As writers on this site, we straddle a line. On the one hand, we’re supposed to provide journalistic content. This means bringing you news and facts about the Ottawa Senators. On the other hand, we’re also fans, and as such, we often bring opinions that only a fan would. We’re passionate about this team (as are all of you!), and sometimes that affects how we cover a story. This article here is firmly in the “I’m a fan” category of my writing.
Also, to Eugene Melnyk’s... credit?... this article had been stewing in my head for a while. I figured it made the most sense to write a true #MelnykOut article once the trade deadline and all its excitement passed. However, a recent development convinced me to bump up this article:
Things are only getting worse with this franchise, so I think it’s time to state that the owner needs to go. But first, time for a little research into what we know about the problems with his ownership.
Eugene Melnyk’s last tenure as a CEO ended terribly. Biovail settled for $10-million because they “repeatedly overstated earnings and hid losses in order to deceive investors”. Melnyk himself had to pay a $565,000 fine and was banned from executive roles in publicly-traded Canadian companies for five years. He quit as CEO in 2004 and chariman in 2009 when Biovail stocks never recovered as he’d expected. I hadn’t thought about this before, but repeated misleading of investors kind of puts into question all of Melnyk’s public accounting to the Sens’ finances.
Eugene Melnyk has liquidated nearly every non-Sens asset he owns. He sold his racing and breeding stock (of horses) back in 2014 after being in the business since 2001 (though he has bought his way back into breeding horses to sell). His $1.5-billion in Biovail shares dropped in value to $600-million under his watch, but he refused to sell them until a hostile takeover and renaming as Valeant Pharmaceuticals — he sold them at $20 per share, less than one-fifth of what they were back up to by early 2013. His only ongoing ventures seem to be two small pharmaceutical startups, but even those he’s quietly sold shares in to help finance himself. His activities seem to be those of a person who is bleeding money and desperately trying to stay afloat.
Melnyk’s financial situation appears dire. Despite his estimated $1.5-billion net worth when he bought the Sens, Melnyk still decided to do nearly half the purchase in debt. He has had to routinely refinance and restructure his debt. He’s had to keep getting extensions on his debt repayment. He reportedly got very upset at Scotiabank over how they were handling his debt, tore up their arena naming agreement (selling the rights to Canadian Tire), and tried to remove their presence completely from the arena before Bettman forced him to not alienate the exclusive Canadian bank sponsor of the NHL. Travis Yost has commented that the interest rates on Melnyk’s most recent loans are “bordering on predatory”. And let’s not forget that the last time Yost reported on Melnyk’s lack of finances, all of his articles were erased due to hacking by a mysterious Ukrainian IP address. He seems to be out of cash, and is financing the Sens with increasingly impossible loans.
The Sens’ front office is a mess. Long-time president Cyril Leeder was fired in January 2017, reached a severance agreement seven months later, and has thrown shade at Melnyk on Twitter ever since. Tom Anselmi was brought in to replace Leeder and resigned just over a year later, with some saying it was in part due to him being used to a much bigger staff (and perhaps because he expected to go to Sweden?). Erin Crowe quit as CFO after 18 years on the job; her replacement, Stephen Brooks, lasted 14 months in the position. Scouts have left for greener pastures. Peter O’Leary, former Chief Marketing Officer among other roles, has an ongoing $1.55-million lawsuit alleging wrongful dismissal and an unbearable work atmosphere due to Melnyk’s actions. And as Melnyk himself said at the outdoor game, he’s cut the staff back to the bare bones. Even the GM himself was scouting in Europe earlier this season! It looks like a lack of money and the owner’s own behaviour have turned the Sens into a relatively undesirable place to work.
I hope most of you will agree with me that the Sens are a financial mess. All the evidence we have points toward a debt-laden owner with a mess of a stripped-down staff. I’d now like to move into discussing my fears about the team. With an owner with no money to spend, we’re never going to see a good team. Firing Guy Boucher won’t matter, because Melnyk will want to replace him with a cheaper coach. It’s not worth talking about GMs, because Pierre Dorion just got a three-year extension. Everything this team does has an eye on saving money in the short-term. The team was reportedly shopping Mike Hoffman, mostly because he makes $5.65M and teams would want to trade for him. The trade of Dion Phaneuf, serviceable NHL defenceman, for Marian Gaborik, ghost of an NHL scorer, happened for financial reasons that could have been accomplished much more easily without the Phaneuf trade:
Assuming the Sens buy out Gaborik this summer, the team's decision not to buy out Cowen, Michalek and Greening in the 2016 offseason will have cost the organization $18,824,572.— The 6th Sens (@6thSens) February 17, 2018
I can’t help but look at Erik Karlsson’s future as a lose-lose. If the team keeps him at, say, $12M per year, there’d be no money to surround him with any talent. If they trade him, what do we hope to get back? Draft picks are only useful if the team can actually pay amateur scouts. Trading for prospects or roster players is best done with professional scouts to evaluate those players ahead of time. Without budget to pay for these staff members, I don’t see the point in hoping for good things. This team needs to get lucky and draft a roster full of star-quality players on ELCs to compete.
Thankfully, it’s not all bleak. It was wonderful to see #MelnykOut trend after his outburst and the outdoor game, but I don’t think that’s enough. Melnyk has never been one to cave to public pressure. He’s always seemed proud, and often seems to say or do things in defiance of public opinion. At this point, he’s not going to be hurt by people saying mean things about him. It may even motivate him to keep the team as long as possible to spite the haters.
No, I believe the time has come to hurt him where it matters: his wallet. Our only hope for a competitive team is to get a new owner, and for that to happen someone needs to force him him to sell the team. It’s unlikely the NHL does this. Our best bet seems to be if his creditors decide to collect on their debt, forcing him to sell the franchise. He’s threatened relocation, but I don’t see how his creditors would accept that as a debt-paying solution. As a fanbase, I think we need to deliberately start giving the Sens less money. That doesn’t mean stop going to games completely - I realize that if you’re reading a blog, it’s one of your favourite things to do. But maybe go to fewer. Maybe don’t buy a jersey. If we all join together, we can maybe force Melnyk into a place where he has no choice but to sell.
Maybe I’m too down on things, but I don’t see this team ever being good as long as Melnyk’s in charge. His appointment of himself as CEO is just the latest in a long line of poor decisions by a man without enough money to run this franchise anyway. I say enough is enough, which means it’s time to starve him out.