Speculation: Theory as to why Eugene Melnyk backtracked on LeBreton

[Back in Black]

Melnyk would lose almost every concert revenue stream. The only thing he'd be able to keep are the low-rent events like monster truck rallies and pro bull fighting.

Why do you say that? He puts big names in there now @ CTC, why would it be any different??

 

[BonkTastic]

Why do you say that? He puts big names in there now @ CTC, why would it be any different??

He puts big names in there because it's the only concert venue of it's size in the city. It's a market of one, and Melnyk has they keys to the only building in town with enough capacity seating to justify big acts coming to the city. Melnyk pulls big names because there is literally nowhere else for those big names to play if they want to stop in Ottawa.

You think Taylor Swift will be bringing her world tour through a brand new state-of-the-art stadium in the downtown core of the city, or a 25 year old rink an hour's drive away from the city center (and even longer for potential ticket buyers int he East end) with bad acoustics running on a skeleton staff?

 

[Micklebot]

Why do you say that? He puts big names in there now @ CTC, why would it be any different??

Currently, the CTC is the only game in town for 5000+ capacity events. If a 17000 seat venue were to open downtown, which do you think would be more attractive to a band looking to sell out?

 

[BonkTastic]

Currently, the CTC is the only game in town for 5000+ capacity events.

Technically TD Place Arena (aka: the Civic Center) is available for concerts in the 5-8k capacity range.

The acoustics in that building are so horrific that nobody ever rents it for concerts anymore, though. It has a reputation of being one of the worst concert venues on this side of the country, simply because the sound is so bad.

 

[Micklebot]

Technically TD Place Arena (aka: the Civic Center) is available for concerts in the 5-8k capacity range.

The acoustics in that building are so horrific that nobody ever rents it for concerts anymore, though. It has a reputation of being one of the worst concert venues on this side of the country, simply because the sound is so bad.

True, I never considered it, as no band would ever willingly go there.

 

[BonkTastic]

True, I never considered it, as no band would ever willingly go there.

I saw R.E.M. play there in like... 2004? Somewhere around then.

It was the worst concert from a top-tier band I've ever been to, by a massive margin. My friend and I even considered leaving early, and we both consider R.E.M. to be among our favorite bands.

 

[Back in Black]

Currently, the CTC is the only game in town for 5000+ capacity events. If a 17000 seat venue were to open downtown, which do you think would be more attractive to a band looking to sell out?

I was referring to him owning the new arena @ Lebreton

Technically TD Place Arena (aka: the Civic Center) is available for concerts in the 5-8k capacity range.

The acoustics in that building are so horrific that nobody ever rents it for concerts anymore, though. It has a reputation of being one of the worst concert venues on this side of the country, simply because the sound is so bad.

I just saw April Wine/Trooper there and it was fine. The back of the stage was facing the football field and it was all opened up facing the most seats of the arena. That was probably the most idea location, instead of at one end of the rink.

Matter of fact my youth was spent there in the 70's/80's/90's listening to bands like Kiss, Scorpions, Ozzy, Iron Maiden, Motley Crue, etc..., But I was pretty F***ked up back then...

 

[BonkTastic]

I was referring to him owning the new arena @ Lebreton

I wasn't. My whole post that you responded to was prefaced with "if someone else other than Melnyk develops LeBreton and puts a world-class "Arena + Concert Venue" there"

 

[Tundraman]

Are there any season ticket holders here who live in the west end of the city? Have you been polled as to whether you would renew your season tickets if the team moves into the core. As anyone heard of any kind of phone or mail-in survey asking anything ticket sales related. I'm just wondering if Melnyk is worried they might lose some of their base season ticket holders even if they gain walk-up business that might be more fickle and unreliable. Plus he's probably trying to negotiate which non-team/non-NHL-shared revenue streams he can control for x number of years like he currently does in his own building.

 

[Samboni]

Lets be honest here; the only reason the two competing bids had an arena in their proposals was because they thought it increased their odds of winning. If having a hockey team/arena is no longer an option, the NCC will have no problems finding someone to take over the development of that land. The NCC doesn't need Melnyk more than he needs them. If he takes his ball and leaves, they'll find something else to put in there.

I agree, but threw that out there as we don't know what's happening behind closed doors or what's going on in EM's mind. Maybe he's setting the stage in case the whole deal goes south and he wants to save face.

