Phoenix LXXII: Send in the Clowns
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02-15-2013, 03:32 PM
Join Date: Nov 2004
Originally Posted by
I'm confused. My understanding is that the debt was assumed, not paid off. So the option of "taking the cash" was never on the table - there was no cash on the table - and the debt is still there. If that description is accurate (is it?), he essentially bought a $0 call option on an asset with bad cash flow.
I suspect that if the NHL's offer in Glendale was "here, take the team for nothing, run the team and pay us $170M in installments when you can", new owners could have been found right quick.
I was just illustrating that to Cohen, it was the same thing. Let's say he was -$200 MM. The new owners hypothetically say you can have it as cash or we assume your -$200 MM debt. If he were to take it as cash, he then turns around pays off the debt. He no longer owns the team but he also has zero debt. The debt doesn't just disappear because he sells. Not sure how the NHL structured the actual transaction as far as their requirements for 50%; plus the guarantee money, but that's a different issue.
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