Takashi Okubo should send an effusive thank-you note to the citizens of Hillsborough County. In recent days, taxpayers have chipped in about $1.15 million to help out Okubo, a man who, as far as anyone knows, has never set foot in Tampa and wouldn't know Ybor City from Timbuktu.
Officials were forced to dip into the county's tourist tax funds to offset a shortfall in money to pay the mortgage on the Ice Palace, a publicly owned facility that Okubo controls. That wasn't supposed to happen. Hockey, you may recall, was going to be a booming success, and the Ice Palace an economic engine for downtown Tampa. Ticket surcharges and parking revenues would certainly be enough to pay the publics $87-million share of the arena's construction cost, officials proclaimed only a few years ago.
It hasn’t turned out that way, of course — a story depressingly reminiscent of the Tampa Convention Center and the Florida Aquarium. The Tampa Bay Lightning is in the National Hockey League’s cellar — well, actually, its win-loss record is so bad, "subterranean" is a better description.
Loss after wrenching loss — 11 in a row as of Jan. 28 — have driven away fans. A new coach, Jacques Demers, and a flurry of player trades haven’t helped.
With the newly triumphant Buccaneers and the long-awaited Devil Rays vying for corporate and fan dollars, a hockey team that’s better at pratfalls than scoring goals may find itself an unmarketable commodity.
Nonetheless, while Okubo certainly has some monumental cash problems of his own with the Lightning, he doesn’t have to sweat paying the public bond issues — even if his sad-sack team is the culprit responsible for calamitous deficits in parking and ticket surcharge collections.
No, common citizens are obligated to do that for Okubo.
Just who is Takashi Okubo to merit such generosity? A lot of people have wondered that during the last few years.
Mel Lowell, for example, was one of the Tampa Bay Lightning’s original partners. He learned about his boss in a curious manner. "We were putting together our media guide" for the 1994-95 season, the team’s third year on the ice, recalled Lowell, the Lightning’s executive vice president until a bitter dispute two years ago. "We were already late and were the laughingstock of the league. They (other team officials) were hiding the pages."
The reason for the subterfuge, Lowell said, is that a new name was making its first appearance in that year’s media guide, and the team’s insiders wanted to keep it secret as long as possible from Lightning employees, the press and the public. The mystery name was Takashi Okubo, who, as Lowell would learn, was the true owner of the Japanese company that had controlled Tampa’s hockey team since early 1991.
Okubo evolved from a minor investor to a major player in the Lightning shortly after the team won its National Hockey League franchise in December 1990. His Kokusai Green Co. Ltd. then took over the Lightning. He was the main beneficiary when the first plan to build an arena collapsed, and Kokusai Green captured the valuable development rights. He was the recipient of $87 million in public financing for the arena, plus tens of millions of dollars in private loans to the Lightning.
Yet public officials, private lenders, the NHL, and Lightning investors and employees knew little — and often nothing — about Okubo until more than two years after he and his lawyer, David LeFevre, skillfully swept aside other partners and would-be coliseum builders in a power play to own Tampa’s ice.
Okubo’s employees and lawyers throw a different spin on events. They say he never intended to be a long-term player in hockey. "It was only because of major misrepresentations that the Japanese became more than minor partners," said one source close to Lightning management. "It was never Okubo’s intent to become the controlling interest."
And, Lightning executives say, as losses mounted, Okubo generously pumped millions of dollars into Tampa’s economy and made a dramatic save of the franchise after previous groups failed to find financing for the team and the arena.
Whichever slant is accurate — and both are to a degree — this much remains indisputable: Little more is known today about Okubo than when he first surfaced as the stealth owner of the Lightning four years ago.
The few new morsels of information about Okubo come largely from a succession of lawsuits in state and federal courts. Also, the Weekly Planet has obtained documents that shine light on the Japanese businessman’s finances and associations — although some of that data, as with just about any information on the Lightning and Okubo, is hard to verify.
Skating on Thin Ice
So, Okubo’s an enigma. Interesting, but does the truth about the man really matter?
