On Tuesday, Sportico surprised a lot of people in the Ottawa market by reporting that the Senators have hired a firm with the intent of selling the NHL franchise.
After years of speculation about the ownership situation in Ottawa, this finally felt like some tangible news on an elusive subject.
In the hours that followed, The Athletic spoke with three people with direct knowledge of the situation, who requested anonymity because they are not authorized to share details of this process. All three confirmed that an outside firm has been retained to assess the valuation of the Senators franchise and explore the possibility of the team being sold.
When contacted for a response to this story, the Ottawa Senators declined to provide a comment on Tuesday.
But clearly this is a story with significant traction.
Where is the sale process at right now?
One source summed up the situation using a very simple real estate analogy.
While the “For Sale” sign isn’t officially on the front lawn at Canadian Tire Centre, the Senators are basically having a real estate agent actively assess the value of their place. And they’ve discreetly let some potential buyers know their home will be hitting the market soon.
Multiple sources said a more formal, public announcement that the Senators are officially for sale should come this month. And at that point, the team will officially be on the market.
Who is overseeing this process?
The Senators have entered into an agreement with a New York-based firm to assess the value of the franchise and explore a potential sale.
Galatioto Sports Partners’ website notes that the company has overseen “engagements in more than 100 transactions in the major US professional sports leagues as Financial Advisor, Arranger and Agent.” The Ottawa Senators are listed as one of their key clients.
Will the team stay in Ottawa?
Any time there are rumblings about a Canadian franchise being for sale, there will be rumors about potential relocation to other markets.
Two of the sources who spoke to The Athletic said there are “multiple” groups willing to purchase the Senators franchise and keep them in Ottawa. Both sources indicated that potential buyers are extremely interested in the prospect of a downtown arena at LeBreton Flats.
In the spring, we quoted a source familiar with these ownership groups saying there was “no scenario” where he could envision the club leaving Ottawa. That same sentiment holds true today.
The only time the NHL would ever consider relocation is in a situation where no investors stepped up to keep the team in Ottawa. And that is certainly not the case in Ottawa.
Who are the potential new owners?
At this juncture, potential ownership groups want to stay in the shadows as much as possible. In the past, Bettman has frowned upon potential owners who start leaking information and speaking to the media in advance of being formally vetoed as an owner. Jim Balsillie — the brash and outspoken businessman who tried to buy the Coyotes and relocate them to Hamilton — serves as a cautionary tale for potential new owners.
Roger Greenberg, the executive chairman of the Minto Group and a real estate mogul in Ottawa, has gone on the record to say his group would throw their name into the hat if the Senators were ever on the market.
“So yes, we’d likely participate, if that’s something that’s feasible, when the time comes,” Greenberg told CTV Ottawa in April when he was asked about an interest in purchasing the Senators.
In addition, there are multiple other groups — with one based in the Toronto area and others in the United States — that are expected to be serious bidders once the process formally opens.
What’s the potential selling price?
In its most recent NHL franchise valuations this week, Sportico listed the Senators with a value of $655 million US That represents a 21 percent jump over the Senators’ previous valuation by the publication — which was the biggest increase for any NHL team.
The Pittsburgh Penguins sold for $900 million in 2021.
If there is a small bidding war for the Senators, it’s possible the price tag could be higher than many people initially speculated.
There are some outstanding debts that need to be serviced, but the Melnyk estate should stand to make a tidy profit if they sell a majority stake in the franchise. Eugene Melnyk purchased the Senators — and the club’s home arena — for just under $130 million in 2003.
How does the LeBreton lawsuit factor in?
There is still an outstanding legal wrinkle that could play a role in the sale of the franchise.
Eugene Melnyk, through his company Capital Sports Management, sued the Trinity Development group for $700 million over the failed arena project at LeBreton Flats in 2018. Trinity turned around and counter-sued for $1 billion and the two sides have been entrenched in a legal battle since then.
The next court date in this case is scheduled for Jan. 3, 2023.
A new ownership group would no doubt want some clarity on that situation before moving forward.
What’s a realistic timeline for this to be completed?
The Jan. 3 court date shouldn’t be viewed as any kind of hard or fast deadline as it pertains to the sale of the franchise.
A realistic timeline for a sale to be completed is believed to be in the six-to-nine month range. There is a possible scenario where they agree in principle to sell the team sooner than that — but by the time all of the paperwork is done, we’re probably looking at a spring or summer deal.
There are often unseen hurdles and red tape to clear in financial transactions of this magnitude, and the fact that Melnyk passed away in March — leaving his estate to handle the matters — adds another layer of complexity to this situation.
(Photo: Andre Ringuette/NHLI via Getty Images)