BankAmerica Corp. "plans to lend" $400M to seven NFL
teams in "the aftermath of the embarrassing suspension of
the league's bond offering," according to Daniel Kaplan of
the SPORTSBUSINESS JOURNAL. NationsBanc Montgomery
Securities, the investment banking unit of BankAmerica, sold
"derivatives designed to protect the bonds against rising
rates" to six of the seven teams, who were "left with
potentially large losses from exposure to Treasury hedges."
The new financial package from NationsBanc "will be designed
to mitigate some of the damage from the hedges." Kaplan
reports that some teams "were said to be upset because even
though the bond offering was suspended, they were still
obligated to pay NationsBanc for the Treasury hedges," which
are designed to "lock in a core interest rate." Kaplan
writes that while it "is unclear what the financing
structure will be, the costs of the hedges are expected to
be wrapped in to the loans." BankAmerica CEO Hugh McColl
"personally discussed the loans" with Patriots Owner & NFL
Finance Committee Chair Robert Kraft, signifying the
"importance NationsBanc attached to the NFL deal." While
nine teams had originally committed to the offering, the
Cowboys and Saints will not be part of the new effort.
Still involved are the Cards, Broncos, Rams, 49ers,
Patriots, Bucs and Oilers. Both the Cowboys and Saints "had
planned to borrow" $100M each, and Kaplan reports that the
Saints "may borrow the money from" Hibernia Corp., a local
bank (Daniel Kaplan, SPORTSBUSINESS JOURNAL, 11/16 issue).
