Ottawa Senators receiving bids for more than 900 million USD (1.24 billion CDN)

[TheDoldrums]

Who's paying for the arena?

When you can't answer that, you can't pretend there's a zero chance of them moving. Contracts get broken. If the new owners can't shake down the city for arena funds (good luck, the city is broke and full of a more conscientious population than Edmonton) then things will still be left up in the air.

If the new owners make a good faith effort for funding the new arena and can't get it to work, I don't see the NHL suing them to keep the team in a bad building if there are viable alternative cities to make everyone more money.

 

[Golden_Jet]

Who's paying for the arena?

When you can't answer that, you can't pretend there's a zero chance of them moving. Contracts get broken. If the new owners can't shake down the city for arena funds (good luck, the city is broke and full of a more conscientious population than Edmonton) then things will still be left up in the air.

If the new owners make a good faith effort for funding the new arena and can't get it to work, I don't see the NHL suing them to keep the team in a bad building if there are viable alternative cities to make everyone more money.

Senators we’re 14th in operating income last year , according to Forbes.

 

[Race Dawg]

Look it up.

The average person in Ottawa makes more money than the average Toronto & Montreal fan.

Despite that, the Sens still have bottom 5 ticket prices while the other 2 are top 5, and still don’t sell out. The Ottawa market doesn’t care about Senators hockey.

Not many people in Ottawa care for the Sens, if anything, ironically, most Sens fans don’t even live in Ottawa. It’s the Arizona of Canada for hockey.

Ok I'll bite. Ottawa HAD a market that cared about hockey and then Eugene hurt all their feelings and then the feud got real pretty fast. I get it, the Canadian Tire Centre is not situated in the most ideal location and pretty well much everyone agrees that a downtown location would have been better but at the time that was the only parcel of land that the Sens ownership had access to. Toronto residents are built differently and not by choice. Most people are wiling to drive excessive distances for their entertainment. I drove every day from Yonge and Lawrence to Streetsville for work for 7 years. I was ready to pulverize people sometimes as GTA driving is some of the worst on the planet. My 2.5 hour drive home was long but that is what we did so I sometimes chuckle at my fellow Sens fans for complaining about driving to Kanata. I guess I'd appreciate having an NHL team in the area but that's just me. But is the market coming back? Yup. The interest has skyrocketed with the thought of new ownership and a team that is up and coming. The Sens are young are will be contenders very soon IF the current core stays together.....

 

[rojac]

Who's paying for the arena?

When you can't answer that, you can't pretend there's a zero chance of them moving. Contracts get broken. If the new owners can't shake down the city for arena funds (good luck, the city is broke and full of a more conscientious population than Edmonton) then things will still be left up in the air.

If the new owners make a good faith effort for funding the new arena and can't get it to work, I don't see the NHL suing them to keep the team in a bad building if there are viable alternative cities to make everyone more money.

My guess is that it may be a seven year thing similar to what Balsillie refused to sign when he tried to buy the Penguins. I think several other new owners have similar promices that they'll keep the team in its current locale for at least 7 years.

Now that I think about it, it might be a mix of couple of things that the NHL has already done. The seven-year no-relocation deal and a guaranttee to Ottawa that if they approve the new arena, the Senators will sign a 30 year no-relocation deal. Bettman has promised Tempe that if the arena is approved in May, the Coyotes will sign such a deal. So, basically, if they get the arena approved, the owner has to sign the 30 year no-relocate deal. If they don't get the arena, the can relocate after 7 years.

I'll be surprised if the new arena isn't paid for and owned by the team. There might be some tax breaks and the city may pay some infrastructure costs but those are not uncommon for any developer building a large scale project. I beleive the LeBreton Flats deal would allow the Sens owners to redevelop areas around the arena. Plus since the Sens own the Canadian Tire Centre and the land around it, that area would also be available for redevelopment. This whole thing could be very profitable and hence the high bids.

 

[Golden_Jet]

My guess is that it may be a seven year thing similar to what Balsillie refused to sign when he tried to buy the Penguins. I think several other new owners have similar promices that they'll keep the team in its current locale for at least 7 years.

