At Manhattan’s $400-a-night Sofitel Hotel just a few minutes’ stroll from Times Square time was running out. NHL Commissioner Gary Bettman left an abbreviated negotiating session with the players’ union representatives in a determined abrasive mood. It was Aug. 9 2012. If there was no deal on a new contract by Sept. 15 Bettman said the players would be locked out. There would be no season.

The owners — many of them self-made billionaires — wanted a bigger share of the league’s revenues. Indeed they saw this round of bargaining as crucial for creating profitable team operations. But there were a few owners who also viewed the upcoming deadline with something approaching alarm. Eugene Melnyk for one.

The proprietor of the Ottawa Senators since 2003 Melnyk had seen his once-staggering wealth — more than $1.5 billion when he bought the team and arena — shrink significantly. The pharmaceutical entrepreneur is still by any ordinary standard immensely wealthy. But his diminished fortune — estimated in the hundreds of millions of dollars — is tied up in a variety of assets and commitments unrelated to the hockey team. Melnyk has sufficient cash to cover his Senators’ cash losses — which have been averaging close to $10 million per year. But last August he faced the prospect of significant further bleeding. And it worried him.

Indeed Melnyk was more exposed to the financial consequences of a lockout than outsiders realized. Prior to the expiry of the players’ collective agreement he had been negotiating a new loan to cover the team’s $130-million debt — held by a syndicate of eight banks including Scotiabank and CIT Group of New York. The loan had expired at year-end 2011 and had been operating under a series of extensions with appropriate financial penalties applied. Melnyk was being forced to cover millions of dollars in extra debt interest payments until he could line up a new set of lenders.

Ordinarily Melnyk might have been able to convince the original group of eight to agree to new terms on a fresh loan. But some members of the syndicate had decided to get out of the business of lending to sports teams and others were concerned by the extent of the Senators’ debt load which is approaching 50 per cent of the estimated $300-million value of the team and the arena. This is high even by the standards of the NHL. The Senators consider it manageable.

The day Bettman emerged from the Sofitel Hotel the Senators’ owner had been negotiating with a new group of banks including HSBC Group. Melnyk had been confident that fresh financing was within his grasp. But the arrangement was still tentative and proved vulnerable to second-guessing by at least one of the banks in the group. When rumours of an NHL lockout surfaced a member of the proposed new syndicate dropped out. When the lockout became fact convincing another lender to fill the gap proved impossible — pushing Melnyk back into the arms of the original group of lenders and their regime of extra fees.

The result was that last autumn the Senators faced a series of financial stresses including ongoing losses on operations higher-than-usual debt interest payments and probably more than $10 million in additional costs related to the lockout and the resulting loss of ticket sales.

The financial squeeze affected every level of the Senators’ organization from payroll to marketing. Loose talk misplaced as it turned out held there wouldn’t be enough cash on certain weeks to settle paycheques. “There is no truth to the rumour that we had a payroll issue at any time under Eugene’s leadership” said Senators president Cyril Leeder during a recent interview.

It was only after the league returned to action allowing the Senators to generate revenues from ticket sales that Melnyk finally arranged $150 million in fresh financing — this according to Davies the law firm that helped to negotiate the deal. He signed a four-year deal in April 2013 with a pair of U.S. specialty funds. By this time the mantra of conservative spending was even more firmly embedded in the Senators’ financial culture. This posture would be an important factor in the ill-fated contract negotiations involving the Senators’ long-serving captain Daniel Alfredsson.