Maloofs Owe NBA $75-million, Brothers Unsure How Many "Yes" Votes They Have To Reloca

[JB_kings]

Taking a stab at this...

I think the NBA did a line of credit back in the 2003 timeframe. This was the 1.7 billion dollar line of credit with 12 banks. I think this is where the Kings reworked the Sac City loan and basically swapped a higher interest rate debt for the lower interest line of credit debt. This would be the 75 million dollar re-fi that Fireplug unearthed in the city documents.

And again in 2009 the NBA went back and did another 200 million dollar line of credit that about 15 teams shared. The Kings were I assume one of those who tapped into the 13-20 million dollar funds available.

So this makes much more sense. Essentially in 2003 the bond holders swapped from the original deal in 1997 to the NBA arranged banks in May of 2003. So mystery solved!

 

[Fireplug]

Taking a stab at this...

I think the NBA did a line of credit back in the 2003 timeframe. This was the 1.7 billion dollar line of credit with 12 banks. I think this is where the Kings reworked the Sac City loan and basically swapped a higher interest rate debt for the lower interest line of credit debt. This would be the 75 million dollar re-fi that Fireplug unearthed in the city documents.

And again in 2009 the NBA went back and did another 200 million dollar line of credit that about 15 teams shared. The Kings were I assume one of those who tapped into the 13-20 million dollar funds available.

So this makes much more sense. Essentially in 2003 the bond holders swapped from the original deal in 1997 to the NBA arranged banks in May of 2003. So mystery solved!

Yeah, JB, this isn't really any new news so I am not sure why the media is making such a big deal about it right now. Everybody from the city, media, law firms, and league all have known about that for years.

 

[Section 101]

Yeah, JB, this isn't really any new news so I am not sure why the media is making such a big deal about it right now. Everybody from the city, media, law firms, and league all have known about that for years.

I think it's the $75 million tag that is the new part.

 

[Krunker]

If the Maloofs owe the NBA $75 million and the NBA thinks they have a better chance of getting paid back if the Kings are in OC, that doesn't really help in our favor.

 

[JB_kings]

The Maloofs don't owe the NBA 75 million. The team and the city basically used the NBA as a conduit to refinance the 1997 bonds in 2003. So just different bond backers... ie: banks. And a reminder, the Maloofs are not making payments to the NBA. They make sublease payments to the City of Sacramento. The city in turn makes the payment on the bonds.

 

[BMiller52]

If the Maloofs owe the NBA $75 million and the NBA thinks they have a better chance of getting paid back if the Kings are in OC, that doesn't really help in our favor.

They wouldn't have a better chance to get paid back. The league is looking at revenue sharing, and the move would cost the lakers 500 million dollars from their new tv deal. That means the league would be losing a lot of money. And also if the Maloofs move, their Samueli loan takes first priority and the NBA loan takes second priority I believe. That hurts the NBA's chances of getting paid back.

 

[Section 101]

The Maloofs don't owe the NBA 75 million. The team and the city basically used the NBA as a conduit to refinance the 1997 bonds in 2003. So just different bond backers... ie: banks. And a reminder, the Maloofs are not making payments to the NBA. They make sublease payments to the City of Sacramento. The city in turn makes the payment on the bonds.

Um no. They used a line of credit the NBA offered all NBA teams. The reported figure is they used $75 million of the $125 available to each team. This was within the past 2 years. They still owe the city $67 million plus the $10 for the early payment. So they owe the city and NBA $142 million. They may have used the line of credit to refinance debt but it wasnt the bonds to the city.

 

[fansinceday1]

My head hurts.
Will the city get it's money?
How does the bill working it's way toward the gov desk effect this? To paraphrase,: The bill says that any sports team has to make good on its debts before it leaves. Darrell Steinberg worded the bill to take effect immediately. I havent yet heard how much of a chance this bill has of passing.

 

[Glenn]

Just my opinion.

I cannot in any way imagine that the NBA under the leadership of David Stern would allow a team to stiff a city without serious repercussions. Stern wants the league to be universal which means big market, small, market, all around the world. At the least he wants the "perception" to be that. Whether it is reality or perception, it really makes little difference. If Sacramento gets stiffed, it would be a blow to the NBA.

 

[Geoff]

This really does confirm a lot of answers. The Maloofs can't afford the Kings or the Palms any more.

Samueli is poised to gradually -- or not so gradually -- take the Kings/Royals over. Kings fans are victims.

I'm all for Dave's call to stage a peaceful sit-in after the game tomorrow. Makes complete sense.

In spite of what people may think, I wanted the Kings to stay. But if the owners are broke, the team cannot stay. Everything we've seen so far has been calculated. I'll bet they have a decision on the move by May 1. And, we know what the decision is.

They're just going through the motions now.

