LeBreton Flats project holds the key to Senators' future in the nation's capital

OTTAWA – In the months since Eugene Melnyk died, there has been a respectful pause around the potential sale of the Ottawa Senators.

Everyone involved wanted to give Melnyk’s daughters, Anna and Olivia, proper time to grieve the loss of their father and sort through the myriad business interests they inherited while still in their early 20s. Most notably, they took on an NHL team based in the nation’s capital.

Melnyk, who passed in March, once told a reporter that he had set up the Senators succession plan “so it’s in my family for generations.”

As it turns out, the hockey team may not remain in the family for more than a year or so, although there exists the possibility the Melnyks could retain a minority interest. It was always going to be up to the Melnyk sisters to decide if they wanted to be in the hockey business for the rest of their lives, or give it up for a great sum – a more practical solution.

On Tuesday, the respective pause gave way to a bold reality: the Ottawa Senators are for sale.

Sportico.com, a digital sports business site, reported that the NHL’s board of governors have interviewed “sell-side bankers” and have already garnered significant interest in the hockey team. Galatioto Sports Partners, a New York investment bank, has been retained by the Melnyk family to sell the franchise.

Sportico valued the franchise at $655 million (all figures in U.S. dollars), but that figure has been widely panned as low of the mark. Market forces rule, of course, but the NHL has a vested interest in maintaining strong value for its franchises and the Seattle Kraken paid $650 million just to join the NHL as an expansion team. The 30-year-old Senators won’t be sold that cheaply, and could inch up beyond $800 million depending on the degree of interest.

Arena plans vs team sale

What comes first, a new arena or the sale of the team? Sources suggest the sale could be done much more quickly, but new ownership will want to make sure everything is lined up to build a new arena on an identified 7.5-acre tract of land in LeBreton Flats, just west of Parliament Hill.

Last June, the National Capital Commission announced that the Senators are the preferred bid to build a major facility – in other words, an arena – on the NCC site and signed a memorandum of understanding that provided 15 months to sort out a lease deal. That would take the two sides to the fall of 2023.

It’s quite possible the sale of the franchise could take place before the new arena is finalized, but any new owner is going to want assurances before buying the club. After all, the Senators and the Ottawa community went down this road before – the Senators’ RendezVous LeBreton pitch was named the preferred bid in 2016 only to have the development fall part in a lawsuit and countersuit between Melnyk and then business partner Trinity Developments.

Those lawsuits will have to be resolved before any franchise sale gets done.

Could the new owner(s) take on the cost of constructing the arena? It’s possible, but seems unlikely when you look at some of the recent arena deals.

In Edmonton, the city owns and operates the Rogers Centre while the Katz Group, which owns the hockey club, paid a portion of construction costs and is leasing the arena from the city over a 35-year period. By most accounts, the arena has been a boon to the downtown area and the arrangement ensures that the hockey club remains in the city for years to come.

You know there will be wrangling about how the new Ottawa arena gets paid for and how much public money is involved. There are already concerns expressed from fans that they could lose their team. Anytime a local team goes on the market, there is bound to be fear that the team established here by founders Bruce Firestone, Cyril Leeder and Randy Sexton could wind up in Houston.

At this point, the most likely scenario is that the team stays in Ottawa and thrives in a new, central arena. The recent election of Mayor Mark Sutcliffe, a business-minded former broadcaster and entrepreneur, dovetails nicely with the NCC-Senators' plans for LeBreton.

Keeping the Senators in Ottawa is clearly the preference of NHL commissioner Gary Bettman. Consider the actions of the league over the past year, during Melnyk’s final weeks as owner and beyond: The team’s board of directors, led by Melnyk’s longtime advisor and executor Sheldon Plener, has seamlessly operated the club while maintaining the usual ties with hockey and business operations.

Senators president Anthony LeBlanc and CFO Erin Crowe have been working diligently on the demanding LeBreton file as well as day-to-day business. General manager Pierre Dorion, who worked with Melnyk on a rebuilding plan for the hockey team, has moved into the next phase of that plan, creating a roster that can compete in the Eastern Conference.

And while the Senators have had some hiccups early in the season, taking a 4-5 record into Thursday’s home game against the Vegas Golden Knights, it is widely accepted that the NHL head office oversaw a payroll increase over the summer to make Ottawa more competitive and more attractive as a franchise about to be sold.

Once the deal goes through, the vision of new ownership will kick in and we can’t know exactly what direction that will take, except that the LeBreton Flats arena holds the key to the future of hockey in Ottawa.

Remember when the Senators rejoined the NHL in 1992 for $50 million? It seemed outrageously expensive, designed to weed out frivolous bids.

A new owner could be paying closer to $1 billion to buy the Ottawa Senators.