To say that the last 365 days have been a whirlwind in Sens Nation is an understatement. Not since the months leading up to the 1992-93 inaugural season have so many franchise altering moments been crammed into a single calendar year.
In a dizzying barrage of headline capturing events, fans of the club have experienced the passing of owner Eugene Melnyk, the revitalization of the once dead in the water Lebreton Flats arena deal, the acquisition of arguably the best pure goal scorer since Dany Heatley in Alex DeBrincat, and the signing of hometown favourite Claude Giroux in a matter of months.
Couple this with the standout play of several Senators prospects at the World Juniors this summer and rumours of a potential Jakob Chychrun deal, and fans can be excused for forgetting about the elephant in the room which is the ownership of the team moving forward.
With so much off ice action during the usually quiet summer months in the Nation’s Capital, talk about team governance has taken an understandable back seat amongst the fanbase. However the future of the team remains very much up in the air at the ownership level, with talks likely to resume a serious nature once training camps begin to open in the fall.
When Eugene Melnyk passed away in March of 2022 there was an awkward sense of unease amongst many Senators fans. While many had openly griped about Melnyk’s antics over the years, few could have predicted nor wished to have seen such an abrupt end to his era with the organization.
Ian Mendes, Katie Strang and Dan Robson ultimately summed up the Melnyk era as best as one ostensibly could in their now infamous piece which appeared in The Athletic titled: “The Eugene Melnyk era in Ottawa: Hopeful, then bizarre and tyrannical”.
And yet, as overbearing and omnipresent as Melnyk was at times, one at least knew who was calling the shots at the top (for better or for worse). Now? Not so much.
At the moment, the Senators are currently being run by committee, with Olivia & Anna Melnyk, whom Eugene had previously mentioned he intended to one day leave the team to, factoring in prominently in the decision making process. Also involved in the de facto leadership group is President of Business Operations Anthony LeBlanc, and the Melnyk estate executors.
Following years of a singular, arguably dictatorial at times, vision for how things should be run, many in the Senators organization are likely relishing the leadership by committee approach at the moment. But it bears consideration how long the transition of power will take, and once complete, who will ultimately be at the helm for the Ottawa Senators?
NHL Commissioner Gary Bettman has done his part to quell the flames in the wake of Eugene’s passing telling reporters “The franchise is being professionally run…The club’s not on the market. There’s no urgency. The club’s not unstable.”
He also went on to remark that the 19 & 23 year old Melnyk sisters would ultimately decide how they wanted to proceed with regards to ownership of the franchise moving forward.
While the all male NHL board of governors is in desperate need of both youth and diversity, one has to wonder whether a pair of young women with limited hockey or business experience are the ideal candidates to break up the old boys club.
Which is where things get interesting, as the future of the Senators could splinter off in a variety of different directions depending on what the Melnyk sisters end goal truly is.
As it currently stands, the NHL still lists Eugene Melnyk as the Governor for the Ottawa Senators. Since his passing, the board of governors met previously in June where they held a moment of silence for the former owner, but very little else was released publicly regarding the franchise.
With another meeting coming up in the fall, you can be sure that there will be more than a few owners who are curious as to what the club’s long term succession plans are. Any potential sale, and the subsequent figure reached, indirectly have effects on their clubs as well. And with record breaking sale prices recently for the Denver Broncos and Chelsea FC, many will be interested to see what effects those deals will have on NHL franchise valuations moving forward.
If the sisters elect to go with an outright sale of the club, the estate stands to turn a tidy profit. Purchased for $92M back in 2003, any potential sale of the Senators will yield significant returns for the Melnyk family.
Elliotte Friedman indicated back in 2018 that Eugene reportedly turned down a $400M offer to buy the club from an unnamed group, though it was believed to be headed by Cirque du Soleil founder Guy Laliberte. Since then however, Forbes has shown a significant increase in the value of the Senators on paper, listing them at a valuation of $525M at the end of 2021.
While that number presents a substantial return on investment, if a sale were to actually go through, many speculate that the final figure would be significantly higher. The Edmonton Oilers saw their value double to $1.1B once they locked up their core players to long term deals, and began competing as a viable postseason contender.
With Ottawa’s young core now locked up for the foreseeable future, and playoffs no longer an outrageous thought, the Sens are also due for a spike in valuation when the 2022 list is released as well.
Not to mention the fact that the Seattle Kraken just completed the final instalment of their $650M expansion fee, which many speculate Bettman and the board of governors (who would need to approve any potential deal) now view as a “floor” for entry into the NHL ownership ranks.
While some may scoff at the idea that the Senators could fetch $650M+ on the open market, consider the fact that in the world of professional sports franchises, that price point would be considered a bargain. The lowest valued MLB franchise, the Miami Marlins, currently hold a $990M valuation from Forbes, the cheapest NBA franchise, the Memphis Grizzlies, will set you back $1.5B, and the cheapest NFL team, Buffalo, will cost you $2.27B on paper.
Keep in mind that Forbes also released its valuations prior to the announcement that the Lebreton Flats arena deal was suddenly back from the dead as well. The potential financial impact of a downtown arena is not an insignificant sum when it comes to a potential sale.
NHL teams who have moved into new arenas in recent years have seen a substantial spike in value when it comes to their valuation from outsiders like Forbes. The Detroit Red Wings saw their value increase from $625M to $700M when they opened Little Caesars Arena in 2017. The New York Islanders jumped from $520M to $950M when they moved into their state of the art UBS Arena in 2021. And the aforementioned Edmonton Oilers saw their value increase $75M in their inaugural year at Rogers Place in 2016-17.
