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NBA TO GUARANTEE EXPANSION TEAMS' DEBT UNTIL CBA IS REACHED
Published May 11, 1995
NBA Commissioner David Stern, in Toronto to announce the Canadian national TV deal with CTV, said an agreement has been reached to allow the Raptors and the Grizzlies "to make the balance" of their $125M franchise fees in the absence of a CBA with the league's players. According to Craig Daniels of the TORONTO SUN, "Stern stopped short of calling the deal a guarantee, but, ultimately, that's what it amounts to." The NBA is requiring each expansion team to come up with just over $50M of their franchise fees in cash, with the rest in secured debt. The problem was, however, that no bank would secure the debt without a CBA and a guarantee that next season would be played. So, Daniels reports, "the NBA has essentially stepped in and agreed to assume both teams' debt obligations until the new CBA comes into effect. Once that happens, the debt will be transferred to each team's respective bank." One league source said the NBA is essentially "acting as a bank until the CBA is signed" (TORONTO SUN, 5/11).