Bruce Firestone was just enough of a dreamer to believe he could bring an NHL franchise to Ottawa.
In those early days, when Firestone’s group somehow managed to come up with a $50-million fee to be awarded a conditional franchise, Firestone received some words of wisdom from then-NHL president John Ziegler.
“Each one of these franchises is a treasure,” Ziegler told Firestone, as the NHL grew to 24 teams with the addition of Ottawa and Tampa Bay for the 1992-93 season.
Firestone just might have looked at Ziegler askance. Treasure? The founding fathers had just emptied their pockets, and beyond, to make this happen and hardly had enough cash left over to run the franchise. In the startup years, there was no game revenue yet.
Treasure seemed to describe the cost of entry more than the asset.
“You know, there was a little bit of, I don’t want to say skepticism, but a bit of doubt as to how treasured a franchise would be,” Firestone says today, nearly 33 years after winning an NHL bid, alongside Cyril Leeder and Randy Sexton.
“John has since long passed, but he was right,” Firestone adds. “When I saw that billion dollar franchise price tag (for the current Senators sale) was now considered a starter kit for people who would like to be involved in the sports entertainment business, that really re-emphasized for me that (NHL teams) are a scarcity — like a Fabergé egg.”
Except more expensive. Considering the most expensive Fabergé egg checks in at around $33 million, it would take a boatload of them to come close to the money being talked about in the Senators sale.
As Firestone says, there are reports of bids around the $1-billion mark, with celebrities like actor Ryan Reynolds and hip-hop artist Snoop Dogg wanting to be part of ownership groups of the club.
How did the price get so high when the last expansion fee was $650 million for the Seattle Kraken just five years ago?
There are a number of reasons. Foremost among them is the real estate potential. Not only does the new franchise owner get the opportunity to build a new arena, and other construction entities around the rink, there is the matter of 75 acres of land in Kanata on which the current Canadian Tire Centre arena sits. That holds enormous potential for housing or commercial construction, and is partly why most of these bidders are builders at their core or have aligned themselves with builders.
Ottawa has grown up. A lot. It is not the sleepy burg it was 35 years ago.
Don’t even get us started as to how far the franchise has come. This was the small-market Canadian city that didn’t deserve a team (read files from Hamilton and Toronto). When it got one, because it didn’t blink at $50 million when Hamilton did, the early years were a struggle.
The founding fathers gave way to the intricate financing wizardry of Rod Bryden, but there are only so many rabbits to be pulled out of hats.
On multiple occasions, the Senators faced bankruptcy and when Eugene Melnyk came along in 2003, the franchise was desperate to find its footing. As recently as 2017, Melnyk mused about moving the team if ticket sales didn’t improve.
Who can forget Don Cherry backing that idea on Coach’s Corner: “He’s nuts to stay there,” Cherry said, about Melnyk and Ottawa, suggesting the franchise move to Quebec City.
For decades, fans in Ottawa lacked confidence in the financial stability of their beloved hockey franchise. Who could blame them for being skittish. But now?
Fourteen months after Melnyk’s passing, the team and its real-estate potential are valued beyond $1 billion. You could make a movie about these developments but it would sound far-fetched. No doubt, it will all be part of an upcoming documentary.
Land values in the Nation’s Capital are very much a part of this leap in fortune.
Firestone, 71, who has spent his life in real estate and entrepreneurship, notes that the original Senators paid $12,000 an acre for that Kanata land. Today, industrial land can sell for $1 million to $2 million per acre depending on location. That adds up quickly on a large parcel.
Firestone is not surprised at the bidding war that has evolved in recent months, in a sale conducted by Galatioto Sports Partners on behalf of the Melnyk estate.
“I’ve been saying for some time I thought the price would go over $1 billion,” he says. “When you’ve got five or six billionaires vying for what they consider a prize — they don’t like to be told, ‘no.’ They’re used to getting their own way.”
Einstein and compound interest
The value of land has increased, but that shouldn’t shock anyone. Firestone figures that if the franchise sells for $1.1 billion it would represent roughly 10.5 per cent interest compounded over the last 30 years.
“It’s just proving once again what Albert Einstein said a long time ago,” Firestone says. “The most powerful force in the universe isn’t nuclear fusion, it’s compound interest.”
Having Ryan Reynolds, the Canadian actor, or Snoop Dogg, the American rapper and actor, involved with separate bids to buy the Senators only enhances the quality and panache of the bid.
Snoop Dogg has 83 million followers on his Instagram account. Reynolds has 51 million.
With his Ottawa roots (Reynolds spent part of his youth living in the city’s end end of Vanier) and Canadian perspective on hockey, Reynolds and his Remington Group (based in Vaughn, Ont.) feel like an authentic fit. Still, the Neko Sparks consortium brings the historic possibility of the first black owner in the NHL, with Snoop Dogg able to spread his formula for inclusion and accessibility in youth sport.
Celebrities provide the ability to expand the brand of a team. Even just by association.
Think Jack Nicholson with the Los Angeles Lakers. Drake and the Toronto Raptors.
Vince Vaughn and the Chicago Blackhawks. John McEnroe and the New York Rangers.
Celebrity fans make it cool to be a fan of a team.
Celebrity owners are a coming trend. Imagine Ottawa being out front on a trend?
The Senators could reap a small fortune in revenues from merchandise and jersey sales. And that won’t hurt at the ticket office either. Maybe the Winnipeg Jets should catch a ride on this celebrity-brand train.
“I think associating the Senators with a brand that’s as strong as those two (Reynolds, Snoop Dogg) is a very powerful thing and great for the city,” Firestone says. “It’s great for the franchise and will have lasting repercussions.”
How much a celebrity gets involved in the day to day work is bound to vary. Any ownership partner is going to be involved in decision-making and signing off on deals.
And yet the grunt work behind the scenes will continue to be carried out by mere mortals, conducting the business of selling tickets, scouting and recruiting players and developing and coaching them.
Lest we be blinded by the bright lights of fame, don’t forget there are other serious bidders, including the Michael Andlauer group, once considered the front runner because of their NHL connections.
It’s all rather dizzying.
The Senators as the coveted prize in a fierce battle among billionaires.
Even a dreamer like Firestone didn’t envision this scenario. His franchise truly has become a treasure.