After all, being reclusive isn’t a crime, and no one has yet produced documentary proof that Okubo is, as one federal lawsuit alleges, connected to the Japanese underworld. Okubo might be just another in a string of odd characters who have acted their roles in the Lightning tragicomedy.
But Tampa’s hockey team has captured national attention for two decidedly unpleasant reasons that make Okubo noteworthy: The team is dead-as-a-cold-corpse last in the NHL, with a demoralizing record of 9 wins, 34 losses and 8 ties.
At the same time, the Lightning is scoring the dubious reputation of being one of professional sports’ all-time financial disasters. It is one of the most debt-laden franchises in the nation. The team owed banks, bond holders, the NHL, vendors — and, notably, Okubo — $177,120,880 at the end of last season, according to Lightning financial statements.
Lightning lawyer Paul Davis last week emphasized that third-party debt was $103 million; an analysis of the team’s finances put the number at about $116 million. Okubo is owed about $61 million in loans and interest, according to team records.
The Lightning’s value is a mere fraction of its debt. Forbes recently pegged the team’s worth at $75 million, with debt exceeding value by 236 percent, the worst balance sheet in pro sports. When teams have debt in excess of 50 percent of their value, they are considered financially ailing.
Others are even less generous in their diagnosis of the Lightning. Financial World in June calculated the team’s value at only $64 million and the authoritative Conway’s Sports Research assessed it at a puny $48 million. The Lightning ranks 22nd in value among the NHL’s 26 teams, and 109th among all of the 113 major sports franchises, according to Financial World.
Meanwhile, this season’s financial performance is as lame as the Lightning’s efforts on the ice. Hockey fans are staying away from the Ice Palace in droves. As of Nov. 15, the Lightning had attracted an average of 11,213 fans to Ice Palace games, a plunge of more than 25 percent compared to last year, according to NHL internal reports.
Per-game revenues averaged $425,676 as of Nov. 15, a drop of 11 percent from last season’s $479,012, according to the NHL. The team’s confidential internal projections anticipated average gate revenues of $585,750.
Since Nov. 15, as the team has lost and lost and lost on the ice, attendance has reflected the continued meltdown. In December, an average of 11,002 fans clicked through the Ice Palace’s turnstiles for each of seven games, barely filling half the arena’s seats, according to team reports to the Tampa Sports Authority. Only 10,815 spectators watched the Bolts fall 3-2 to the Carolina Hurricanes on Jan. 28.
The bottom line is this: The Lightning have piled up losses of $81.1 million in the last five seasons, according to internal team financial statements. If you deduct money owed Okubo and non-cash paper losses claimed for amortization of the franchise and player costs (their salaries are already computed into the balance sheet), the losses fall to $32.3 million, still a lot of red ink.
Does all of that matter now that there are serious efforts to sell the team?
Emotionally bruised fans can hope that a new owner would pump money and vitality into the Bolts. "Kick Ice" might again evoke cheers instead of snickers. The mystery over Takashi Okubo and his murky business empire would become irrelevant. Skullduggery alleged in federal lawsuits would cease to merit much interest — and a sale would likely force settlements without a determination of who was really the bad guy.
In short, a nasty national embarrassment would be neatly swept under the ice.
But, there’s little likelihood of a quick sale. One prospective buyer, the Maloof family of New Mexico, walked away from the table despite, according to NHL insiders, being handpicked by league officials to take over the Lightning. NHL Commissioner Gary "Bettman absolutely thought that was a done deal," said veteran sports writer Russ Conway, author of Game Misconduct, a book about corruption in the NHL.
Atlanta developer David Berkman is said by one league insider to be negotiating a $164-million deal for the Lightning. That price includes assuming almost $96 million in debt, according to transaction documents. Those debts include about $60 million in arena bonds owed by the Lightning, other team debt of $21.5 million, repayment of $12.2 million advanced for broadcast rights and by the NHL, $1.3 million owed to a limited partner and $1.1 million owed to LeFevre. After other adjustments, the cash required from the buyer would be $24.1 million.
Lightning President Steve Oto, Executive Vice President Chris Phillips and attorney Davis indicated last week that those terms were close to the mark, but they wouldn’t predict whether a sale is imminent. "We would lose considerable money" if a deal is signed at that price, Phillips said.
