AN
OPEN LETTER TO THE FRANCHISE AND MARKET ANALYSIS COMMITTEE FROM DR. BRUCE
MURRAY FIRESTONE, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF TERRACE INVESTMENTS
LIMITED

August 15, 1990

Gentlemen;

Terrace
Investments Limited, on behalf of the Ottawa Senators Hockey Club, has tried to
stress substance over style in this application document, but we know that a
person to person presentation is still the best means to communicate our
enthusiasm, our dedication and our love of the game of hockey. We believe that strong ownership and
leadership is an important and necessary criterion for the success of any
professional sports franchise. We also believe that it is very difficult to
demonstrate this strength and leadership in a written document. We hope that we
will be given the opportunity to make a formal presentation to FMAC,
of Ottawa’s bid. However, I have taken this opportunity to describe to you some
of my personal thoughts regarding the design of our facility, the Ottawa
Palladium, why I believe Ottawa is the best North American hockey market
currently unserved by an NHL franchise, how I would hope to run the Ottawa Senators Hockey
Club and some of my personal views and philosophies regarding business, hockey
and combining the two .

... ON ARENA DESIGN

At
Terrace Investments Limited, our main line of business has been, for many
years, real estate; it continues
to be a big part of our business. Our franchise bid has a significant real estate
component. Real estate is what we know best and it is the real estate element
of our bid that will allow us to pay the National Hockey League’s asking price
for an expansion franchise of $50 million, build a world class sports and
entertainment facility and at the same time, make money for Terrace Investments
Limited and the Ottawa Senators Hockey Club. It is also my opinion, that during
the next ten years, the single biggest source of new revenues for NHL member teams will
come from upgraded facilities that they will play in.

The
arena is of course, a real estate asset and this has created a natural
relationship between hockey and real estate. In order for an arena to generate
significant new revenues, I believed that a new generation of design was needed. The multi-purpose facility that I had
in mind when I first considered initiating a bid for an NHL expansion franchise
in 1987, involved a sports and entertainment complex unlike anything that had
yet been seen in Canada. I believed the facility had to incorporate office
space, hotel space, retail space and lots of parking because this had to be a
365 day a year development. It had to be a
private sector initiative, owned and controlled by Terrace Investments Limited.
Owning and controlling the arena complex was important to us because it would ensure that we,
and the Ottawa Senators, would receive full benefit from the facility’s many
revenue sources. As well, if we owned the land, and we were going to finance
the arena, we controlled the timing and could react quickly to any NHL expansion plans or
requirements.

In
order to privately finance a modem sports and entertainment facility like this,
it had to include all of those components mentioned above and we would have to
make it very much a people place.

After
interviewing a number of architects from Canada and the United States, we discovered
much to our satisfaction that one group had already made great strides in arena
design. That group, of course, is lead by Mr. Gino Rossetti from Rossetti
Associates and their design was the Palace of Auburn Hills in Detroit, Michigan. We examined the facility and realized
right away that this was the kind of facility that we wanted and one that the National
Hockey League would likely require from its new expansion bidders.

We
had a number of meetings with Mr. Rossetti and some of his people and we found that our
philosophies of design were remarkably similar. Rossetti Associates was eager
to take the good example of the Palace and improve upon it to make that next
leap in facility design. Together
with Rossetti’s team, Terrace was able to introduce a number of new ideas
including:

1)
street orientation of concession space/retail space at grade that faces inwards
to the concourse as well as outwards to the street;

2)
addition of leaseable office space, leasable health club and dining club space
in the Palladium;

3)
the introduction and use of significant natural light within the concourse and
the other leasable spaces;

4)
the inclusion of an unheard of number of luxury suites (210 with additional
expansion capabilities), because we wanted to reach further down into the
market; our smallest suite would, in fact, be only ten seats, sized to accommodate smaller firms and
professionals;

5)
the Palladium would be connected to a 408 room hotel with 48 suites actually
inside the Palladium overlooking the playing surface;

6)
the seating capacity should represent a significant increase from today’s
standard 15,000-18,000 seat arena; this was a requirement for our already large
hockey market and to accommodate additional fan support in the years ahead.

