SBJ/November 17 - 23, 2003/FinancePrint All
The Milwaukee Brewers quietly switched banks several months ago, dropping Banc of America Securities, which had been the team's lender since 1995. The Brewers instead turned to Citicorp for a loan of up to $60 million, a surprising choice in sports circles given that the bank has not been an active lender to teams.
The Citicorp loan came from the company's private bank, the area that caters to very wealthy people, said Mark Peters, head of that division. Peters insisted Citicorp has led sports loans for many teams, though he declined to name them or the members of the Brewers' management who are the private bank's clients.
Banc of America declined to comment, and the Brewers could not be reached. MLB Commissioner Bud Selig holds the team in a trust. Under terms of his agreement with MLB, Selig must take no role in managing the club's operations.
Financial sources said that with a previous Brewers loan set to mature in February, the club sought to refinance on similar terms. But Banc of America and the team, which has struggled at the gate, could not come to agreement and Citicorp entered the picture. The sources said there was dissension on the length of the new transaction, as well as the rate.
The Brewers were advised by Triton Sports on the deal.
The club borrowed $50 million from Bank of America in 1998 to finance its new ballpark and through principal payments had knocked that down to near $40 million. The Citicorp loan is for between $50 million and $60 million, the sources said.
Since the Brewers switched bankers, Banc of America's parent company agreed to buy FleetFinancial, which manages Major League Baseball's $1.5 billion credit facility.
Citicorp's Peters said his unit's pursuit of the Brewers' business had nothing to do with creating a stronger relationship with MLB and possibly gunning for management of the credit facility. Citicorp is part of MLB's bank syndicate.
The NFL and its banks earlier this month renewed the league's credit lines, which now hover near $2 billion, the largest among the professional sports leagues.
Leagues use collateral such as media contracts to borrow from banks and then allow clubs to tap into the credit, giving them lower rates than they otherwise could obtain on their own.
The NFL money pool now lends to 18 teams, having added three in the last 12 months. Two of those teams are the Houston Texans and Minnesota Vikings. It is unclear which is the third team.
The league's ability to raise so much money "says it is an incredibly strong asset and has been successful on all fronts," said Mitchell Ziets, a sports consultant. And as important, he added, the league's financial policies have aided its clubs' creditworthiness.
The NFL and its bank, Banc of America Securities, declined to comment.
Because of the credit pool's financial structure, it must be renewed every year. When it was first started in 1998, the facility opened at $428 million and nine teams used it. Last year at this time, the credit lines had $1.6 billion and 15 teams.
The NBA has a $1 billion credit facility managed by J.P. Morgan Chase; Major League Baseball has a $1.5 billion pool managed by FleetFinancial. The NHL does not have a lending facility for its clubs.
— Daniel Kaplan