Berkman also wouldn’t comment on details of his negotiations but told the Planet that he had "much to do" before he could close a purchase. He denied knowing about federal lawsuits against the Lightning and its former New York law firm, Reid & Priest — which means either he still has significant homework to do on the deal or that the Lightning hasn’t been overly generous in sharing information about the team’s troubles, or both. Davis said Berkman’s lawyers have been advised of the litigation.
Another prospective buyer — probably the best hope for this community — is Skip Glass, president of Tampa’s TransWorld Diversified Services, a temporary employment firm. Glass has teamed up with former Lightning partner Lowell to make a bid. Glass confirmed that the Lightning was seeking about $164 million, "but we would not want to close a deal in that range. Previously, our estimate of the team’s worth was much lower. And now, if anything, the value of the team has declined even more recently due to the losses."
So, until there is a deal — and maybe much longer because turnarounds take time — the Lightning will continue its embarrassment on the ice, fans will seek other entertainment, and tax dollars will be siphoned to pay the Ice Palace debt. That’s one reason to pay attention to the Lightning, whether you’re a hockey aficionado or not.
Here’s another reason, expressed by Jonathan Alpert, a lawyer who has been involved in litigation against the team: "The Lightning is a private, profit-making entity using public dollars to help finance its operations. It enjoys a protected franchise. Yet, everything is done in secret. That isn’t right. Every team that feeds at the public trough should be subject to the Sunshine Law. Its records should be open and there should be full financial disclosure."
The Lightning’s attorney, Davis, said: "I can’t disagree. You can make a good argument that people should know more" about Okubo and the internal machinations at the Lightning.
The Bolts’ Financial Fizzle
Here’s the bad news: Things could get worse. The Lightning could end up collapsing financially. The team has discussed that scenario. In a Jan. 30, 1993, internal memo, Kokusai Green executive Mushao Miyake called the Lightning finances "a crisis," and stated that "we are afraid that … loss of confidence in the company’s financial security will be triggered, which will force the company out of operation."
Twenty months later, as the team’s debts mounted, General Manager Phil Esposito discussed bankruptcy at a management meeting. "That was just Phil," lawyer Davis said. Perhaps, but bankruptcy has indeed crossed the minds of the Lightning bosses.
On Nov. 16, 1994, two months after Esposito pondered bankruptcy, Mark Anderson, the team’s chief financial officer, wrote to his bosses: "Our working capital situation is critical and is hazardous to the arena effort as well as the Lightning. We continue to pay, as we have for two years, yesterday’s bills with today’s dollar. It is uncertain whether we can ‘dodge the bullet’ as we have in the past."
According to information in lawsuits and other team memos obtained by the Planet:
Team president Oto stressed last week that "we’re paying our bills." And, NHL Commissioner Gary Bettman said: "The club is current in all of its obligations, right? That’s all we care about."
However, the financial crisis festers, exacerbated by such things as players’ salaries, which have soared from about $9 million in the 1992-93 season to about $23.5 million this season (or, from less than $200,000 per player six years ago to more than $1 million today), according to Oto and Phillips.
"We will continue to fund the team until it is sold," Oto said.
Creditors are still pounding on the Lightning’s door, however. In 1994, TDC Inc., an American affiliate of Tokyo Tower Development Co. Ltd., a Lightning limited partner, made a $1-million loan to the team. The Lightning didn’t repay the loan, despite repeated demands, and last June TDC sued. In its complaint, TDC stated: "The Lightning invariably responded with an assortment of evasive and dilatory justifications for its inability to meet its obligations."
Under worst case scenarios, Tampa could lose its hockey team, but maybe that wouldn’t be so bad. "Hey, we would get an arena at less than half price," said Mickey Farrell, director of operations at the Tampa Sports Authority, the technical owner (but not operator) of the Ice Palace. "We could go after another franchise, maybe an NBA team. The community can’t lose."
What could be really bad is that a new Lightning owner might demand more concessions to keep the team in Tampa — perhaps asking local governments to pay off $60 million that was the Lightning’s portion of the Ice Palace construction debt. The history of Tampa officialdom is to cave in to demands from team owners in order to get and save franchises.
