Thursday, February 26, 2009
Updated: February 27, 3:31 AM ET
NBA lines up $200 million for teams
NEW YORK -- The NBA has lined up $200 million to distribute to teams interested in additional cash, which the league considers a sign it remains strong in a slumping economy.
Between $13 million and $20 million will be available to each of 12 teams that have expressed interest in the funds, commissioner David Stern said Thursday. The money can be used for any purpose, including helping teams deal with operating losses incurred because of the economy.
It should not, Stern said, be construed as a bailout. At a time when credit markets have been frozen, investors saw the NBA as a safe bet.
"It's exactly the opposite" of a bailout, Stern told The Associated Press "This was a show of strength in the creditworthiness of the NBA's teams."
The NBA declined to name the teams interested in the money.
The league has an existing $1.7 billion credit facility, essentially a line of credit established by lenders from which teams can borrow. The league had been interested in growing the facility when the credit markets seized up last fall.
"They told us there's no chance of any additional funds being raised for any sports league, and indeed, the credit facilities that had come up for other leagues were being termed out rather than renewed," Stern said.
JPMorgan Chase and Bank of America recently approached the league to say $150 million might be available, a figure that eventually grew to $200 million.
"It's a great sign of confidence in us and that's wonderful that the market is opening up, so we'll take it," Stern said. "And we turned to our teams and said, 'OK, we've got this much more to distribute under the facility for those of you who want it now.'"
The 12 interested teams aren't necessarily those in the worst financial shape.
"Many of them are doing well," Stern said.
Still, the additional credit comes at a time when pro sports leagues are cutting staff and teams are slashing ticket prices and payroll. The NBA announced last October that it was eliminating about 80 jobs in the United States, or about 9 percent of its domestic workforce, and teams have also felt the pinch of a struggling economy.
Charlotte Bobcats owner Bob Johnson has acknowledged losing tens of millions of dollars since paying $300 million for the expansion franchise, which began play in 2004-05.
The Bobcats would not say whether they are among the 12 teams interested in the money.
"We don't disclose our financial information," Bobcats spokesman Michael Thompson said Thursday. "But the fact that NBA teams get opportunities like this really speaks to the strength of our business."
SportsBusiness Journal first reported that a credit deal was in the works. Alex Martins, chief operating officer of the Orlando Magic, told the journal that the money would help the Magic offset losses of between $15 million and $20 million and "bridge the time period between now and when we move into our new events center in 2010."
Magic spokesman Joel Glass said Thursday the team would not have additional comment until the league addresses the issue.
Paul Andrews, executive vice president of Kroenke Sports Enterprises, was unsure whether the Denver Nuggets will take advantage of the available money.
"We're still researching the situation and don't have enough knowledge today to give an educated opinion," Andrews said.