Speculation: Sens, Lebreton, and the NCC part II

[Rand0m]

Interestingly it would seem, at least superficially, that TV deals are growing as bodies in the arena are declining. With the TV setups that people have at home now it's no wonder really. A new arena downtown is a must because they need to create an evening out atmosphere and a certain excitement about going to a game, otherwise the best seats in the house are arguable in your own house.

I think this is a reality that a lot of markets in most major sports will have to deal with. 4K TV, surround sound, DVR, comfy couch are all things that keep fans at home. For the Sens, TSN has done a terrific job with its broadcasts, the analysis, on air talent and production value is great. This also means that the team has to increase the appeal of going to the actual games since the at home experience has gotten so much better than even 5 years ago. This is why the downtown arena is so important, as you said, it’ll allow people to make an evening out of it.

In my opinion, the days of mid-sized markets filling up a 18k+ arena are done. I think something like 15k capacity arenas will help increase scarcity while also eliminating the cheapest tickets. The in arena experience should be better too.

 

[topshelf15]

Not making enough to spend to a competitive level...Feel better now?

So how does EM sell this to a fanbase??

 

[Sensung]

idk, rich people plunk down gobs of cash for all sorts of things that don't intrinsically hold value; sometimes it's not about the return on investment, it's about having a status symbol.

Maybe that was true when the purchase of a franchise represented a much smaller portion of their net worth and perhaps for a limited group of ego driven ultra rich.

However, the model itself works, especially when coupled with land development projects like Lebreton. Hard nosed ultra rich businessmen are looking to add NHL franchises and arenas to their portfolios. It's not just because it allows them to show off.

 

[Sensung]

According to many here, ownership change will bring them back. No it won't. They will find another excuse not to go. Too far , probably.

I agree, everything is very black or white. It is like Civil War here. There seems to be no common ground because no one wants to give an inch.

Gee, I wonder why that is with you calling multiple posters who promise to give back their financial support liars...

 

[coladin]

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.

Precisely. Meanwhile , where is the liquidity required to pay up front bonuses? The situation is too tight financially to properly fund a winning team. Hence the new partner. Hence the new face, regardless of controlling interest or not. Hence rebuilding the fanbase. Things will get better. But fans needs to just be fans again, not financial experts, not scouts, not organizational masterminds who would rather a "properly run organization" more than anything.

 

[topshelf15]

I wish we could talk about our team ,and its hopes for the future without having to argue about what we can and cant do because of budget limitations....Cap plus 15 mil a season,for everything...Is what the budget should be ,now we dont need to spend this every season but it should be there regardless

 

[BankStreetParade]

Feel free to point out where I did this specifically. I see answers to the questions you raised about the Forbes numbers.



That would be a pleasant change. Perhaps when you are done, you could get around to the rest of the questions I raised.


Who chose to load the Sens with debt?
Are fans responsible to make sure that all of Melnyk's businesses make money regardless of the debt load that HE chose for each enterprise?

Deflect, deflect, deflect.

Are you totally incapable of answering a question? I made it pretty simple for you. Gave you some very favourable parameters for how much money the team makes in the Forbes hypothetical estimations. We even used the best year of revenue in the team's history to help make your point.

And yet here we are, with you still unable to answer a pretty straightforward question.

I didn't ask you who loaded the team with debt. I asked you this question and I'll even simplify it more for you:

Let's assume the numbers from 2017, their best ever year for revenue on record with Forbes. Let's say the Senators made a profit of $10 million.

The Senators have a debt load of approximately $135 million. They have secured a six year senior term debt on that number. The interest on that should be somewhere in the range of 8-9%. So just the interest on that debt load is approximately $10.5 to $12.15 million per year.

Let's safely assume that Eugene Melnyk wants to make money from a business he owns. Under what scenarios does it make sense for him to continue paying huge amounts of interest on the debt instead of finding a way to pay it off and pocket all of that extra money.

At the end of the day, as you imply, this is all about Melnyk making a killing from this business. So explain to me how carrying that much debt and paying that much interest on it benefits him and his bottomline? Wouldn't he make A LOT more if he paid off the debt and didn't have to make all those heavy interest payments?