If local officials balked, the new owner could file for bankruptcy protection, not an outrageous act considering the team’s negative net worth. Bankruptcy — which would allow the Lightning to break leases at the Ice Palace, and skate to another city — has happened before in the NHL, an organization beset by financial problems and misconduct of its executives and team owners.
From Dukes to Deals
The general public perception of Lightning history is that during 1990, a group headed by Esposito had a rugged time putting together a viable bid for a hockey franchise. Investors came forward and then reneged. The most entertaining episode starred His Grace, Angus Charles Drogo Montagu, the honest-to-God 12th Duke of Manchester. He promised financing, but it was a scam, and two years ago a federal jury found the duke guilty of conspiracy and wire fraud.
Out of this disarray, a group of Japanese companies emerged as the self-proclaimed saviors of Tampa’s hockey hopes. The Japanese provided the cash muscle that allowed a group headed by hockey great Phil Esposito to wrest the franchise away from a competing St. Petersburg organization in heated competition before the NHL board of governors.
What is clear is that the only thing the NHL cared about was whether a group that wanted a team would pony up the $50 million franchise fee. Gil Stein, a former NHL president, wrote in his book Power Plays last year: "Say the magic words and win an expansion franchise. And what were the magic words? ‘We’ll pay the $50 million!’"
Stein, in an interview, said it was then Commissioner John A. Ziegler’s responsibility to check out prospective franchise owners, such as Okubo and Kokusai Green. "Did they do any real investigation? Not to my knowledge."
NHL spokesman Andy McGowan refused to comment on the league’s 1990 expansion. "It wasn’t under Gary Bettman’s watch." Ziegler, now the target of litigation that charges racketeering and conspiracy while he was NHL boss, could not be located.
Eventually, the NHL did come to know about problems but chose to ignore them, critics charge. "The NHL was specifically aware of certain challenged conduct by the controlling ownership of the Tampa Bay Lightning," stated Mark S. Levinstein, a Washington, D.C., attorney in a May 19, 1997, letter to the league. "An investigation conducted by the NHL and its outside counsel made the NHL aware of a wide variety of alleged misconduct, including self-dealing."
When the Japanese companies took over control of the Lightning, their lawyer, David LeFevre, emerged as a major dealmaker in Tampa. LeFevre, the team’s "governor" until an unexplained rupture with Kokusai Green last year, is a New York lawyer who had been involved with the Houston Astros and Cleveland Indians. He also had once struck a deal between the New York Yankees and Nippon Meat Packers, owner of a Japanese major league baseball team. LeFevre’s relationship with Nippon Meat became the Japanese beachhead in Tampa.
LeFevre already carried baggage when he hit Tampa. Stein, in his book, noted: "There is seemingly intractable bad blood between him and (New Jersey Devils owner) John McMullen," which dated back to an incident when both were involved with the Astros.
Eventually, LeFevre would create a river of bad blood in Tampa with almost everyone who did business with him, including his key client, Kokusai Green.
For example, Andrew Williams, president of Equity Resource Group in Vero Beach, a Lightning limited partner, protested about $2 million paid to LeFevre for arranging the arena financing. Williams called the fee "improper" in a Nov. 7, 1995, letter and asked: "Having made the decision to embrace (Kokusai Green) and LeFevre, is the NHL willing to assume responsibility (for) … their conduct?"
Robert Murphy, an attorney for another limited partner, called for LeFevre’s ouster from Lightning management. Murphy complained on Dec. 1, 1992, that "information provided to the press … resulted in materially false and misleading statements regarding an upcoming private placement of securities. This action … (by) LeFevre clearly constitutes an illegal ‘priming of the market.’"
In a Jan. 30, 1993, Kokusai Green memo, LeFevre is accused of being tardy in sending money back to Japan. The memo asked: "What are his excuses?"
In separate lawsuits by Lowell and Marc Ganis, who had attempted to build a coliseum for the Lightning, LeFevre is repeatedly accused of making misrepresentations. Five current and former Lightning associates and business contacts made similar criticisms of LeFevre. None wanted to be quoted on the record. "He’s ruthless," said one.
