By –Greg Patterson –Kate Livesey –John Watson ase Study

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

The Senators now… Established on December 6, 1990 Last year they clinched a playoff spot 2 Seasons highs – goals scored They finished with 95 points Finished 2 nd 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.

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 it’s profitable, what are some possible recommendations to make it more profitable?

Background A vision was formed…NHL 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:

To get a Perspective…

Horizon Development Plan Legend: Green: Hi-tech sector Yellow: Residential Red: Palladium Pink: Shopping

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:

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 –(Cdn$64.5 / US$1)

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?

Some Numbers…

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

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 Management–tight 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 it’s “Come see the Senators”

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

Recommendations Treat owning a hockey team like owning a business, apply all other business practices you would if you wanted it to be profitable. -“You’re selling sizzle not steak” - Barb Smith. It’s a service industry

Recommendations Cont’d. 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

Recommendations Cont’d… Marketing 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

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

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 -> Increased Profits The team and building weren’t bought to make money on, it was bought to increase the value of the surrounding land therefore increasing their profits on the whole.

The End