Skating on thin ice: the financial fall of the Fort Worth Brahmas
12/13/2013 5:10 PM
12/13/2013 5:11 PM
When Mike Atkinson and his investor group bought the Texas Brahmas minor-league hockey team late last year, he promised a bigger and brighter future for the franchise.
Atkinson renamed the team the Fort Worth Brahmas and announced that the team would eventually move out of the North Richland Hills arena to venues in downtown Fort Worth.
Atkinson, a venture capitalist and avid TCU athletic booster, bragged that some of his backers were the same ones who bought the Texas Rangers two years ago.
“We’re back,” Atkinson said when the purchase was announced. “We want to earn the loyalty of the Fort Worth community. We want to be an option for people in Fort Worth who like hockey.”
But not long after the first puck dropped, the team was on financial thin ice. Payroll checks bounced. Vendors didn’t get paid, according to court documents. Eventually, there wasn’t enough money to take care of injured players, investors said.
Nine months after Atkinson announced that the Brahmas were back, the team was suspended and returned to the previous owner, was renamed the Texas Brahmas and was temporarily out of the Central Hockey League. Though it’s not clear how far the team was in debt, a court document suggests that toward the end, the Brahmas owed more than $500,000.
Fort Worth officials say the city and vendors at the Fort Worth Convention Center are owed slightly more than $8,000, and the NYTEX Sports Centre in North Richland Hills is out at least $80,000.
Some of those who signed on with Atkinson — as investors and vendors —say they got duped.
“I had no knowledge that I was screwed from Day One,” said Mike Levitz, a Fort Worth businessman who was a major Brahmas booster and invested more than $100,000 to be a part of the team. Eventually he would sue, accusing Atkinson of securities fraud.
Frank Trazzera, owner of the NYTEX Sports Centre, simply described Atkinson as a “deadbeat.”
“He painted a nice picture and he spun a story that it was going to be a great business, and his business plan had holes in it,” said Trazzera, who had been associated with the minor-league team for years. “He didn’t have the money to buy sticks and tape.”
Other investors, while not happy to have lost so much money, said Atkinson simply didn’t have enough financial support.
“He wanted to make it work. He worked his tail off,” said Neil Leibman, who along with a friend also bought a piece of the Brahmas. “But when you are underfunded, it just doesn’t work.”
Leibman is with the Texas Sports Acquisition Group, one of the investors in the Texas Rangers.
Atkinson did not return repeated phone calls from the Star-Telegram over the past several months that were left at his homes and businesses in Fort Worth and Illinois.
Bill Collins, Atkinson’s Fort Worth attorney, declined to comment on Levitz’s lawsuit but in court documents denies every allegation and suggests that Levitz’s own actions “caused or contributed” to his losses and that there were “independent and intervening” causes for what had happened.
Neither Atkinson nor his company got any “unearned benefit” from the money Levitz put into the team, in fact, “Atkinson and others realized a tremendous financial loss,” court papers state.
Records also show that Collins’ client is ready to ask a long list of people to testify about the case.
“Let the pleadings speak for themselves,” Collins said.
Success on the ice
Through the years the Brahmas have been through what one of its employees once described as many “trials, tribulations and successes.”
For 14 years, Stuart Fraser, vice chairman at Cantor Fitzgerald, an investment bank and brokerage firm that lost employees in the World Trade Center attack on 9-11, was involved in the ownership and operation of the team.
When Fraser became an investor in the Brahmas in 1998, the team played its home games at the Fort Worth Convention Center and the Will Rogers Memorial Coliseum, and it reached the conference finals.
The team quickly became a successful minor-league alternative for Metroplex sports fans, and the future looked bright until the Brahmas were forced to suspend operations in 2006 after failing to reach favorable lease terms with the city.
The team, renamed the Texas Brahmas, returned to the ice a year later for the 2007 season after moving to the NYTEX Sports Centre, with 2,500 seats about half the size of the convention center. Over the next five years the team reached the postseason every year, including a championship in 2009.
Still, with all that on-ice success, the team struggled financially, losing at least $600,000 during the 2007-08 and 2008-09 seasons. Trazzera said he and his brother Sal were the primary owners and operators of the team.
By 2012, Fraser, the longest-tenured owner in the Western Professional Hockey League/Central Hockey League, finally decided to look for local ownership for the team.
“Unfortunately, I personally am unable to be involved in many of the day-to-day decisions, and we feel this is the best opportunity for the fans to have a committed ownership group which has connections to the area,” Fraser said in a statement last year, when the team was sold to Atkinson’s group.
How Atkinson got involved depends on whom you talk to.
Levitz had been hanging around the team and already knew the previous owners, coaches and players. He had apparently expressed a desire to buy an equity interest in the team, according to court documents filed by Atkinson’s attorney.
A friend of Leibman’s and an avid hockey fan, Atkinson had his own firm, MMA Investments, in Fort Worth. Atkinson was introduced to Levitz by Mike Barack, who was in the Fraser ownership group.
Leibman had known Atkinson for years and had been approached by Atkinson with several other deals. Besides the Rangers, Leibman is an oil and gas investor who also has interests in several minor-league baseball teams. He also is a business associate of Glenn Picquet, an oil and gas speculator from the West Texas town of Albany and another investor in the Rangers.
Leibman’s office filed the documents with the state forming the company to buy the Brahmas.
Atkinson was promising to raise $1.5 million to $2 million from a number of investors to operate the business for three years, according to Levitz’s lawsuit. And he pledged to have at least $400,000 from four investors — himself, Levitz, Leibman and Picquet — before moving forward, Levitz said in an interview. In court documents, Atkinson denies making that promise.
