XM MLB Chat

Monday, December 15, 2008

Ponzi-Me-Not, no dream scenarios for MLB teams

  • MLB has its own credit facility to help out teams, but the rates are going up and will be passed on accordingly.

(Sports Business Journal): "MLB teams owe roughly $30 million to lenders beginning this week in accelerated principal payments sparked by the league’s inability to refinance its entire credit facility, according to banking and club sources.

  • Many middle-market teams that have so far begged off free agency spending this offseason borrow from the credit facility.
  • Those clubs now are faced not just with this week’s tab — an average of $1.5 million for each of the 20 clubs that have tapped the loan pool — but far steeper payments in coming years.

Confronted with the global credit crisis, MLB has been trying to refinance its credit facility, a process the NFL similarly went through in October.

  • The facility, for which MLB pledges the contractual revenue from its
  • national TV deals, provides for cheaper terms for teams than many would be
  • able to win on their own.

Unlike the NFL, MLB obtained some new financing, a $125 million loan though Bank of America, the sources said, a notable achievement in a clenched credit environment. The bulk of the credit facility, however, because it was not refinanced or renewed, “termed out,” the sources said." ...

  • As long as banks are lending less money, teams may struggle.

(Sports Business Journal): "MLB’s total credit facility was about $1.5 billion. Banks lent one third of this amount, and that had already begun amortizing under pre-planned payments. The remaining $1 billion came from commercial paper, which is short-term debt structured to renew annually, a vehicle that had not been a problem until now.

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