NBA TO GUARANTEE EXPANSION TEAMS' DEBT UNTIL CBA IS REACHED
NBA Commissioner David Stern, in Toronto to announce the
Canadian national TV deal with CTV, said an agreement has been
reached to allow the Raptors and the Grizzlies "to make the
balance" of their $125M franchise fees in the absence of a CBA
with the league's players. According to Craig Daniels of the
TORONTO SUN, "Stern stopped short of calling the deal a
guarantee, but, ultimately, that's what it amounts to." The NBA
is requiring each expansion team to come up with just over $50M
of their franchise fees in cash, with the rest in secured debt.
The problem was, however, that no bank would secure the debt
without a CBA and a guarantee that next season would be played.
So, Daniels reports, "the NBA has essentially stepped in and
agreed to assume both teams' debt obligations until the new CBA
comes into effect. Once that happens, the debt will be
transferred to each team's respective bank." One league source
said the NBA is essentially "acting as a bank until the CBA is
signed" (TORONTO SUN, 5/11).