SBD/Issue 112/Leagues & Governing Bodies

Twelve Teams Set To Borrow Between $13-20M From NBA Credit Line

Stern Says Money Should Not Be
Considered A Bailout
The NBA Thursday officially lined up a $200M credit line to "distribute to teams interested in additional cash," and NBA Commissioner David Stern said $13-20M will be available to each of the 12 teams that have expressed interest, according to Dave Skretta of the AP. However, Stern said that it should not be "construed as a bailout," because at a "time when credit markets have been frozen, investors saw the NBA as a safe bet." Stern said it is "exactly the opposite" of a bailout. Stern: "This was a show of strength in the creditworthiness of the NBA's teams." Stern added the creditors "told us there's no chance of any additional funds being raised for any sports league, and indeed, the credit facilities that had come up for other leagues were being termed out rather than renewed." Skretta noted the 12 teams expressing interest in the funds "aren't necessarily those in the worst financial shape." Stern: "Many of them are doing well." JPMorgan Chase and Bank of America, which arranged the credit line, recently "approached the league to say $150[M] might be available, a figure that eventually grew" to $200M. Stern: "It's a great sign of confidence in us and that's wonderful that the market is opening up, so we'll take it. And we turned to our teams and said, 'OK, we've got this much more to distribute under the facility for those of you who want it now'" (AP, 2/26). Fox Business' Cody Willard said, "Aren’t these teams all colluding? Why is the NBA allowed to centralize prices and the Department of Justice doesn’t ever investigate them?” (“America’s Nightly Scoreboard,” Fox Business, 2/26).

NEED A HAND? Kings VP/Business Communications Mitch Germann Thursday confirmed that the Kings are among 12 teams set to borrow from the credit line. The team "did not detail the amount it will borrow or how it plans to use the cash." NBA Senior VP/Marketing Communications Mike Bass said that the amount each team can borrow is contingent on "previous borrowing." The NBA will not release the names of the 12 teams (SACRAMENTO BEE, 2/27). Meanwhile, NBA and Wizards sources Thursday confirmed that the team is not among the 12 franchises that will use the credit line (WASHINGTON POST, 2/27).

COLD, HARD CASH:'s Bill Simmons writes under the header, "Welcome To The No Benjamins Association." For once, the NBA's "problems have nothing to do with talent, drugs, racial issues and how the sport is being played," as money "hangs over everything." With the U.S. "embroiled in its worst economic crisis in 80 years, the NBA is quietly bracing for its own little D-Day ... only outsiders don't fully realize or care." Every decision teams made leading up to the February 19 trade deadline was "predicated on fear: fear of the great unknown, fear of a shrinking salary cap and a dwindling luxury tax threshold, fear of a landscape where middle-class Americans might collectively decide, 'I no longer want to buy tickets for sporting events.'" Looking forward, unless the NBPA "agrees to major concessions by the summer of 2011 -- highly doubtful because that would involve applying common sense -- the owners will happily lock out players as soon as the current CBA expires, then play the same devious waiting game" as they did during the '98 lockout. The owners would "plant their feet in the sand, grab the tug-of-war rope and dig in," and they "know they will win." Looking at the "next 15 months only, the consensus of people in the know was that multiple NBA franchises will move cities, get sold to new owners or throw themselves on the mercy of the league." The future for the league is "murky, unpredictable and not so lucrative," but "other than the NFL, the NBA will emerge from this financial quagmire in the best shape of any professional sport" (, 2/27).

IT PAYS TO BE AVERAGE:'s Ric Bucher writes for NBA teams, being an average franchise is now "more cost-effective than going a round deeper in the playoffs," which is "unhealthy." The league "shouldn't wait until the [CBA] expires to cure the situation," because "whatever problems the NBA faces, they are sure to multiply if the pursuit of a ring becomes synonymous with fiscal suicide" (, 2/27).

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