Houston Senators? Senators Future in Doubt as Finance Plan Fails Reuters OTTAWA - The future of the Ottawa Senators of the National Hockey League is once again in doubt after a plan to refinance the troubled franchise fell apart. According to The Globe and Mail newspaper, a complicated deal involving the sale of the team by majority owner Rod Bryden to a limited partnership for C$186.7 million ($118.2 million) fell apart on Tuesday. The terms included injecting C$42 million into the team and paying off C$14.3 million given to it from the NHL. According to TSN, Canada's national sports television network, Senators' players did not receive their checks on Wednesday as the club missed its payroll due to the collapse of the deal, which would have injected badly needed cash into the franchise. In lieu of payment, TSN reported, the Senators received a letter explaining the current situation. "The transaction will not proceed," Gordon Fox of Norfolk Capital Partners, which managed the limited partnership, told The Globe and Mail. "It's a sad story for everyone." The NHL confirmed on Wednesday that the re-financing of the Senators had fallen through. Bryden and the Senators have not commented on the latest developments. The Senators have been in financial difficulties for several years and the team's creditors will now have to look for a new buyer for the team. The team attempted another refinancing package earlier in 2002 but it fell through when Covanta Energy Corp., a U.S. company that is a major lender to the team, filed for bankruptcy protection in April. ($1-1.579 Canadian Dollar)
All I have to say is that the Sens had better not leave Ottawa. If they do, I'm going to kick somebody's butt.
I can’t figure out why the Sens are having any more trouble than other small market teams. They’ve got a beautiful quite new rink. They’ve got an affluent city of hockey fans. They’ve got pretty good attendance. They probably don’t have the same number of ultra rich, potential owner types that Calgary and Edmonton have, but the metro area has the highest average income in Canada. So what gives?! About the name. There was a team named the Ottawa Senators before the times of the “original six,” and resurrecting the name was a big part of the push to get a new franchise. I don’t know for sure where the name first came from, but Ottawa is our nation’s capital and one of our two governing houses, both located in Ottawa, is the Senate. As far as the logo goes, I guess they thought that a Roman Senator would be more fearsome than an old wrinkly politician.
Hasn't part of the problem with the Sens been the shiny new building, since it was privately financed (as is the prevailing custom in the Great White North) and the taxes involved with the building, as well as the team itself?
That’s true. And yes there is a real lack of willingness on the part of the Canadian taxpayer to give many breaks to multimillionaires, both owners and players, but that’s true in all parts of the country. They may well be paying more rent than the Flames or the Oilers, and it also looks like they’ve just been having some bad luck getting their debt restructured. http://ottawa.cbc.ca/template/servlet/View?filename=ot_sens20030102
Northstar -- You know very well that this isn't exactly "Another NHL team in trouble." The title should be "Another NHL team in Trouble failing to get out of trouble, again." As the article says, the Senators have been in trouble for a while, and have been held together by bandaids and the dedication of some local business people. Grizzled, it's my understanding that the Senator's problems are due primarily to two factors: 1) a falling Canadian dollar, and 2)the Canadian tax system. 1) The falling Canadian Dollar: The Canadian Dollar has been weak relative to the US dollar for a while. While foreign currency transactions don't have a direct, noticible effect on most of us, it does on the Canadian NHL hockey teams. They have to compete with the US NHL clubs for players, and pay them in US dollars. Unfortunately, their fans pay for tickets, and advertisers buy advertising, in Canadian Dollars. Since you can't convert the ticket prices, the teams have to absorb the loss. The NHL has worked on a subsidy system, but otherwise there's not much anyone can do to fix this. 2) The Canadian Tax system: The Canadian government is more socialist than the US government. It places a greater tax burden on its citizens, but at the same time, provides services the US government doesn't (like 100% government funded healthcare). Businesses in general, pay more in tax than their US counterparts. However, the hockey franchises (and other similar businesses) must pay entertainment and other taxes. They also pay these taxes on three levels (natonal, province, and local.) The trick is that many of these taxes are based on revenue, not on income as they are in the US. So even if a team posts a loss, they still pay the same taxes. I've read that the Senators pay something like $9 mil a year in franchise taxes, where if it was in the US it would pay $0 in income taxes. (Considering they've been posting $10 mil ish losses, you can see why there is a concern.) In fact, each of the Canadian franchises pays more business tax than all of the US franchises combined. Add to that the problem of high taxes on the players. Again, the Canadian teams are competing with US teams for talent, so the teams themselves are forced to offset the difference. (No one is going to agree to $50,000 more a year to play for the Senators than the Blackhawks if they have to pay $300,000 more a year in taxes. If the Senators want the player, they have to pay the $300,000 in additional taxes.) If the Canadian Franchises are to be successful, they have to have a more level playing field. Under the current conditions, they have a huge handicap in competing for players -- in the 8 digit range. That includes Hockey, Baseball, AND Basketball. However, many Canadians have the same outlook as GoGrizz! -- I'm not giving a tax break to millionaires. Unless something gives, teams like the Expos, Senators, and Flames are going to move south, while the more successful clubs will strugle to survive.
