How's this for quick thinking: You're the general manager of the
Tampa Bay Lightning, a debt-plagued NHL franchise fighting for
its very existence, and your most charismatic asset, the
sizzling young talent who's the future of your
organization--bruising 6'4", 218-pound center Chris Gratton--has
just received a five-year, $16.5 million free-agent offer sheet
from the Philadelphia Flyers. If you're Tampa Bay general
manager Phil Esposito, you know you can't afford to match the
offer, so you come up with a brainstorm. As Esposito later
explained to arbitrator John Sands during a hearing on the
Gratton matter, he couldn't figure out Philly's proposal to the
22-year-old Gratton because some of the numbers on the sheet
that was faxed to him were, uh, smudged.
Even for Tampa Bay, a team with an inglorious history of
bumbling, this was rich--the equivalent of saying the dog ate my
homework. But when it comes to the Lightning, slapstick has
always ranked higher than slap shots. An article in Forbes last
year called Tampa Bay pro sports' most leveraged team. You could
also make the case that the Lightning, which at week's end had
already gone through three coaches this season and had the
poorest record in the NHL (16-43-9), is the worst franchise in
Tampa Bay's seven-year history is full of episodes just as
ridiculous as that August 1997 smudged-fax claim, which, no
surprise, didn't dissuade Sands from ruling that the Flyers'
offer sheet was valid. (Gratton ultimately ended up in Philly as
the result of a trade with Tampa Bay.) The Lightning has been
for sale since the fall of '96, and nobody seems interested in
buying it. Lightning Partners, Ltd., as the franchise is
formally known, has a mystery owner from Japan named Takashi
Okubo, who bought a limited stake in the team in '90 through his
Tokyo golf resorts company, Kokusai Green, and is identified by
a source in one lawsuit as being a "gangster." The Lightning's
two Japanese-born top executives, president Saburo (Steve) Oto
and executive vice president Chris Phillips, blame much of Tampa
Bay's financial woes on Okubo's accuser, Marc Ganis, a
Chicago-based developer who failed in his efforts to build the
Lightning an arena in time for Tampa Bay's 1992 NHL debut.
The franchise is more than $100 million in debt, and NHL sources
say that bankruptcy or a league takeover isn't out of the
question, an assertion that Oto and NHL commissioner Gary
Bettman deny. Through the years Tampa Bay's ownership has tried
to save money in many ways, some of them counterproductive.
Example: NHL teams usually employ as many as five pro scouts to
do advance work on trades or to stay current on rival clubs, but
the Lightning didn't have a pro scout until it hired Peter
Mahovlich before last June's entry draft. Esposito's
explanation? "We don't need a pro scout. We have our satellite
dishes," he said.
March 30, 1998
Tampa Bay's front office has often aired its dirty laundry in
public. In mid-December, Oto and Esposito engaged in an exchange
in the St. Petersburg Times about the Lightning's faltering
fortunes. Oto said he didn't want "Band-Aid" or "Mickey Mouse"
trades and said Esposito's job wasn't in jeopardy "yet."
Esposito countered by saying, "I'd like to make the final
decision, but I don't, and that's the truth." The Times reported
that Oto was vetoing trades, and Oto admitted he killed one, a
swap that would've sent a minor leaguer to the Anaheim Mighty
Ducks for journeyman center Kevin Todd. "To me, that's a
Band-Aid trade," Oto said.
What does Okubo, the first non-American or non-Canadian owner of
a North American major league sports franchise, think of the
sorry spectacle his team has become? Who knows? He has never
attended a Lightning game, never been to Tampa and never granted
an interview to a member of the North American media. (Okubo
didn't respond to an interview request for this story.) Among
Lightning players and top management, only Oto and Phillips have
met Okubo, and no one at the NHL offices has met him--not former
league president John Ziegler, who approved Kokusai Green's
acquiring a stake in the Lightning, and not Bettman, who has had
to live with the aftereffects of that investment.