 

[Ice-Tray]

Iam not ranting, iam stating the truth in a blunt matter...LOL ...The message and actions of this team need to change to affect more than just the play on the ice...It needs to change to facilitate growth with young fans ,and by appeasing the existing fans the team can ensure healthy stable ST sales...

Its been almost 3 decades of the same message,yet some still seemed surprised as to why the market is still considered small...The money has always been there,the ownership just wants it to walk over to them

It pains me that wrote all of that and you chose to respond to the word "rant". That was my bad, and a colossal waste of my time.

The 3 decades comment makes no sense to me, neither does you inability to understand that Ottawa is a small market, or perhaps it's an inability to differentiate small market from bad market. Ottawa is a small market with a much smaller financial commitment to sports than other much larger markets. This doesn't;t make it a bad market. It's market realities like these that created the need for a salary cap to begin with; so that the many small market teams could compete with the large market teams.

I'm also not sure how you've created this sense of being hard done by for 30 years, like you are literally the only person I have ever heard express that sentiment. This current situation is not all of a sudden for sure, but it has roots starting with the rise in salary cap since the last labour deal at best. We as fans have generally been quite happy with the team up until around the time Alfie left.

Anyways, I feel that you're quite emotional about the issue and that's ok, it just doesn't seem like a circumstance for further discussion at the moment.

 

[topshelf15]

It pains me that wrote all of that and you chose to respond to the word "rant". That was my bad, and a colossal waste of my time.

The 3 decades comment makes no sense to me, neither does you inability to understand that Ottawa is a small market, or perhaps it's an inability to differentiate small market from bad market. Ottawa is a small market with a much smaller financial commitment to sports than other much larger markets. This doesn't;t make it a bad market. It's market realities like these that created the need for a salary cap to begin with; so that the many small market teams could compete with the large market teams.

I'm also not sure how you've created this sense of being hard done by for 30 years, like you are literally the only person I have ever heard express that sentiment. This current situation is not all of a sudden for sure, but it has roots starting with the rise in salary cap since the last labour deal at best. We as fans have generally been quite happy with the team up until around the time Alfie left.

Anyways, I feel that you're quite emotional about the issue and that's ok, it just doesn't seem like a circumstance for further discussion at the moment.

Almost 3 decades isnt exactly 30 years,but its closer to 3 than 2 ...And its not only me that has been hard done by...Its been the team,we have consistantly heard the same excuse as to why we are what we are...But little has been to done to change this,the ownership seems hell bent on pushing this tired mandate...They want growth and cost certainty yet they do sweet f*** all to facilitate this....you need to have the courage and the drive to propel the team forward...Otherwise we will continue to spin our wheels ,which has been the case for most of the 26 years,or close to 3 decades that we have had the team...

 

[Micklebot]

[snip] Wouldn't he make A LOT more if he paid off the debt and didn't have to make all those heavy interest payments?

That depends; can he get a greater return on investment using that money elsewhere than it costs to service the debt. If it costs him 2% annually to borrow 150 mil, and he can get a 10% return on investing 500 mil in acme sprockets but he only has 350 mil on hand, but could only get a 3% return on investing the 350 mil in other potential ventures, there's no reason not to borrow that money (other than the inherent risk of being wrong about the potential return)

I'm not saying that's what's happening, but the point is a lot of people and businesses borrow even though they could use cash. I mean, why does Forbes indicate that the Rangers (~60 mil), Habs (~225 mil) and Leafs (~112 mil) carry debt. Couldn't they make even more money if they didn't have to pay interest?

 

[Sensung]

Deflect, deflect, deflect.

Umm, I've answered your questions and you have yet to reciprocate for any of the points I have put forward.

At the end of the day, as you imply, this is all about Melnyk making a killing from this business. So explain to me how carrying that much debt and paying that much interest on it benefits him and his bottomline? Wouldn't he make A LOT more if he paid off the debt and didn't have to make all those heavy interest payments?

