Speculation: Theory as to why Eugene Melnyk backtracked on LeBreton

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Mingus Dew

Microphone Assassin
Oct 7, 2013
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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.

I mean he can sue for whatever he wants, kind of. Whether or not he would be awarded any kind of damages/remedy is a different matter.

Does Melnyk not strike you as the kind of dude that would bring a frivolous lawsuit lol? I could definitely see something around the NCC failing to negotiate in good faith or so on.
 

Micklebot

Moderator
Apr 27, 2010
55,694
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I mean he can sue for whatever he wants, kind of. Whether or not he would be awarded any kind of damages/remedy is a different matter.

Does Melnyk not strike you as the kind of dude that would bring a frivolous lawsuit lol? I could definitely see something around the NCC failing to negotiate in good faith or so on.

Ya, I could see him sue, but good faith negotiating doesn't include threatening to relocate a team imo.
 

Mingus Dew

Microphone Assassin
Oct 7, 2013
5,598
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Ya, I could see him sue, but good faith negotiating doesn't include threatening to relocate a team imo.

I’d generally agree, but I haven’t seen any of the paperwork involved.

I could definitely see him going after the NCC in the courts though. That’s like Melnyk 101.
 

JD1

Registered User
Sep 12, 2005
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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.

you should read more clearly the post you are replying to. it helps if you are trying to respond to the post.
 

Micklebot

Moderator
Apr 27, 2010
55,694
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you should read more clearly the post you are replying to. it helps if you are trying to respond to the post.
Ya, see, I'm responding to the string of replies. You replied to saying the NCC doesn't need Melnyk more than he needs them with talk about the bidders taking the NCC to court if they didn't do a deal with either of them. I clarified my position by saying that if Melnyk was being unreasonable, they could move to the other bidder, and if Melnyk did in fact decide relocation was his endgame, there is no obligation by the NCC to accept the DCDLS group proposal as is, they can negotiate changes so long as both agree to it. With Melnyk moving the team, it seems likely they would but they don't have to.

Your taking this in a direction which was never intended; negotiating out the arena would likely only be explored if the team left and neither party still wanted it included.

The overall point though remains that Melnyk can't bully the NCC into making a bad deal by threatening relocation, because they can just go to the other bidder if he's being unreasonable, and in the event that Melnyk were to follow through with his threats and move the team, the NCC isn't left high and dry because they can negotiate a modified proposal in the best interest of both parties with DCDLS.
 

Pancakes Pancakes

Registered User
Aug 3, 2005
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Tank Nation


Obviously not a source for anything, but still interesting.


I mentioned something similar in a post a few days back from a legal source with the city. You can look it up. Melnyk cant afford Lebreton. They are looking at other groups to finance. Not sure what this means for the actual team though in terms of ownership.
 

Stylizer1

Teflon Don
Jun 12, 2009
19,767
3,908
Ottabot City
Ya, it's been a big 180 from "moving downtown is a must" to "we don't want to alienate the fans in kanata" lol
Seems like there are a lot of wealthy people trying to do business and Melnyk is screwing it all up. NCC is going to go with the other group and build the stadium regardless. Melnyk stays in Kanata and people refuse to go to concerts/hockey Games. Melnyk asks the league to move the team and they say no. Melnyk sues the league.
 

coladin

Registered User
Sep 18, 2009
11,900
4,624
Ya, see, I'm responding to the string of replies. You replied to saying the NCC doesn't need Melnyk more than he needs them with talk about the bidders taking the NCC to court if they didn't do a deal with either of them. I clarified my position by saying that if Melnyk was being unreasonable, they could move to the other bidder, and if Melnyk did in fact decide relocation was his endgame, there is no obligation by the NCC to accept the DCDLS group proposal as is, they can negotiate changes so long as both agree to it. With Melnyk moving the team, it seems likely they would but they don't have to.

Your taking this in a direction which was never intended; negotiating out the arena would likely only be explored if the team left and neither party still wanted it included.

The overall point though remains that Melnyk can't bully the NCC into making a bad deal by threatening relocation, because they can just go to the other bidder if he's being unreasonable, and in the event that Melnyk were to follow through with his threats and move the team, the NCC isn't left high and dry because they can negotiate a modified proposal in the best interest of both parties with DCDLS.

