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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

National Hockey League Adds $200 Million to Credit Facility

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07-17-2013, 11:02 PM
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Fugu
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National Hockey League Adds $200 Million to Credit Facility

http://www.bloomberg.com/news/2013-0...-facility.html

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National Hockey League Adds $200 Million to Credit Facility
By Scott Soshnick -
Jul 17, 2013 3:39 PM PT

The National Hockey League increased its credit facility to $600 million, up $200 million from the previous amount, according to data compiled by Bloomberg.

The league also received a better rate on the agreement with Citigroup Inc. (C), which was completed last month. The new facility is priced at the London interbank offered rate, or Libor, plus 250 basis points. The previous facility was $400 million at Libor plus 300 basis points.
The National Hockey League locked out players at the start of last season in a collective bargaining dispute and played a 48-game campaign starting in January.

Professional sports leagues create loan pools by using collateral such as national broadcast contracts to secure credit at better terms than most teams could individually.

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07-17-2013, 11:22 PM
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Killion
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Well now thats interesting. The NHL did that, upped their LOC to I believe $250M from $80M in
the spring of 2009 just prior to the Moyes BK Case in Phoenix. I wonder whats spurred this on?...

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07-17-2013, 11:26 PM
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Quote:
Originally Posted by Killion View Post
Well now thats interesting. The NHL did that, upped their LOC to I believe $250M from $80M in
the spring of 2009 just prior to the Moyes BK Case in Phoenix. I wonder whats spurred this on?...

Well, they are financing the sale of the Coyotes to RSE, for starters, interest-free was it for 5 yrs?


Last edited by Fugu: 07-17-2013 at 11:36 PM. Reason: oops
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07-17-2013, 11:27 PM
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Quote:
Originally Posted by Fugu View Post
Well, they are financing the sale of the Coyotes to RSE, for starters, interest-free was it for 5 yrs?
But that was only $85M, what are they doing with the balance?

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07-17-2013, 11:30 PM
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Quote:
Originally Posted by Fugu View Post
Well, they are financing the sale of the Coyotes to RSE, for starters, interest-free was it for 5 yrs?
yeah, but arnt they getting paid the fortress money up front?

something else might be going on. I hate to pile on the devils, but we do already know that the NHL stepped in to ensure paycheques got out last season, and we still havnt heard anything with finality about vanderbeek's partner search.

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07-17-2013, 11:33 PM
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Originally Posted by Llama19 View Post
But that was only $85M, what are they doing with the balance?
They may choose to finance RSE for that amount of time, but they have to keep servicing the debt that they incur.

Some of the money could be going to teams who take advances on the revenue sharing money. The NHL would draw on its line, then repay it when the monies are audited at the end of the season (or whatever payment plan they have in place).

The article says the money could also be available to individual teams as the pool has a better rate than what a team could get individually.

NJD's owner is in some financial difficulty as well. Maybe more financing there? (And before DevilChuk []or any other NJD fans jump on me--- no, I don't have proof, just speculating why the NHL would want a $600 MM LOC.)

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07-17-2013, 11:36 PM
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Quote:
Originally Posted by danishh View Post
yeah, but arnt they getting paid the fortress money up front?

something else might be going on. I hate to pile on the devils, but we do already know that the NHL stepped in to ensure paycheques got out last season, and we still havnt heard anything with finality about vanderbeek's partner search.

RSE will pay the NHL $170 MM, correct? NHL will lend them $80 or 85 MM? The league has to repay their loan ($140 MM), and then service the amount going to RSE.

I also mentioned the Devils. Not sure if there are any other shortages the league may need to cover.

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07-17-2013, 11:38 PM
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to further that, i've always wondered why the NHL doesnt use their own credit power to refinance debt for some of these teams in debt trouble. They can use the franchise as collateral anyways.

I mean, i'm sure the NHL could get a better rate on the 230M the devils owe than what the devils are getting from whatever banks they used.

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07-17-2013, 11:39 PM
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Quote:
Originally Posted by Fugu View Post
They may choose to finance RSE for that amount of time, but they have to keep servicing the debt that they incur.

Some of the money could be going to teams who take advances on the revenue sharing money. The NHL would draw on its line, then repay it when the monies are audited at the end of the season (or whatever payment plan they have in place).

