Category: Ottawa Senators

When last we checked in with Ottawa Senators owner Eugene Melnyk back in April, he’d won a discounted deal to get land and development rights for a new downtown arena project at LeBreton Flats, but was stalling on actually starting building it because he called it a “tremendous risk.” And if you had “sue your development partners” next on your Eugene Melnyk bingo card, you’re a winner!

While people involved in the LeBreton negotiation have accused Melnyk of being the roadblock to landing a final development deal, Melnyk’s lawsuit claims he was kept in the dark about [Trinity Developments’ John] Ruddy’s development interest at 900 Albert St., across from the Bayview LRT station and near LeBreton Flats…

The lawsuit says Melnyk hired PricewaterhouseCoopers to look into the residential market and found the massive project at 900 Albert would “destroy the viability of the LeBreton project outright.” The market, according to the lawsuit’s description of the report, couldn’t support both projects.

That certainly sounds like Melnyk being a roadblock — “we don’t to build housing with our partner because they’re also building housing elsewhere” is a strange argument, especially since Ruddy would be effectively shooting himself in the foot as well. The Ottawa Citizen cites “three sources with direct knowledge of the negotiations” (without saying which side they’re on) as alleging that the Senators owner is just trying to get out of paying for an arena, while indicating that “no one is quite sure what Melnyk’s end-game is on LeBreton Flats.” Presumably by “no one” they didn’t include Melnyk himself, though given the man’s behavior so far, it’s always possible he has no idea what he’s doing either.

Whether this is good news or bad news for Ottawa residents depends on whether a developer can now be found for the site whose plan is something other than “get rights to the land, sit around complaining until someone else pays to build on it,” but presumably that won’t be too hard. It’s probably bad for Senators fans, who will have to keep shlepping out to the existing arena way out of town for games (or not, which has more often been the case), but that’s still arguably better than paying once for tickets and again for an arena with tax money, as seemed to be Melnyk’s goal.

And speaking of oblique move threats, Ottawa Senators owner Eugene Melnyk dropped some more on Friday:

“If it doesn’t look good here, it could look very, very nice somewhere else, but I’m not suggesting that right now. All I’m saying is that I would never sell the team.”

This isn’t anything new, as NHL commissioner Gary Bettman just said essentially the same thing last month, though it is new for Melnyk to say it quite so bluntly. Melnyk is still angling for final development rights (and a discounted price) for land for a new arena in Ottawa, and hinting at moving the team is always a good way to turn up the heat on that, except of course that the easiest alternative option would be Quebec, and he’d have to sell the team to have it go there since Quebecor wants to own any team that plays in its new arena, so that’s out if “would never sell the team” is a hard and fast rule. And Seattle is reportedly only being considered for an expansion franchise, so … Houston? Are we supposed to think that it looks “very, very nice” in Houston for the Ottawa Senators? It’d really help if team owners would be more specific about their threats, though I suppose being specific is exactly the opposite of the effect they’re shooting for.

The Ottawa Senators story so far: Then-owner Rod Bryden built an arena in the suburbs in 1996 to be the anchor of a new retail district, then that didn’t work and he went bankrupt. Then new owner Eugene Melnyk decided in 2014 that what he really wanted was an arena downtown, blaming this on the suburban one not being “built to last,” and started angling for development rights to a plot of downtown land, which he got the rights to negotiate for last year. But Melnyk still needs to negotiate how much he’ll pay for those rights, plus whether he’ll get public money toward construction costs despite having promised that “no government money” would be involved, all of which means it’s high time for move threats! Levied by anyone other than Melnyk, because that’s the way this game works.

First up, NHL commissioner Gary Bettman:

“A new downtown arena is vitally important to the long-term future, stability and competitiveness of the Senators,” Bettman said. “The process is ongoing, but I think asking Mr. Melnyk or the Senators the status would be more appropriate than asking us.

“However, we believe there needs to be a solution for the long term.”

That’s a pretty oblique threat, admittedly — “vitally important” to the team’s “stability and competitiveness” could mean a lot of things, from the team leaving town to it just not making as much money as it might otherwise, I think? It’s a nice start, and why Bettman earns is salary, but really you want somebody to come right out and say — oh, hi, legendary hockey announcer Don Cherry:

“If they don’t put an arena downtown they’re gone,” Cherry said during Hockey Night in Canada on Saturday. “I think they’re just hanging on here in Ottawa, not drawing out, with a great team like that.”…

“If they’re not drawing out with that team… I say they’re gone, and I say they go to Quebec,” said Cherry.

The Senators are definitely not selling out despite a contending team, and the suburban location probably isn’t helping. Moving to Quebec, though, would require selling the team to Quebecor, the media giant that owns the management rights to Quebec’s arena and has said it wants to be the owner of any NHL team there. And Melnyk has been pretty adamant that the team is not for sale — even saying “the team is not for sale” and that he’s promised his daughter she can own it when he dies — so that doesn’t seem like a thing that is likely to happen.

More to the point, meanwhile, is that if the Senators need a new arena, they can build one right now: They have the land, and if a downtown venue would be so much more lucrative that it’d be worth the construction costs, then Melnyk can just go to a bank and borrow the money. Unless what Bettman et al are saying is that the only way it would pay off for the team is if Melnyk got public subsidies to help pay for it — either via a sweetheart lease or straight-up cash or tax breaks to pay for construction — in which case this isn’t actually “the Senators need a new downtown arena” so much as “the Senators owner is unhappy with how much money he’s making, and would appreciate it if someone would undo the previous owner’s mistake and build a new arena in a better location, please.”