Now that I think about it, it might be a mix of couple of things that the NHL has already done. The seven-year no-relocation deal and a guaranttee to Ottawa that if they approve the new arena, the Senators will sign a 30 year no-relocation deal. Bettman has promised Tempe that if the arena is approved in May, the Coyotes will sign such a deal. So, basically, if they get the arena approved, the owner has to sign the 30 year no-relocate deal. If they don't get the arena, the can relocate after 7 years.

I'll be surprised if the new arena isn't paid for and owned by the team. There might be some tax breaks and the city may pay some infrastructure costs but those are not uncommon for any developer building a large scale project. I beleive the LeBreton Flats deal would allow the Sens owners to redevelop areas around the arena. Plus since the Sens own the Canadian Tire Centre and the land around it, that area would also be available for redevelopment. This whole thing could be very profitable and hence the high bids.

Ya I think atm they have a 6 acre parcel agreed upon, bare minimum, but believe they negotiate for other parts of LeBreton, to increase acreage.
As for help ya it’s likely infrastructure and land cleanup, as land cleanup is first step, since it was industrial back 60-100 years ago. Negotiating land is with the NCC. Land cleanup , for all of LeBreton (don’t remember its total acreage). I think was 200-300 million. There is a federal program that you can apply to, that helps with land cleanup costs.

Your right, arena will be owned by the team I’m sure , that’s why some partners are land developers.

 

[JianYang]

900 is the new 600.

Look no further than your next grocery store visit.

 

[JianYang]

My wife's family were all Leafs fans prior to the Senators returning to the league and now they are all Senators fans.

Interesting, my mother-in-law was in the stands for the 1967 Stanley Cup victory. She showed me the ticket stubs.

Pretty much every Senators fan over a certain age is a convert from another fan base (most often the Habs and Leafs).

In the end, it became easy for them to move on from the Leafs with the long track-record of regular season and playoff failure and missed expectations. I suspect that might continue with the way things have been going over the past couple of decades.

It's probably why Toronto is leery about allowing another team in the GTA. (obviously Buffalo has a say as well)

In any event, geography has always been their blessing and their curse. Montreal is much closer to Ottawa and unsurprisingly there are a lot of Habs fans both in the Ottawa area and a short drive away.

Coverts are either a really slow process or only go so far.

The teams in western Canada have been around longer than the Sens, and I still see a ton of habs fans at those games. The Canucks have been around for over 5 decades and you still see a ton of red in the seats.

I thinks its the future hockey fan that just happens to live in the area where you get most of your fanbase rather than converts.

 

[NyQuil]

Coverts are either a really slow process or only go so far.

The teams in western Canada have been around longer than the Sens, and I still see a ton of habs fans at those games. The Canucks have been around for over 5 decades and you still see a ton of red in the seats.

I thinks its the future hockey fan that just happens to live in the area where you get most of your fanbase rather than converts.

I mean, people travel and move for work as well.

I’ve been surprised to see the number of Senators fans at games in Western Canada, and they are the newest of the Canadian franchises.

In general though, people don’t tend to convert after that initial novelty period, unless one of the teams really starts to tank for a good period of time and the other gets really good.

I know quite a few Habs fans in the Ottawa area who also have Senators jerseys. They just don’t take fandom as seriously as people around here.

 

[JianYang]

I mean, people travel and move for work as well.

I’ve been surprised to see the number of Senators fans at games in Western Canada, and they are the newest of the Canadian franchises.

For Vancouver specifically, the most notable crowds are usually the Habs, leafs, oilers and bruins.

I've never met a sens fan personally, but I can believe that since this area is a desirable place for people to move.... Now if only it wasn't so darn expensive.

Anyways, perhaps I should restate what I said. It's the future hockey fan that grown up in the local area that are more easily recruited than potential converts.

 

[Golden_Jet]

For Vancouver specifically, the most notable crowds are usually the Habs, leafs, oilers and bruins.

I've never met a sens fan personally, but I can believe that since this area is a desirable place for people to move.... Now if only it wasn't so darn expensive.

Anyways, perhaps I should restate what I said. It's the future hockey fan that grown up in the local area that are more easily recruited than potential converts.

You can here the Sens fan cheer on TV when they score in Vancouver .

 

[Bouboumaster]

It's already built, guys:

 

[NyQuil]

It's already built, guys:

You’re going to need a really big truck to move it to Ottawa.