By October, the sale was announced, with Atkinson telling Levitz that $475,000 was the initial investment, according to court documents that also say that the purchase was financed through the previous owner and that they would retain an interest that permitted foreclosure in the event the Atkinson group defaulted.
“He portrayed himself as a successful person in the community with a lot of connections that would be beneficial for the team going forward,” Levitz said.
Atkinson — who emphasized in a newspaper interview that he was not the owner but the managing partner — said the new owners planned to play at least five games at the convention center and hopefully play more in downtown Fort Worth in the future, with Will Rogers Coliseum being the primary home.
“For starters, the team's roots are in Fort Worth,” Atkinson told the Fort Worth Business Press. “No disrespect at all to North Richland Hills … but from a fan perspective and a sponsorship perspective, the opportunity to identify ourselves as a Fort Worth team again just makes sense.”
Unpaid bills mount
But Atkinson didn't have a solid business plan to make that dream come true.
For starters, city officials told Atkinson that it would be difficult to give his team the dates it wanted in the convention center and coliseum during the hockey season. With the opening of the Omni Fort Worth Hotel, the city was looking for events in those two venues that would attract tourists and their dollars.
“He was adamant that he wanted to play downtown,” said Kirk Slaughter, the city’s public events director. “What it came down to for us was making a choice of doing something that is local or what brings in visitor dollars.”
Soon after the purchase, said Levitz, the most visible of the initial investors, he was contacted by a vendor to discuss unpaid bills. He soon discovered that other vendors were owed money and that payroll checks for players and other employees had bounced.
Trazzera said that at one point players threatened not to play in a game if they were not paid. After contacting Atkinson for the checks, someone went to pick them up. He found the checks in an envelope taped to the front door of Atkinson’s office.
By January, Atkinson and the team made the first of several “capital calls” to raise more money.
In February, Atkinson hired a management company to run the team while also acknowledging to Levitz that he had not invested any money in the team as promised and was financially unable to put in any money at that time, according to the lawsuit. Atkinson admits in court documents that he did not invest $100,000 in the team when it was bought.
Picquet, Levitz and Trazzera also discovered later that the Internal Revenue Service was taking action against Atkinson. Court records in Tarrant County and Illinois show that a tax lien for $3.9 million was filed against Atkinson in October 2012.
Tarrant County court records also say that in 2011 Atkinson had been sued by Citibank for a $167,664 credit card debt. He eventually settled out of court with the bank in August 2012.
“He started making cash calls … and never put in a penny himself,” Levitz said.
Another dry hole
By the spring, after making several requests, Levitz received financial documents showing that the team had lost more than $300,000 during its first season, that it had outstanding debts of $500,000 and that the management company hired by Atkinson said the team had been mismanaged, documents say.
Picquet, who said Leibman persuaded him to invest, said that he never signed a legal document and that when he got a Brahmas business plan, it was “a weak one.” But he still put in his money.
“My gut feeling was not to get into the deal, but I said I would so I did,” he said.
Leibman, who said he never attended a game and couldn’t even say who the coach is, said, “To depict me as a major player in the team is silly.”
Yet when the team made several more cash calls seeking additional money, he chipped in $25,000 more, increasing his investment to about $100,000, and Picquet also provided additional funding, upping his investment to at least $135,000. Levitz put in $10,000 more.
“We morally felt bad that some people were not getting paid — there were players who had been hurt and needed medical care,” Leibman said. “We felt morally obligated to take care of those debts.”
Unlike Levitz, Leibman and Picquet said they don’t have any plans to sue Atkinson. With their experience in the oil field, they consider the Brahmas just another dry hole.
Trazzera said they are working on a lawsuit, and Slaughter said he plans to turn the matter over to the legal department.
“Shame on all of us; we should have paid more attention to detail,” Leibman said. “I’m not defending him; I lost a lot of money and I’m not happy about that, but I don’t think it was for his self-enrichment.”
Levitz, who describes himself as a passive investor in the team, admits that he should have done more homework: “I should have done a lot more due diligence than I did.”
He also stresses that he does not owe anyone money from the team’s failure and that he never had any say over the day-to-day operations of the team or was consulted when contracts were signed.
“If I bought stock in Coca-Cola and it went bankrupt, I wouldn’t owe any money,” Levitz said.
By June, it was announced that Atkinson’s group had defaulted on its purchase agreement and the team reverted back to the Fraser-owned partnership, which voluntarily suspended operations for the 2013-14 season.
The league made the team’s players unrestricted free agents.
New era, new arena
Barack, who was with the Brahmas for years before Atkinson’s group took over, is back in the front office as the franchise president of the Texas Brahmas.
Barack said the team returned to that partnership because Atkinson’s group defaulted on money it owed to the original owners.
He stressed that the Texas Brahmas are not folding. He also made it plain that they are not responsible for any of the unpaid bills left by the Atkinson regime.
Barack said the team will remain on hiatus in the Central Hockey League until it can find a new arena somewhere in the greater Fort Worth and Tarrant County area. Previously, he said the team wanted a 6,000-seat venue, similar to the one in Allen where another CHL team plays.
He didn’t give a definite timeline for when the Brahmas will return but said they expect to play again within the next two seasons.
But the team’s ownership is convinced there is a market for minor-league hockey in Tarrant County.
“Having been in the sports industry for many years we’ve seen tremendous highs and lows with the Brahmas,” Barack said. “We are hopeful to bring the team back for the loyal fans who have followed us for more than a decade.”
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