Ottawa Senators for sale (upd: sold to Michael Andlauer)

[Voight]

If a majority owner I believe he would have to sell his stake. NHL hasn't had a majority owner in more than one market since the Wirtz family in Chicago and St. Louis I believe. Maybe Jacobs with Boston and Buffalo? But owning minority stakes in multiple franchises is something that Bell has done, in Toronto, Montreal and Ottawa.

He'll likely sell it to get cash for the purchase anyways.

Bettman must be happy a Hollywood A Lister wants to own a piece of a team.

 

[BKIslandersFan]

He'll likely sell it to get cash for the purchase anyways.

Bettman must be happy a Hollywood A Lister wants to own a piece of a team.

Marshawn Lynch and Jerry Bruckheimer owns share of Kraken.

Wonder if there are other celebrities that own a stake in an NHL team.

 

[powerstuck]

I don't think you are far off, but I think you have the values reversed. The team is projected to go for north of 800 million.

While construction costs have risen. They may come down some over the coarse of the project. I don't see the sens building anything more elaborate than what Edmonton built, which cost 530 mil in todays dollars. Plus, the arena is part of a much larger redevelopment of the land where the city, and other development projects around it, will share if not cover a significant portion of the necessary land prep, infrastructure, etc. that other arena projects have to pay for themselves. Prices have gone up, but they haven't doubled. I see the arena costing around 600 mil, and the team paying about a 3rd of that with the city/fans/developers picking up the rest.

If you can get the sens and a new arena for around a billion, and then see the value increase similar to Edmonton the past ten years...and ride the revenue growth of the NHL as a whole at the same time...I can see why this is an attractive asset for those that can afford it.

Honestly I wish and hope my construction numbers are wrong, because costs are absurd right now.
But seeing construction permits daily, there is quite a lot of delays due to lack of materials, lack of workforce which all in the end comes to increased costs.

 

[rfournier103]

Honestly I wish and hope my construction numbers are wrong, because costs are absurd right now.
But seeing construction permits daily, there is quite a lot of delays due to lack of materials, lack of workforce which all in the end comes to increased costs.

I’m in the construction business myself, and I don’t know what construction costs are in Canada vs. the US, but the biggest delays seem to be in electronics/lights and things of that sort. Even now there’s a bit of a construction boom in Boston, and there are tower cranes and structural steel everywhere.

I’m not a project manager, but I’d like to think that if the project were planned out far enough in advance (asap) the delays could be minimized.

 

[Golden_Jet]

Honestly I wish and hope my construction numbers are wrong, because costs are absurd right now.
But seeing construction permits daily, there is quite a lot of delays due to lack of materials, lack of workforce which all in the end comes to increased costs.

Ya getting team and building for a billion is a pipe dream.

 

[powerstuck]

I’m in the construction business myself, and I don’t know what construction costs are in Canada vs. the US, but the biggest delays seem to be in electronics/lights and things of that sort. Even now there’s a bit of a construction boom in Boston, and there are tower cranes and structural steel everywhere.

I’m not a project manager, but I’d like to think that if the project were planned out far enough in advance (asap) the delays could be minimized.

I would think Canada, and Quebec more so, is more expensive than US solely due to a multitude of unions there is that regulate everything from hours to how many employees for each speciality you can have on site depending on it's size.

 

[rfournier103]

I would think Canada, and Quebec more so, is more expensive than US solely due to a multitude of unions there is that regulate everything from hours to how many employees for each speciality you can have on site depending on it's size.

I’m a member of the International Brotherhood of Electrical Workers Local 103 and almost all of the biggest projects - including stadiums and arenas - in the US are built using union labor. Typically, in the US, using union labor is more cost effective in the long run because we tend to be better skilled and usually make fewer mistakes.

I truly hope Ottawa gets their downtown arena.

 

[LadyStanley]

Hmmm

 

[Gil Gunderson]

Hmmm

Desmarais backed the Lebreton bid that competed with Melnyk’s. It could have been just fluff, but they said they were able to build the arena without public funds. I’m pretty sure Desmarais has a pretty good relationship with Bettman too.

 

[BlueSeal]

[Dead.Pool] has entered the chat.

 

[LadyStanley]

"Michael Andlauer, a Toronto billionaire who owns the Ontario Hockey League’s Hamilton Bulldogs, has formed a partnership with Oshawa Generals owner Rocco Tullio" to buy Sens.