It’s not clear why LeFevre was ejected from the Lightning inner circle. But it is obvious there is little love in the Bolts’ executive offices for the team’s former governor. "David LeFevre? You know it, he’s not always truthful," said Executive Vice President Phillips.
LeFevre did not return phone calls left on his answering machine at the Lightning offices. No residential or business phone is listed for him.
All in all, however, LeFevre didn’t do bad, collecting the $2 million for arranging the arena financing, and a more recent $1 million paid in installments.
Nippon Meat became the first Japanese company to eye hockey in Tampa. It was joined in the venture by Tokyo Tower Development Co. Ltd. and Okubo’s Kokusai Green.
Also along for the ride was New York Yankees owner and Tampa resident George Steinbrenner, whose presence was intended to quiet concerns of the NHL and win the support of the local business community. He was repeatedly described by the Lightning as a limited partner. Court documents show that wasn’t the case, and in a series of letters from February through April 1992, Steinbrenner demanded the return of a $2.5-million deposit. "I will again reiterate, for the nine-millionth time, that I am not going to be proceeding," Steinbrenner wrote LeFevre on April 4, 1992.
From 1990 until the summer of 1993, another outfit, Tampa Coliseum Inc., was slated to build an arena adjacent to Tampa Stadium. The involvement of Tampa Coliseum, whose partners included Chicago sports consultant Ganis and Tampa lawyer-developer Jim Cusack, was an integral component to Tampa winning an NHL franchise. However, after a long series of delays TCI was unable to finance its deal and folded in mid-1993. Exactly what caused it to fold is at the heart of Ganis’ lawsuits.
In late 1993, the Lightning, with LeFevre now in full control, went into the coliseum development business. LeFevre pitted St. Petersburg against Tampa as the spot for an arena. He struck a two-year deal at the Florida Fairgrounds’ Expo Hall, broke it after one year and moved to St. Pete’s ThunderDome, where the Bolts played for three years.
Tampa’s downtown landowners, aided by County Commissioner Ed Turanchik, pitched an area along Garrison Channel, and that’s where the arena landed, funded by $87 million in public money and $60 million in bonds backed by the Lightning to be paid from arena proceeds. The Ice Palace opened Oct. 20, 1996.
But, wait. According to Ganis — and detailed in his two federal lawsuits, one against the Lightning and the other targeting LeFevre and the law firm where he was a partner, Reid & Priest — there’s a lot more to the story.
Here’s the account as told in court documents and by Ganis and five other current and former associates of the Lightning.
Code Green
When, in 1990, the Lightning partnership was struggling to find financial backing, LeFevre offered to find investors from among several Japanese companies. The Lightning organizers flew to Tokyo to make their pitch, beginning with Nippon Meat.
"Most of these companies were impressive," recalled one Lightning insider. "Nippon Meat, Tokyo Tower all checked out. But not Kokusai. We couldn’t find out anything. We weren’t permitted to go to the offices of Kokusai Green. We met at a nightclub in the Ginza (Tokyo’s prestigious entertainment and commercial district) where there were girls climbing all over us."
A Japanese man named Yoshio Nakamura, who claimed political connections, was introduced as the head of Kokusai Green. Nakamura for the next three years would be touted as the company’s strongman.
"I thought it was Nakamura’s money,'' Esposito told the St. Petersburg Times in October 1996.
In a May 19, 1992, letter to Sun Bank of Tampa Bay — written to coax along a $15 million loan — Lightning executive Miyake listed Nakamura as 50 percent owner of Kokusai Green and the only person "active in management." Okubo was noted as minor partner with 20 percent ownership and no management responsibilities.
Lawyer Davis acknowledged last week that wasn’t accurate. Ganis argues that such misrepresentations constitute fraud.
Others don’t recall hearing much about Kokusai Green’s true owner.
"Okubo? I don’t know that his name came up," said Jim Pappas, former business dean at the University of South Florida who acted as mediator between Tampa Coliseum and the Lightning. Part of the negotiation had required the companies to supply detailed corporate information.