I don't think there is the opportunity to go back to the other bid. They chose a winning bid and they do not approve the other bid. That is how they spelled it out at the time, as I recall. Therefore if this deal dies, then the whole project dies. Possibly , they could reopen the bidding and DCDLS will have an opportunity to satisfy what the NCC wants. I liked their bid more anyways
 

Tundraman

ModerationIsKey
Feb 13, 2010
11,705
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North
What incentive is there for the city to get financially involved since they don't own the land.

What is the end game for this land? Does it get sold to the developers (lets say Melnyk's group) and become private property and get transferred to the city for tax purposes only or once built will the land and structures remain NCC property or will ownership be transferred to the city who would then take on the maintenance and lease the buildings out. If the NCC turns it over to the city either full ownership or all structures and land or just land transfer for property tax purposes what would they expect in return.
 

Gil Gunderson

Registered User
May 2, 2007
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Ottawa, ON
Seems like there are a lot of wealthy people trying to do business and Melnyk is screwing it all up. NCC is going to go with the other group and build the stadium regardless. Melnyk stays in Kanata and people refuse to go to concerts/hockey Games. Melnyk asks the league to move the team and they say no. Melnyk sues the league.
Isn't it the league's legal right to impose a relocation fee that he may not be able to afford?

If he can't afford his share for the Lebreton arena, I doubt he'd be able to pay a relocation fee.
 

Stylizer1

Teflon Don
Jun 12, 2009
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Ottabot City
Isn't it the league's legal right to impose a relocation fee that he may not be able to afford?

If he can't afford his share for the Lebreton arena, I doubt he'd be able to pay a relocation fee.
Atlanta had to pay 60 million in relocation fees. Can't see the league wanting to go that route when expansion fees are around 650m.
 

danielpalfredsson

youtube dot com /watch?v=CdqMZ_s7Y6k
Aug 14, 2013
16,575
9,269
It won't get as far as the league having to set a relocation fee.

Is there a building in Ottawa? Check. CTC is good for 10 more years with renovations.

Are there other groups willing to buy the team and keep it in Ottawa if Melnyk does not want to continue doing business here? I don't know for a fact, but rumours seem to indicate yes.

As long as there is a building, and others willing to buy the team, Melnyk will NEVER be granted the ability to relocate the Senators. It's that simple. Relocation is a last resort in the NHL for when there is no building and no ownership group. Melnyk has the rights to a franchise in Ottawa, that's it. He can't relocate without board of governors approval, which he won't get even if the Senators are bleeding him money because there is a building and there are other groups willing to pay him hundreds of millions of dollars for the building+franchise rights in spite of the franchise being at risk to lose money.
 

Gil Gunderson

Registered User
May 2, 2007
31,604
17,519
Ottawa, ON
Atlanta had to pay 60 million in relocation fees. Can't see the league wanting to go that route when expansion fees are around 650m.
I think Atlanta's was 60 because everyone needed the Thrashers to get out of town. They got kicked out of their arena and had nowhere to play.

Phoenix's fee was set to 195 million in 2009. You'd have to think Ottawa's would be at least 300 million with the increase in league value and all. That would already probably be more than Melnyk's share of the Lebreton arena cost.

This is of course only a scenario where he threatens to sue the NHL and the board of governers.
 

coladin

Registered User
Sep 18, 2009
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It won't get as far as the league having to set a relocation fee.

Is there a building in Ottawa? Check. CTC is good for 10 more years with renovations.

Are there other groups willing to buy the team and keep it in Ottawa if Melnyk does not want to continue doing business here? I don't know for a fact, but rumours seem to indicate yes.

As long as there is a building, and others willing to buy the team, Melnyk will NEVER be granted the ability to relocate the Senators. It's that simple. Relocation is a last resort in the NHL for when there is no building and no ownership group. Melnyk has the rights to a franchise in Ottawa, that's it. He can't relocate without board of governors approval, which he won't get even if the Senators are bleeding him money because there is a building and there are other groups willing to pay him hundreds of millions of dollars for the building+franchise rights in spite of the franchise being at risk to lose money.

I can't see someone or group pay $400M USD for the team and then $600M on an arena at Lebreton. It would be cheaper for him to move it and get a new arena, or deal, elsewhere.
 

Stylizer1

Teflon Don
Jun 12, 2009
19,767
3,908
Ottabot City
I think Atlanta's was 60 because everyone needed the Thrashers to get out of town. They got kicked out of their arena and had nowhere to play.

Phoenix's fee was set to 195 million in 2009. You'd have to think Ottawa's would be at least 300 million with the increase in league value and all. That would already probably be more than Melnyk's share of the Lebreton arena cost.