Who chose to load the team with debt is the salient point.
Are the fans responsible to make sure that all of Melnyk's Sens related corporations make a profit, no matter how he structures them and how much debt he chooses to load them with?

I have never claimed that Melnyk is making a "killing" from this business. Just that his operations as a whole are profitable and that the increase in the valuation of the team will see him make a tremendous amount of money when he sells.

Him crying poor to justify cutting spending is a joke. Having fans perpetrate the lie on an on-going basis is simply sad.

 

[coladin]

So what do you want? What exactly are you getting at? What's your point? Ottawa sucks?

Sort of. Just saying the pizza line was played in front of a papered house. People are intellectually dishonest around here about it because it is common knowledge that it was papered. We all do. And I don't care if it is common practice in the NHL. In Canada, it is most likely not. Why would they need to? They can move their tickets, we cannot.

Yes, the tarps should not have happened and if costs was an issue, would they not tarp off the most expensive seats that cannot be moved? People will not but the cheapest tickets. There is work to be done there. Will Lebreton cure this problem? A resounding no, but if they want to put an arena downtown, good luck to them. Lebreton will cost fans more. Period.

 

[Daffy]

Sort of. Just saying the pizza line was played in front of a papered house. People are intellectually dishonest around here about it because it is common knowledge that it was papered. We all do. And I don't care if it is common practice in the NHL. In Canada, it is most likely not. Why would they need to? They can move their tickets, we cannot.

Yes, the tarps should not have happened and if costs was an issue, would they not tarp off the most expensive seats that cannot be moved? People will not but the cheapest tickets. There is work to be done there. Will Lebreton cure this problem? A resounding no, but if they want to put an arena downtown, good luck to them. Lebreton will cost fans more. Period.

We have great fans. We have more challenges than most markets. We are still trying to grow our fanbase. But the support is there. We just need competent ownership and some direction. We've had to try and convert lifelong Habs and Leafs fans to cheer for the Sens. Stick an MLB team in Connecticut and try and convert Yankees and Red Sox fans. It's challenging and takes time.

 

[Sensung]

We have great fans. We have more challenges than most markets. We are still trying to grow our fanbase. But the support is there. We just need competent ownership and some direction. We've had to try and convert lifelong Habs and Leafs fans to cheer for the Sens. Stick an MLB team in Connecticut and try and convert Yankees and Red Sox fans. It's challenging and takes time.

Sens ownership is actively shrinking our fanbase.

 

[Pancakes Pancakes]

I don't believe anyone has mentioned this name yet. Shane Smith. He is co-founder of Vice Media, is from Ottawa and it worth $1.38B. 99% chance it's not him, but it's another name. Haha

 

[coladin]

So how does EM sell this to a fanbase??

He doesn't. It is a reality of being a small market team that also receives equalization payments to try and make the team competitive. Fact of the matter is attendance comparable to the other Canadian Markets would add 8-10M to the revenues at our prices. That could go a long way in stabilizing things. That is a star player salary.

 

[BankStreetParade]

Umm, I've answered your questions and you have yet to reciprocate for any of the points I have put forward.


Who chose to load the team with debt is the salient point.
Are the fans responsible to make sure that all of Melnyk's Sens related corporations make a profit, no matter how he structures them and how much debt he chooses to load them with?

I have never claimed that Melnyk is making a "killing" from this business. Just that his operations as a whole are profitable and that the increase in the valuation of the team will see him make a tremendous amount of money when he sells.

Him crying poor to justify cutting spending is a joke. Having fans perpetrate the lie on an on-going basis is simply sad.

Time and time again you're given the opportunity to man up and answer the question you're being asked. Instead you continue to deflect. I ask you why Melnyk would choose to carry debt and pay enormous amounts of interest on it and you answer "who chose to load the team with debt?"

I'm not talking about where the debt came from. Not yet.

I gave you some of the most favourable parameters to answer the question: I gave you the best revenue year in team history. I gave you a generous operating profit figure. I gave you realistic numbers about the debt and the interest it accrues.