All that to say is even the agreement in principle to have a new downtown arena in Ottawa has likely added tens of millions of dollars onto any potential sale price for the club down the road.
If Anna & Olivia’s goal is to walk away with generational wealth, then they’ll certainly have the option to do so in the form of a potential future sale. Yet, an outright sale to the first bidder to come up with a viable offer seems to run counter to the limited sample size of public appearances we’ve seen from the ladies thus far.
We’ve seen the Melnyk sisters attend the draft in Montreal, appear in the Sens team photo, and drop the puck at fan appreciation night in the months since their father’s passing.
We’ve also seen a massive shift in the day to day operations of the team in virtually every facet. On the hockey ops front, Pierre Dorion has gone from punch line, to the toast of the town with his “Hot Pierre Summer” offseason. Seemingly freed to make the roster moves he wants, many Sens fans remain in disbelief that the opening night roster for 2022-23 is the same franchise as the one that took the ice in October of last year.
The Sens social media accounts are also another indication of a culture shift at the CTC as they’re actually interacting with fans, producing meaningful content, and doing things you’d expect a multi-million dollar sports entity to do on a day to day basis.
Even seemingly small things like acknowledging Pride Month have caught the eye of keen eyed Senators fans as a sign of change at the upper levels of management. As outlined in The Athletic piece, this wasn’t always the case at 1000 Palladium Dr. in the past.
Modern, youthful decisions have been implemented, and it would be a disservice to the Melnyk sisters to simply brush that aside as a “coincidence” that these things took place once they became directly involved with the franchise.
That being said, of all the options currently on the table, Olivia and Anna retaining full ownership over the team for the next decade plus would seemingly have the longest odds of actually taking place.
For starters, they’re young women with their full lives ahead of them, each with their own unique sets of interests and passions. Being the only women, or people born in the last few decades for that matter, in a room full of old men who are more set in their ways than possibly any other professional sports league on earth is a large ask of anyone. Let alone a 19 and 23 year old who just lost their father.
Whether the minutiae of NHL governance is their particular cup of tea is up for debate. But more importantly, one must also realize that Eugene Melnyk’s “thrifty” ways weren’t just an idiosyncrasy, but more often than not a necessity at the financial level.
Simply put, no one will be confusing Eugene Melnyk’s estate with that of free spending Los Angeles Clippers owner Steve Ballmer’s anytime soon. Canadian Business Magazine listed Eugene’s net worth in 2017 as $1.21B. In 2021, they listed it as $1.15B.
Before anyone starts thinking “woe is me, the Billionaire lost $60M”, keep in mind that it’s been well documented that most billionaires made substantial gains over the last 4-5 years, with CBS Moneywatch estimating the figure to be “54% richer during the pandemic alone”. So to somehow lose money during this period of time should raise eyebrows.
There’s also the question as to how much of that estimated net worth is actually fluid, vs. tied up in assets. The club previously had to refinance debt back in April of 2013 to the tune of $150M, which was then followed by another refinancing plan worth $135M in June of 2018 which prompted the initial Cirque du Soleil purchase rumours to surface.
While the Melnyk estate is undoubtedly a healthy sum of money, there are still lingering court cases which need to be resolved, and the question of how much do Olivia and Anna want to sell in terms of company shares, property etc. in order to make a go of running this team full time?
Most team owners across the globe are billionaires multiple times over, and treat their franchises as “play things”. Eugene Melnyk told the Ottawa Citizen back in 2013 that his team was averaging $10M in losses per year and that was before the pandemic prevented the gate-reliant Senators from having fans attend home games for 2 seasons.
While other owners simply write off any losses their teams incur, Melnyk didn’t hide the fact that ran the Senators like a business, and very much expected it to turn a profit as a result. Melnyk may have had wealth beyond what most fans could even dream of, but in terms of his stature within the rarified air of professional sports owners, he was at the low end of the spectrum for sure.
Do Olivia and Anna want to put their entire inheritance on the line for a project which could cost them tens of millions of dollars annually? That’s a tough ask for a pair of neophytes in the business world.
Which brings us to the most logical solution, which is also the most likely. The Melnyk sisters ultimately decide to sell controlling interest of the club to a deep pocketed ownership group, while retaining a minority stake in the team.
This way they can continue to honour their father’s legacy, stay involved with the team, and help usher in a new more progressive era and fan experience. They also then wouldn’t be bogged down with the day to day operations of the club, or the dirty politics which can sometimes creep into the owners boardroom.
The club would also benefit from Olivia and Anna staying onboard (if that is indeed their wish), as even having minority female owners is a rarity in the sports world, let alone the NHL. One needn’t look too far to find hockey headlines where having a different perspective to shape policy would have been beneficial.
If this is indeed the path the Melnyk sisters choose to follow, they’ve certainly positioned themselves well to maximize a partial sale to date. A new downtown arena, big offseason acquisitions, and re-engaging the fanbase and business community alike have been huge accomplishments in the last 6 months.
Not surprisingly, Sens fans have returned to the club in droves in the wake of the organizational about face. Speaking to reporters this summer, Anthony Leblanc said “The reaction has been absolutely unparalleled in the market…In the last 24 to 48 hours, we’ve had over 500 separate companies, account possibilities, reaching out. New season seats were up 25 per cent already from the activity over the last few weeks from where they were last year with season seat memberships…Everything is just moving incredibly well.”
Whatever the Melnyk sisters decide to do in the future, their first foray into NHL ownership has gotten off to a solid start. To borrow a slogan from the Sens of old, “The Kids are Alright”.
-Kyle Skinner
Twitter: @JKyleSkinner
Photo: Doug Kerr. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.