Interesting synergy.

 

[ColinM]

"Michael Andlauer, a Toronto billionaire who owns the Ontario Hockey League’s Hamilton Bulldogs, has formed a partnership with Oshawa Generals owner Rocco Tullio" to buy Sens.

Interesting synergy.

I realize the answer should be No but will this mean a Sens to Hamilton thread in the future?

 

[NorthCoast]

I realize the answer should be No but will this mean a Sens to Hamilton thread in the future?

I don't think this is the way to look at these things. As in, the guy is from or has a business in Hamilton and so maybe they might move to Hamilton.

The relocation of any franchise is driven by what is good for the team owner, the other 31 owners, and the NHL as a whole. I'll break this down:

Personally, I don't see how you generate more ROI on your investment in Hamilton (or anywhere else) over the next 20 years than in Ottawa because of the potential relocation fee which would be equivalent to an expansion fee (potentially much higher in Hamilton actually because of the leafs). Just do the math, are you going to realize a 700 million higher return over 20 years (how an owner looks at it, they are old and don't live forever) somewhere else. Where?

While a move to a much larger US market 'could' provide the other owners with more revenue over a long-period, it's not a guarantee that a Houston or Atlanta will actually work in the short term (see Arizona) and so it's still a risk. Further, as much as the additional revenue would be nice, most of the large markets are very, very profitable already. From a competitive standpoint, why would you want to move small market teams that are handicapped because of internal budgets to larger markets where they can be more competitive. Just sayin...

There is no criteria that you can apply to Ottawa in terms of why they should be moved that really doesn't apply to pretty much all small markets in the NHL. In other words, if the NHL is willing to move Ottawa, or any other small market, then all small markets are up for grabs. This would be really bad for the NHL brand in all those markets.

There is plenty of ROI to be made in Ottawa (see Edmonton value before after new stadium) the other owners (2/3 of which would have to approve any move) are fine with it in Ottawa, and the NHL wants to keep it in Ottawa.

 

[Golden_Jet]

GARRIOCH: Bidding for Senators about to get serious as Ryan Reynolds steps up efforts to be part of a group

It's believed the 46-year-old Canadian actor has talked with NHL commissioner Gary Bettman to express formal interest in the franchise.

ottawasun.com

 

[LadyStanley]

Timing from article..

Dec 1 - authorized parties can have access to financial documents, MOU on new arena location. Due diligence
Dec 31 - access ends
Jan 1 - bidding process begins. Could be $800m-$1b


Reynolds has talked to Bettman and various interested parties to see which group he might want to align himself.

 

[LadyStanley]

Today's podcast includes discussion of Sens sale (potential owners).

 

[LadyStanley]

Mention of Sens sale, with a few potential owners mentioned. PR might make it that the NHL pushes "winning" group into adding Reynolds.

 

[Golden_Jet]

GARRIOCH: The Ottawa Senators have attracted a ton of interest from potential buyers

LAS VEGAS — The Ottawa Senators are a hot commodity on the retail market.

ottawasun.com

Up to 20 interested parties possibly.

 

[LadyStanley]

What's the temp in Ottawa?

 

[Tom ServoMST3K]

Gotta be a healthy sign for the league so many groups are interested in the Senators.

I wonder if franchise values spiking in the NBA have pushed more potential team owners to look into NHL teams?

 

[Karl Eriksson]

financing costs are going to be a killer, and drive the negotiations. If you look at what will cause variability in the model, my guess is it boils down to assumptions around exchange rate and discount rate. The rest is probably all pretty easy to model. Exchange rate largely a function of oil prices and differential economic growth, so the proponents will argue that the US is going to keep outpacing Canada and that we’ve hit peak oil. Use that to argue that FX should be capped at current rates which are weak by historical standards. They might even argue for 0.72 or something.

But since the way these data room models work is free cash flow based, the main driver of everything is the choice of discount rate, which is in the eye of the beholder.

I’ve seen models where revenue assumptions could swing 10-20%, but where the dominant force was still the choice of discount rate because of how long the investment horizon is. Here I’m assuming 20 years of free cash flows are modeled and they they apply a terminal value. Maybe they use the life building and go to 30. Over that horizon, the time value of money will dwarf all other factors in yielding a present value which +/- some goodwill represents the basis for an offer when you have privately held assets/companies where you can’t value the shares.

