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SBD/Issue 81/Sports Industrialists
Is Maloof's Restructuring Of Casino Debt A Sign Of Financial Trouble?
Published January 10, 2011
|Maloof Could Remain
Operator Of Palms
Leonard Green & Partners LP and TPG Capital are “in talks to take a controlling stake in the Palms Casino Resort” in Las Vegas, as owner GEORGE MALOOF “seeks to restructure the property’s debt,” according to sources cited by Jinks & Keehner of BLOOMBERG NEWS. Sources said that the firms “acquired most of a loan backed by the casino and its hotel towers at a discount last year, and may take an equity stake in the first quarter as part of the restructuring.” The sources added that Maloof, a co-Owner of the NBA Kings, "may partner with Los Angeles-based Leonard Green and TPG to remain the operator" of the resort with a "reduced ownership stake" (BLOOMBERG NEWS, 1/6). In Sacramento, Kasler & Bizjak in a front-page piece wrote the debt restructuring is a “possible sign of fresh financial turmoil” for the Maloof family. The Kings are “contending with another weak year at the box office and will have to find another naming-rights sponsor for the arena when the NBA season ends,” as Arco is “ending its $700,000-a-year sponsorship after 25 years.” But the Kings' “finances are strong enough to make payments on the $69 million the team owes the city” on a '97 loan. Sacramento City Treasurer RUSS FEHR said that the Kings have “made all their payments on time and 'their projected year budgets (show they) have the capacity to make the payments.'" The Maloofs last year sold their beer distributorship in New Mexico. Maloof said that the family “wasn't under pressure to sell, but he added that some of the $100 million-plus proceeds were used in the restructuring of the Palms' debt” (SACRAMENTO BEE, 1/8).
ANAHEIM-BOUND? In California, Randy Youngman writes the Maloofs' “significant financial problems” provide a “greater sense of urgency to move the franchise to a market with better demographics, more potential corporate sponsors and an NBA-ready arena.” If the Maloofs “decide to move the Kings -- or are forced to sell a team struggling on the court and struggling at the gate -- Anaheim and San Jose are believed to be the most likely destinations because they both have NBA-quality arenas and waiting billionaires to help them overcome financial obstacles.” Ducks CEO and Anaheim Arena Management Chair MICHAEL SCHULMAN yesterday said that Ducks Owner HENRY SAMUELI “remains interested in bringing an NBA franchise to Honda Center” (ORANGE COUNTY REGISTER, 1/10).