The NHL’s legal team "failed to ensure" that the league’s US$2B line of credit complied with Canadian regulations when it was launched in October, and as a result, none of the seven Canadian-based NHL teams "can take advantage of the low-interest credit facility, which is managed by Citi," according to David Shoalts of the GLOBE & MAIL. This is "not a huge blow for six of the Canadian teams, which are owned by individuals or corporations wealthy enough to borrow from alternative sources at favourable interest rates." But Senators Owner Eugene Melnyk has "suffered financial reverses in recent years in his pharmaceutical businesses, and the Senators have carried significant debt ever since he bought the team" in '03. But even though the NHL’s line of credit is secured by its national media contracts, including the Canadian broadcast deal with Rogers Communications, Melnyk "cannot lower his debt payments the way the Coyotes are doing." No one from the NHL is "willing to divulge the details, but it appears the Canada Revenue Agency ruled that the line of credit is offside, perhaps because of how interest payments to a U.S. entity are handled." Melnyk and NHL Deputy Commissioner Bill Daly both "declined to comment." The league and its lawyers have been "working to get the credit facility to comply with Canadian regulations, but that may take another three months to achieve." Sources said that it "could take less time." But it still means Melnyk has "been left with much higher interest payments for most of this NHL season." Sources said that the league’s credit facility is "not drawing full participation even from teams that have access to it" and "regard the line of credit as a honey trap" (GLOBE & MAIL, 1/21).
