NBA Scheduled To Borrow $200M On February 26 To Assist 15 Teams
The NBA is set to borrow $200M on February 26 which will be available to 15 teams. Each of the teams can borrow a maximum of $13.3M from the debt proceeds (Daniel Kaplan, SportsBusiness Journal). SPORTSBUSINESS JOURNAL's Kaplan & Lombardo report the move is "one of the first league financings since the implosion of the credit markets last fall." The money "supplements an existing $1.7[B] leaguewide credit facility that uses the NBA's media contracts as collateral to secure loans for the clubs." The NBA surveyed its teams, and 15 responded they "would like to tap into the new borrowing." The deal "came at a cost, with interest rates up 8.27[%], hammering home the notion that the era of cheap money in sports is over." The 15 clubs "can use the money for any purpose, but covering operating losses may be high on the list." Magic COO Alex Martins: "In this economic environment, it's tremendous that the league can place such a facility. It certainly helps us bridge the time period between now and when we move into our new events center in 2010. We've been operating at a [$15-20M] (annual) loss over the past half-dozen years, so it helps us." Kaplan & Lombardo note the private-placement deal was arranged by JPMorgan Chase and Bank of America (SPORTSBUSINESS JOURNAL, 2/16 issue).
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