This is of course only a scenario where he threatens to sue the NHL and the board of governers.
Ownership in Atlanta were in a legal battle amongst themselves.

"
Turner Broadcasting Systems is a staple of Atlanta sports, owning the Braves, Hawks, and Thrashers. However, Turner became a subsidiary of Time Warner in 1996, and four years later Time Warner made the biggest mistake in corporate history getting purchased by America Online for $164 billion, who fraudulently inflated sales numbers to appear more financially viable. In the midst of huge financial troubles, AOL Time Warner sold the Thrashers, the Hawks, and operating rights to Philips Arena to the Atlanta Spirit, a new partnership between nine businessmen from Atlanta, Washington D.C., and Boston.
Two years after buying the team (2005), the partnership developed a dispute involving a trade with the NBA's Phoenix Suns. As a result, Boston-native and 30% partner Steve Belkin wanted to buy everyone out, and everyone else wanted to buy him out, so like all good businessmen they sued each other. A circuit court in Maryland (the corporate home of the Atlanta Spirit) ruled that Steve Belkin was entitled to buy everyone out but was later overturned. Belkin would be bought out, but no one agreed on a price.
From 2005-2010, the Atlanta Spirit spent more time in court than watching their team, except for partner Bud Seretean who died in 2007. In the process, they say they lost $174 million. In fact, the remaining owners became very vocal that hockey wasn't going to work in Atlanta, helping them lower the price of buying out Belkin. Don Waddell remained general manager through their distraction and apathy.
Finally in December 2010, Michael Gearon and Bruce Levenson became the lead owners buying out Belkin, but the group wasn't finished suing. They sued their lawfirm for $195 million, blaming them for botching the contract between them and Belkin. In this lawsuit, they claim the bad contract thwarted their attempts to sell the Thrashers for six years, dating back to 2005 (two years after buying the team).
With the ownership status now clear, the Atlanta Spirit quickly moved to sell the team, but they would not be selling the rights to Philips Arena. Unsurprisingly, no one wanted to become a partner or the tenant of a lawsuit happy landlord. At the end of the 2010-11 season, the NHL jumped at the chance to rid themselves of these owners along with taking a $60 million relocation fee (one they would not receive if moving the league-owned Coyotes back to Winnepeg)."
 

pepty

Let's win it all
Feb 22, 2005
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I don't think there is the opportunity to go back to the other bid. They chose a winning bid and they do not approve the other bid. That is how they spelled it out at the time, as I recall. Therefore if this deal dies, then the whole project dies. Possibly , they could reopen the bidding and DCDLS will have an opportunity to satisfy what the NCC wants. I liked their bid more anyways
This has been a negotiation period with Rendezvous le Breton. The NCC have reserved the right to go with the Devcore bid if they are still interested.
NCC to enter formal negotiations with Melnyk’s RendezVous group on LeBreton Flats project

If talks with RendezVous ultimately falter or collapse, the NCC has the option of entering into negotiations with the Devcore group.

I guess they realized awhile ago that Melnyk does not have the resources to actually continue with LeBreton, I wouldn't have thought that OSEG would have the resources either but maybe they are going to partner with someone from Devcore who do have deep pockets.

He was so excited and surprised when he won. Interesting to read after all is dismissive comments about Lebreton this weekend.

Senators-backed bid beats out rival for LeBreton redevelopment

Senators owner Eugene Melnyk promised to deliver on everything in the proposal to both "change the landscape of the city" and "solidify" the future of his NHL team, which has been playing in the suburb of Kanata far from downtown since 1996

'It's going to be a huge, huge win all around," he said after the meeting. "I can't wait to build that stadium — very quick."
 

coladin

Registered User
Sep 18, 2009
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This has been a negotiation period with Rendezvous le Breton. The NCC have reserved the right to go with the Devcore bid if they are still interested.
NCC to enter formal negotiations with Melnyk’s RendezVous group on LeBreton Flats project

If talks with RendezVous ultimately falter or collapse, the NCC has the option of entering into negotiations with the Devcore group.

I guess they realized awhile ago that Melnyk does not have the resources to actually continue with LeBreton, I wouldn't have thought that OSEG would have the resources either but maybe they are going to partner with someone from Devcore who do have deep pockets.

He was so excited and surprised when he won. Interesting to read after all is dismissive comments about Lebreton this weekend.

