Vinik’s buyer of Lightning stake may be private investment firm, according to report

Arctos Sports Partners is also looking to add a share of the Minnesota Wild to its sports franchise portfolio.
Tampa Bay Lightning owner Jeff Vinik, left, holds the Stanley Cup alongside team captain Steven Stamkos on Sept. 29, 2020, in Tampa. Vinik on Thursday confirmed he is negotiating to sell a minority stake in the two-time defending Cup champions.
Tampa Bay Lightning owner Jeff Vinik, left, holds the Stanley Cup alongside team captain Steven Stamkos on Sept. 29, 2020, in Tampa. Vinik on Thursday confirmed he is negotiating to sell a minority stake in the two-time defending Cup champions. [ DIRK SHADD | Times ]
Published Dec. 10, 2021|Updated Dec. 10, 2021

The prospective buyer of a minority stake in the Tampa Bay Lightning is a private equity group that also owns shares of the Boston Red Sox, Golden State Warriors and Sacramento Kings, according to multiple reports.

Lightning owner Jeff Vinik on Thursday confirmed he was negotiating to sell a stake in the two-time defending Stanley Cup Champions after the NHL approved a handful of ownership moves during a league Board of Governors meeting.

Related: Jeff Vinik will sell minority share of Tampa Bay Lightning

Financial Times reported the buyer is Arctos Sports Partners, a New York- and Dallas-based private equity firm that in the past few years has purchased stakes in at least a dozen sports franchises. Among them are the Kings, the Warriors and Fenway Sports Group, which owns the Red Sox and Liverpool FC and on Thursday was approved to purchase the Pittsburgh Penguins.

Arctos is also behind a bid announced Thursday for a 10 percent stake in the Minnesota Wild, according to team owner Craig Leipold.

In statements, both Vinik and Leipold said the sales would not impact their majority ownership of either team.

“If a minority sale is finalized, I will maintain control of Vinik Sports Group, and nothing will change with respect to the daily operations and objectives of the Tampa Bay Lightning,” Vinik said in a statement. “If and when a transaction is complete, I will comment further at that time.”

Spokespeople for both Vinik and Arctos declined to say more on Friday.

Vinik, a Boston hedge fund manager who was until 2019 a stakeholder himself in Fenway Sports Group, bought the Lightning in 2010 for a reported $170 million. The team is now worth $670 million, according to Forbes, making it the NHL’s 20th most valuable franchise. The team’s value has jumped 113 percent in the past five years, according to Forbes, the sixth highest leap in the league.

“Jeff is not just a smart guy, he’s a very smart guy,” said Robert Caporale, founder and co-chairperson of Miami Beach-based Game Plan, a pro sports investment advisory group that’s worked with Arctos on past deals. “And he’s done a remarkable job with that franchise. So I can see why an investment fund would want to be invested in him.”

Vinik is the sole partner in Vinik Sports Group, formerly known as Tampa Bay Sports and Entertainment. That group is the parent of the Lightning and operations at Amalie Arena and the Yuengling Center, including concerts and other nonsporting events.

The Lightning play games at Amalie under a long-term lease with Hillsborough County, which owns the property, and the Tampa Sports Authority, which is involved in the lease. In 2019, Vinik took out a $102 million mortgage against the Lightning’s arena lease. At the time, a team spokesman said the mortgage would help fund some of Vinik’s other business ventures — including Water Street Tampa, a $3.5 billion development enveloping downtown’s southeastern corner.

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Tampa Sports Authority board member Patrick Manteiga said it was unclear if an ownership change would be an issue the board might need to discuss.

“It’s not a change of ownership (of the lease); it’s just a change in who owns the owner,” said Manteiga, publisher of Ybor City’s La Gaceta newspaper. “Borrowing was a bigger issue, because had they gone bad on the loan, we would have a whole new owner, and that would be a bank, and a bank’s hard to deal with, and that could have been more problematic. In this case, with just a minority purchaser, I don’t see how it really changes anything.”

Prior to Thursday’s news involving the Lightning, Wild and Penguins, the NHL approved a rule change enabling funds such as Arctos to buy noncontrolling interests in franchises, said league spokesman John Dellapina.

Such rules put tight restrictions on investors’ level of involvement with the teams, Caporale said. A fund with ties to different teams “will not get access to any information that relates to competition, so they don’t have any information about player compensation and things like that,” he said.

Such investments are attractive to team owners, he said, because they provide liquid capital without requiring much control.

“The fact that they’re out there is making it a lot easier to monetize your interest,” Caporale said.

In October, Arctos announced it had closed its flagship fund with more than $3 billion in assets under management. That, Sportico reported, includes 17 percent of the Kings in a deal that valued the franchise at $1.8 billion and 5 percent of the Warriors in a deal valuing them at $5.5 billion.

“Sports franchises and leagues benefit from numerous qualities that make them particularly valuable: deep customer affinity and loyalty, global must-see content, the live experience ecosystem and scarcity,” Ian Charles, Arctos’ co-founder and managing partner, said in a statement at the time.

Arctos’ investors and executives include an array of sports power players. Co-founder and managing partner David O’Connor spearheaded the creation of Hollywood agency CAA’s sports arm before becoming president and CEO of Madison Square Garden, where he oversaw projects including a long-running residency by Billy Joel. Former Red Sox and Cubs general manager Theo Epstein is CEO of an Arctos affiliate company. Tim Leiweke, founder and CEO of venue management company Oak View Group and older brother of former Lightning CEO Tod Leiweke, sits on an Arctos committee of sports advisors and executives.

“We bring investment capital and unique expertise to leagues, franchises and owners to support and enhance their incredible growth trajectory,” O’Connor said in an October statement.

Over the past five years, the value of most pro sports franchises has exploded, making them increasingly attractive as private equity investments.

Excluding the newer Las Vegas Golden Knights and Seattle Kraken, the average NHL team has increased more than 76 percent in value since 2016, according to Forbes. The Buccaneers’ value has increased 63 percent to more than $2.9 billion during that span, while the Rays’ value has increased 62 percent to more than $1 billion.

“The values of these teams have gotten so high that even a limited partnership interest can be over $100 million,” Caporale said. “There aren’t many people who are going to want to write a check for $100 million-plus just to be a limited partner.”

The Lightning haven’t said how much of the team Vinik is looking to sell. But at a valuation of $670 million, a 25 percent stake would be worth $170 million — enough to recoup his initial investment in the team.

“I don’t know what his financial condition is,” Manteiga said. “I know he’s certainly involved in a lot of projects, and everybody’s always speculating on how much money the guy’s got to do it all. But at the end of the day, he seems to deliver every time.”