If everything goes as planned, Hollywood producer Oren Koules could have control of the Lightning by early June.
Key is a plan in which owner Palace Sports & Entertainment and Galatioto Sports Partners, a New York sports investment bank, will combine to finance about $100-million of the $200-million deal that includes the team, the St. Pete Times Forum lease and 5-1/2 nearby acres.
The deal acknowledges a poisonous financial landscape fed by the global credit crunch and this country's sub-prime mortgage fiasco.
Koules, 47, who heads OK Hockey (which includes business partner Mark Burg, developer and former NHLer Len Barrie, California banker Russell Belinsky and still unnamed minority investors from the Tampa Bay area), lost $100-million in financing from Societe Generale, France's second-largest bank, and a proposed deal with New York's CIT Group also recently fell through.
GSP, whose president, Sal Galatioto, has been brokering the deal for Palace Sports, agreed to be the lender while Palace Sports defers payment on the amount not covered by OK Hockey and GSP.
Though the paperwork is yet to be signed, the plan seems the most promising way to get Palace Sports out and Koules in.
What are the parameters of the deal?
OK Hockey has raised about $100-million of the $200-million purchase price. GSP is believed willing to put in slightly less than $50-million. Palace Sports will hold an interest-bearing note on the rest.
Who would be responsible for paying the interest?
What does this mean for Palace Sports?
When the deal closes, the company will get about $150-million up front. It will wait for the credit market to ease so GSP can find financing for OK Hockey to pay off the note.
How long before GSP can find financing?
Up in the air, though Scott Brown, chief economist at Raymond James in St. Petersburg, said Tuesday that it could be "a year or even longer" before the credit market corrects.
And if things don't change?
Worst-case, and highly unlikely, Palace Sports forecloses and returns as owner with $150-million in its pocket and tries to find another buyer. That would soften the bottom line given Palace Sports in the summer of 1999 bought the team for about $100-million and claims another $80-million in losses. Much more likely, Palace Sports would extend the agreement until the market improves.
Assuming an improved market, what does this mean for GSP?
The company eventually will be the lead lender for OK Hockey. As with any lender, it will have no say in the running of the club. Neither will Palace Sports.
What does this mean for OK Hockey?
Once financing is secured, it generally takes the NHL four to six weeks to investigate a prospective owner, meaning approval could happen by early June. The financial deal could then close, which would give Koules control for the June 20-21 draft in Ottawa, where Tampa Bay will select center Steve Stamkos with the No. 1 overall pick.
Has owner financing been tried before?
Twice recently. The Los Angeles Business Journal reported News Corp. in January 2004 funded $175-million of a $421-million deal with which Boston developer Frank McCourt bought the Dodgers. The Rocky Mountain News reported Molson Coors brewery in January 2001 helped substantially finance the $190-million sale of the Canadiens to Colorado businessman George Gillett.
Damian Cristodero can be reached at [email protected]