Hit by Recession, NBA Borrows $175M for Clubs

The NBA is borrowing $175 million on February 26th to "bailout" 15 of the 30 NBA teams. The NBA conducted a league-wide survey of the 30 teams, and 15 responded that they would like to acquire a loan. In the first major league-wide financing since the collapse of the credit markets last fall, the 15 teams can each borrow a maximum of $11.7 million from the debt proceeds. The interest rates of the deal are unfavorable for the NBA -- they pay rates of 8.27% for $100 million of the $175 million. Sports Business Journal describes the high interest rates:

The NBA deal comes in the context of a changing landscape for the leaguewide credit facilities. Once cheap sources of loans, the banks that manage the loan pools have soured on them and have been unwilling to renew at the old terms. The NFL and MLB were both unable to renew their deals late last year and termed out. That means the debt automatically converted into a fixed-rate loan and triggered amortization and slightly higher rates.

	New NBA Debt
	Amount	Rate	Term
	$100 million	8.27 percent	Seven years
	$75 million	7.45 percent	Five years
	Source: NBA