The Aeros are my favorite hockey team... The Senators are my favorite NHL team... It would be cool to have the Senators here... but nobody will go to Aeros games, and they would have to move, and that would suck ass.
DC Sports raises good points about the challenges facing Canadian teams -- however, the unwillingness to subsidize pro sports is also a huge factor. I'm told that through deferrals and other means beyond my comprehension, the tax athletes’ pay can be kept comparable to the tax in higher US tax states, like New York and California. There's not much the teams can do about the falling Canuck buck. The US is very sports crazy -- as some of you prove out each day -- and some cities seems willing to provide top of the line taxpayer funded stadiums as well as tremendous operating benefits to the teams that just would not be acceptable up North. US corporations also tend to be much more generous towards sports then corporations of other countries. It's a different way of thinking. Would Houston have kept the Rockets (Astros?; Oilers (oops)?) if the city hadn't generously provided publicly funded stadiums? It's a weird world. PS -- This is somewhat the same issue Buffalo is facing -- and they're not even Canadian -- though they probably wish they were .
The arguements about whether teams should move or not aside - If you had to have a relocated team, they'd be a good choice. One thing in their favor, is that the Canadian teams have good depth. They focus (out of necessity) on building their farm systems and developing players. Unfortunately, they loose the best as soon as free agency hits. As a result, they have a lot of good players, but few great ones. The Senators, transplanted to Houston, Portland, or wherever, with a little cash and a few star free agents injected into the lineup, could be a good team.
New Sens financing deal close: NHL TORONTO (CP) -- A new financing arrangement for the troubled Ottawa Senators could be in place by the middle of next week, the National Hockey League said Friday. NHL commissioner Gary Bettman made the announcement in a brief statement after a meeting between the team and its creditors at the league's head office in New York. The meeting included Senators chairman and owner Rod Bryden and major creditors CIBC, Fleet National Bank and Covanta Energy Corp. A new deal to inject money into the top-level team would replace a defunct $234-million financing plan that fell apart on New Year's Eve. That deal would have injected $42 million into the club to cover operating expenses -- including missed salaries to players this week -- and payments to keep its loans current. "We met with all the interested parties and discussed a framework for providing financing that would enable the club to become current on its obligations," Bettman said. "It is our hope that the financing can be arranged and finalized by the middle of next week." With 53 points, the Senators sit atop the NHL's standings this year and have been drawing good crowds, with a comparatively modest payroll. However, the club's heavy debts -- estimated to be about $160 million -- have made it impossible for the team to make money. Bettman did not elaborate on what financing deal could be approved. A report published Friday by Sun Media suggested the NHL could help Senators owner Rod Bryden secure a short-term loan from a big American bank and give him additional time to prepare a more detailed refinancing plan. Others have speculated that the Senators might opt to seek bankruptcy protection from creditors to allow the team to continue operating while it restructures its debts. The $234-million financing deal -- which involved about 650 investors buying units in the team that would give them Canadian tax writeoffs, largely on the depreciation of 47 Senators player contracts -- will not be revived, according to sources. That deal hinged on a Dec. 31 completion so investors could enjoy the tax benefits for the 2002 taxation year. It also required approval by Fleet and CIBC -- owed a total of $60 million by the Senators. Boston-based Fleet has said it was not alone in rejecting the deal. Covanta has lent money to the Senators over the years -- including funds for its initial $50-million US expansion fee, paid in 1991. But the U.S. company was forced into bankruptcy protection last spring, killing a financing deal similar to the one that died Dec. 31. One source close to the later deal said only $12 million of the $42 million in funds geared for the team would have gone to top creditors: the National Hockey League, owed $14.3 million; Fleet, owed $20 million; and CIBC, owed $40 million. The banks were unwilling to exchange the security of their loans for a risk the Senators can turn a profit after years of operating losses. The creditors also disagreed over who would get what under the terms of the deal, said a source familiar with the talks. "There was only so much money to go around," the source said Friday. "The question was who was going to get what?" The Ottawa team has hung on by a financial thread since Canada's capital city was granted the franchise in 1990. Many observers criticized the choice of Ottawa, saying the community was too small to support professional hockey. Proponents argued that the federal government and growing high-tech base would offer strong support. Initial plans by real estate firm Terrace Investments called for a 240-hectare, commercial and residential community named West Terrace -- a mini-city of parks, office buildings and malls -- built around an arena. Those plans were drastically scaled back after provincial regulators and the Corel Centre's seating capacity was scaled back by 4,000 to 18,500. Its grand plans downsized, Terrace turned to outside investors to help build the arena, which ended up costing about $225 million, about $100 million more than first estimated. About half of Terrace was later sold to Bryden. Further financing problems pushed back the start of the Corel Centre's construction to July 1994. This forced the team to stay longer than initially planned at the 10,500-seat Civic Centre, impacting revenues. Club expenses also rose along with player salaries -- now averaging well over the $1-million US mark and paid in American funds while revenues are collected in the weaker Canadian currency. Very public attempts by Bryden in 1999 to sway the federal government into offering financial support for Canadian sports teams fell apart. Meanwhile, banks have been under increasing pressure to clean up their loan portfolios after a year in which Canada's biggest banks took writedowns on bad loans to the telecom and energy sectors. CIBC's total corporate and government loans at the end of 2002 amounted to about $42 billion. "On a whole, it's a relatively small portion of their loan book," said a Bay Street analyst who follows CIBC, adding however that the terms of the loan were likely quite high in a business that typically operates under "razor-thin margins." Those high rates on the loans would in turn put even further financial pressure on a team whose operating losses have piled up in recent years. "It's a vicious circle." A spokesman for Finance Minister John Manley -- who spoke to CIBC chief executive John Hunkin this week on the status of the Senators' financing talks -- said Ottawa is not considering putting cash on the table to protect the franchise.
