Speculation: Sens, Lebreton, and the NCC part II

[Tuna99]

The franchise itself may very well not be making a profit, and heck, even if you're more intellectually honest, and consider ulterior or secondary revenue streams like the arena which wouldn't really exist without the franchise, they may not always be profitable without the growth of franchise value considered. The cost of ownership could exceed the value growth and income while you own it, but that's not the sole value these things hold; it's a bit of a status symbol to the rich, so that can boost the "franchise value" too. There's also value in potential; just because Melnyk is presumably doing a poor job running the franchise, doesn't mean another rich dude doesn't see potential to turn things around and make a profit.

The Ottawa Senators make a profit. You don’t live in Barbados and fly around in a private jet if your main source of revenue is losing money in another country while every other franchise around you, and specifically in Canada, is making money .

 

[mysens]

My favorite argument that these Melnyk's supporters continue to assert is that these complains are only happening on HFBoards. Its utterly mindboggling that you guys think that this is the only place where people run to complain about Melnyk. Go to Reddit, read some blogs, go on Twitter, ask people around the city how they feel about your Supreme Commander.

I don’t know if you noticed, it’s the same people posting there to. I have never heard complaints in our season ticket seats with the same people sitting there for the last ten years.

 

[BatherSeason]

the best player in the world on their team?

The organization does not care that they have one of the best players in the world, that is where most of this hatred stems from. If they showed they cared, maybe the fans would reciprocate the same feeling.

 

[Joeyjoejoe]

Man for such a shitty money pithole of a franchise with poor terrible fans, there seems to be a lot of interest buying it from the broke ass version of Mr. Burns.

 

[BatherSeason]

I don’t know if you noticed, it’s the same people posting there to. I have never heard complaints in our season ticket seats with the same people sitting there for the last ten years.

Maybe get out of your bubble and talk to some more people.

 

[Joeyjoejoe]

I don’t know if you noticed, it’s the same people posting there to. I have never heard complaints in our season ticket seats with the same people sitting there for the last ten years.

Hahahahahaha so wait, there isn't anybody complaining about the team because you talked to all 8,000 season ticket holders, yet there is an attendance issue that you blame on the fans.

So which one is it, there is no fans to fill the seats or there are fans and they aren't complaining?

 

[stempniaksen]

I don’t know if you noticed, it’s the same people posting there to. I have never heard complaints in our season ticket seats with the same people sitting there for the last ten years.

C'mon now. There was a lot of STH's up in arms at the Town Hall's as well. This clearly isn't just some rogue group of Melnyk haters, a large portion of the fan base is unhappy (to varying degrees) with the organization.

 

[BatherSeason]

So which one is it, there is no fans to fill the seats or there are fans and they aren't complaining?

According to mysens, its only the fans in here that complain. And the rapid decline of season ticket holders is because of other reasons not associated with how this organization is run.

 

[Micklebot]

What is good business practice in this world of sports? Sign big money players while the fans opt out to not support the team by placing their butts in the seats? They justify it to themselves for a number of silly reasons to not show up to see the best player in the world on their team? Where is this money coming from. This family who is honing in on this partnership is not in it to lose money. That will be made very clear from the beginning, or should they come straight out and tell everyone it’s ok to stay home, don’t spend your money to support us, we just sold off and liquidated 35% of our holdings. If we lose it, oh well, shucks. I am not sure about the business practice you are eluding to.

I'm just trying to figure out why somebody would invest in a business where they think the potential client base all have a sense of entitlement to a level of service beyond what the business can support? I mean, if the fanbase is just going to find excuses as you suggest, all the while expecting the team to spend far too much, why invest? Seems like a losing cause to me. On the other hand, if they see untapped potential; ways to win back a disenchanted fan base, great, but I don't see how you do that starting from a position of animus towards your potential clients.

 

[Silencio]

There are no EM supporters or apologists. We really should try and stop trying to force this divisiveness. This simplistic 'us vs them' way of trying to single out groups on the boards is pretty lame, and it's generally the same three guys doing it.