This
community will support 15,000 season’s ticket holders and we will achieve this
goal before we begin play in the Ottawa
Palladium. In ten to fifteen years, this number could be 40 percent larger.

The
design of the Ottawa Palladium is well advanced at this time. We have a program to build the Ottawa
Palladium from November of ‘91 to December of ’93. Our original program called
for completion in September of ’94, but working with our architect and our engineers
together with our construction management group, we now feel that we can achieve
completion by December 1993. Thus, the Ottawa Senators will play less than one and
a half seasons in Ottawa’s existing 10,000 seat arena, the Civic Centre.

While
we were designing the Palladium, we realized that the revenue generating
potential of a facility of this type was very substantial. However, we also
expected the price of an expansion franchise would be very substantial. We
realized that we would need to have significant new revenue generating sources
in order to pay what we anticipated would be a price
of $30-35 million for an expansion franchise.

The
NHL has pegged the market value of an expansion franchise at 50 million dollars
paid one year in advance of play. This is a substantial increase on current market values and on previous
expansion franchise costs. We will be able to meet the NHL’s financial requirements
for an expansion franchise, because we have properly planned for it.

We
have designed a facility that will allow us to take advantage of every possible
revenue source. We
assembled 602 acres of land around our arena site that will increase significantly
in value once the arena facility is built.

…
ON OPERATING THE OTTAWA SENATORS HOCKEY CLUB

I
think it is
very important that I explain my philosophy of how I would like the Ottawa Senators
to be run. I firmly believe that a team is successful on the ice, because it is
first successful as a business. Now I know that perhaps some others may not
agree with that philosophy and may feel that good on ice performance comes
first and financial success comes second I believe organizations that are
financially successful are able to employ the best
people, the best technology and play in the best facilities. I believe that the
Ottawa Senators will be a successful, competitive franchise, that the Ottawa
Senators will win a tenth Stanley Cup in due course and that this competence
will derive from the financial success of the franchise. We intend to hire the
best people we can find. We intend to use the best technology. I want the
Ottawa Senators team to be a tough team, to be a fit team, to
be a smart team. Other attributes I want to see in our team, other attributes
that I see in other successful organizations in the NHL, include character, a
strong work ethic and class.

We
intend to have a full complement of coaches. Our organizational structure is
patterned after successful organizations in the NHL. We will have a President
of the Ottawa Senators – his job will be to run the team as a business. We will have a General Manager/Director of Hockey Operations who
will run the hockey operations – exclusively the hockey operations. His job will be to see that the
team’s on ice performance is competitive. He will select a coaching staff- a
coach and his assistant coaches. Together, the coaching staff will train
our team to be winners. We will have a health club and fitness training centre which will be fully equipped to train
25 elite athletes at a world class level. I would hope to
run the team as a business, but market it properly so that the public perception
is that we are a “hockey team” and a big part of the community with
involvement by the players and management on a year round basis.

The
ownership of the Ottawa Senators Hockey Club will be substantially concentrated
in the hands of Terrace Investments Limited. The Governor of the new franchise will be myself, the alternate
governor will be the President of the Ottawa Senators. It is my intention to leave the
operation of the Ottawa Senators Hockey Club to the President reporting to the
Chairman of the Board, myself, and to the Board of Directors of the Ottawa Senators
Hockey Club. It will be the responsibility
of the President to run the business and the responsibility of the General
Manager and Vice President to run the hockey operations with input from myself
and the Board of Directors. It is very important to us that we put the right
people in place. The President and the General Manager are two critical
appointments – it will be largely up to them to produce a team that is a
winner. And this is our goal. Not only do we want to secure an expansion franchise, we want to
win a tenth Stanley Cup.

