Toronto-based businessman Michael Andlauer began his career trucking goods around the country, before expanding into merchant banking, pro sports, and health care. He would be wise to tap into all of his logistical know-how, given how many balls will be in the air after announcing his successful US$950-million bid for the Ottawa Senators on Tuesday.
Among the challenges: securing the approval of the National Hockey League’s board of governors, selling the 10-per-cent stake he holds in the Montreal Canadiens, navigating the unique federal and municipal obstacle course of Ottawa to secure a new downtown arena, juggling the demands of an ownership group of more than 20 parties and convincing skeptical locals that he, a little-known billionaire from a city that is home to the Senators’ provincial rival, is the right man for the job instead of the shiny parade of celebrities such as Ryan Reynolds who flirted with the idea of team ownership.
And, oh yes, helping to revive the fortunes of a team that most recently finished 20th in the regular season standings, hasn’t made the NHL playoffs in six years and has never won the Stanley Cup.
Under the deal, a group of investors led by Mr. Andlauer will own 90 per cent of team, with the remaining 10 per cent retained by the two daughters of the club’s late former owner, Eugene Melnyk.
Mr. Andlauer has been a front-runner to buy the team since the daughters, Anna and Olivia, put the Senators on the block last November.
Even though the team attracted a star-studded list of potential suitors, including Snoop Dogg and The Weeknd, Mr. Andlauer’s existing ties to the NHL gave him the edge.
He has a good relationship with league commissioner Gary Bettman, and has been a minority owner of the Montreal Canadiens, controlling 10 per cent since 2009 and serving as the team’s alternate governor.
The former beer-league goalie’s involvement with hockey team ownership dates back to 2003, when he bought the American Hockey League’s Hamilton Bulldogs. After selling that team in 2015, he purchased the Ontario Hockey League’s Belleville Bulls, moved the team to Hamilton and called it the Bulldogs.
Mr. Andlauer’s move up the hockey league food chain has grown with the success of Andlauer Healthcare Group Inc. AND-T, the transportation company he launched in the early 1990s that today serves the medical industry. The company went public in 2019 and since then has more than doubled in value.
In a statement announcing the purchase, Mr. Andlauer described the future of the Senators as “bright” and said the team’s fan base “is one of the most passionate in the league and I’m excited to take the franchise’s success both on and off the ice to the next level.”
Mr. Andlauer did not respond to requests for an interview.
However a source close to Mr. Andlauer, who The Globe and Mail is not identifying because they are not authorized to speak publicly, said the trucking entrepreneur views the Senators purchase as a key part of his legacy and is buying the team with an eye to winning the Stanley Cup. The source said financing for the transaction has been in place since the sale process began, and that it involves very little debt.
The deal was handled by Mr. Andlauer’s merchant bank, Bulldog Capital Partners, with legal advice from Goodmans, the source said.
The new ownership group also includes Ottawa business executive Jeff York, as well as Ottawa’s Malhotra family, owners of Claridge Homes, among others. The source said that other local business people may be added to the club’s ownership base over time as the team tries to strengthen ties with the city’s business community.
Before the purchase can receive final approval from the NHL’s board of governors, Mr. Andlauer must sell his minority position in the Canadiens. That will kick off another sales process that the source close to Mr. Andlauer, pointing to Forbes’ most recent analysis of NHL teams, which valued the Canadiens at US$1.85-billion, said could establish a new high-water mark for team valuations.
If those figures seem eye-watering, experts say they make a very specific kind of economic sense.
“There are very few investments outside of professional sports that limit economic competition,” said Kevin Mongeon, an associate professor of sport management at the University of Ottawa.
“The socialism of professional sports protects all of the members,” said Rick Burton, a professor in sport management at Syracuse University in New York and co-author of the recently published book Business the NHL Way.
In North American sport, he noted, “there is no relegation” to lower-tier leagues. As well, “you can take losses on the ice and losses on paper in the short term, but you can watch the asset appreciate by really comfortable rates, as long as you hold the property.”
While the NHL signed lucrative broadcasting deals in 2013 with Rogers Communications Inc. and in 2021 with ESPN and TNT in the United States that saw sharply higher valuations than previous agreements, observers have suggested that sports media rights may be overinflated and due for an adjustment. Still, predictions of a bursting bubble have yet to come to fruition.
“Well, experts like myself continue to say that there should be a market correction, and experts like myself continue to be proven wrong,” noted Mr. Burton. He added that the NHL is popular in territories outside of North America such as Scandinavia and northern Germany. Furthermore, he suggested, the Russia-based Kontinental Hockey League – seen as the second-best professional hockey league in the world – may be under increasing pressure due to Russia’s invasion of Ukraine.
“There are a number of factors that make the NHL a pretty stable bet,” he said.
Still, Mr. Andlauer will want to move the team downtown to improve its attendance, something Mr. Melnyk tried and failed to do for years. Last June, the team announced it had entered into a memorandum of understanding with the National Capital Commission to pursue a development in the LeBreton Flats neighbourhood.
The development was expected to include a mix of retail, office space and residential buildings.
On Tuesday, a spokesperson for the NCC suggested Mr. Andlauer’s purchase would not alter those plans. “We look forward to working with Mr. Andlauer and his partners on a lease agreement for a future major events centre at LeBreton Flats, building on our existing Memorandum of Understanding,” said Valérie Dufour.
But the source close to Mr. Andlauer said LeBreton is just one potential option for a new arena and redevelopment project.