He may have said those things to gain an advantage - possibly over some potential partners e.g. we do it my way or I will walk away. Perhaps some of his partners wouldn't be able to join Devcorp if the deal fell through.

 

[JD1]

But the Amazon bid by the city is LeBreton Flats. I guess he thinks he has leverage... I don't really see it. His only other move is keep the team in Kanata where he alleges he has lost and continues to lose a lot of money.

Even if he was allowed to move by the NHL, he's not picking up and moving to an arena he has to pay rent to.

didn't he just say "we're doing ok"

 

[JD1]

Lets be honest here; the only reason the two competing bids had an arena in their proposals was because they thought it increased their odds of winning. If having a hockey team/arena is no longer an option, the NCC will have no problems finding someone to take over the development of that land. The NCC doesn't need Melnyk more than he needs them. If he takes his ball and leaves, they'll find something else to put in there.

the NCC went to tender and received 2 proposals that both included an arena. If they don't come to terms with one of those proponents they will end up in court with both and they will lose

 

[JD1]

This may also be there to put pressure on the governments (local and federal).

I see three likely scenarios here. And in fact scenario 1 is probably a fact :

1) The cost of cleaning up the contamination at the site is causing friction in the negotiations. The fact is no one knows the costs. The low estimation is 40M, the upper I have heard is 175M. The mayor was on the radio several months back and was adamant the city is no way would be picking up that tab. You can bet that the development group wants nothing to do with it. The federal government could be balking (pure speculation on my part) as they are already giving up land worth 100+M. This could have a huge impact on the financials for the project, if they are getting a flat out no from the city (thats 100% certain) and the feds (no idea), this could be a move to apply pressure to them.

2) Financial aid. This is speculation, but based on what happened in Edmonton and Calgary. In Edmonton the total price tag was 613.7M, with the owner (Katz) writing a cheque for 25M and the city "covering" the rest. The city will recoup that over the 40 year lifetime in ticket surcharges, rent and tax levies. But the key was the owner only had to front 25M. Calgary wanted much the same deal, and it obviously was not going to work and hence they are in the process of determining the next steps (which sounds much like Melnyks speech). It would not surprise me if the same thing is playing out here in Ottawa. Melnyk could easily be looking for an Edmonton type deal, and being offered a Calgary type deal. In that case why would he not act much like the Calgary team and say they may have to move.

3) Melnyk may be pushing for the government to allow federal employees to accept tickets from suppliers. That will have a huge impact on what he can charge downtown, and will especially be critical to filling up luxury boxes. Given how poorly the government are doing at ethics at the moment, I cannot see that flying.

This whole speech at what is likely a critical juncture of negotiations (aren't they supposed to be up end of Jan?) may be more about applying pressure for negotiations.

I think your #3 scenario is off base

Your #1 scenario is well said and is exactly what I think the issue is. It's pushing 5% of the project's economics.

There may be some validity to #2 but Melnyk has said he isn't looking for money. I think #1 might be creating # 2.

I posted about this the other day. Katz with double Melnyk's net worth put nearly nothing into the Edmonton facility and they are looking for the same deal in Calgary. Our guy is saying he can do this himself but is labelled cheap.

 

[JD1]

I'll say this much - if someone else other than Melnyk develops LeBreton and puts a world-class "Arena + Concert Venue" there, it would put the team at risk of being legitimate bottom-feeders from a payroll perspective.

Melnyk would lose almost every concert revenue stream. The only thing he'd be able to keep are the low-rent events like monster truck rallies and pro bull fighting. There's no way he wouldn't lean into the Sens side of that ledger to make up the losses.

he'd sell. he'd have to.

 

[JD1]

I was referring to him owning the new arena @ Lebreton



I just saw April Wine/Trooper there and it was fine. The back of the stage was facing the football field and it was all opened up facing the most seats of the arena. That was probably the most idea location, instead of at one end of the rink.

Matter of fact my youth was spent there in the 70's/80's/90's listening to bands like Kiss, Scorpions, Ozzy, Iron Maiden, Motley Crue, etc..., But I was pretty F***ked up back then...