…
ON THE OTTAWA MARKET

I
want to come back for a moment to the idea of returning the Ottawa Senators to
the NHL. We made great efforts to secure the rights to the name “Ottawa
Senators” and “Ottawa Senators Hockey Club”. Some people asked us why we bothered.
We could have just as easily renamed the team the Ottawa
“somethings”. The answer to that question is very simple and I think it will help reassure
the NHL that hockey is our first priority. The Ottawa Senators had a great
tradition. They played in the NHL from its inception until 1934. It was only the great depression that
caused the Ottawa Senators to come to grief.

When
the Ottawa Senators won their last Stanley Cup in 1927, they were getting over 10,000
fans for their games. Interest for some games was so great that tickets were
often sold at $3 – $5 each, the equivalent of a day’s wages. Ottawa is a great
hockey town, with a great hockey tradition.

Many
of the early franchises in the NHL suffered as well during the depression. We
lost our hockey team in 1934 and there are still many people in Ottawa who
remember that moment. I had the privilege of speaking at a press conference
last year, which was the public kick off of our campaign to Bring Back the
Senators. During
that press conference, while I was speaking, we witnessed the arrival of Mr. Frank Finnegan. Mr. Finnegan scored
the Stanley Cup winning goal for the Ottawa Senators in 1927. He is a true
Ottawa hero. We found Mr. Finnegan hail and hardy, living not too far from the
City of Ottawa.

We
asked him to attend the press conference and his grandson indicated that he would
make every effort to be there and we were hopeful that he would come. When our
press conference began, Mr. Finnegan was still expected. He arrived a short
time later from his home in Shawville. When Mr. Finnegan entered the room, I was going to introduce him and I
started to do so. But before I could finish the introduction, before I could
ask everyone to stand and give Mr. Finnegan a warm welcome, the entire audience
of over 350 of Onawa’s community leaders, stood as one, and gave Mr. Finnegan a
standing ovation. I was very moved. I think everyone in the room that day was
very moved. We knew then, that we were right, the Ottawa Senators was the only
name for our team.

This
is just one small example of the type of
community support that exists for bringing back the great tradition of the
Ottawa Senators. Community
support throughout Canada’s Capital City has been extraordinary. The NHL, as
part of its expansion criteria, has made it
mandatory that a new expansion franchise have 10,000
season tickets fully paid for in a trust account before becoming a full,
unconditional member club. We are in complete agreement with this and support
this as a requirement of an expansion franchise. Ottawa, and the Ottawa
Senators, will have no problem meeting that minimum requirement.

We
have already obtained over 11,000 non-refundable season ticket deposits of $25
each. We have over 100 corporate and associate sponsors having paid a minimum
of $500 each. In addition, we have 30 Original Sponsors who have paid from
$15,000 to $100,000 to assist in Bringing Back the Senators. The Ottawa
franchise will create additional revenue by adding value through market
differentiation. We will
have no difficulty in meeting the minimum requirement for premium seating. A
large number of premium seats will allow us to have a large number of family
priced tickets as well. In our
building, there will be a seat for everyone.

Ottawa
now has 900,000 people in what is known as Canada’s Capital City. Within 70 miles,
or approximately a one hour drive of our site, we have over 1.7 million people.

This
is not a well known fact in Canada or in the U.S. Ottawa is following the
growth pattern of the Washington D.C. area. Our area is booming. We are the
fastest growing metropolitan region in Canada. We compare favourably with many
of the faster growing areas in the U.S. We are the richest, most affluent
market in Canada. The quality of life here is second to none.

For
Ottawans, hockey is the number one sport. We currently support two major junior
A teams, both very successful. We have hundreds of indoor and outdoor rinks.
Ottawa has contributed hundreds of players to the NHL over the years. At this
time, there are 78 players on active NHL rosters; making the Ottawa area the
single biggest contributing source of players anywhere in the world.

The
television market in the Ottawa region is a very strong one. We mentioned above
that the population within 70 miles of the Ottawa Palladium is over 1.7 million
but we did not mention that the cable penetration in our market is high as
well. The television market is very strong both for national broadcasts and
also for our local broadcast rights. We expect to do very well with our local
broadcast contract One of our Original Sponsors is the preeminent television
station in our area CJOH TV. As well, we have other Original Sponsors from both English
and French radio media. We will be able to sell our local television and radio
rights in both of the Official Languages of Canada.