The Melnyks would want a low rate, might use some historical trailing rate to get some low years in, or a long long term average rate to smooth cycles. But buyers will use their weighted average cost of capital, which has shot through the roof. Those revenue streams change dramatically if you discount by 4% vs 7%.

there is a chasm between the value of this team at those two rates, which I’d say will be the main issue for negotiation. Prospective Owners might apply some discount factor for NCC regulatory risk in there absent a comfort letter. I suspect the sens get a comfort letter to mitigate that.

 

[adsfan]

Move Sens to Winnipeg, bring our Boys Back to Atlanta

I heard a rumor that there are three AHL teams moving to Atlanta.

Milwaukee, Chicago and Texas. It is going to be a crowded arena.

 

[PlayersLtd]

financing costs are going to be a killer, and drive the negotiations. If you look at what will cause variability in the model, my guess is it boils down to assumptions around exchange rate and discount rate. The rest is probably all pretty easy to model. Exchange rate largely a function of oil prices and differential economic growth, so the proponents will argue that the US is going to keep outpacing Canada and that we’ve hit peak oil. Use that to argue that FX should be capped at current rates which are weak by historical standards. They might even argue for 0.72 or something.

But since the way these data room models work is free cash flow based, the main driver of everything is the choice of discount rate, which is in the eye of the beholder.

I’ve seen models where revenue assumptions could swing 10-20%, but where the dominant force was still the choice of discount rate because of how long the investment horizon is. Here I’m assuming 20 years of free cash flows are modeled and they they apply a terminal value. Maybe they use the life building and go to 30. Over that horizon, the time value of money will dwarf all other factors in yielding a present value which +/- some goodwill represents the basis for an offer when you have privately held assets/companies where you can’t value the shares.

The Melnyks would want a low rate, might use some historical trailing rate to get some low years in, or a long long term average rate to smooth cycles. But buyers will use their weighted average cost of capital, which has shot through the roof. Those revenue streams change dramatically if you discount by 4% vs 7%.

there is a chasm between the value of this team at those two rates, which I’d say will be the main issue for negotiation. Prospective Owners might apply some discount factor for NCC regulatory risk in there absent a comfort letter. I suspect the sens get a comfort letter to mitigate that.

Interesting. And although my first thought was that if you need to finance a sports franchise, you ain't buying a sports franchise, but that isn't true, I see that sports franchise purchases are commonly financed after a little research.

So add to the equation the financing needed to develop Lebreton and you have a very, very interest heavy venture. Financing one sure, but both? That is a double whammy that comes with a lot of risk in today's lending environment.

Won't this weed out all but the very wealthiest bidders and isn't the Desmarais family the only truly wealthy bidders in this game? How do you finance a good chunk of the team if it can only be done with an asterisk of also financing a big chunk of the Lebreton development?

I would think if cash was ever king it's in a $1.5-2B deal for the Senators and land development at a time when interest rates are sky high and a recession of an unknown magnitude is looming.

 

[Karl Eriksson]

Interesting. And although my first thought was that if you need to finance a sports franchise, you ain't buying a sports franchise, but that isn't true, I see that sports franchise purchases are commonly financed after a little research.

So add to the equation the financing needed to develop Lebreton and you have a very, very interest heavy venture. Financing one sure, but both? That is a double whammy that comes with a lot of risk in today's lending environment.

Won't this weed out all but the very wealthiest bidders and isn't the Desmarais family the only truly wealthy bidders in this game? How do you finance a good chunk of the team if it can only be done with an asterisk of also financing a big chunk of the Lebreton development?

I would think if cash was ever king it's in a $1.5-2B deal for the Senators and land development at a time when interest rates are sky high and a recession of an unknown magnitude is looming.

It does not all need to be financed. But you need to pick a discount rate. That’s how the models work. For me that would be my HELOC rate averaged with my mortgage rate or something, weighted to the size of them. It gives you your theoretical cost of capital.

As for your other question, a buyer is also buying exclusive rights to develop real estate. So see it as almost three transactions in one sale. Team, right to building and operate an arena, right to build and sell/lease residential and commercial real estate. Could be three sets of experts in there in the consortium. A rich wanna be team owner, a facilities developer/operator, and a real estate developer. They all work in partnership with rights to the profits of only certain elements.

 

[LadyStanley]

OHL Hamilton owner liquidated some stock (proceeds to Corp, not personal). More than $80mm