dc sports: You make some good points, but those conditions apply to all Canadian teams. Calgary and Edmonton are about the same size cities as Ottawa so I found it surpassing that Ottawa was having so much trouble. (Calgary and Edmonton have their troubles, mind you, but they’re not bouncing cheques.) I head a news clip the other day where they were explaining that the Senators were largely debt financed, so that is probably the key difference. Calgary and Edmonton are owned outright by partnerships of local multimillionaires, who try not to lose any money but sure aren’t making any. The banks, however, demand their return on investment.
Bouncing Cheques. I am a Canadian fans, and we go to the Molson Centre to watch them. Centre. Even funnier. btw, I thought the Canadians were sold to some American?
Are you in Montreal? Yes the Canadians are owned by an American, as are the Canucks. And I take it you’re making fun of my Canadianisms? Try this. I’m sitting here in my housecoat and toque (the boiler is out) on the chesterfield in my duplex here in Cowtown, eating backbacon and tomato on brown with scads of poutine, a Nanaimo bar and a glass of homo (and a mickey of Screech for later). I’m watching Iggy dipsy-doodle and deke. Those who said he was a one year wonder don’t know dick. I’m also contemplating whether a ghost car had followed me home today. Maybe CSIS is on my case because I don’t support the Grits? While flexing my Molson muscle I’m also wondering how I can translate all this for you folk on cc.net. American lingo and spelling is a b****, eh? (note: poetic licence taken) If my Canadian English guide is correct, non-Canadians are going to have a hard time figuring out what I just said, but it’s all spelled correctly.
First of all. No, i live in Houston. Second of all, what the hell did you just say? I think it says you're eating a hamburger with a gay person, I think? And you want to doodle him on some grits? And you have a fat stomach.
These are all words that are apparently uniquely or predominantly used in Canada. Some I knew were Canadianisms. Most I had no idea. housecoat -> what you would probably call a bath robe or a house robe toque -> a knitted hat that is used to keep you head and ears warm in winter. I see lots of American hip-hop guys wearing them and I can’t help but laugh. Where on earth did that trend come from? chesterfield -> a couch or sofa duplex -> I’m not sure what you call this. A side-by-side? It’s a single structure that has two housing units/homes in it that are side by side and share an common wall. (I actually own a condo, not a duplex, but I think you know what a condo is.) Cowtown -> a common name for Calgary backbacon -> I believe you call it Canadian bacon. We never call it Canadian bacon. We call it backbacon “on brown” -> means on brown bread, which for you would be whole wheat or 60% whole wheat bread. scads -> lots, an abundance of something poutine -> French fries smothered in cheese curds and gravy. It’ll clog your arteries in the blink of an eye. Nanaimo bar -> an exquisite desert square that originated in Nanaimo BC homo -> homogenised whole milk mickey -> 13oz (375 ml) bottle of hard liquor Screech -> Famous Newfoundland Rum (and if you go there to drink it, you may have to get intimate with a cod fish first) Iggy -> Jerome Iginla dipsy-doodle and deke -> hockey terms for pulling a move on another player, faking him out. “don’t know dick” -> means “don’t know anything” ghost car -> an unmarked police car CSIS -> Canada’s spy agency. Yes we have one. You can stop laughing now. Grits -> a common name for a political party (the Liberals) in Canada, like the GOP Molson muscle -> you got this one right. eh? -> the true meaning of this word is actually a national secret that all Canadians have sworn not to reveal. Did you know any of these? bnb & fadeaway: Are there any of these that you didn't know?