Support
in both the Anglophone and Francophone communities has been equally strong.

Another
fact that is not well known about our city is the strength of our private
sector. Our private sector is dynamic, and is growing rapidly. In Canada’s
Capital, there are 30,000 independent businesses. Within the 70 mile radius
that I mentioned above, there are many, many more.

Over
the last seven years, Royal LePage ranked Ottawa first in terms of growth of
new commercial office leasing in Canada. This was at a time when Toronto and
Vancouver and Montreal were growing very rapidly. Ottawa grew faster.

We
think it is very important that the owners of a prospective new franchise have
deep personal roots in the community in which the new teams will play.
Certainly, the staff of Terrace Investments Limited has roots in the Ottawa
community as does the ownership of Terrace Investments Limited. Terrace has
been continuously active in Ottawa since 1956 and the principals of the company
live and work in the city. We know this community well. The community knows us
well. The extensive involvement I have had with the local business community in
Ottawa has given me some insight into the go-go nature of this city.

As
publisher and founder of Ottawa Business News, I quickly became aware of how extensive
the business community in Ottawa had become . The success of that newspaper is
well known and this has definitely given us additional insight concerning the
viability of the NHL’s return to Canada’s Capital.

Canada’s
Capital City will add appeal to the NHL. Our marquee value is good. As an organization,
I hope we will add ideas and contribute whenever and wherever we can for the
good of the League as a whole. We are great believers in the NHL. We believe
the NHL should expand in areas where the game is known, is played and is loved.
Canada’s Capital is such a place. Canada’s Capital will provide the NHL with an
expansion franchise that is stable, which is competitive and which will add a great deal to
the long term uptick for the League. I believe that if you examine the
information and demographics carefully and understand our City the way we do,
you will realize why we say that “Ottawa is the best hockey market in
North America currently unserved by an NHL team”.

…
ON BUSINESS AND HOCKEY PHILOSOPHIES

I would
like to turn now to the question of business philosophy. What is Terrace’s business
philosophy? What is my business philosophy? When I started out in business, a man
I respect a great deal told me, “Bruce, when you look back ten years from
now, 20 years from now, all that you will
have going for you is your reputation. Protect it!” I
think that this was very good advice. Terrace Investments Limited has
established itself as a group that has integrity and can be trusted. This is
very important for a company like ours.

We
are able to raise money for real estate projects because banks and financial institutions
trust us. We are able to sign clients to extensive, long term leases because
they trust us.

We
are very service oriented, we are very quality oriented. Our corporate
philosophy is shown right at the top of our letterhead, our motto is
“Great Space for Great People”.

Terrace
is a great company and its people are excellent. It is not the assets of the Corporation
that produce a return on investment, it is our people. Our people are young and
ambitious and they will make good partners for the NHL.

Terrace
Investments Limited is a successful real estate development company
specializing in land development and commercial office construction. The
company has a fair market value (net worth) of approximately $105 million
dollars and our projections show this increasing over the next seven years to
close to $400 million dollars. Terrace Investments Limited has the financial
capacity to carry forward the purchase of an
expansion franchise and to provide for the operation of the hockey club at a
sufficiently high level to become competitive with the elite teams of the NHL.
This is based partly on the financial capacity of Terrace Investments Limited
and partly on the extensive support of the community in a class A market like
Ottawa.

One
of the areas I have not yet addressed is the question of generating intense
rivalries between the Ottawa Senators and other existing NHL teams. We feel
that natural rivalries will develop between the Ottawa Senators and a number of
teams in the north east including, Washington, Boston, Toronto, Montreal,
Buffalo, Philadelphia, Pittsburg, Hartford and Quebec City to name a few.
Ottawa is less than a two hour car ride from

Montreal.
We anticipate a return of the intense rivalry that once existed between the
Ottawa and Montreal franchises during the formative years of the National
Hockey League. We look forward to challenging the Washington Capitals to the
“Capitals Cup” where .the capital of the United States and the capital of Canada play
each year for the right to claim national precedence.