And despite all of that you continue to be unwilling to answer the question. And you deflect. And you post deceiving information. You constantly lie and perpetuate misinformation that you could never hope to prove. And anytime someone confronts you with some type of actual information, you try your best to pivot the conversation into stupidity by asking asinine questions that have almost no bearing on the discussion.

Answer the question I'm asking so we can, for once, have an earnest discussion.

 

[stempniaksen]

Time and time again you're given the opportunity to man up and answer the question you're being asked. Instead you continue to deflect. I ask you why Melnyk would choose to carry debt and pay enormous amounts of interest on it

Check post #560

 

[Sensung]

Time and time again you're given the opportunity to man up and answer the question you're being asked. Instead you continue to deflect. I ask you why Melnyk would choose to carry debt and pay enormous amounts of interest on it and you answer "who chose to load the team with debt?"

I'm not talking about where the debt came from. Not yet.

I gave you some of the most favourable parameters to answer the question: I gave you the best revenue year in team history. I gave you a generous operating profit figure. I gave you realistic numbers about the debt and the interest it accrues.

And despite all of that you continue to be unwilling to answer the question. And you deflect. And you post deceiving information. You constantly lie and perpetuate misinformation that you could never hope to prove. And anytime someone confronts you with some type of actual information, you try your best to pivot the conversation into stupidity by asking asinine questions that have almost no bearing on the discussion.

Answer the question I'm asking so we can, for once, have an earnest discussion.

Because Eugene wants no part of putting a single dime of his money into the operation. Never has, never will.

As Micklebot pointed out in post 560, not exactly an unusual practice for the industry, but it doesn't change the fact that it was Melnyk who has structured his Sens related business holdings to have the team post paper losses.

Now it's your turn.

Are Sens fans responsible to make sure that each one of Melnyk's Sens related holdings post a yearly profit? Does this responsibility hold no matter how he structures the holdings or how much debt he chooses to saddle them with?

Simple questions. I await your response.

 

[Smash88]

Not making enough to spend to a competitive level...Feel better now?

However you want to justify it go for it.

All I said was Melnyk does not lose money with the Senators. Again, it's an opinion as I'll never see the true numbers.

All revenues brought in by owning the Sens count towards that, I don't care if it comes from the NHL, TV deals, merch deals, expansion fees.. It's all associated with owning the Sens. He can keep them if he wants as that is his right, but then he can't get pissed when the fans decide not to show up.

After this dismal season, where most teams would of went on a marketing blitz and tried to keep everything positive towards the future, they go out and have one of the worst off seasons in memory.

I'm no where near as pissed about it as some here, but I certainly understand it. There is pretty much zero reason to be optimistic about this season. The sens brass (or whatever is left of it) have pretty much made sure of that.

 

[Sensung]

Not making enough to spend to a competitive level...Feel better now?

Weird that TB can spend to a competitive level with similar revenues.

 

[BankStreetParade]

Because Eugene wants no part of putting a single dime of his money into the operation. Never has, never will.

As Micklebot pointed out in post 560, not exactly an unusual practice for the industry, but it doesn't change the fact that it was Melnyk who has structured his Sens related business holdings to have the team post paper losses.

Now it's your turn.

Are Sens fans responsible to make sure that each one of Melnyk's Sens related holdings post a yearly profit? Does this responsibility hold no matter how he structures the holdings or how much debt he chooses to saddle them with?

Simple questions. I await your response.

Yes, the debt of the Ottawa Senators is the same practice as that of the Rangers, Leafs and Habs. Hmmmmm...what a coincidence that those 3 teams happen to be the 3 richest, most valuable franchises in the league and some of the most valuable sports franchises in the entire world.

Yes, the $60 million in debt of the Rangers, who had $246 million in revenue and $96 million in operating profits, is exactly what the Ottawa Senators and Eugene Melnyk are doing.

Holy. f***.

Never mind man. I can't have this discussion with people who are this intentionally dense. This is actually lunacy.

We're comparing the debt of the Senators to what the Rangers, Leafs and Habs are doing. Oh my god. I honestly can't believe this is where the conversation is now.

