- The Washington Times - Sunday, January 12, 2003

The now-bankrupt Ottawa Senators have done almost everything right.
The club operates lean, does not pay mega-salaries and boasts one of the best talent development systems in the NHL. The Senators' $30.3million payroll is the sixth lowest in the league, and the club is an annual leader in the cost-per-win ratio given a strong history of regular season-success. Attendance, though at brief times a struggle, has not dipped below 16,500 per game since 1997 and stayed above the league average in that time.
So what went wrong? How could such an efficient, results-driven organization fall into such disarray, amass more than $100million in debt and even fail to pay its players Jan.1?
The Senators, led by owner Rod Bryden, made two critical errors that now threaten the fate of the club in Ottawa and even its very existence: an uncontrolled accumulation of debt and an unrealistic assessment of the average Senators fan.
Nearly every pro sports franchise carries some significant debt. Whether it be building loans, deferred salaries or the acquisition of the team itself, no pro sports team owner pays for everything in full up front. There is also a major difference between good debt and bad debt. Good debt can be handled and often provides meaningful tax advantages, similar to interest on a home mortgage. Bad debt, in its simplest terms, is any debt that cannot be systematically and meaningfully paid down over time.
Bryden showed an all too unhealthy willingness to take on bad debt, not dissimilar to someone running up a massive credit card bill. Bryden borrowed to gain the expansion franchise in 1991. He borrowed to have Corel Centre built in 1996. He borrowed to pay the team's share of a highway overpass that serves only the arena. And he borrowed to cover the Senators' operating losses.
Not surprisingly, there was not nearly enough revenue to carry the nine-figure burden of debt. The team has never advanced deep into the playoffs to accumulate extra funds from postseason home games. And given that the NHL generates only a fraction of the TV revenue of the NFL, NBA and Major League Baseball, fighting against that debt was essentially just ticket and luxury seat sales, sponsorships and some local broadcasting revenue.
The club has lost money in each season of its 11-year existence.
"It is indeed unfortunate that both the club and arena have been undercapitalized since their inception," said Bob Goodenow, executive director of the NHL Players Association.
Bryden also has showed a remarkable amount of hubris toward the Senators' fan base in recent years. Three seasons ago, he conducted a full-throttle ticket sales drive in which relocation of the club was offered as a thinly veiled threat for fans failing to pay up. Since then, Bryden has kept up the pressure on Ottawa area fans and businesses to buy season tickets at a rate outstripping both the league average and the economic might of the Ottawa market.
Again last week, Bryden put much of the onus regarding the Senators' future squarely on the shoulders of the average fan.
"Ottawa has to make a decision and take some action," Bryden said. "If you want to convince an investor to keep the team here, you can't do it with empty seats."
This last part is a shining example of where pro sports has failed and Hollywood has thrived. Instead of demanding that people come out win or lose regardless of the fan experience, Hollywood has fallen all over itself trying to create movies people actually want to see even when some of those films couldn't be interpreted as art by anyone. Hollywood generated a record $9.4billion last year in U.S. ticket sales.
"It's always been 'we'll worry about it later' with the Senators," said Jeff Citron, former attorney for the NHL Players Association and now a Toronto-based corporate finance lawyer. "Well, later has now arrived, and it's going to very tough for them."

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