It reminds me of the great Fisher debates. What happens is that some posters goes to the ultimate extreme with their arguments against someone, and other posters who hold a more moderate view feel compelled to try and reign in such fans so as not to have their view be the dominant voice in the thread. They end up arguing seemingly in favour of a person that they don't necessarily support, when really they just don't feel as extreme and are just arguing a less extreme version of the same position.

The reality here is that no one is happy with the ownership situation, and no one is a fan of EM around here. People are concerned though that some of the loudest voices are being disingenuous when looking at the attendance and budget issues and not accepting that the fan base also has to take some responsibility if things are to be turned around. It's not enough for new ownership to come in and spend more, there will be an expectation that fans will have to spend more as well, especially if people want/expect a cap team. Flamingo in the only poster I can recall who has actively committed to spending more if the ownership situation is sorted out.

We can all understand that EM has alienated the fanbase, but the fix is not likely to be a super rich owner that's ok losing money every year to fund a cap team while charging the cheapest ticket prices in Canada and dealing with less than full arenas. It's more likely to be a properly funded organization that runs a budget team that reflects the markets ability to spend on the team. The more you spend the more you get.

Fans need to be committed and ownership has to be committed, pretty simple, it's common sense really. So let's try and leave the EM apologist/defender stuff in the trash where it belongs, it's lowest common denominator stuff and makes us all look bad.

Well said. It is possible to be a "good fan" while a) calling out Melynk for his mistakes (and there's lots to call out) and b) at the same time recognizing that yes, an ECF home game in a Canadian market in the midst of an exciting and unexpected playoff run should really and truly have been sold out, no excuses.

 

[BankStreetParade]

You don't seem to be addressing my point. I have no issues with stating the fact that we don't have access to the required info to determine if the team makes or loses money. I do have an issue with admonishing people for taking assumptions as facts, and then doing the exact same thing themselves one sentence later.

I'm not taking any assumptions as facts. It's a pretty simple proposition: take the Ottawa Senators as a standalone business not affiliated with the NHL and their value crumbles in comparison. The Ottawa Senators are not worth what some are saying because of their business, they're worth that because of all the other businesses that are part of the same collective. And you can do the math in many many ways to arrive at a real, stand-alone valuation for the business. Even if you take the Forbes numbers as a very basic and rudimentary guesstimation of the financials of the team, how can you say that a team with an operating income of $10 million in 2017 is worth $500+ million?

What's really happening is that the price of the franchise is being inflated artificially. And that's being done by the NHL setting an entry price for new franchises well above the value of the majority of its current teams.

So maybe Melnyk is holding on to this investment not because it's making money every year but because in a couple of years, once Seattle has entered the league, he'll be able to get a hugely overvalued price of $750 million from someone?

It's like a real estate bubble. People are overpaying to get on the ride in the hopes that down the road they'll have someone willing to overpay them to take their seat.

 

[stempniaksen]

Wrong in both accounts. I have been a season ticket holder since the building opened in 1996. Yes, I know all issues associated with poor attendance. I have been there through the droughts and when it is at capacity. What I also know is the constant whining of the fans on this form, blaming parking, food, the non existent traffic this year, the temperature of the water and of course the owner. It’s rather pathetic, they want the best players in the world here and to resign, all the while not attending the games. Not going to happen. But apparently the fans here have the sense of entitlement on all of the above.

It's not the consumers responsibility to prop up a business they no longer believe in. The onus is on the organization to give their customers a reason to spend their money.
This is literally rule number one of any B to C business.
Nothing the team has done in the last calendar year has given the fan base any reason to spend their hard earned money on a sub-par product.

I think you've mentioned you're a business owner around these parts before, so if anyone should be aware of this it's you.

 

[Samsquanch]

Yo this is absolutely epic

well done.

The best part is that he showed the local time on his watch, thus dispelling any last shreds of doubt that he isn't 100% legit. You cant fake out father time, people!!!

For the record I truly give ZERO shits if he's really as "accomplished" as he thinks he is. But its been a hilarious read following this thread and the course its taken..

