The NHL is expanding its loan pool that extends low-interest debt to clubs by $300 million, to $1.7 billion, and is allowing Canadian teams to join in the borrowing for the first time.
Citigroup is leading the transaction, which the league expects to complete next month.
The NHL launched the loan pool, also known as a credit facility, in 2014.
“The issue when we launched the credit facility was that we had some issues with the Canadian government, with respect to including our Canadian teams and giving them access to the credit facility,” said Bill Daly, NHL deputy commissioner. “That’s what we’ve been working on the past year, and that’s really the change in the credit facility: that Canadian clubs can now participate.”
NHL teams can borrow up to $100 million from the credit facility, which is backed by national media contracts. That amount means that for now, if teams were to borrow to the maximum amount, no more than three of the NHL’s seven Canadian teams could borrow from the credit facility.
“I don’t think the NHL has ever been stronger,” said Gordon Saint-Denis, head of sports lending at Citizens Bank and who has a long history of lending to the NHL. “There has been strong reception from the market.”
Citigroup is syndicating the debt to other banks, which include Bank of America, JPMorgan Chase and PNC Bank.
Citigroup declined to comment.
Leagues organize these credit facilities so teams can access cheaper credit than they could on their own. The league can pledge national contracts and secure lower rates than clubs generally can individually.
The NHL was the final of the big four U.S. sports leagues to secure a credit facility when it launched its pool in 2014, aided by a new national TV deal in Canada. The league announced that 12-year, $5.2 billion (Canadian) contact with Rogers Media in November 2013.
However, the contract is paid in Canadian dollars, and the league did not buy a currency hedge. As a result, the value of the contract has fallen almost 30 percent since it was signed, to $3.5 billion in U.S. dollars from $4.9 billion at the time of the deal’s announcement.
Saint-Denis said unless the Canadian dollar fell far more precipitously, the league credit facility is still a good risk.
