Something a little OT from the Pens on an off day; in attempting to uncover a little more info on Ulf's son going to Sudbury, I dialed up the local newspaper.....the
Sudbury Sun.....and came across the following anaysis on the Senators' (and Gene Melnyk's) financial issues. From a distance, I found it a compelling piece which answered a few questions for yours truly (and one which
t is presumably very familiar):
Bagnall: Can Senators break early pattern of historically low attendance?
The loss of spectators represents serious money. Forbes estimates gate receipts accounted for nearly 30 per cent of the Senators’ $124 million U.S. in revenues two years ago, with television and radio rights, advertising and other revenues accounting for the rest.
The Senators organization is well aware that more fans are staying home. Melnyk noted that ticket buyers in coming weeks will be treated to “an enhanced experience” involving theme nights, live music and fresh offerings of food and beverages.
Assuming the Senators can get their paid attendance back up to at least 14,000 per game this year, that could still represent more than $5 million in lost revenue compared with the 2017-18 season. The potential losses might be smaller depending on what percentage of seats sold are in the more expensive rows closer to the ice surface.
Can Melnyk cover additional losses ?
In recent years, he has certainly been careful with his cash. The Senators’ payroll, according to capfriendly.com, is significantly below the amount permitted under NHL rules. A year ago, Melnyk aggressively sought an arrangement that would have seen him pay relatively little upfront for a new arena on LeBreton Flats. More recently, the Senators’ owner has been defending himself vigorously against a lawsuit launched this summer by a Connecticut casino that is attempting to recover $1 million US in gambling debts and related interest.
While Melnyk’s liquidity does not appear to be as strong as when he ran Biovail more than a decade ago, he’s not lacking in assets. He bought the Senators in 2003 out of bankruptcy court for a bargain $93 million US, and the team and arena are now worth an estimated $450 million US plus. Most years the Senators lost money, causing the debt to rise from $45 million US to an estimated $200 million US. Despite those losses, Melnyk has netted roughly $200 million US in additional assets during his tenure with the Senators.
Looking ahead, the Senators owner can also anticipate improved revenue streams from broadcasting rights. The NHL’s multi-year deal with NBC expires in 2021, and according to Forbes will generate substantially more cash for each team — up to $400 million US annually split among the 31 teams, or double the current arrangement. (Even more lucrative deals featuring Rogers Communications and TSN do not expire until 2025.) Melnyk can also look forward to a piece of the $650 million US franchise fee to be paid by Seattle, which begins play in the 2021-22 season.
All of which suggests Melnyk may be biding his time while rebuilding the team with inexpensive young talent
Except the slumping attendance figures suggest a somewhat obvious danger with this approach.
From the beginning, Melnyk has understood the national capital region is a tough sell for professional hockey. It’s a small market — one-quarter the population of greater Toronto — in which the biggest employer, the federal government, discourages its workers from accepting tickets to games. And Ottawa remains the only Canadian city without a downtown NHL arena.
Little wonder that Senators’ ticket prices are the lowest among Canadian teams.
Melnyk also suffers a political disadvantage compared with owners in other small-market cities. Ottawa Mayor Jim Watson shares with his counterparts in Toronto and Montreal the conviction that municipal taxpayers shouldn’t contribute to NHL teams.
And yet, until recently, the team has consistently filled seats. The initial fan enthusiasm related to reacquiring an NHL franchise carried the team through the 1990s. By 2002-03, the Senators were attracting full houses based on talent. That season, the team led the league in the regular season in points and came within one game of reaching the Stanley Cup finals.
That was also the year the Senators slipped into bankruptcy for reasons that had nothing to do with on-ice performance. When Melnyk acquired the team and arena for a song in August 2003, a Cup seemed just a matter of time. Led by captain Daniel Alfredsson, the Senators had a profound connection to the community.
The team topped 100 points in 2006-07 for the fourth straight season — when more than 19,000 fans filled the stadium on average each night. That was the year the Senators reached the finals only to lose to the Anaheim Ducks. It would be the last time the team topped 100 points in the regular season. It has yet to earn another spot in the Cup final.
Enthusiasm ebbed. Trips to the playoffs were no longer a given. Alfie left in 2013. Then, in 2016-17 the fans began to drift away
Melnyk did not help his cause by musing late in 2017 that he might consider moving the team to another city if the economics became a “disaster.”
In his email Tuesday to this newspaper, Melnyk distanced himself from that sentiment, noting, “I have been very clear about my commitment to the city and the hockey club,” adding that “I plan to be in Ottawa for the duration of the journey towards winning a Stanley Cup.”
Assuming he does stay, it may take a little time for Ottawa residents to look past the collapse this year of the Rendezvous LeBreton partnership — selected by the National Capital Commission to remake LeBreton Flats with an NHL arena as its centrepiece.
Last February, 69 per cent of Ottawa residents surveyed by Ekos Research Associates said they believed Melnyk was “very responsible” for the impasse over the development of LeBreton Flats while just 38 per cent felt the same was true of Melnyk’s then-partner, John Ruddy.
Whether that’s a fair perception or not is beside the point. In a small market such as Ottawa-Gatineau, many things have to go right for the franchise to succeed. It starts with a solid, real connection between the team and its fans, and this includes players, managers and owner. The team must also offer an experience worth making the drive to Kanata, one that at least offers hope the wins will come.
Those empty seats suggest hope is not yet there. But Melnyk remains convinced the fans will return “as they come to know this young team both on and off the ice.”
....The East truly is a beast this year in the O....