I remember the plumes of smoke fondly lol

 

[Sens of Anarchy]

Melnyk 'tantrum' all about public funds for arena: economist
Ottawa taking stand on new arena cost | Metro Ottawa
LeBreton redevelopment land deal could be revealed by the end of 2017
I am really not sure what is happening with Lebreton.. Just costing that project would be difficult... then who is paying for what? Hard to tell where they are in all of that and there is likely a ton of stuff going on behind the scene.It wouldn't surprise me if Melnyk is pissing people off on both sides thru this process but there is soooo much we do not know here

 

[Stylizer1]

Melnyk 'tantrum' all about public funds for arena: economist
Ottawa taking stand on new arena cost | Metro Ottawa
LeBreton redevelopment land deal could be revealed by the end of 2017
I am really not sure what is happening with Lebreton.. Just costing that project would be difficult... then who is paying for what? Hard to tell where they are in all of that and there is likely a ton of stuff going on behind the scene.It wouldn't surprise me if Melnyk is pissing people off on both sides thru this process but there is soooo much we do not know here

Melnyk can't find the money for his portion and the rest of the group are growing impatient.

 

[Micklebot]

the NCC went to tender and received 2 proposals that both included an arena. If they don't come to terms with one of those proponents they will end up in court with both and they will lose

Rendezvous only got preferred status. If the NCC can't come to terms with Melnyk and the Rendezvous group because he's not being reasonable, or trying to extort taxpayer dollars, they have no obligation to let him develop the land. If the other group still wants to develop it, great. Technically, preferred status doesn't even mean they accepted the proposal as it was made, they could negotiate out the arena.

 

[JD1]

Melnyk 'tantrum' all about public funds for arena: economist
Ottawa taking stand on new arena cost | Metro Ottawa
LeBreton redevelopment land deal could be revealed by the end of 2017
I am really not sure what is happening with Lebreton.. Just costing that project would be difficult... then who is paying for what? Hard to tell where they are in all of that and there is likely a ton of stuff going on behind the scene.It wouldn't surprise me if Melnyk is pissing people off on both sides thru this process but there is soooo much we do not know here

the economist's take is in line with the viewpoints of a few people that were posting similar takes over the past 48 hours. Even referencing the same examples of similar situations.

 

[JD1]

Rendezvous only got preferred status. If the NCC can't come to terms with Melnyk and the Rendezvous group because he's not being reasonable, or trying to extort taxpayer dollars, they have no obligation to let him develop the land. If the other group still wants to develop it, great. Technically, preferred status doesn't even mean they accepted the proposal as it was made, they could negotiate out the arena.

what they are negotiating is the details around land transfer and some of the finer points around development. I highly doubt they are negotiating an arena out of the deal. they can conclude that a deal with the melnyk group is not possible however to do that I believe both sides would need to hold that view without ending up in the courts.

the government routinely ends up in the courts as a result of failing to conduct itself in the prescribed manner.

 

[JD1]

Melnyk can't find the money for his portion and the rest of the group are growing impatient.

interesting take. fake news though.

the deal survives bank financing models or it doesn't. no one is pulling 4 billion out of their pockets to do this.

 

[Gil Gunderson]

Either talks haven't been going well or Melnyk is a complete schizo.

Most likely it's both.

 

[Stylizer1]

interesting take. fake news though.

the deal survives bank financing models or it doesn't. no one is pulling 4 billion out of their pockets to do this.

How many banks are lining up? Maybe he has bad credit.

 

[Mingus Dew]

interesting take. fake news though.

the deal survives bank financing models or it doesn't. no one is pulling 4 billion out of their pockets to do this.

Yep. Any project of this size will be funded by some kind of financing package, and that package would have 100% needed to be in place at the time of a bid.

 

[Micklebot]

what they are negotiating is the details around land transfer and some of the finer points around development. I highly doubt they are negotiating an arena out of the deal. they can conclude that a deal with the melnyk group is not possible however to do that I believe both sides would need to hold that view without ending up in the courts.

the government routinely ends up in the courts as a result of failing to conduct itself in the prescribed manner.

The whole premise of this conversation is that Melnyk is trying to bully his way to a better deal, and that the NCC needs him more than he needs them. Sorry, but if he is trying to get the gov't to pay for more than is reasonable and they say no, he can either walk away and they'll find somebody else (DCDLS Group) to develop it or he can change his ask. If he walks away, and it seems unlikely the Sens will be around to fill an arena, they can negotiate it out with the DCDLS Group. Melnyk is not going to be able to sue because millions of tax payer dollars aren't gifted to him and he decides not to play ball anymore.