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MORE DECEMBER DEADLINES, THIS TIME FOR THE TIMBERWOLVES
Published November 23, 1994
Rising interest rates "pose the newest threat to completion of the Target Center buyout and Timberwolves sale," with a December 31 deadline approaching. Henry Savelkoul, chair of the Metropolitan Sports Facilities Commission said that the Federal Reserve's announcement that it will boost interest rates another 3/4 of a point will make the Timberwolves/Target Center transaction "very difficult." Since the summer, when state and city financing of about $54M was approved to buy the downtown arena -- and another $25M or so set aside to refinance other outstanding debt on the building -- interest rates have gone up two full percentage points. Debt service on a new mortgage for a publicly owned Target Center could be as much as $1.4M more per year than projected, according to Savelkoul (Weiner & Hartman, Minneapolis STAR TRIBUNE, 11/22). SOLUTIONS? According to Savelkoul, one possible solution is issuing shorter term bonds than the previously agreed-upon 30- year long bonds. Short term financing could bring down the interest rates. Wolves buyer Glen Taylor and team and arena sellers Marv Wolfenson and Harvey Ratner are facing a December 31 deadline to close on the sale of the team. That sale is contingent on the Sports Facilities Commission buying the Target Center. There is a "risk" that interest rates will continue to rise, "placing the entire financing package in jeopardy" for buying the arena. As of now, ticket taxes will pay the mortgage on the arena, but if that does not cover it, then the Commission may ask the city to cover the payments through a liquor and hotel tax (Weiner & Hartman, Minneapolis STAR TRIBUNE, 11/22).