It was a busy day on the business front for the NHL yesterday as the Tampa Bay Lightning sale neared completion and the Dallas Stars went on the auction block.
Boston money manager Jeffrey Vinik is close to buying the Lightning for about $170-million (all currency U.S.) according to multiple sources familiar with the talks. One source thinks the deal could be completed within a week.
It looks like a deal in principle has been reached, since Lightning co-owner Oren Koules, who was in New York since Monday for the negotiations, returned to Tampa yesterday. Talks between NHL commissioner Gary Bettman and representatives of Vinik continued yesterday on what look to be the final details. Koules declined to comment.
Meanwhile, after denying a report by The Globe and Mail last October that his financial troubles would force a sale of the Stars, owner Tom Hicks yesterday said he has retained one of his creditors, Galatioto Sports Partners, to explore the possibility of a sale.
"While a sale is not a certainty, it is a possibility," Stars president Jeff Cogen said in a statement released by Hicks Sports Group. "Mr. Hicks has received numerous inquiries about the team. Those potential investors recognize that the Stars are a success story."
Galatioto Sports Partners is a New York investment banking and sports advisory company operated by Sal Galatioto that has been involved in dozens of financing deals in all of the major professional sports. In addition to being one of the Stars' major creditors, Galatioto is also a major creditor of the Lightning.
Hicks Sports Group, which owns the Stars, 50 per cent of American Airlines Arena and the Texas Rangers, defaulted on $525-million (all currency U.S.) in loans to 40 banks last year. The sale of the Rangers is awaiting approval from Major League Baseball and the banks. After it is completed, the fate of the Stars will be determined.
An NHL source said there are four parties seriously interested in buying the Stars. Only one of the interested persons is from the Dallas area while the other three are thought to be Canadian businessmen.
One of the Canadians is Calgary oil man Bill Gallacher. He was in contact with Bettman months ago and expressed his interest in the Stars. Gallacher, the president of Avenir Capital Corporation and the chairman of Athabasca Oil Sands Corp., could not be reached for comment. He also owns the Portland Winter Hawks of the Western Hockey League.
The Stars will fetch a much higher price than the Lightning because they come with a half interest in an arena that makes a lot of money and they are in one of the largest markets in the United States, one that has shown it will support a decent team. One source said the asking price will be more than $300-million.
Once the sale of the Lightning is completed, Vinik will be the sole owner. Neither Koules nor his co-owner, Len Barrie, with whom he had a falling-out when Barrie's financial woes surfaced, will keep an interest in the club.
The sale fell into place quickly after Bettman was introduced to Vinik, the head of Vinik Asset Management, at the annual outdoor game in Boston on Jan. 1. The pair were introduced, one source said, by Boston Bruins owner Jeremy Jacobs, who is also the chairman of the NHL's board of governors.
There is a great deal of motivation for Bettman to conclude the sale of the Lightning as quickly as possible. It was an embarrassment for the NHL commissioner when Barrie was accused by the former auditor of his Bear Mountain golf resort and a representative of several investors of improperly taking money from the development to finance his purchase of the Lightning. Barrie's arrival as an owner in 2008 coincided with Bettman's vow to conduct more rigorous due diligence on prospective owners after the William (Boots) Del Biaggio scandal, in which the former part-owner of the Nashville Predators went to jail for fraudulently obtaining the money to buy his share of the club.
Koules and Barrie plus a group of minority partners bought the Lightning in June, 2008 for $207-million from Palace Sports and Entertainment Ltd. It is not clear how much money will be left from the sale for Koules and Barrie.
In Barrie's case, creditors from the Bear Mountain resort near Victoria, B.C., will demand any proceeds from the sale. As a successful film and television producer, Koules does not have a line of creditors waiting to seize any proceeds but he will be taking a substantial loss on the club on both the sale price and the money he had to put in to cover operating losses for two seasons.
Also up for a haircut is former owner Palace Sports and Entertainment Ltd., which financed about $100-million of the deal and guaranteed a loan of about $30-million from Galatioto Sports Partners.