Senators-backed bid beats out rival for LeBreton redevelopment

Senators owner Eugene Melnyk promised to deliver on everything in the proposal to both "change the landscape of the city" and "solidify" the future of his NHL team, which has been playing in the suburb of Kanata far from downtown since 1996

'It's going to be a huge, huge win all around," he said after the meeting. "I can't wait to build that stadium — very quick."


Good to know that they can go back to the other bid. If they do, Melnyk is toast
 

pepty

Let's win it all
Feb 22, 2005
13,457
215
WARREN: Is the Senators' financial history repeating itself?
Today, there are countless hints, allegations and things left unsaid about Melnyk’s mounting debt load. He has acknowledged the club is operating with a razor-thin management staff. Yet while the rumblings of Devcore Canderel DLS looming in the background continue to grow, he insists he’ll never sell.
 

BonkTastic

ಠ_ಠ
Nov 9, 2010
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... he insists he’ll never sell.

Lance Armstrong insisted he never took PEDs.

Richard Nixon insisted he wasn't a crook.

Bill Clinton insisted that he did not have sexual relations with that woman.


... public declarations are ultimately meaningless as far as the truth is concerned.
 

Nac Mac Feegle

wee & free
Jun 10, 2011
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I can't see someone or group pay $400M USD for the team and then $600M on an arena at Lebreton. It would be cheaper for him to move it and get a new arena, or deal, elsewhere.

A relocation fee would likely be the value of the team.

And, without an arena of his own, he loses out on the biggest revenues he needs to operate the team (Capital Tickets, concerts, and other non-hockey related events at an arena). And whatever revenue he does get from the team, would have to be shared with the owner of the arena. In this day and age of the NHL, it's virtually impossible to operate at a profit when you don't own the arena outright, or you don't have a sweetheart deal with a city-owned arena.

If he's having financial troubles now, then there is no way he could pony up the cash to move, and very limited places in North america where he could even rent an arena, or build on in a suitable location.
 
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Micklebot

Moderator
Apr 27, 2010
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A relocation fee would likely be the value of the team.

And, without an arena of his own, he loses out on the biggest revenues he needs to operate the team (Capital Tickets, concerts, and other non-hockey related events at an arena). And whatever revenue he does get from the team, would have to be shared with the owner of the arena. In this day and age of the NHL, it's virtually impossible to operate at a profit when you don't own the arena outright, or you don't have a sweetheart deal with a city-owned arena.

If he's having financial troubles now, then there is no way he could pony up the cash to move, and very limited places in North america where he could even rent an arena, or build on in a suitable location.

It seems to me the league wants to expand to 34 teams and has identified Seattle, Quebec, and Houston as their targets for new teams. They won't pass up on the expansion fees to let a team move to any of those places, which limits the viability of relocation. A relocation fee would likely easily exceed 100m at this point, my guess is around 150m, given that Atlanta had to pay 60 mil to move to Winnipeg when franchise were valued at roughly half of what they are today.

So, for Melnyk to move, he needs to pony up 150m in relocation fees, find a suitable market that will lease him a building on a sweetheart deal or has a space for him to build a new arena (which he and whoever he partners with would be on the hook for ~500+ mil to build). When the team is already servicing as much debt as it's rumoured to be, that's a lot of extra costs to change markets with no guarantee that it will result in a better situation than he currently has.
 

Nac Mac Feegle

wee & free
Jun 10, 2011
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It seems to me the league wants to expand to 34 teams and has identified Seattle, Quebec, and Houston as their targets for new teams. They won't pass up on the expansion fees to let a team move to any of those places, which limits the viability of relocation. A relocation fee would likely easily exceed 100m at this point, my guess is around 150m, given that Atlanta had to pay 60 mil to move to Winnipeg when franchise were valued at roughly half of what they are today.

So, for Melnyk to move, he needs to pony up 150m in relocation fees, find a suitable market that will lease him a building on a sweetheart deal or has a space for him to build a new arena (which he and whoever he partners with would be on the hook for ~500+ mil to build). When the team is already servicing as much debt as it's rumoured to be, that's a lot of extra costs to change markets with no guarantee that it will result in a better situation than he currently has.

Agreed.

I just don't see how he could possibly end up in a better financial situation in another city. Lebreton rivals the best locations in the entire country, and he already has an established Senators fanbase here.

Even a city like Hamilton is no guarantee of success...all we have to do is look at the red-headed stepchildren in the Islanders and Devils in NYC to see how a huge markets treats the johnny come lately teams in comparison to their beloved Rangers. If Leaf fans in Ottawa won't convert to the Sens, why would the folks in the GTA migrate to a team in Hamilton?
 

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