Return to Sender
David Shoalts is all over the latest scandal among the NHL ownership group. Apparently Len Barrie bought his half of the Tampa Bay Lightning with someone else’s money without telling the someone else what he was doing. According to the company auditor, Barrie’s actions were at best improper, and at worst, illegal.
The matter also raises questions once again about the NHL’s due diligence in investigating new owners…
Mr. Barrie and Mr. Koules, who has no involvement in Bear Mountain, were the first two owners investigated last year after the NHL claimed it made its due diligence much tougher in the wake of the scandal that saw William (Boots) Del Biaggio approved as a part-owner of the Nashville Predators and depart in a hail of bankruptcy and criminal charges.
To me, this story isn’t so much due diligence or even Len Barrie. The real issue is the viability of the Tampa Bay Lightning if they can’t find anyone with money to own the team.
Whether or not Len Barrie has done anything wrong – and he denies any wrongdoing – he failed my test to be an NHL owner even before his resort investment began to founder. (My test involves answers to obvious questions: “Does this guy have any money? Where did he make it?”) Barrie was never rich enough to own a big stake in a hockey team. Oren Koules has a lot more money than Len Barrie, but I don’t think he’s got nearly enough either. If he had a fortune he would not have invited Barrie along in the first place.
Palace Sports and Entertainment – owned by the estate of Bill Davidson – had been trying to sell the team for a year before Koules emerged in the spring of 2008. Unfortunately, Koules had neither the money nor the partners to swing the deal. Even after hooking up with Barrie, Koules could not get financing. It is a mark of how desperately Palace wanted out that they agreed to temporarily carry the mortgage. After Koules failed again to get alternative financing, the arrangement became more than temporary.
It now appears that Koules and Barrie’s falling out happened when the team ran out of money early in 2009 and Barrie couldn’t answer the cash call. Koules (and the league?) carried the Lightning through the season. If the news reports are correct, Koules is back knocking on the Palace door because Len Barrie has to be bought out, because the team will probably run out of cash at some point during the season again, because Koules doesn’t have the money and because Koules can’t borrow it anywhere else.
What can Palace Sports and Entertainment do? I’m sure the executors of Bill Davidson’s estate want out of the hockey business, but they have a substantial amount of money at risk. If Palace goes along it will be because the alternative is bankruptcy and they will be effectively repossessing the team. Furthermore, the team is not the same one they sold. The fan support has eroded, they are paying Barry Melrose not to coach, and the team has added well over $100 MM in long term payroll obligations. Palace Sports and Entertainment does not want to own this hockey team.
Who does? If the answer is nobody, Gary Bettman has another big problem on his hands.