Kokusai Green initially set a price of $230 million, according to Wayne, for the team and its 40-year sweetheart lease with the Ice Palace, which finally opened in 1996, thanks to public financing. The price has dropped to $167 million, but even that has been too high to attract serious bidders. New Jersey Devils owner John McMullen says a prospective buyer recently asked him to evaluate the Lightning as an investment. McMullen's response: "You'd be a fool to consider buying that team for that number."
Oto, a former partner with the Big Six accounting firm of Deloitte & Touche, says the Lightning's debt is about $103 million, not the $177 million that Forbes reported. This fiscal year Tampa Bay is on pace to lose $16.9 million, which would push the Lightning's total losses since 1992 to $85 million—or $35 million more man the original cost of the franchise. Because of the delays in building the $153 million Ice Palace, Tampa Bay played its inaugural season at Expo Hall, a drafty 10,400-seat barn on the grounds of the Florida State Fairgrounds in Tampa. It spent the next three years at St. Petersburg's Thunderdome (now Tropicana Field). Internal memos and team financial records from '92 through '95 show that the Lightning was so cash-strapped that Tampa Bay executives worried about making payroll and about the collapse of their team.
In November 1994 the IRS and the state of Florida were ready to file liens on the Lightning for $750,000 in past-due taxes. Tampa Bay owed Sportservice Corp., its concessionaire, $4 million. The Sunshine Network, which televises Lightning games, was demanding $768,000 it was due. Tampa Bay's ad agency threatened to remove the team's billboards from around the city unless it was paid $345,407 in back bills. TWA suspended credit for nonpayment of $73,000.
To pay those bills, Kokusai Green borrowed against many of the team's revenue streams. Under its lease with the Ice Palace, Tampa Bay Arena, L.P., a subsidiary of Lightning Partners, Ltd., gets all revenue from arena events, according to the club's outside lawyer Paul Davis. But much of that income is committed to paying down the Lightning's debts. Beyond that, Tampa Bay owes the NHL $6.5 million on the $10 million loan the league quietly gave the Lightning in 1996 as an advance on Tampa Bay's share of national TV revenue. Because of that arrangement, the Lightning would receive no further NHL broadcast and royalty revenue until July 1999. Then there's Ganis's lawsuit for $123 million for which a trial date has been set for next March.
Bettman said three weeks ago that Tampa Bay was current on all of its financial obligations, but when asked the same question, Oto said, "No. Just like any business, some [bills] you pay in 30 days, some you pay in 60 days. We try to stretch some like you try to stretch your MasterCard payment, to the very last day."
Hanging over the Lightning Partners, Ltd. as Oto spoke was at least one large bill. A former limited partner, Tokyo Development Corp. (TDC), sued the franchise last year for failing to repay a 30-day, $1 million emergency loan from 1994 and won a $1.5 million judgment. On March 4, with that judgment still unpaid, TDC obtained a writ of execution empowering it to garnishee Lightning bank accounts if it so chose. When SI interviewed Oto and Davis on March 12, Davis said the team's relationship with TDC "is not an antagonistic situation." Two days later Davis called SI and said the club had agreed to pay TDC the $1.5 million by June 30.
The original Tampa Bay ownership group, led by Esposito; Mel Lowell, a former vice president of finance and business affairs with the New York Knicks and Rangers; and Tampa businessman Henry Paul, was plagued by cash shortages even before it was awarded the franchise in December 1990. Four months earlier one of the group's major investors, the Pritzker family, which owns Hyatt Corp., among other important holdings, pulled out. The Pritzkers had promised to put up Tampa Bay's $50 million franchise fee, which was to be paid to the NHL in three installments over the course of a year.
Esposito and Paul scrambled for financial help and in November 1990 landed a modest $2 million commitment from one of LeFevre's clients, Kojima, president of Nippon Meat Packers. Buoyed by that success and urged on by LeFevre, Esposito went to Japan to troll for more investors, including Kokusai Green. During that trip Esposito cut deals with Kokusai Green, TDC and Nippon Meat. Thanks to the Japanese companies, the Lightning was saved for the time being. When a triumphant Esposito was asked how he wooed the investors, he cracked, "The more we drank, the more it made sense. I said hockey. They thought I said sake?'
Former NHL president Ziegler says "normal checking" was done on Kokusai Green when it expressed interest in purchasing a stake in Tampa Bay. "Remember," Ziegler says, "we didn't have a Mr. Spano by that moment," referring to John Spano, the 33-year-old who duped the NHL and essentially took control of the New York Islanders last year before pleading guilty to fraud.
Gil Stein, the NHL's general counsel under Ziegler, says the reason Okubo and Kokusai Green got in the door was simple: They promised to deliver the franchise fee the league was owed. "I compare it to that old Groucho Marx show, You Bet Your Life? says Stein. "Just say the magic words and win an expansion franchise. What were the magic words? 'We'll pay the $50 million fee! Up front. In cash.' "