 

[mysens]

Here is another pic for DrunkUncleDenis at the beach! My beautiful wife helping me out, she has no idea what the heck I am up to but will play along!

 

[Sensung]

The increase in value is not specifically correlated to the success of the Ottawa franchise. The value is derived artificially. There were increases due to renegotiating the national TV deals as well as the universal inflation of team values to account for expansion teams wanting to do business.

So Billionaires are lined up at the door pounding away desperate to get into a league with a failed business model where only the top few markets in the biggest cities make money and the rest of the owners lose money hand over fist! I can see the attraction for these terrible businessmen who have made billions by throwing their money away...

Stop for one second and apply some critical thinking to the situation.

In a vacuum, the Senators franchise would barely be worth half of what you're suggesting because of the limitations of the market.

Speaking of dubious financial claims...

So no, increase in value does not equate to profitability.

But again if you can provide us the financial documents that can prove with finality what the fiscal health of this franchise is like that would be amazing.

The BEST source of information we have with regards to the Sens finances is Forbes. We all know that they say the Sens have generated an operation profit consistently over the last decade.
If you have a better source for you claims that they lose money, feel free to bring it to the discussion.

 

[Silencio]

Here is another pic for DrunkUncleDenis at the beach! My beautiful wife helping me out, she has no idea what the heck I am up to but will play along!

I dunno, looks like Sandbanks to me

(Seriously, keep these pics coming).

 

[topshelf15]

,The franchise itself may very well not be making a profit and heck, even if you're more intellectually honest, and consider ulterior or secondary revenue streams like the arena which wouldn't really exist without the franchise, they may not always be profitable without the growth of franchise value considered. The cost of ownership could exceed the value growth and income while you own it, but that's not the sole value these things hold; it's a bit of a status symbol to the rich, so that can boost the "franchise value" too. There's also value in potential; just because Melnyk is presumably doing a poor job running the franchise, doesn't mean another rich dude doesn't see potential to turn things around and make a profit.

The team is most expensive to run part of the equation for sure...But the CTC itself as you mentioned should be part of its profit stream,as neither exists without the other...

 

[Sensung]

Wrong in both accounts. I have been a season ticket holder since the building opened in 1996. Yes, I know all issues associated with poor attendance. I have been there through the droughts and when it is at capacity. What I also know is the constant whining of the fans on this form, blaming parking, food, the non existent traffic this year, the temperature of the water and of course the owner. It’s rather pathetic, they want the best players in the world here and to resign, all the while not attending the games. Not going to happen. But apparently the fans here have the sense of entitlement on all of the above.

Except that the owner promised to spend when we were a contender...

Team makes is to within a goal of the Cup Final, raking in huge profits along the way from the playoff games and while pocketing an expansion fee.

Owner cuts spending on roster and hockey operations and is in the process or holding a fire sale for all the prime assets.

Melnyk is the one who has created the disconnect between spending and revenue. Don't blame the fanbase for calling him on his BS.

 

[slamigo]

Here is another pic for DrunkUncleDenis at the beach! My beautiful wife helping me out, she has no idea what the heck I am up to but will play along!

Thank you for not sporting a speedo.

 

[Ice-Tray]

Man for such a ****ty money pithole of a franchise with poor terrible fans, there seems to be a lot of interest buying it from the broke ass version of Mr. Burns.

Come on now, what purpose does this hyperbole serve? No one sees this is a crushing money pit, and no one thinks the fans are terrible. This kind of post is just inflammatory and is unhelpful.

I get that it's easy to get defensive when the fanbase is put a little on the hot seat, but surely you're on board to spend more if an ownership partner comes in to spend more?

Also, I think most people can agree that the franchise is not a money maker. I don't think anyone thinks it's bleeding 10s of millions, but best case scenario in Ottawa is likely a profit neutral organization that spends what it makes in hockey revenues.