As for how much money Melnyk is making, Forbes estimates the team turns a profit of a few million dollars a year, while the team is valued at $355 million, up from the $100 million that Melnyk paid for it in 2003 — an annualized return on investment of about 9.5%, thanks to the discounted sale price he got in part because of that whole bankruptcy thing and the lousy arena location.

Tl;dr version: Sports executives have a funny definition of “need.”

And meanwhile, in Ottawa, where Senators owner Eugene Melnyk promised last year that he’d build a new arena and surrounding development with “no government money” … you know where the rest of this sentence is going already, don’t you?

Mayor Jim Watson isn’t ruling out investing public money into a downtown NHL arena at LeBreton Flats.

“I don’t know if they’re going to come forward and ask for any of those dollars,” the mayor told reporters after Wednesday’s council meeting. “Certainly I want to make sure that whatever happens there is to the benefit of the taxpayers of Ottawa.”…

While the mayor repeated that he wasn’t going “to speculate on something that hasn’t been asked,” it is the first time he has seemed open to the possibility of putting taxpayers money into the arena.

“My bottom line is, whatever is being asked from us, does it make sense and is there a return on our investment whether it be through property or development charges or the increased market value assessment of the property,” Watson said.

Yeah, you know, if you don’t want to speculate about something that hasn’t been asked, maybe openly speculating about it isn’t the best way to go about it. To be fair, Watson was probably asked about this by a reporter, and felt like he had to say something, and so he improvised a line about “return on investment” based on something he vaguely remembered Naheed Nenshi saying, and it ended up as a headline. So cut Mayor Paralipsis a break, okay? This whole talking-while-governing thing is hard.

Ottawa Senators owner Eugene Melnyk has won his battle with a rival developer for the federally owned LeBreton Flats site, the National Capital Commission awarding him exclusive negotiating rights to develop the 21.6-hectare (that’s 53 acres — you double it and add 30, or something) downtown site. If talks go well, and the federal government approves, then Melnyk would build a whole buncha stuff on the site, including a new Senators hockey arena to replace their old one, which is 20 whole years old but also in the middle of nowhere because their old owner was crazy.

If you’re ready carefully, meanwhile, you noticed that that’s just the right to negotiate to develop the site — still up in the air is how the money would work out, including how much Melnyk would pay for the development rights and whether the project would require any public cash, as he’s previously indicated. (He’s since said there would be “no government money that is going to be granted,” but that doesn’t preclude tax breaks or a discounted price on the land.) This could end being a good deal for Ottawa — if you want to develop undeveloped land, you’re going to need a developer — or a lousy one, depending on how details like that go, and also details like the development timeline, which could stretch as long as 30 years. Win-win or land grab to get a site for a new arena? They still need to talk about it. Meanwhile, are there renderings with beams of light streaming into the night sky? You betcha!

The private developer competing with Ottawa Senators owner Eugene Melnyk to build an arena (among other things) on the LeBreton Flats site now says it would consider allowing Melnyk to own the rink if that would make things easier:

“Our attitude is, if we win the bid – and we firmly believe that the Senators should be downtown – we’re there and we’re willing and able to have a variety of discussions,” said Daniel Peritz, Canderel senior vice-president and spokesman for the Devcore Canderel and DLS Group, in an interview.

When asked specifically if that included the Senators owning the arena, Peritz answered: “Under the right conditions, everything is on the table.”

Presumably Devcore wouldn’t build an arena and then just give it to Melnyk for free, so how much would he have to pay for it? And how much would he be willing to pay for it? There’s a hint of a hint elsewhere in the Ottawa Sun report:

Earlier in the day, Melnyk told Postmedia’s Bruce Garrioch that playing in a new downtown arena could mean as much as $10 million more for the Sens’ payroll, so the team “can spend more.”

Does that mean $10 million more after paying for arena construction? Because if not, a new arena sounds like a pretty crappy investment, since it would cost around $500 million to build and only produce $10 million a year in new revenue. And even if that’s net gain, it’s a pretty marginal return on that kind of investment — Melnyk would be better off just putting his money in a mutual fund. (Okay, not the past few months, but in the long term.)

The takeaway here, as always, is follow the money. Once somebody has any idea how to pay for all this, it’s worth taking seriously. Until then, it’s not even pretty pictures.

Ottawa Senators owner Eugene Melnyk is locked in a battle with a competing developer over the downtown LeBreton Flats site, and on Friday he responded to rumors that the other guys could include an arena for the Sens with some quotes for the ages:

“The long and short of it is, the team is not for sale. Never will be in my lifetime, for sure. Number two: you can’t come into my territory. What’s a matter with you? Like, who is going to play there?”…

“How in God’s name do they want to build an arena? I don’t get it because there’s no NHL team available. This team is mine for life. My daughter has already taken first dibs on it when I go to heaven,” he said.

Melnyk said if he doesn’t get development rights to LeBreton Flats, the Senators will continue to play in their current arena out in the boonies, which, um, isn’t much of a threat given that he’s the one complaining about that arena not being “built to last.” Any threat in a storm, I guess.