I think the stability of each franchise
should be one of the main concerns of FMAC. It is very important to the NHL,
its credibility and its long term financial viability that the League does not
experience a number of franchise moves.

I think it is important to remember that the
NHL is a true partnership of 21 teams, now 22, and hopefully soon there will be
a few more. A partnership has to be run on the basis of principles that require
each individual team ownership group, from time to time, to remember that the
good of the League must come first. I am reminded again of the problems that
the Ottawa Senators faced in the 1930’s when the Great Depression was at its height
and Ottawa sadly lost its NHL team. I know that the Wirtz family and the Norris
family were involved in rescuing certain NHL teams from severe fmancial
difficulties. The commitment of these two families essentially saved the League
from collapse. When we look back at recent NHL history, the movement to share
all television monies equally between Canadian and U.S. teams was a good
decision for the benefit of the League. This meant that there was a recognition
amongst all of the team owners that this was one League, not one League in
Canada and one in the U.S.

I
believe continued Canadian participation in the NHL is important to the NHL and
not just because Canada is a major source of players and hockey talent. It is
also a major source of television dollars and it gives the NHL an international
flavour, which will become more important over the next decade. We must
remember that the NHL has been a co-operative effort of our two countries over
a long period of time. It has been an exceptional partnership, one that
transcends the border and reaffirms the long tradition of friendship between
our two countries. Canada is a country with two founding peoples, English and French,
and this makes Canada a different and interesting country. I think it adds to
the marquee value of the NHL and it is something that I would like to see
continued because I am a Canadian nationalist and a Canadian patriot. There is
no hiding that fact that I believe very strongly in my country. I believe that
it contributes mightily to the NHL.

… IN SUMMARY

It
is a great honour to be in
a position to submit an application to the NHL for an expansion franchise. It is an opportunity granted
to few and it means a great deal to me personally. Along with this great honour
comes the burden of responsibility. The responsibility that Terrace Investments
Limited has to Bring Back the Senators is a very large responsibility – we owe
it to the thousands of people that have made deposits for season’s tickets, the
over 100 Corporate and Associate Sponsors, our 30 Original Sponsors, the members
of the great Ottawa Senator Stanley Cup Winning Teams – still alive and the
memory of those now deceased, the hundreds of thousands of hockey fans in the
Ottawa area, the young people of our region – future fans of the Ottawa Senators, the 29 members of our Ad Hoc
Committee who have put so much time and effort into this process, the City of
Ottawa, the City of Kanata, the Township of West Carleton, the Outaouais, the
Regional Municipality

of
Ottawa-Carleton, the Provincial Government lead by the Honourable David
Peterson and the Government of Canada lead by the Right Honourable Brian
Mulroney. We owe
it to these people, and to ourselves, to Bring Back the Senators.

The
commitment of Ottawa’s fans to the game of hockey is phenomenal. The love of
the game here in Canada’s
Capital is unsurpassed. I hope to see the Ottawa Senators, admitted to the NHL under the NHL’s Plan of Sixth
Expansion. I hope to see the Ottawa Senators one day win a tenth Stanley Cup.

Dr. Bruce M.
Firestone Ottawa Canada

ORIGINAL

SPONSORS

Bell Canada Inc

Canadian Airlines International
Ltd

Canadian Tire Corporation

Capital Foods

Scotts Hospitality

CFRA 580 AM

CHEZ 106 FM

CJOH TV, a CTV affiliate

CJRC 11 50 AM

CKTF 104 FM

C P Hotels and Resorts – The Chateau Laurier

Coca Cola Bottling

Coscan Development
Corporation

Dollco Printing

Kinburn Corporation

Gallop + Gallop

Le Droit

Loeb Inc

McDonalds Restaurants of Canada
Limited

Peat Marwick Thorne

Perley-Roberston Panet
Hill & McDougall lawyers

Priority Courier

Rossetti Associates

Royal Lepage Real Estate
Services

Surgenor Pontiac Buick

Terrace Investments Limited

The Royal Bank of Canada

Ticketmaster

Tridel
Corporation