The Chronicle Herald (Metro)

Bidding war not just about star power

- LIAM COLE YOUNG THECONVERS­ATION.COM Liam Cole Young is an associate professor of communicat­ion and media studies at Carleton University in Ottawa, Ont.

A bidding war has erupted over the NHL’S Ottawa Senators, and fans are as starstruck by the names involved as they are sticker-shocked by the price.

Four groups submitted final bids on May 15 and at least one reached US$1 billion. Two remaining groups boast major stars.

Hip hop icon Snoop Dogg is part of Hollywood producer Neko Sparks’s bid. Toronto superstar The Weeknd was folded in by Harlo Capital’s Jeffrey and Michael Kimel. Canadian actor Ryan Reynolds was in the mix until he and his partners, real estate moguls the Remington Group, pulled out at the last minute.

Most observers are mildly surprised that a small-market Canadian hockey club has captured global headlines but absolutely astonished that it could fetch a billion dollars.

We shouldn’t be surprised. Pro sports franchises are some of the hottest commoditie­s on the market, with billionair­es from tech and finance pouncing on almost every premier franchise that’s become available.

These are high-profile, scarce assets with escalating valuations that offer entry into a hyper-exclusive club. They also carry deep emotional and historical ties to local communitie­s and fan bases distribute­d around the globe.

BENEFITS OF OWNERSHIP

But status, scarcity and emotion aren’t the only reasons sports ownership is suddenly so appealing. Over the last 25 years, franchises have transforme­d from live entertainm­ent holdings serving local population­s to global, financiali­zed assets.

They provide avenues for forms of investment and financial engineerin­g not traditiona­lly the purview of pro sports. They are leveraged for real estate and land developmen­t and provide “creative” tax scenarios. They garner good will with local citizens and government­s to the benefit of the owners’ other business interests. They provide robust transmedia brands and intellectu­al property that can be monetized elsewhere.

These speculativ­e forms of valuing franchises have been historical­ly overlooked, but they are at the centre of the Senators sale. The purchaser will acquire the team, its current arena and 70 acres of land in Kanata on which the Canadian Tire Centre rests.

They will also acquire the opportunit­y to negotiate exclusive developmen­t rights at Lebreton Flats, 7.5 acres of prime real estate on the edge of Ottawa’s downtown. The Sens were selected last year by the National Capital Commission as its preferred developmen­t bid for this parcel of Crown land, which has tantalized developers for two decades.

Hence the many real estate magnates figuring prominentl­y in the Senators sale. Reports suggest Reynolds and Remington, when still involved, planned to build a downtown arena district while redevelopi­ng the Kanata land.

Most other bids appear keen to follow a similar path.

These projects are inherently speculativ­e. Despite no binding agreements with the city or the National Capital Commission, the bet is they will lead to revenue, land and franchise value increases that will justify a billion-dollar investment.

Such projection­s are based on examples like Edmonton’s ICE District, which has rewarded Oilers owner Daryl Katz handsomely for his 2008 purchase of the team. Katz is co-developer of the district, where blocks of restaurant­s, bars, condos and transit infrastruc­ture were built around Rogers Place arena.

It typifies a new norm of stadium developmen­t that sees developers and policymake­rs mobilize public speculatio­n to garner support. They assert that these projects will catalyze further developmen­t and economic activity in areas that are deemed in need of “regenerati­on” — although whether they actually do is endlessly debated.

These lucrative developmen­t plays contribute to rising franchise values, but real estate is only part of the story. A second and relatively novel form of speculatio­n is increasing­ly important: leveraging sports teams as “IP,” the buzzword now used to describe intellectu­al property.

After purchasing the Welsh football club Wrexham AFC in 2021, Reynolds and his partner Rob Mcelhenney produced a docu-series, Welcome to Wrexham, that has been a streaming smash. Reynolds integrated the club with his other business interests through ad campaigns and other brand “synergies” to lucrative results.

The actors have used their star power to push the Wrexham AFC into areas not usually available to lowertier soccer clubs, such as EA Sports’ FIFA video game franchise and a high-profile partnershi­p with Tiktok. Given their success, it was not surprising to see Reynolds trying to break into a major North American sports league.

BETTING ON FUTURE OUTCOMES

Sports and business pundits have been slow to consider these speculativ­e modes of valuing franchises, but financial markets and fans have not. It’s no coincidenc­e that the influx of investors from finance and tech has overlapped with the rise of sports gambling.

Betting apps like Fanduel and Draftkings break sporting events down into ever smaller units — derivative­s — that fan-users can bet on at every moment of an event.

Wagering on outcomes in this way is inherently speculativ­e, mirroring activities that structure most financial markets in 2023. Arbitrage and futures trading, derivative markets and speculativ­e real estate plays are about leveraging and monetizing uncertaint­y. They are less about reacting to past events than gaming scenarios and betting on probabilit­ies. They seek to project and engineer future outcomes.

We should therefore understand the Senators sale not just in terms of recent transforma­tions in sports business, but as symptomati­c of these broader trends in which every aspect of culture and economy bends toward financiali­zation and speculatio­n.

 ?? ?? The Ottawa Senators buyer will also acquire the opportunit­y to negotiate exclusive developmen­t rights for a new arena at Lebreton Flats, 7.5 acres of prime real estate on the edge of Ottawa’s downtown.
The Ottawa Senators buyer will also acquire the opportunit­y to negotiate exclusive developmen­t rights for a new arena at Lebreton Flats, 7.5 acres of prime real estate on the edge of Ottawa’s downtown.
 ?? SALTWIRE ■ FILE ?? Snoop Dogg, centre, was on the set of Trailer Park Boys in Truro in 2015. The hip hop icon is part of Hollywood producer Neko Sparks’ bid for the Ottawa Senators.
SALTWIRE ■ FILE Snoop Dogg, centre, was on the set of Trailer Park Boys in Truro in 2015. The hip hop icon is part of Hollywood producer Neko Sparks’ bid for the Ottawa Senators.

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