SBD/Issue 88/Franchises

Preds May Be Forced To Strengthen Guarantee With Nashville

Predators' Ownership May Have To
Strengthen $50M Guarantee With City
The Predators' ownership "may be forced to strengthen their $50[M] guarantee with the city because of the discovery of a financial agreement among the owners that has tougher terms than the city can guarantee," according to David Shoalts of the GLOBE & MAIL. Under the agreement, which was signed in December '07, if "one or more of the owners can no longer meet his financial obligations to the franchise and the NHL or causes a financial loss, then the other owners have to cover the obligations in a ratio of their ownership percentage in the franchise." The Predators owners also "signed two agreements with the NHL, one a financial guarantee for as much as $50[M] and the other a consent agreement, that are far more binding than the city agreement." Those contracts "give the NHL the right to be the front of the line of any creditors and the right to revoke the franchise if it decides the owners are no longer meeting their obligations." They also do "not allow any of the owners to escape financial commitments by declaring bankruptcy." Shoalts notes the city of Nashville, which owns Sommet Center through the Metro Sports Authority (MSA), is "seeking assurances from the team owners about their financial situation." That "became necessary after the news last month" that Predators Owner David Freeman had a "federal tax lien placed on his house." If Freeman "cannot settle the lien, he and the team could be found in default on the city guarantee." MSA Finance Committee Chair Rusty Lawrence said that he was "not aware" of the agreement among Predators owners, and that he "now plans to bring it to the attention of the Sports Authority committee that is negotiating with the Predators owners and add it to his list of reasons why the city's guarantee needs to be strengthened." Lawrence noted that the negotiating committee "plans to meet with the owners early next week." Their report "will be delivered to a special meeting of the finance committee" on January 28 (GLOBE & MAIL, 1/20).

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