Opinion: Wanted: Two billionaires to buy NHL’s Ottawa Senators

Actor Ryan Reynolds joked that he is looking for a billionaire, a “sugar mommy or sugar daddy,” to back as the next owners of the NHL’s Ottawa Senators.

How about two sugar mommies or daddies?

It will take a dual set of skills – in sports management and real estate – and two serious fortunes to realize the Senators’ potential as a pro sports franchise and a business. That is why a consortium, rather than an individual, is likely to win the team. And it’s why alliances between the entrepreneurs lining up to bid on the Sens may be critical to hoisting the prize.

Late club owner Eugene Melnyk’s two daughters formally put the Senators up for sale in late October, and stipulated that the next owner must keep the team in Ottawa. Rick Burton, a professor in sport management at Syracuse University in New York and co-author of the recently published book Business the NHL Way, estimates the franchise could fetch US$800-million or more.

The Senators’ next owner can make serious money by solving one of the thorniest problems in Canadian real estate: Turn the team into an anchor tenant in a new, downtown facility in Ottawa’s LeBreton Flats, while finding a new use for its current, suburban arena. , the 19,000-seat Canadian Tire Centre. Prof. Burton said the property investment effectively doubles the price of the franchise: Potential buyers would need an additional US$800-million-plus to build the team a new home.

“The real estate challenges are daunting, as the Senators’ owner will need to fill a multipurpose arena 200 nights each year, in a city that doesn’t have an NBA team or any other major tenant,” said Prof. Burton. He said even a billionaire buyer will want to delay the construction of a new arena in order to raise cash.

A go-slow approach isn’t going to fly with myriad levels of government – ​​including the federal National Capital Commission – that are attempting to develop LeBreton Flats. The project has been stalled for decades, in part because of Mr. Melnyk’s inability to strike a deal with potential partners.

Last June, the National Capital Commission signed a memorandum of understanding for a new arena with Capital Sports Development Inc., a consortium led by the Senators. If the team’s new owner backed out of this arrangement, there is a good chance the property is developed without a home for hockey.

Billionaires don’t get rich by spending foolishly. Every potential bidder knows that for much of their recent history, the Sens were a property play that happened to run a hockey team.

The first owner, real estate developer Bruce Firestone, was forced to sell after failing to pay down the team’s debts by building malls and homes around the arena. His successor, tech executive Rod Bryden, put the team into bankruptcy. Mr. Melynk, a pharmaceutical entrepreneur, dealt with his own financial issues. Over the years, the team’s off-ice problems hurt the on-ice product.

The Senators now need an owner with both sports expertise and a deft touch in real estate. In a few National Hockey League cities, one individual has both skills. The Edmonton Oilers’ Daryl Katz rebuilt a team around the core of Alberta’s capital. However, Mr. Katz could dip into a $3-billion fortune gleaned from selling his family’s Rexall drugstore chain.

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The NHL can count on the luxury of multiple bidders for the Senators, as the team is hitting the market at a time when the league’s prospects are on the rise. NHL revenues were less than US$1-billion annually when commissioner Gary Bettman took the helm in 1993. Prof. Burton said revenues will exceed US$6-billion by 2025.

“The NHL’s board of governors can say to a new owner: What do you bring that builds our game, how can you help us grow hockey around the world?” said Prof. Burton.

In Ottawa, the answer to that question may be a consortium bid, an entrepreneur with a track record in professional sports, such as Andlauer Healthcare Group Inc. founder and minor-league hockey team owner Michael Andlauer, joining forces with one of the region’s wealthy real estate developers. Deadpool’s Mr. Reynolds would want to join a dream team like that.

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