Greg Patterson

1

ase Study

• By
• Greg Patterson
• Kate Livesey
• John Watson

2
Agenda

• Senators Now
• Issues to be solved
• Background - Ottawa Senators and Corel Center
• Problems Involved
• The Senators and The Corel Center
• NHL in Canada
• Financials and sensitivity analysis
• Recommendations
• Conclusions

3
The Senators now

• Established on December 6, 1990
• Last year they clinched a playoff spot
• 2 Seasons highs goals scored
• They finished 41-30-11-2 with 95 points
• Finished 2nd in the Northeast Division (5 points
  Behind Toronto!!!)
• Averaged 17,509 fans/game (out of a possible
  18,500 fans), 13 sell-outs, 3 growth rate in
  attendance.

4
Issues to be solved

• Question 1 What are some of the negative
  factors affecting the Ottawa Senators and the
  Corel Center currently?
• Question 2 Are the Ottawa Senators and the
  Corel Center a profitable investment?
• Question 3 Regardless of whether or not its
  profitable, what are some possible
  recommendations to make it more profitable?

5
Background

• A vision was formedNHL in Ottawa
• A letter was written
• Press Conference
• Plans unveiled for Kanata, 600 Acres
• Horizon Investments David Peterson - Full
  support
• Horizon receives invitation
• 100 acres rezoned for MCF

1987 June 12/89 Sept 6/89 Nov. 28/89 May
7/90 May 31/90 June 30/90
6
To get a Perspective
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Horizon Development Plan

• Legend
•  
• Green Hi-tech sector
• Yellow Residential
• Red Palladium
• Pink Shopping

8
Background Cont

• 11,000 pledges for seasons tickets
• Lease negotiated with Civic Center
• Horizon Officials, 150 Supporters,marching
• band travel to Palm Beach
• 45 min. presentation to board of Governors
• Awarded the NHL franchise

Nov 6/90 Nov 14/90 Dec 2/90 Dec 5/90 Dec 6/90
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Problems

• The tough taxes (PAT, GST,PST, property,
  infrastructure) which give American teams a
  benefit over Canadian teams.
• TV Rights (National vs. Local)
• West Side of the Corel Center (no signage)
• US/CAN exchange differential
• (Cdn64.5 / US1)

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1) Do these problems cause the Ottawa Senators
and Corel Center to be an unprofitable
investment?2) Would you buy the Senators and
Corel Center NOW?
11
Some Numbers
12
Financial Data

• Stable Growth Model Spreadsheet
• Assumptions
• Sensitivity Analysis
• Value of the firm
• The future of the Ottawa Senators and Corel
  Center
• If everything remains the same
• EBITDA

13
Why else would one buy the Ottawa Senators and
Corel Center?

• Core Competencies
• Winning games points, good quality players
• Having different events at the Corel Center
• Excellent Managementtight budgets, good
  marketing and signage
• Excellent marketing with manipulation of the
  Senators appearance
• Use to be Come see your favourite team play the
  Senators, Now its Come see the Senators

14
Why else?

• 30 population growth over the next 10 years.
• Ottawa is the third largest tourist city in
  Canada with many tourist attractions including
  museums, Winterlude, beautiful parliament
  buildings, etc.
• Large population within 70 mile radius
• Major international airport
• Government workers and high-tech

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Recommendations

• Treat owning a hockey team like owning a
  business, apply all other business practices you
  would if you wanted it to be profitable.
• -Youre selling sizzle not steak - Barb Smith.
  Its a service industry

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Recommendations Contd.

• Pro-Line sharing profits (trademark)
• Lobbying
• TV rights (National vs. Local)
• Signage on West side
• Taxes (amusement, infrastructure)
• Gambling on-line NHL.com
• Hockey Channel or website
• NBA to share the Corel Center

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Recommendations ContdMarketing and Sales
Strategies

• Market to higher salaried individuals
• Want to teach viewers that keeping salaries down
  keep ticket prices down
• increase the happiness our fans if they
  understand and also make them understand with an
  increase in salaries the fans have to pay for it.
  
• Sale and Lease Back to City

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• Ottawa loves its hockey!!!
• All the difficulties
• Economic Impact

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Conclusions

• Value of the firm is positive
• The EBITDA will be positive this year if Senators
  make the playoffs
• Ottawa is a good market for another Professional
  sports team -gt Increased Profits
• The team and building werent bought to make
  money on, it was bought to increase the value of
  the surrounding land therefore increasing their
  profits on the whole.

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The End