Saturday, November 28, 2009

Bear Mountain Developer Len Barrie Subject to Tax Investigation

Lightning co-owner subject to probe

by David Shoalts

Canada Revenue Agency looking into handling of finances at Len Barrie’s Victoria development

TAMPA — From Wednesday's Globe and Mail Published on Tuesday, Nov. 24, 2009 10:10PM EST Last updated on Thursday, Nov. 26, 2009 9:46PM EST

Len Barrie is still listed in the Tampa Bay Lightning’s media guide as a co-owner of the NHL team, but those close to the team say he is out of the picture.

His financial problems with the Bear Mountain golf resort and housing development near Victoria were severe enough to scuttle his attempt to buy out fellow owner Oren Koules in late summer. Now it appears as if the problems will worsen.

In the wake of a damning report by the company’s former auditor that accused management at Bear Mountain of misappropriating funds, a source said Canada Revenue Agency is looking into the development’s finances.

Barrie, who was accused in the report and by a member of the development’s executive committee of improperly financing at least part of his share of the Lightning with Bear Mountain funds, did not respond to a request for comment.

Bear Mountain is limping along with some housing sales, although at least one condominium project was halted and a large financing deal has not materialized. Barrie had said an agreement with Siraj Capital, a company based in Dubai, was to inject $350-million (all currency U.S.) into the development by October, but it has not come to fruition.

Barrie had tried to get Anthony Sansone Jr., a St. Louis real-estate developer, to be his partner in buying out Koules. But that, too, did not pan out and Barrie informed NHL commissioner Gary Bettman he was pulling out of the process.

Sansone has told the local media in Tampa he is still interested in the team. How that will work out with Koules remains to be seen.

Bettman orchestrated the buyout plan after Koules and Barrie told the commissioner last June their relationship deteriorated so badly it could not be repaired. The commissioner came up with a sort of double-barrelled shotgun buyout that gave Barrie the first shot. He was given until late September to try to buy out Koules. If he failed, Koules was to get until Nov. 23 to complete his own buyout.

Koules tried to make a deal with Miami real-estate mogul Jeff Greene, but he declined. Koules has also explored going it alone with the support of the Lightning’s former owner, Palace Sports and Entertainment, which has about $100-million in loans tied up in the franchise.

People close to the Lightning think Barrie may resurface looking for some cash if Koules completes a buyout. However, there will be a lineup of creditors, including a large group of current and former NHL players who invested in Bear Mountain, eager to part the cash from Barrie.

All is quiet on the buyout front, although that does not seem to bother Bettman. He told reporters recently that Koules is no longer subject to a deadline and he is satisfied with the team’s situation.

On the ice, the Lightning’s record is up from last season, but ticket sales are down. However, the team is still bumping along and paying its bills, which keeps it from being one of Bettman’s bigger headaches. For now.

“We’re seeing our way through the darkest period,” said Koules, who moved to Tampa this year to take charge of an operation stripped down to save on expenses. He is running the business operations of the Lightning, serving as governor, president and man in charge of everything outside the purview of general manager Brian Lawton, who looks after the hockey side of things.

Even though the Lightning have stayed in playoff contention this season, holding eighth place in the Eastern Conference with a 9-5-7 record, attendance is down at St. Pete Times Forum from last season’s disastrous campaign in which the Bolts finished second last overall. After nine home games this season, the average crowd is 14,605, down almost 1,900 from last season and 24th among the NHL’s 30 teams.

Koules is getting by because the Lightning qualified for a $15-million revenue-sharing payment this year. An NHL source said the team is meeting its obligations and the league has been assured it will continue to do so. But unless ticket sales increase dramatically, he is going to need an investor at some point.

On the plus side, Koules said sponsorship sales are up from last season. He would not give a revenue number but said sales have exceeded last season’s totals by 10 per cent.

“It’s a different world down here,” Koules said, and then invoked his team’s next opponent, the Toronto Maple Leafs, who pay a visit tonight. “It’s not like you can open the door and you haven’t won in 37 years or whatever and still sell out.”

On the ice, things are similarly good and bad. Thanks in part to the development of centre Steve Stamkos, the No. 1 overall draft pick from two years ago, who has 15 goals in 21 games, and this year’s No. 2 overall pick, defenceman Victor Hedman, the Lightning are staying in the playoff picture despite the indifferent play of star Vincent Lecavalier. His future with the team remains the subject of speculation.

So does the Lightning’s ability to survive without the arrival of a major investor. A source in the banking community said Koules is keeping his bankers satisfied, but if he is using his own money to keep the team going, sooner or later he will need a partner or two.