 

[Sol]

I hope that the Ottawa Senators don't go to the highest bidder, but rather to an ownership group that will care for the team after the purchase is made. For example, by spending to the salary cap limit and being an actual fan of the team.

You would think that the highest bidder would also care for the team after purchase, considering the fact that they should care for an asset that they paid so much for. But this isn't always the case.

Unfortunately, the sellers don't usually care what happens with a team after they sell. So they will take the highest bid.

You can’t blame anyone for doing that. There’s no point in losing a few hundred million dollars for something you’re no longer going to be a part of.

 

[Golden_Jet]

Also remember this also likely a real estate deal as well.

To those chirping about moving, an owner(s) not going to build an arena and possible hotel or condos or whatever vision might be, and then pull out the team.

 

[LeighDx59]

Gotta love how a thread about the Sens being sold got taken over by Leafs fans and a pissing match

On topic, hoping whoever buys them does actually care about them and gets them that new arena. I think the general thought is thats a guarentee with Ryan Reynolds.

 

[NyQuil]

A) No doubt the Sens could be a top 15 team in the league potentially ahead of Calgary and Edmonton.

B) You're not there yet and still don't have an arena.

C) You still have a much harder time getting fans from the other teams. For starters what never gets mentioned is that a quarter of the metro is in Quebec, and they happen to give a lot of support to their Q team. Few people outside of Ottawa look to Ottawa as their team. Atlantic Canada is a massive proportion of your anglo audience and no one there cares about the sens, it's like it doesn't even crack the top 5.

I have total faith this is gonna change around pretty fast. But you know you're in trouble when the prime minister who resides in the city roots for the habs.

The nordiques would have an overnight fandom and an arena ready to go.

In fact I'd wager a good bit of cash a lot of sens fans are nordiques fans who only root for the team because they hate the habs.

This is from 2017 so it may have changed but still interesting:

Infographic: Canada’s favourite NHL team by region, generation, sex – Sportsnet.ca

www.sportsnet.ca

What’s funny is that Ottawa is more popular by percentage of respondents in Atlantic Canada than anywhere else, including Ontario.

It’s not that surprising because Sportsnet East carried the Senators for years.

Where the Senators fans are isn’t hard to understand. Eastern townships (e.g. Western anglophone Quebec like Pontiac, Shawville), Eastern Ontario and Ottawa Valley (basically Kingston eastward) and parts of Atlantic Canada.

Belleville might now as well because of its AHL team.

 

[LPHabsFan]

I'm not going to go into a whole explanation but if you want to have a discussion about STH, ticket prices, revenue, and attendance in general, you have to dive into the fact that Ottawa is a government city, and there are strict rules in terms of what can and can't be given to people who work for and/or with the federal government.

 

[Scomerica]

Not sure of his share of the company but Reynolds should have some more change in his pocket by the end of the year.

 

[IpsoPostFacto]

Look it up.

The average person in Ottawa makes more money than the average Toronto & Montreal fan.

Despite that, the Sens still have bottom 5 ticket prices while the other 2 are top 5, and still don’t sell out. The Ottawa market doesn’t care about Senators hockey.

Not many people in Ottawa care for the Sens, if anything, ironically, most Sens fans don’t even live in Ottawa. It’s the Arizona of Canada for hockey.

one real issue is corporate sales which account for the vast majority of the tickets in Toronto. In Ottawa, the number 1 employer - by a country mile - is not allowed to purchase or accept tickets.

Aside from that, your last paragraph sounds made up. I would be wiling to believe that a number of folks outside of Ottawa cheer for Ottawa as a second team if only to piss off Maple Leaf fans.

 

[Silky Johnson]

Senators we’re 14th in operating income last year , according to Forbes.

Yeah, I see Bettman and the BOG giving is easily on that type of revenue...I mean look how passive he has been when he didn't want to the Coyotes.

 

[Silky Johnson]

I have no basis or way to know if $500 or $900M is right or fair but I would think it goes a little bit like this:

The value of the franchise = the current value of the team + a risk adjusted premium based on what the team could be worth under future operating/market conditions such as an arena downtown.

How much that premium is adjusted for risk probably depends on how confident/optimistic the bidders are in implementing/realizing the operating/market condition changes.

