PSE, GSP Agree To Finance Lightning Sale In Credit Crunch

PSE, Galatioto Sports Partners To Finance Sale Of Lightning To Movie Producer

Palace Sports & Entertainment (PSE) and Galatioto Sports Partners (GSP) will finance PSE's sale of the Lightning to movie producer Oren Koules in order to "remove the uncertainty that has been a constant of the four-month process," according to Damian Cristodero of the ST. PETERSBURG TIMES. Lightning President Ron Campbell: "To move the process along and make it as efficient as it can be and gain control of the process, (GSP) and [PSE] stepped in and said, 'We'll finance it until the credit markets get corrected. At some time, and we'll be patient, you all will pay us back when you get traditional financing.'" While Campbell did not give specifics, it is believed that PSE and GSP will contribute $100M of the $200M sale, which includes the Lightning, the St. Pete Times Forum lease and 5 1/2 surrounding acres. How much PSE and GSP each would contribute also is unknown, but PSE is "likely the primary lender." Paperwork "still must be signed, but that is expected to be done relatively quickly." Campbell said of the credit market, "We've never seen it like this in our lifetime" (ST. PETERSBURG TIMES, 4/22).

ANOTHER LOSS: SPORTSBUSINESS JOURNAL's Daniel Kaplan reports CIT Group, which sources said was set to lend Koules up to $110M for the acquisition, earlier this month backed out of the agreement. This follows the loss of a "pending loan earlier this year from Société Générale, which abruptly exited the sports business and scuttled an oral agreement" with Koules. PSE CEO Tom Wilson said in an e-mail, "It is fair to say that the financial markets are strained, as we speak, and we will look to help with the financing of a portion of the purchase price." But Wilson added, "The deal is still on." PSE's assistance in its own sale is not "unprecedented." News Corp. and Molson both employed seller financing with their sales of the Dodgers and Canadiens, respectively. An investment banker said of PSE financing the deal, "It tells you without question that [PSE] wants out of hockey in the worst possible way.'' The source added that PSE, which has owned the Lightning since '99, "expects the financial losses the Lightning is incurring annually will begin to outstrip gains in franchise appreciation" (SPORTSBUSINESS JOURNAL, 4/21 issue).