Amid speculation that a new owner is poised to take over the Tampa Bay Lightning, the organization lost a top executive Friday.
And the team’s captain might be the next to go.
Joe Fada, who has been the chief financial officer for the Lightning since 2003, resigned his position yesterday to take the same job with the Tampa Bay Buccaneers of the National Football League.
Fada’s resignation comes amid reports the team is on the verge of being sold from the OK Hockey Group to Boston-based hedge fund manager Jeffrey Vinik. Sources say Fada’s departure has been in the works since December and that it had nothing to do with the team’s ownership situation. In fact, those doing the due diligence on Vinik’s behalf reportedly attempted to convince Fada to stay with the Lightning.
But the timing of the announcement is curious.
Meanwhile, several more sources Friday confirmed a THN.com report that Vinik, a limited partner in the Boston Red Sox, is negotiating to buy the Lightning from current owners Oren Koules and Len Barrie in a deal that is being brokered by NHL commissioner Gary Bettman. The selling price is believed to be about $170 million, but the final figure could turn out to be lower than that.
There is also growing speculation Vinik will want to immediately trim payroll, meaning the team will be shopping captain Vincent Lecavalier and his $7.72 million salary cap hit leading up to the March 3 trade deadline. In the first year of an 11-year contract, Lecavalier’s salary is actually $10 million this season and each of the next six seasons and it’s believed Vinik thinks the Lightning has to get out from under that contract if it is to be financially viable.
It’s believed that if the deal is made, it will be done before Vinik takes over the team so the new owner can be insulated from the inevitable backlash that would come from dealing the franchise player.
One team that appears to have entered the fray for Lecavalier is the Los Angeles Kings, who are also believed to be in the running to deal for Ilya Kovalchuk of the Atlanta Thrashers. So far, the deals presented to the Kings for either player – obviously, they would deal for one or the other and not both – have reportedly not been very attractive.
It’s believed the Lightning would want a large package of players and draft picks for Lecavalier, along with the cap and salary relief they’d receive by dumping Lecavalier’s contract. The Lightning has apparently asked for defenseman Jack Johnson, right winger Wayne Simmonds, a prospect and several draft picks.
The Kings are a natural destination for Lecavalier, partly because it’s believed he would not block a trade to Los Angeles and in part because the Kings have both the salary cap room and the assets to get a deal done.
Sources have also said Vinik is not pleased that news of his interest in the Lightning has been leaked and while it isn’t expected to scuttle the deal, it has created some road bumps. For example, one source said Wall Street investors have expressed surprise that an aggressive hedge fund manager such as Vinik would make what is known in the industry as a “vanity purchase.”
Given Vinik’s proclivity for investing money into money-making ventures, there has been some surprise that he would put his resources into a money-losing hockey team that, if the price is as high as $170 million, is overvalued.
Andrew Zimbalist, a professor of economics at Smith College and one of North America’s leading sports economics experts, said Vinik should be prepared to lose money at first, which may have an effect on his integrity as a hedge fund manager.
“It might not be a great thing for his reputation in the short term, but we’ll see,” said Zimbalist, who was asked to arbitrate a dispute between Oren Koules and Len Barrie four months ago. “Most sports teams are a vanity purchase to some degree. It just depends on how much you’re willing to pay for the vanity. For this, the cost is $170 million and perhaps losses of $10 million or $20 million a year for a few years. But there also might be value in that in terms of self-promotion.”
Regardless, Zimbalist said the Lightning is not a great investment. It should be noted that Vinik is using his own capital for the deal and not the money from clients who invest in his hedge fund.
“If someone were to ask me about it,” Zimbalist said, “my advice would be to be very cautious about getting involved.”
Ken Campbell, author of the book Habs Heroes, is a senior writer for The Hockey News and a regular contributor to THN.com. His blog will appear Wednesdays and Fridays and his column, Campbell’s Cuts, appears Mondays.
For more great profiles, news and views from the world of hockey, subscribe to The Hockey News magazine.