It would be a fun valuation/negotiation exercise to be a part of for sure.

Usually, privates companies are valuated by multiples of EBITDA, assets, liquidity, Comparable Company Analysis & Net Present Value (discounted cash flow) analysis. Moderating factors include intellectual property, market conditions, management team, growth prospects and potential risks.

In my work we typically use Net Present Value with all the other factors contributing to the determination of future cash flow and Hurdle Rates.

This seems to go out the window for sports franchises at for whatever reason their valuations just seem to go up and up.

You may overpay for them but you can also likely over sell them when you want to.

Mostly they are vanity purchases of the super rich.

 

[Silky Johnson]

Imagine living in Kanata, Canada

Both words have the same Etymology. Different spellings for the Huron-Iroquois word for "settlement".

 

[Silky Johnson]

A lot of the leaf's fans are just ottawa fans with a 2nd jersey. This idea there's some blood feud between the two teams is just absurd.

I mean why would a sens fan stop liking the leafs, if that was the only team they had until 1990ish? Obviously the same applies to the habs etc.

Regardless I think people are downplaying how truly awful it is to go to that arena. It's an awful experience. They should just rename them the Kanata Senators. It's just such a buzz kill going to that arena it's like they put an arena in an emptied costco.

Keeping in mind it's Canada so going out into the middle of the nowhere is a lot less fun when it's -20. It's the anti tailgating experience. They need to be in the actual city to be relevant.

Speak for yourself.

I was a Habs fan due to family. When the Sens came in I started to watch them as a resident of Ottawa. Within a couple years they were my number one.

A couple years after that I started to hate the Habs. I just became plainly obvious how awful and annoying most Habs (and Leaf) fans are.

Now, I hate them so much that when they are flying, I root for gravity. When they are driving, I root for oncoming traffic.

Most of my Sens convert friends feel the same way.

It's also awesome to say that I have watched the majority of my teams games they have ever played and paid attention (highlights and boxscores) to ALL of them

 

[Golden_Jet]

No, it’s the opposite. Playing near a big market makes you more valuable because you have a chance to convert fans that are already interested in the sport.

Look at the LA Clippers, they play with a bunch of teams in the area and that helped their value, not hurt it.

It takes a generation to get o to the maker, that’s where they are now. It’s attractive since it’s the capital of the country.

A lot of the leaf's fans are just ottawa fans with a 2nd jersey. This idea there's some blood feud between the two teams is just absurd.

I mean why would a sens fan stop liking the leafs, if that was the only team they had until 1990ish? Obviously the same applies to the habs etc.

Regardless I think people are downplaying how truly awful it is to go to that arena. It's an awful experience. They should just rename them the Kanata Senators. It's just such a buzz kill going to that arena it's like they put an arena in an emptied costco.

Keeping in mind it's Canada so going out into the middle of the nowhere is a lot less fun when it's -20. It's the anti tailgating experience. They need to be in the actual city to be relevant.

Hate to disappoint you , but this person was a hawks fan, not a Leafs fan.

 

[badfish]

Usually, privates companies are valuated by multiples of EBITDA, assets, liquidity, Comparable Company Analysis & Net Present Value (discounted cash flow) analysis. Moderating factors include intellectual property, market conditions, management team, growth prospects and potential risks.

In my work we typically use Net Present Value with all the other factors contributing to the determination of future cash flow and Hurdle Rates.

This seems to go out the window for sports franchises at for whatever reason their valuations just seem to go up and up.

You may overpay for them but you can also likely over sell them when you want to.

Mostly they are vanity purchases of the super rich.

Indeed. I used to work in corporate finance as well and the techniques you described is what I'd use to triangulate the base valuation. However we'd run a second exercise where we consider what changes the new asset managers could implement and what the impact on value is there. Often the original owners would have started some of the work that would lead to the new valuation and so there would typically be some adjustment upwards in the valuation based on how they've de-risked those changes from occurring.

The premiums that arise from owning a sports franchise likely come into play in the multiples valuation. If the franchise has done anything towards derisking the move downtown that would come in the second part I mentioned.

Though to be candid I've never done a valuation or acquisition involving sports teams so I could be completely out to lunch. That's just what my approach would be.