Since Kokusai Green became involved with Tampa Bay, the NHL has
mediated disputes involving the Lightning on at least three
occasions and has advanced the franchise money or investigated
Tampa Bay management for conduct at least once. Though Bettman
is loath to admit it, he has been kept in the dark about Okubo
as much as anyone. When he went to Nagano in February for the
Winter Olympics, he scheduled a meeting with Okubo--only to
receive a note when he arrived stating that Okubo was sorry, but
he had been pulled away by a business emergency in China. "He
sent me a tie clasp," Bettman says.
Esposito and Tak Kojima, a former investor in the Lightning,
tell similar stories of last-minute cancellations by Okubo. Tony
Guanci, a consultant for the Las Vegas-based Maloof family,
which considered buying Tampa Bay last summer and later
purchased the NBA Sacramento Kings, says jokingly, "Not only did
I never speak to Okubo in our eight months [of pursuing Tampa
Bay], I began to wonder if he exists."
Why the shroud of secrecy? In a lawsuit filed last year in Tampa
federal court by Ganis against Lightning ownership, management
and former team lawyer David LeFevre, Okubo is described by one
potential Japanese source of financing for Tampa Bay as a
"gangster." In Japan there is a mob organization called yakuza,
which has been known to enter the sports world, most notably to
launder money through such enterprises as golf courses. Stephen
Wayne, the New York lawyer who has handled Tampa Bay's search
for a buyer for the last 14 months, contends that any
implication that Okubo is involved in organized crime is
"entirely unfounded." Adds Phillips, "We deny the charge tenfold."
Regardless of the veracity of the "gangster" allegation,
questions remain about the Lightning's tangled finances, about
Kokusai Green's business practices and about whether the NHL
sooner or later will feel compelled to do something about the
Tampa Bay ownership--or will just keep praying that the
Lightning will get sold and the problem will go away.
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 than 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
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.'"
Oto says that Kokusai Green never wanted more than a limited
interest in the Lightning but that because of Tampa Bay's
financial woes--in June 1991, the team missed a $22.5 million
franchise installment payment--the company felt obliged to take
a majority stake in September 1991. A former Lightning
executive, however, says Kokusai Green and LeFevre plotted to
grab control of the franchise almost from the time Kokusai Green
became a limited partner. "We have copies of the letters that
LeFevre sent to John Ziegler offering to step over us and go
directly into [majority] ownership of the franchise," the
executive says. "He wrote those letters while he was
representing us." (LeFevre says he doesn't remember those
letters and that he worked only for Kokusai Green.)
LeFevre's efforts soon paid off. At a September 1991 meeting,
the NHL's Board of Governors approved Kokusai Green as the
franchise's new majority owner, replacing Esposito's group.
McMullen says that at this meeting he warned other NHL owners
not to trust LeFevre but that his words fell on deaf ears.
"There was no way that LeFevre should have been awarded a
franchise," says McMullen. "That is when I came to the
conclusion we had to get a new [league] president."
Lightning coworkers have called LeFevre the Count--as in
Dracula--behind his back. Others have called him worse. LeFevre
has been accused of double-crossing his bosses and sabotaging
business plans that didn't work to his advantage. These charges
come from rivals he has outmaneuvered and from people he has
worked for, notably Oto, Lowell and McMullen, who says LeFevre
was his personal lawyer when he purchased the Houston Astros in
1979. McMullen broke with LeFevre when he sided with limited
partners against McMullen in a disagreement over the Astros'
partnership. LeFevre says the claims of sabotage and
double-dealing are "absolutely not true," and he denies serving
as McMullen's personal lawyer.
In his lawsuit Ganis charges that LeFevre and Kokusai Green
caused his company, Tampa Coliseum Inc. (TCI), to lose a $60
million financing pledge for the Ice Palace project because they
failed to provide routine information to his lender, Fuji Bank.
Walter Herbert, who was Fuji's loan officer on the arena deal,
and Lowell agree with Ganis's characterization. Herbert, who
worked on the building of the America West Arena in Phoenix, the
United Center in Chicago and the Fleet Center in Boston, says,
"This character David LeFevre was just somebody we didn't want
to be involved with. And Kokusai Green was a strange company.
Very small, yet sort of controlling the deal. It was a negative.
Kokusai Green embellished the problem by not complying with our
requests for normal due diligence."
