Senators Ownership Problem Is an NHL Problem

A few weeks back, Eugene Melnyk, the owner of the Ottawa Senators, was sued by Connecticut-based casino Mohegan Sun for failing to pay $900,000 that tracks back to 2017. According to the court documents from July, he tried to pay the casino back in bank drafts but it was “dishonored” by the bank. His defense claimed that the casino declined to cash out his chips when he was winning and that caused him to suffer the loss in the casino.

This is certainly not the first time that the Senator’s owner has been in hot water. When trying to negotiate a new arena for his team, he was sued for $1 billion in damages. The claim against him was that he tried to get the arena paid by the city and the third party for $500 million while also getting 30 years’ worth of free rent.

Senators tracking behind NHL average since 2013

Melnyk has been the owner of the Senators since he purchased the team in 2003 for $100 million. When he acquired the Senators, they were a bankrupt franchise on the brink of financial ruin. Currently, according to Forbes, the franchise is valued at $435 million, approximately $200 million less than the NHL league average.

Senators Franchise Value Affected by Investment Problem

That lack of franchise value has had a lot to do with the financial trouble that the Senators have had to deal with over the years. For the 2019-20 season, the team ranks dead last in the NHL for salary with $70.9M on the books. Over $10 million in projected cap space. That makes three consecutive seasons in which the Senators have ranked in the bottom five teams in the NHL in terms of salary spending.

Related: NHL Attendance leaves A lot to be Desired

In addition to the lack of spending in recent years, the aging Canadian Tire Centre continues to get older and older. Built in 1996, the 17,000-seat venue is now 23 years old and efforts to land a new venue have failed. Compounding all of these issues is poor attendance numbers. The Senators posted the lowest attendance numbers since they moved to the venue and ranked 27th in the NHL with 14,553 in attendance. Based on the current capacity of the venue, that is an 85% capacity rating. But here’s the catch, the venue used to hold more fans.

Toronto Maple Leafs right wing Ilya Mikheyev celebrates his first NHL career goal with teammates Tyson Barrie and Trevor Moore (THE CANADIAN PRESS/Nathan Denette)

In 2017, Melnyk reduced the capacity of the venue by 1,500 fans by covering seats in the upper bowl with tarps. Based on the previous attendance numbers, the totals would have been a 78% venue capacity. Ottawa has been in the bottom half of the NHL in terms of average attendance every season since 2013-14 when they averaged 18,108 per game.

NHL Should Move on From Melnyk

Calling for an owner to sell a team is foolish. But for the NHL who is looking to grow the average value of a franchise and continue to build their brand, a major market like Ottawa needs to fire on all cylinders. Melnyk is in countless legal battles on the arena, casino, and trying to get back his private plane. As a whole, the NHL Board of Governors could force a sale of the team.

Forcing an owner to sell is tricky but possible. In 2009, the then-Phoenix Coyotes went through a bankruptcy period and then subsequent sale. That situation revealed a clause in the NHL by-laws that would allow the NHL Board of Governors to force a sale of a team.

Ottawa being for sale has been a circulated story in the past with the last big round of speculation coming in June of 2018. Those rumors were denied by both the NHL and the Senators, who completed a $135-million refinance around that time.

Saturday afternoon, the granddaughter of NFL owner Robert Kraft, Kathryn Kraft, posted a cryptic SnapChat from Ottawa that sent NHL Twitter into a frenzy. While the rumor was quickly dispelled, it did make it abundantly clear that there is a vocal part of the Senators fanbase who are looking for a change.

(Jean-Yves Ahern-USA TODAY Sports)

Kraft, who is worth $6.9 billion, would be in the right financial background of a potential suitor but his lack of connection to the City of Ottawa makes him an unlikely candidate.

Senators Ownership Situation Unlikely to be Resolved

With the NHL on the brink of potentially locking up a record national television deal after this season, the time to acquire a franchise is now. That being said, why would Melnyk sell? Despite little attempts to improve the product on the ice and the lack of capability of building a new venue, his team’s value has continued to slowly rise. The longer he waits, the more return he potentially has on his investment. From an NHL perspective, they need an owner who has the capital to spend on quality players while also having the ability to build a downtown arena.

Forcing out an owner is dangerous; if faced in a similar situation, the other NHL owners wouldn’t want the same happening to them. It is certainly in the best interest to move on from Melynyk but at this point, the NHL would have already done just that. If the on the ice product continues to struggle, as well as attendance and profits, maybe he will contemplate a sale. But at this point, the Senators continue to sit as a team at the bottom of the league with no hope in sight.