Kings fans have an excuse to have any size (safe) bonfire they want now. The Maloofs may want to stay, but aren't you glad the City didn't get involved in a new arena for them? That would have been an albatross, for sure. Of course, this also means the City won't be seeing it's $77M any time soon. Great.

No. Even if all the negative assumptions people have about the Maloofs are true, the new arena would have been an anchor/selling point for the team to stay. The lack of a new arena is still the most valid reason IMO for the Maloofs to pull up and leave, even if I don't want them to.

 

[kennadog]

The league has a line of credit they make available to all NBA teams. Its nothing new. It has been estimated that half the teams in the league lost money last year. The league doesn't nake public how much they loan or to which teams. The figure given for the Kings NBA loan seems high, according to the article, by the way.

Here's a 2009 article about the league's credit line.

http://www.washingtontimes.com/news/2009/feb/26/nba-set-to-acquire-175-million-line-of-credit/

Since any loan was to the team, the debt would just move with the franchise to Anaheim. You don't have to repay a car loan, just because you move to a new house. The collateral for it, isn't the house.

 

[Section 101]

The league has a line of credit they make available to all NBA teams. Its nothing new. It has been estimated that half the teams in the league lost money last year. The league doesn't nake public how much they loan or to which teams. The figure given for the Kings NBA loan seems high, according to the article, by the way.

Here's a 2009 article about the league's credit line.

http://www.washingtontimes.com/news/2009/feb/26/nba-set-to-acquire-175-million-line-of-credit/

Since any loan was to the team, the debt would just move with the franchise to Anaheim. You don't have to repay a car loan, just because you move to a new house. The collateral for it, isn't the house.

Correct. BUT if your the lender on the car loan do you want the owner on the loan taking on more debt to you when they already have suspect finances, ie adding a relocation fee to further increase the amount owed.

 

[BMiller52]

Kreidler said on twitter the NBA line of credit has nothing to do with the arena loan. It's money they used up themselves.

 

[kennadog]

Correct. BUT if your the lender on the car loan do you want the owner on the loan taking on more debt to you when they already have suspect finances, ie adding a relocation fee to further increase the amount owed.

The That's up top the lender to decide. In other words, if the league approves the move, the answer will be they apparently don't mind.

 

[JB_kings]

Well I don't know if people are getting confused by the fact that they dipped into this twice, but I know of only 2 times the NBA did the line of credits to the teams. The NBA arranged for 1.7 billion for a number of teams to use in 2003. The first one was used to refinance the original 1997 bonds. That can be confirmed if you read the documents from the city. It's not guesswork, it's all in there. Go read it and it will become clear that the 75 million was for the 1997 bonds. Did they tap more into that beyond the 75 million back then? It's not really been confirmed.

Then the NBA went and got an additional 200 million line of credit in 2009 to assist teams in financial distress. This was supposed to be between 13-20 million for those teams in need. I wouldn't be surprised if they tapped into that too. So I can believe they took money and used it to keep themselves afloat. But at least 75 million of what they took was for refinancing the the 1997 bonds and the city is on the hook for making payments. The city makes those payments from subleases to the team.

 

[Section 101]

Well I don't know if people are getting confused by the fact that they dipped into this twice, but I know of only 2 times the NBA did the line of credits to the teams. The NBA arranged for 1.7 billion for a number of teams to use in 2003. The first one was used to refinance the original 1997 bonds. That can be confirmed if you read the documents from the city. It's not guesswork, it's all in there. Go read it and it will become clear that the 75 million was for the 1997 bonds. Did they tap more into that beyond the 75 million back then? It's not really been confirmed.

Then the NBA went and got an additional 200 million line of credit in 2009 to assist teams in financial distress. This was supposed to be between 13-20 million for those teams in need. I wouldn't be surprised if they tapped into that too. So I can believe they took money and used it to keep themselves afloat. But at least 75 million of what they took was for refinancing the the 1997 bonds and the city is on the hook for making payments. The city makes those payments from subleases to the team.

He is my problem with your analysis. I dont think the city loans can be refinanced. They would have to pay off the bond holders and make the prepayment penalty. The whole point in investing in the bonds is the guaranteed interest rate.

 

[Fireplug]

He is my problem with your analysis. I dont think the city loans can be refinanced. They would have to pay off the bond holders and make the prepayment penalty. The whole point in investing in the bonds is the guaranteed interest rate.

You are probably right about the original bonds not being able to be reworked, but there is nothing keeping a group of private investors from either taking over the bond payments and trlling the Maloofs that they can repay, oh, 50 years from now or some ridiculous thing. Likewise, the private group could simply pay off the 77 mil up front with other financing. Not saying it is likely, but who knows what kind of crazy money is willing to be put out there for the chance of owning or being part owners of a team. It is a very exclusive toy, afterall.