That was far from the last of the complaints about Kokusai
Green. In October 1995, at least three of Tampa Bay's six
limited partners wrote angry letters to Bettman just days after
Kokusai Green issued an "emergency" cash call to cover Lightning
operating expenses. The partners who sent letters--Kojima;
Andrew Williams of Equity Resource Group, based in Indian River
County, Fla.; and the John Chase family, from Boston--charged
Kokusai Green and LeFevre with "self-dealing" and with a
transparent attempt to drive the limited partners from the team.
The cash call and its terms--$885,000 per partnership unit, to
be paid within 30 days or the limited partner would forfeit any
previous investment--were within Kokusai Green's rights as
controlling partner. But when the limited partners got a look at
the Lightning's finances as a condition of the cash call, they
were surprised. In addition to showing that Okubo owned Kokusai
Green, the records revealed that LeFevre was owed a $2 million
fee for securing the arena financing in Ganis's stead and that
Kokusai Green had been investing in the Lightning in the form of
loans rather than equity, which allowed Kokusai Green to charge
Tampa Bay as much as 12% interest. (The Lightning now "owes"
Kokusai Green $59.9 million--$45.6 million in loans and $14.3
million in interest, but Oto says, "Not a penny of interest has
ever been paid by the team.")
Bettman confirms that the NHL investigated and eventually helped
broker the exit agreement that allowed the three aforementioned
limited partners to leave at what the Lightning's Davis
describes as "a slight loss." Davis concedes, "They [the limited
partners] may not have been given some information. There may
have been some errors of omission, some misrepresentations."
Whether Kokusai Green says it intended to or not, the result was
that Okubo's company ended up with what it was accused of
seeking: total control of the Lightning and of the arena project.
In some ways Kokusai Green remains as mysterious as Okubo. The
company says it's in the golf course management business, but
when SI contacted a variety of sources in Japan, including the
Japanese Pro Golf Association, golf course management firms,
trading companies, prominent businessmen and golf writers, none
had ever heard of Kokusai Green. SI also found that Kokusai
Green, which on company documents gives its address as being in
Tokyo's Ginza district, isn't listed among that city's 10,000
largest businesses, nor is it one of Japan's 500 biggest
recreational golf, leisure-sport or recreational companies.
Three of the four courses that Kokusai Green claims to own are
located in out-of-the-way spots in Japan's Hokkaido, Ibaraki and
Miyagi prefectures. Nevertheless, Oto says that primarily
through the sale of memberships at those courses--memberships
priced at $50,000 to $70,000, according to Oto--the company has
built up more than $100 million in cash reserves. Like Oto's
assessment that Okubo's personal wealth is $250 million, you'll
have to take his word for it. There's no way to document either
figure. Kokusai Green, like the 20 or so other companies Okubo
purportedly owns, is privately held, and its financial
statements aren't public.
This is a story in which hardly anyone escapes unscathed.
Esposito says he ruined a marriage and risked his shirt to land
an NHL club for Tampa. "There were so many times I was scared
s---less," he says. Oto and Phillips say they've tried to do the
honorable thing, only to find their motives questioned. Ganis
says he has lost millions. When Lou Lamoriello, the general
manager of the Devils, was walking to the Ice Palace on Feb. 26
for a game against the Lightning, LeFevre pulled up alongside
him in a car and offered him a ride. Seven months after
resigning from the Lightning when Oto accused him of lying about
his involvement in the Tampa Bay Buccaneers' stadium deal while
he was still on the Lighting payroll, LeFevre is trying to pull
off his biggest power play yet. "I'm working on buying the
Lightning and the arena," he told Lamoriello. Says McMullen,
"He's got nine lives."
If a solution to the Lightning's financial struggles remains
elusive, so does Okubo. One day while Tampa Bay forwards Mikael
Andersson and Mikael Renberg were in Nagano as part of the
Swedish Olympic team, they found two boxes--one for each of
them--outside the door to their apartment in Olympic Village. In
each package was a Japanese table decoration and a note from
Okubo welcoming them to Japan. "It was a real nice thing for him
to do," said Andersson later. "I mean, I guess it was from him.
The note had Okubo's name on it, but...." Yes? "It was