Breeders’ Cup signs Aston Martin DTI Management gets $75M funding Shared goals: EA Sports, MLS renew deal Sponsored backdrops by league Van Wagner adds WCC, three schools NBPA spending on employees up 40 percent Sutton Impact: Sleepless nights USOC works to ramp up college connection The Sit-Down: Ashley Merryman From The Executive Editor: Faith & sport
SBJ/20090727/This Week's News
Sports would feel hit if lender CIT pulled out
Published July 27, 2009
Embattled lender CIT Group backed away from a commitment to lead a more than $225 million (U.S.) loan to the Molson family, which is buying the Montreal Canadiens, finance sources said last week.
While the deal is not endangered because the Molsons apparently have been able to find replacement financing, three hockey and finance sources said, the development underscores the big hit that sports finance, and the NHL in particular, may take if CIT is forced into bankruptcy protection or has to sell a wide array of assets.
“It will be a big negative for the sports lending market if CIT withdrew, mainly due to [the fact] that there has been a contraction in the number of lenders in the last year [that focus on sports],” said Rob Tilliss, the former head of sports at JPMorgan Chase who now runs his own advisory, Inner Circle Sports. “If CIT were to withdraw, that would be removing more capacity from the system.”
A spokesman for CIT did not return queries for comment, nor did Gordon Saint-Denis, the CIT banker who handles sports lending.
CIT, a lender to small and midsized businesses, failed to win more government funding earlier this month but was saved from imminent bankruptcy by $3 billion of loans from its creditors. That injection, however, has not solved its problems in full.
For sports, the news of a CIT demise would not be welcome. The number of lenders to the sector already has shrunk significantly in the last 18 months. Société Générale got out of the business even before the economic implosion last September, and the tightened credit markets have certainly not spared sports.
CIT, however, was open for business and had made a name as a go-to lender in the NHL, extending credit to teams like the Canadiens, New Jersey Devils and Ottawa Senators. The NHL declined to comment. CIT also was a top lender to Legends Hospitality Management, the concessions venture formed last year by the Dallas Cowboys and New York Yankees. One finance source estimated its sports loan portfolio at $500 million.
Multiple sources said that replacement financing was at hand for the Molson family, with two sources naming Bank of Montreal, while another source said a deal had not yet been struck. Bank of Montreal referred questions to a Molson family spokesman, who declined to comment.
The loan is for about $250 million (Canadian), the sources said. The Molsons agreed to buy the team in June from current owner George Gillett. While there looks to be a positive ending in Montreal, the Canadiens are a high-profile team in Canada where native lenders were sure to be on the ready. Other teams needing financing may not be as fortunate.
Staff writer Tripp Mickle contributed to this report.