The Senators’ sale to Ottawa has been remarkably quiet this week.
Since it was supposed to be a lively week for sales, it was strangely quiet. But that does not mean that there is no background news that could help explain the delay.
the athlete He can confirm that representatives of the Sparks ownership group have been actively seeking local partners and investors this week — even reaching parties already connected to other active deals in the sale.
The Sparks Group has also tried aggressively soliciting partnerships with investors not currently affiliated with any competing offerings, in an effort to strike deals with Canadian partners. In their contacts with potential investors, Sparks officials acknowledge that they have secured international funding for their bids, but are specifically looking for other Canadian investors to join their roster.
Currently, the Sparks are one of four finalists to buy the Ottawa Senators, along with Michael Andlauer, Steve Apostolopoulos, and the Kimmel family. The sale is made by New York-based Galatioto Sports Partners (GSP).
in the past two days, the athlete Speak with several people directly related to the sale of the Senators to try to better understand why things are stagnant. They spoke on condition of anonymity because they were not authorized to speak publicly. It’s true to say there was confusion and frustration from some of the other bidders in the process, especially with Sparks being allowed to add investors to their list — in a very public way.
We’ve closed the two week mark since these submissions were submitted and don’t seem to be any closer to a solution.
And the news that Sparks are actively knocking on their doors this week to find partners is sure to raise an avalanche of questions for Ottawa fans.
How can they be allowed to do that at this point?
Why do they do this?
Does this mean that their offer is not financially stable?
These are all fair and reasonable questions, but since the sale is hidden in silence, we’re left to play the guessing game.
So let’s do our best to read the tea leaves and make an educated guess as to what might be going on behind the scenes. To be clear, these are just theories. I’m wrong about why the Sparks group survived the operation, despite the red flags that seem to surround their program.
1. Sparks Group gave GSP and Melnyk something to look at
The obvious question everyone is asking is, “Why are these guys still alive now?” »
If their finances had been shaky or their presentation too detail-oriented, they would have been kicked out of the process a few days earlier. The NHL, GSP and Melnyk just don’t have time to sit and think about a fake offer. They’ve been on this road before with John Spano, and he certainly doesn’t expect them to get burned again in 2023.
So how does the Sparks group stay alive if it’s looking for partners and investors this week?
For starters, Goldman Sachs is Sparks’ offering to the table and is one of the most reputable financial institutions in the world. If it’s a quick process, they’ve somehow convinced one of the most powerful banks in the world to play along. And this feat alone is worthy of a 30-for-the-future 30 documentary or article.
But let’s dive into a plausible scenario of how this show could have happened.
The Sparks may have increased their bid over the past week, reaching a point where they made an offer so lucrative and all-encompassing that league officials had no choice but to consider it seriously. They may have outgrown the billion dollar lineup and now Sparks Group is the club leader in terms of the current offer on the table. Enough people involved in the operation—not connected to the Sparks group—say it’s the only way to survive.
He put on a bold and flashy show that the league could not refuse.
Of course, these types of transactions can be very complex. A complex rendering requires more time and due diligence, and thus a reasonable explanation for the current delay.
But as many sources are quick to point out, these types of transactions also come with inherent risks.
As I explained last week, the higher the bid, the more likely you are to benefit from a higher leverage ratio.
As Irwin Kitchener, who works for the New York law firm Herrick Feinstein LLP, told me, billion-dollar stratospheric offers usually come with a percentage of the debt.
“It would be unusual not to have a certain level of funding for something like this,” Kishner said.
So it’s safe to say that all of these offers will carry a percentage of debt.
The key, of course, is that you want that percentage to be as small as possible. The league should want to avoid a situation where the new ownership group actually starts with $300 million in the hole. If 30% of your $1 billion bid is filled in loans and debts, that’s exactly where you’ll be located.
And maybe that’s what GSP, Melnyk’s ownership, and the NHL are thinking now. Can we live with so much debt? Are we comfortable with Sparks’ risk-reward ratio?
It certainly wasn’t a quick rejection of Sparks’ offer, which leads me to believe they may have a solid offer on the table.
2. There is a row at the table
It must be remembered that there are many parties around the table.
GSP is the company handling the sale, but it operates under Melnyk family ownership. Sheldon Blainer is the attorney for this estate, but it’s also worth remembering that Melnick’s daughters, Anna and Olivia, also have a say in this deal. The NHL has a vested interest in this outcome, knowing that this sale is subject to board approval at some point down the road. The league wants an orderly and clean sale that simply requires a three-quarters seal from the league’s referees.
But suppose there is friction on the table for a while.
What if Anna and Olivia had a vision of how this could happen and it went against what Blair, GSP, or the League recommended? I often thought of something I wrote in March 2022, shortly after the death of Eugene Melnyk. I’ve had conversations with people about the Melnyk girls and their interest in keeping a stake in the franchise. What I wrote about Olivia training with the club has always stuck with me:
A source indicated that Olivia wants to move the club in a more forward-thinking direction when it comes to diversity, equity and inclusion initiatives. She seemed very interested in changing the hockey club’s hiring practices to create a more diverse workplace. »
So what if the Melnyk girls naturally gravitated toward selling the team to the Sparks group, but the other officials sitting at the table told them it was a risky business? This could also explain such a delay. This could explain why the Sparks group survived the operation.
Sparks’ show clearly highlights diversity and inclusion, even going so far as to create a working relationship with local First Nations group Kitigan Zibi Anishinābeg. This type of scenario might appeal to Anna and Olivia, who are clearly forward-thinking young women with a sincere desire to improve the hockey scene.
But in the NHL, money often replaces ideals.
And if the Sparks offer was deemed too unstable, banks, lawyers and the league wouldn’t sign, no matter what scenarios involved.
3. It’s all just one last squeeze of money
Time and time again, people have asked, “How can the Sparks Group continue to add investors beyond the deadline?”
As one source bluntly told me, “There are no rules. The only rule is price maximization.”
Let’s be clear, if adding people to the group after the deadline is against the rules, the Sparks group will now be disqualified. The group made it public last week by announcing several high-profile names. And we were able to confirm that the band is particularly looking forward to doing just that this week. If it is against the rules, the offer will be rejected in a short time.
But maybe it’s all part of GSP’s master plan to help raise the price of the franchise.
Again, without realizing the actual numbers or metrics for each show, it looks like we’re pushing the billion dollar mark for this franchise. If Sparks is allowed to add investors near the finish line, it could prompt other bidders to raise their bids one last time this week.
Of course, the SPG must be wary of the opposite effect happening. Other bidders may be affected by the process drawn up in this way and may choose to simply stick to the number they have submitted.
(Photo: André Ringuette/NHLI via Getty Images)
