Lightning Sale On Ice

posted on
Lightning Sale On Ice

The Tampa Bay Times

Three months after it was announced with fanfare at the St. Pete Times Forum, a $200-million deal to sell the Tampa Bay Lightning has fallen through.

On Nov. 14, team owner Palace Sports & Entertainment terminated a purchase agreement with Absolute Hockey Enterprises. A rift among the buyers left them unable to make a $5-million payment due Palace Sports by Nov. 12.

"We concluded that it does not appear that purchasers will consummate the transaction in accordance with the terms and conditions of the agreement," Palace chief financial officer John O'Reilly said in a letter two weeks ago. "Therefore we must exercise our right to terminate the agreement to protect the Lightning franchise."

Details of the fallout, as first reported Monday afternoon by tampabay.com, emerged when companies and partnerships owned by Absolute Hockey investors Jeff Sherrin and Doug Maclean sued Hollywood horror movie producer Oren Koules. Other known investors were Mark Burg, Koules' business partner, and Tampa lawyer Steve Burton.

Sherrin, a Coral Springs real estate developer, and former NHL executive Maclean allege that Koules not only defaulted on a $4.17-million payment (part of the $5-million due on Nov. 12) but that he also went behind their backs to make his own arrangements with the Lightning.

They are seeking at least $50-million in damages from Koules, whom they blame for the deal's collapse. But the termination letter from the Lightning suggests the financial problems ran deeper than Koules' $4.17-million. O'Reilly acknowledged that Palace Sports was to have provided $30-million worth of seller financing.

Tom Scarritt, attorney for Sherrin and Maclean, said his clients went to court reluctantly after Koules stopped cooperating with his partners. The lawsuit hints that Koules breached the original agreement by negotiating directly with the Lightning.

"Just a couple months ago everything seemed to be going along smoothly," Scarritt said. "Koules decided he wanted a much higher percent of the profits and ownership, and he was willing to shoulder a greater financial burden. So the partners decided to rewrite the contract to allow that to happen.

"He made a partial payment of $5-million, but within the last two or three weeks, all of a sudden we get totally different behavior out of him."

After being approached by Sherrin last summer, the team quickly embraced the idea of a sale. CEO Tom Wilson says Palace Sports has lost at least $76-million during eight years of ownership that included a 2004 Stanley Cup championship.

After Maclean (who declined to comment Monday), Sherrin and Koules were introduced at a joint news conference with Absolute Hockey and Palace Sports at the St. Pete Times Forum in Tampa, the trio of prospective owners promised speedy ratification of the deal from National Hockey League owners. Included in the purchase was 5.5 acres near the Forum, land that Sherrin, based on his background, could have developed.

The team hopes to resurrect some sort of sales agreement that likely would include Koules, a former minor league hockey player who made his fortune producing the Saw horror movie franchise. Koules, who was responsible for providing $50-million cash of the $60-million the group had accumulated, could not be reached for comment.

"While there is no current agreement in place to sell the team, PS&E is hopeful that those differences can still be resolved and a successful ownership transfer can take place," Palace Sports said in a statement Monday evening. "As it has since purchasing the team in 1999, PS&E will remain 100 percent committed to the best interests of Lightning, its fans and the entire Tampa Bay community."

Categories: Past Law Cases, Sports | Tags: The Lightning, Lawsuit, Sports | View Count: (2141) | Return