There are a few way in which they can make some money though, which has to be an option for anyone buying the team. It isn't fair or reasonable to expect anyone to buy the team and commit to losing money every year so that fans can pay little to watch a winner. I think a fair expectation is that the owner can make money on non hockey related revenues (concerts, building rent, etc...) and if/when the outstanding debt is paid off, make money on the increasing value of the team and building.

As I posted before, a massive chunk of playoff revenues goes to revenue sharing, so it's not as simple as looking at playoffs and thinking that it all goes into the owners pockets, but they definitely make more if they make the dance and so it's worth an investment in roster spending, even if they fall short some seasons. In general though a respectable owner can and should be looking to at least break even, or fluctuate depending on hit and miss playoff drives. The fans should expect to pay more for tickets being downtown as their part of building a competitive team.

I do see this as very doable.

 

[Micklebot]

I'm not taking any assumptions as facts. It's a pretty simple proposition: take the Ottawa Senators as a standalone business not affiliated with the NHL and their value crumbles in comparison. The Ottawa Senators are not worth what some are saying because of their business, they're worth that because of all the other businesses that are part of the same collective. And you can do the math in many many ways to arrive at a real, stand-alone valuation for the business. Even if you take the Forbes numbers as a very basic and rudimentary guesstimation of the financials of the team, how can you say that a team with an operating income of $10 million in 2017 is worth $500+ million?

What's really happening is that the price of the franchise is being inflated artificially. And that's being done by the NHL setting an entry price for new franchises well above the value of the majority of its current teams.

So maybe Melnyk is holding on to this investment not because it's making money every year but because in a couple of years, once Seattle has entered the league, he'll be able to get a hugely overvalued price of $750 million from someone?

It's like a real estate bubble. People are overpaying to get on the ride in the hopes that down the road they'll have someone willing to overpay them to take their seat.

I mean, Netflix has had an operating income of under 1 mil per year for the last 4 years, but is valued at ~100 billion. Maybe there's more to valuation than operating income...

Oops, admitatdly, the ref I looked up had incorrect #s. Point remains though, more to valuation than OI, you can be highly valued even while losing money.

Twitter would have been a better example,

 

[Sensung]

What is good business practice in this world of sports? Sign big money players while the fans opt out to not support the team by placing their butts in the seats? They justify it to themselves for a number of silly reasons to not show up to see the best player in the world on their team? Where is this money coming from. This family who is honing in on this partnership is not in it to lose money. That will be made very clear from the beginning, or should they come straight out and tell everyone it’s ok to stay home, don’t spend your money to support us, we just sold off and liquidated 35% of our holdings. If we lose it, oh well, shucks. I am not sure about the business practice you are eluding to.

If you know them personally, then you should advise them to buy a controlling portion or save their money.

As long as Melnyk maintains control, this franchise will die in Ottawa. He is 100% to blame for this situation and until he is gone, attendance will only get worse.

 

[Joeyjoejoe]

Come on now, what purpose does this hyperbole serve? No one sees this is a crushing money pit, and no one thinks the fans are terrible. This kind of post is just inflammatory and is unhelpful.

I get that it's easy to get defensive when the fanbase is put a little on the hot seat, but surely you're on board to spend more if an ownership partner comes in to spend more?

Have you not read the past two pages?

 

[NorthCoast]

Ottawa and Colorado, Buffalo, New York Islanders, Calgary, New Jersey, Minnesota, Dallas and Detroit generate approx the same annual revenue. Why is Ottawa supposed to be a cup contender when so many other teams in the same revenue bracket are not?

Don't know if you are agreeing or disagreeing.

My point was simply that revenue is not what is stopping the sens from being cup contenders unless it's also stopping two thirds of the league as well. Obviously some teams should be ramping up and some rebuilding depending on their window. I just want to dispell the myth that we can't be a cup contender, sign Karlsson, hire better staff, etc, etc because of attendance. There may be reasons why the sens are not contenders this year, but revenue is not stopping any of these other teams from operating and spending competitively so I am curious why it is an Ottawa only issue.

 

[Ice-Tray]

Have you not read the past two pages?

I have, I was just giving you a light chastising You've posted some good stuff in here, this last bit was just over the top no?