Businessman John A. Spano began negotiations in 1996 to purchase the New York Islanders ice hockey team. He represented himself as the owner of a large company and as an inheritor of substantial wealth. When Spano failed to pay for the club he just bought, investigators found that his company was much smaller than claimed to be and that he had no inherited wealth. Spano was convicted of fraud and forgery.
The New York Islanders, one of the newest teams in the National Hockey League (NHL), served as a standout franchise in its first decade-plus. The team originated in 1972 and soon surpassed its fabled neighbors, the New York Rangers, by winning a Stanley Cup in 1979. Unfortunately, the team’s on-ice success did not bring enough money into the coffers of owner Roy Boe. Suffering from financial woes associated with the startup of his hockey team and the expenses of his National
John Spano holds up a team jersey after purchasing the New York Islanders hockey club in 1997.
By 1983, the Islanders had won three more Stanley Cups and seemed on the verge of establishing a dynasty. The team remained competitive for the rest of the decade, but Pickett kept the money from the team’s cable television contract rather than reinvest it in the club. The lack of money reduced the competitiveness of the Islanders as departing stars were replaced by less expensive players. The Islanders had their first losing season in 1988-1989. After the season, Pickett retired to Florida and turned over operation of the team to four people who had purchased minor stakes in the club. Chaos in the front office resulted in losses on the ice and a poor showing at the box office. Pickett put the team up for sale amid talk that the club would leave Long Island, New York.
At this point, John A. Spano appeared on the scene. The owner of the Bison Group, a Dallas equipment-leasing company, Spano had tried to purchase the hockey teams the Dallas Stars in 1995 and the Florida Panthers in 1996. The deals collapsed partly due to financing difficulties. Nevertheless, NHL commissioner Gary Bettman called Spano, who bought the Islanders in February, 1997, a savior. Spano promised to keep the Islanders in Long Island and end Pickett’s penny-pinching ways. Spano claimed to be worth $230 million. A person later described by stunned colleagues as very engaging and likable, Spano charmed the public. Islanders fans began to dream of a winning season, or even another Stanley Cup. Pickett sold the team and its cable television rights to Spano for $165 million.
Spano defaulted on his first payment for $16.8 million to Pickett on April 7, 1997, when a wire transfer of the money failed to deposit the funds into Pickett’s account. Spano then stopped payment on one check for $16.8 million, bounced another for $17 million, wired $5,000 instead of $5 million, and then wired $1,700 instead of $17 million. Pickett’s attorneys asked the NHL to take the team back from Spano on grounds of fraud. The media had a field day with the affair.
As his name was increasingly muddied, Spano vehemently denied that he lied, cheated, or stole anything. He continued to claim that he had the money to purchase the Islanders. Spano accused Pickett of undermining him in an attempt to get the team back and sell it at a higher price. Bettman forced Spano to return control of the team to Pickett on April 11, and the NHL voided Spano’s purchase.
Bettman came under heavy attack for approving the sale of the Islanders to Spano. He claimed due diligence, arguing that six banks had checked on Spano’s finances. The NHL hired the firm of Ernst & Young as well as Arnold Burns, a former deputy U.S. attorney general, to review bank procedures. Amid rumors of pending charges, Spano traveled to the Cayman Islands to meet with bank officials. He returned to the United States after three days. On July 23, he surrendered to U.S. authorities in Uniondale, Long Island, to face bank and wire fraud charges.
A U.S. Postal Service investigation revealed that Spano was accused of making fraudulent claims to obtain an $80 million loan from Fleet Bank,
Furthermore, Spano forged signatures and letters to imply that he had the money to buy the Islanders. The prosecutor described the documents that Spano mailed to Pickett, the NHL, and Fleet Bank as nothing more than faxed “cut-and-paste jobs,” which also included the misspelled names of foreign bank officials. The postal investigators looked at the letter to Pickett from Comerica Bank
Spano also was accused of spending $220,000 of the Islanders’s money in undocumented expenses after fraudulently assuming ownership. Additionally, his equipment-leasing firm in Dallas was virtually bankrupt. He bounced a July 10, 1997, check for more than $85,000 to pay property taxes on a $2.5 million home in the University Park section of Dallas. When his attorney claimed in court that all of Spano’s taxes and mortgage payments were current, the prosecutor produced the bounced check. The bad check showed that Spano’s promises were empty, leading the judge to set the bail amount high at $3 million.
On October 7, 1999, Spano pleaded guilty to federal charges of mail and wire fraud in Long Island and bank and wire fraud in Texas. He subsequently pleaded guilty to one count of bank fraud
Pickett did not lose any money from the Spano affair. Indeed, in July, 1997, he regained control of the Islanders. He then sold the team and its cable television rights to Howard Milstein for $195 million. Milstein initially poured money into the franchise but, without victories, essentially gave up on the team by adopting an austere budget. In 2000, he sold the team to Charles Wang. The Fleet Bank
Wang, the newest majority owner of the Islanders, reinvigorated the team with an infusion of money. The Islanders won more points in the 2001-2002 season than they had earned in any of the previous eighteen seasons. The victories sent ticket sales and fan interest skyrocketing, and the Islanders became one of the premier clubs in professional hockey in the United States.
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Botte, Peter, and Alan Hahn. Fish Sticks: The Fall and Rise of the New York Islanders. Champaign, Ill.: Sports Publishing, 2005. A good general history of the New York Islanders hockey club. Includes some discussion of the Spano scandal. -
Fried, Gil, Steven Shapiro, and Timothy D. Deschriver. Sport Finance. Champaign, Ill.: Human Kinetics, 2007. Explains the complex financing involved in modern professional sports. Useful as a primer for understanding Spano’s dealings with the NHL. -
Wolf, Alexander. “Busted: John Spano’s Giddy Run as an NHL Owner Ended Quickly Amid Charges of Fraud and Deceit.” Sports Illustrated, August 4, 1997. An account of Spano’s fraudulent dealings with the NHL, his purchase and loss of the Islanders, and the scandal’s fallout.
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