 

[Sensung]

Yes, the debt of the Ottawa Senators is the same practice as that of the Rangers, Leafs and Habs. Hmmmmm...what a coincidence that those 3 teams happen to be the 3 richest, most valuable franchises in the league and some of the most valuable sports franchises in the entire world.

Yes, the $60 million in debt of the Rangers, who had $246 million in revenue and $96 million in operating profits, is exactly what the Ottawa Senators and Eugene Melnyk are doing.

Holy. ****.

Never mind man. I can't have this discussion with people who are this intentionally dense. This is actually lunacy.

We're comparing the debt of the Senators to what the Rangers, Leafs and Habs are doing. Oh my god. I honestly can't believe this is where the conversation is now.

Insults and deflection...what a wonderful individual you are to debate.

If/when you ever want to discuss the issue like an adult, I'll be around.

 

[Micklebot]

Yes, the debt of the Ottawa Senators is the same practice as that of the Rangers, Leafs and Habs. Hmmmmm...what a coincidence that those 3 teams happen to be the 3 richest, most valuable franchises in the league and some of the most valuable sports franchises in the entire world.

Yes, the $60 million in debt of the Rangers, who had $246 million in revenue and $96 million in operating profits, is exactly what the Ottawa Senators and Eugene Melnyk are doing.

Holy. ****.

Never mind man. I can't have this discussion with people who are this intentionally dense. This is actually lunacy.

We're comparing the debt of the Senators to what the Rangers, Leafs and Habs are doing. Oh my god. I honestly can't believe this is where the conversation is now.

So... you take issue with a claim that Melnyk is making lots of money, why would he have 150 mil in loans, because he could make even more money if his simply paid them down with the gobs of cash. I point out three teams making gobs of cash that still carry debt, and your rebuttal is they make too much money so what, it makes sense that they carry debt instead of paying it down? I'm really not following your logic here. Nobody is saying Ottawa makes that kind of money, the point is carrying debt is something even the teams that rake in money do. Dallas, Edmonton, Pens, LA, WAS also carry debt. Lots of teams carry debt. I brought up the top revenue teams specifically to point out that even teams that can easily afford to pay down their debt carry debt sometimes. Why would they do this when by your logic, they'd make more money if they didn't have to pay interest?

 

[Take a Bath Son]

No matter how many ways you slice it-total revenue, revenue per fan, we have been bringing in the numbers (at least until the 2017-2018 season).

Fan shamers on this board gotta just stop it. You just alienate the very people you claim are needed. When I read your posts, it seriously makes me not want to buy tickets at all. Shaming them into coming to a game isn't going to work. If you can't tell from this thread, it will only strengthen the resolve of their mindset.

Revenue per fan in Ottawa $88. I believe only Winnipeg and Edmonton are higher. The rest of the NHL is lower. This stat inherently will skew to good small hockey markets but it is a measure of fan worthiness-directly or indirectly (in terms of TV deals) and that is what we are...a good small hockey market.

This is the number that is on the fan and it shows people in this city put up. And no it does not matter if that revenue is from TV deals. Revenue is revenue and it comes from team interest-directly or otherwise. In person viewership yields ticket revenue and those viewers at home contribute by way of the TV revenue. Ticket revenue might be higher per game per person but its irrelevant. An NHL owner will receive revenue from both and the sum is all that matters and is a measure of interest in a team in a given market.

Are there market issues? Yes, but Lebreton will go a long way in making up for them. Ottawa's market issues are corporate based. the lebreton experience will be sure to address that, but it will also result in higher regular ticket prices. A lebreton arena will yield double digit ticket revenue growth-guaranteed.

Fan issues, I'm sorry. This is precisely why posters here are fed up. The average Ottawa citizen has brought in $88 to the team and got yelled at for it while the average Toronto citizen has brought in $34 and is heaped with praise. Bob Mckenzie knows it and said so during one broadcast last winter. Bill Daly confirmed it because the NHL knows the numbers.

As for profitability....frankly, with a private company-we'll never know the full story. And there is probably good reason for that.