improvements. The quebec arena was 370M started almost 15 years ago.
I expect a cost far closer to 1B.
KevFu
Registered User
$950 for 90% of the team is a valuation over a billion for the Sens.
And the owners will make their ROI on the sale of the team.
And the owners will make their ROI on the sale of the team.
Tom ServoMST3K
In search of a Steinbach Hero
I've thought the franchise value bubble would burst for a while now, and it has never even shown signs of slowing down.
If COVID didn't burst it, I'm not sure what will.
I don't think they are going to build an 18,500 seat arena like Calgary and I don't think it will need to be 850,000 square feet. Maybe 17,000 and change and 700,000 square feet? I would think that would save significant money...but yeah, $600 million sounds too low even for that. Probably closer to $800 million even with a smaller arena. Guess we will see in the coming months or years.So we say everytime a team is bought
And 600M for the new arena? Big underestimation IMHO. Calgary is 800M + 400M for surrounding improvements. The Edmonton arena was ten years ago and was ~500M with another 125M for surrounding improvements. The quebec arena was 370M started almost 15 years ago.
I expect a cost far closer to 1B.
I still don't see how this will get built in a market of 1.5 million people without a substantial infusion of public money
Yukon Joe
Registered User
When they quote the price it's the overall valuation they quote, not how much money is changing hands.
Andlauer is probably not paying close to $950 - a lot of the value is probably in assuming debt that attaches to the club. Remember one of the sticking points was Melnyk's daughters needed some cash to be able to afford the capital gains on the team.
KevFu
Registered User
Valid. Although it seems odd they wouldn't make something up with that kind of accounting to say an even billion.
LadyStanley
Registered User
LadyStanley
Registered User
Maybe smaller. But they were able to draw 19821 (virtually 20K) in what is supposedly a bad location (mind you I never believed that), so why shrink down, if anything you should be going up. And thats a lot of arena and team costs to pay for going small may not work. Also remember concerts.
Now I agree with the requirement for public money, but so far there has been a lot of cold water poured on that. There does not seem to be a lot of appetite for it, from the public or the city. They have been open to some items. The land will be free. I think the city is open to eating some of the costs. Originally they said no to covering the soil cleanup costs for all of Lebreton, but now that its just a 6 acre parcel instead of the whole shebang I can see them going for it. Likely eat some of the infrastructure costs, although that would seem to be largely around an LRT which I assume is likely an integration with a current stop. Unlike other cities parking is not an issue, there will be none (one of my huge concerns, Ottawa is a car city, not a mass transit city for the type of people buying seasons tickets). And due to the new reality of work from home, the city is now having to cover 40M a year for transit deficit. The budget is tight. But the mayor also realizes this is a greta opportunity for the city, although its more than just the mayor, Ottawa is a very left leaning town and a lot of the councilors will not be on board.
If the NCC allocates more land that is turned into a development opportunity, that could aid in financing the arena. Hard to say how they go after the last debacle though. So far they want to mostly do small parcel projects, but that may change. Mind you I never trust the NCC to have a vision beyond ... well, libraries, museums, affordable housing, etc. Not exactly the money making opportunities that developers want.
Bettman came out and said they were find in the west end, IMHO to put pressure on the NCC and the city. but with the team likely to have 17K if not 18K average seating next year it may add pressure if the city really wants it downtown. Plus keeping them at the Kanata location potentially increases the costs for stage 3 LRT (if they do that) as thats an extra stop.
In any case though, Calgary just took 8 years to finalize their arena deal and the shovels have not hit the ground. Edmonton was 8 years from proposal to opening (5 from start of proposal to funding in place). If something gets done within 5 years I'd be astounded .......
LadyStanley
Registered User
I read that as "we'd love the opportunity for an expansion team or participate in the next sale."
Is anyone aware of the team having debt and if so how much? Also the capital gains tax would only be on the actual money that is changing hands so if there is debt that will be subtracted from the sale price before capital gains taxes are calculated.
A quick google search (so no idea if its accurate) says that the total gain is halfed and then taxes are paid based on the nominal tax rates (unlike the US which has a seperate capital gains tax). So for every $100MM in actual gain the tax is $16.7MM + any local taxes.
Having the sale cover the capital gains tax is probably a tax loop hole where they can lower the actual sale value which would lower the capital gains tax. A hypothetical scenario....assuming the $950MM is how much is actually going to the Melnyk family (its not an accurate number just using it for simplicity), it would be like paying $850MM for the team (capital gains tax basis) then giving an additional $100MM in another bucket that is not subject to the capital gains tax.
The actual capital gains tax basis would be whatever amount is changing hands minus the original puchase price. That amount would then by halfed then taxed at whatever tax rate the estate is paying.
Golden_Jet
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- Sep 21, 2005
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I believe the capital gains tax will be based on the team’s evaluation when Melnyk passed away in March of 2022.
Yukon Joe
Registered User
Capital gains is not based on the amount of money changing hands. It is based on the increased value of the team.
"Having the sale cover the capital gain" isn't a tax loophole - it's just that Melnyk's daughters need to make sure that the deal includes enough cash to cover the expected tax.
I believe it's common knowledge the team has significant debt - Melnyk's original business was essentially dead a long time ago and the franchise has been cash-poor for a long time. How much debt of course nobody knows.
So this is where I wonder exactly what the structure of the team's ownership is at this time.
Capital gains would be assessed as of the time of Melnyk's passing - if the team was then transferred to his daughters at the time. But then that would mean that capital gains would then be assessed now at the time of the sale - but only for the increase in value from March 2022 to today.
I suspect however the team has never been transferred, and it remains with the estate of Melnyk. Which means capital gains would be assessed at the time of the sale (it will always be assessed at the time of the sale), but going back to when he originally purchased the team.
But Melnyk was in ill health for awhile, so I also wonder if he spun off the team into a trust in order to evade estate taxes at the time of his passing.
madhi19
Just the tip!
Andlauer minority stake in the Habs could be worth the whole Sens purchase, or pretty close. You got to wonder why they did not just arrange a ownership trades instead of paying capital gain.
www.dailyfaceoff.com
Tampa Bay Lightning to sell minority stake at NHL record $1.4 billion valuation
This slice of the Lightning will impact Michael Andlauer’s exit from the Montreal Canadiens – and all NHL franchise valuations.
www.dailyfaceoff.com
