The bitter dispute between the two main stakeholders of a project to develop a new arena for NHL ice hockey franchise the Ottawa Senators has intensified, with Trinity Development filing a C$1bn (£587.8m/€651.5m/$744.6m) counterclaim against Capital Sports Management (CSMI).
The extent of the animosity between CSMI, a company owned by Senators owner Eugene Melnyk, and Trinity first came to light last month when Canada’s National Capital Commission (NCC) warned that it was prepared to reassess the use of land earmarked for the new arena.
An 18,000-seat downtown arena has been planned as the centrepiece of a major redevelopment of LeBreton Flats, an area of Ottawa that has been vacant since the 1960s. In April 2016, Melnyk and his RendezVous LeBreton group won the right to build the new arena as part of a C$4bn development in association with Trinity Developments, headed by John Ruddy.
However, the project has stalled since then and the NCC, owners of the land, voted unanimously in favour of potentially starting a new process to redevelop LeBreton Flats. With Melnyk and Ruddy unable to come to a corporate governance structure for their venture, the NCC will ultimately make a decision on the matter in January.
Melnyk subsequently filed a C$700m lawsuit against Ruddy, Trinity-involved companies and consultant Graham Bird. The lawsuit accused Ruddy of leveraging the redevelopment to raise the profile of a nearby apartment complex. Further developments in the saga came yesterday (Tuesday) as Ruddy made his counterclaim, with Melnyk responding in turn.
The Ottawa Citizen newspaper reported that Ruddy’s counterclaim alleges that Melnyk’s CSMI is struggling financially, with this being the main reason why their LeBreton Flats partnership is ruined. CSMI’s original lawsuit alleged it was unaware of the Trinity-involved development planned across from LeBreton Flats, but the counterclaim has refuted this, pointing to Senators former chief executive Cyril Leeder as being “well informed” about the future 65-storey complex.
As news of the counterclaim emerged, the Citizen said CSMI has proposed to assign its interest to Trinity for the residential, retail, commercial and recreational portions of the LeBreton Flats plan. Trinity would collect all revenue from this end of the development in exchange for financing the C$500m arena, instead of CSMI.
CSMI has proposed to pay for the operating costs of the arena during a lease term, but the proposal has swiftly been shot down by Trinity. “Our court filings today made clear that Mr. Melnyk and CSMI have been demanding a free arena courtesy of local taxpayers and Trinity,” Trinity said. “Mr. Melnyk’s letter does little more than confirm that fact. On its surface, it appears nothing has changed.”
The Senators have played in the 18,600-seat Canadian Tire Centre since 1996, but its location in the suburb of Kanata has made it unpopular with fans.