"We never were told too much about Kokusai Green, never saw any audited statements," said Fred Karl, former county administrator who negotiated the arena deal. "I don’t recall much mention of Okubo."
Ganis, in his court filings, stated that the Lightning sought "to conceal the fact that Mr. Okubo was the driving and controlling force behind (the team) … The purpose of this deception was to deflect public and private interest and financial investigation away from Mr. Okubo."
Okubo’s identity was so well concealed, he managed to play a dual role with the Lightning. In January 1991, the Lightning had to pay $5 million to the NHL as an initial installment on the $50 million franchise fee. "We could only raise $1.5 million," said one Lightning associate. "David LeFevre said he had a solution, that an acquaintance of Yoshio Nakamura could make the loan."
The loan came through a Japanese businessman and Denver resident named Masami Shigata. The Lightning partners were forced to pay Shigata $350,000 as a "finder’s fee." Shigata also demanded favors such as a case of 1978 Romanee Conti Burgundy wine, worth about $250 a bottle in the United States and 10 times that amount in Japan.
Shigata didn’t actually provide the money, however. It came from a company called Okubo International — yes, Takashi Okubo. "We had no idea who Okubo was or that he controlled Kokusai Green," which was already a team partner, said the Lightning associate.
Ganis’ lawsuits and other litigation against the team contend that
LeFevre and Kokusai Green were not the saviors of Tampa’s hopes for a hockey
team and arena — but were conspirators. Three major events happened, according
to court documents:
"LeFevre … had no intention whatsoever of allowing (Tampa Coliseum)
to construct, maintain or operate the Lightning’s arena," a Ganis lawsuit
states.
However, Lowell, who settled his claim and left the team, states in his lawsuit that the capital call was "nothing more than a naked taking of partnership units by Kokusai."
The Lightning is seeking a dismissal of one Ganis lawsuit. The other, which targets LeFevre’s employer, Reid & Priest, was only recently served on the law firm. Larry Hirsh, a spokesman for the firm, wouldn’t comment other than to say that the suit really didn’t accuse the firm of wrongdoing, only LeFevre.
Ganis, meanwhile, is in the process of retooling his legal team. Williams & Connolly, a heavyweight Washington, D.C., law firm, is stepping in, augmenting Chicago lawyer Greg Adamski. Tampa’s Jonathan Alpert is withdrawing. Ganis also has asked the NHL to hold any money generated by a sale of the team pending the outcome of his lawsuits.
The perplexing question for Hillsborough citizens is why — with all of the questions about Kokusai Green, with its staggering debts and unpaid bills, and with fair indications that someone wasn’t telling the truth — didn’t public officials step in and start demanding better answers.
One of the more interesting allegations against the team is contained in Mel Lowell’s lawsuit, which states: "Financial information presented by (Kokusai Green) to the City of Tampa, Florida; Hillsborough County; and the State of Florida is materially false and/or misleading."
If true, that was information needed to secure the $87 million in public financing for the arena. If the information is false, are the bonds valid?
There was plenty of smoke evident in the early days of the team.
For example, in September 1994, then City Finance Director Bob Harrell said he didn’t consider the Lightning a "super solid triple A" risk, according to letter by team CFO Anderson. Which, of course, raises another question: Why were local officials so eager to lend tens of millions of taxpayer dollars to an organization that didn’t have a rock-solid financial reputation?
And, at one private meeting, public officials were advised of concerns about Kokusai Green. Tom McEwen, the longtime sports editor and columnist at The Tampa Tribune, and the city’s consummate insider gossip, told the Weekly Planet in May: "Yeah, I heard that many times." Don Gifford, attorney for the Tampa Sports Authority, also remembered the allegations.
In a May interview with the Planet, LeFevre said he was called into the meeting of officials, which included then-Mayor Sandy Freedman. "They all looked at me with long faces and said, ‘What about all of this?’" LeFevre said. "I told them what I knew" — which the lawyer maintained was very little — "and nothing ever came of it."
The Lightning ranks 22nd in value among the NHL’s 26 teams, and 109th among all of the 113 major sports franchises, according to Financial World.
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