The article says the money could also be available to individual teams as the pool has a better rate than what a team could get individually.

NJD's owner is in some financial difficulty as well. Maybe more financing there? (And before DevilChuk []or any other NJD fans jump on me--- no, I don't have proof, just speculating why the NHL would want a $600 MM LOC.)
So, that means the Coyotes are still a very portable team for the NHL and not RSE/IA?

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07-17-2013, 11:39 PM
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Quote:
Originally Posted by danishh View Post
yeah, but arnt they getting paid the fortress money up front?
Supposedly. $120M from Fortress, $48M from RSE, then turning around & lending RSE $85M over 5 years, though Ive no idea if its paid annually or if they just advance the full sum upon closing of the sale... and ya, you might be on to something there with the Devils.

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07-18-2013, 12:13 AM
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To help with any confusion to those not familiar with business banking. Business credit facilities / line of credit agreements are rarely signed for more than 2-3 years at a time. The Forbes article doesn't make the distinction, but I'm comfortable guaranteeing that the NHL's previous loan agreement expired and it was time to negotiate a new one after the end of the past league year in June.

The borrowing limit increase from $400m to $600m in the new agreement doesn't imply the NHL was approaching the prior deal's $400m limit or that it needed $200m in new loans. It just means the NHL has access to a larger revolving credit facility ceiling if they choose to use it. At lower rates I note from the article.

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07-18-2013, 12:20 AM
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I kind of wonder if this is Devils related, especially with the amount added being $200 million.

A couple weeks ago Forbes reported that the Devils had missed a $3 million payment on a $170 million debt restructuring deal and the owner has $230 in debt on the team and the building.

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07-18-2013, 12:25 AM
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Quote:
Originally Posted by mouser View Post
To help with any confusion to those not familiar with business banking. Business credit facilities / line of credit agreements are rarely signed for more than 2-3 years at a time. The Forbes article doesn't make the distinction, but I'm comfortable guaranteeing that the NHL's previous loan agreement expired and it was time to negotiate a new one after the end of the past league year in June.

The borrowing limit increase from $400m to $600m in the new agreement doesn't imply the NHL was approaching the prior deal's $400m limit or that it needed $200m in new loans. It just means the NHL has access to a larger revolving credit facility ceiling if they choose to use it. At lower rates I note from the article.
It also could mean that they may need the extra head room.

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07-18-2013, 12:28 AM
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Thanks for clarifying mouser.

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07-18-2013, 12:38 AM
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Quote:
Originally Posted by Fugu View Post
It also could mean that they may need the extra head room.
Maybe, maybe not. No way to know in my opine without a lot more info than we have from the Forbes article.

While I don't think the NHL is necessarily using their credit line exactly the same way, I've worked at profitable Fortune 500 companies that regularly kept billion dollar lending facilities maxed all the time. It's a business decision on the cost of borrowing vs self-financing.

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07-18-2013, 12:21 PM
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Quote:
Originally Posted by mouser View Post
Maybe, maybe not. No way to know in my opine without a lot more info than we have from the Forbes article.

While I don't think the NHL is necessarily using their credit line exactly the same way, I've worked at profitable Fortune 500 companies that regularly kept billion dollar lending facilities maxed all the time. It's a business decision on the cost of borrowing vs self-financing.

You don't even have to be that big... I worked for a small natural resources firm that dipped into a revolving $200M credit facility all the time on quarterly revenues of just under $100M... it allayed the fears from investors if we hit a shortage or hedged the market for our commodity wrong... and like you say is cheaper than self-financing...

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07-18-2013, 02:26 PM
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Quote:
Originally Posted by danishh View Post
to further that, i've always wondered why the NHL doesnt use their own credit power to refinance debt for some of these teams in debt trouble. They can use the franchise as collateral anyways.

I mean, i'm sure the NHL could get a better rate on the 230M the devils owe than what the devils are getting from whatever banks they used.
Well, if you use the Coyotes as an example, they are willing to use their financial heft to finance part of a franchise's debt, but not the entire thing.

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07-19-2013, 08:02 PM
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Quote:
Originally Posted by danishh View Post
to further that, i've always wondered why the NHL doesnt use their own credit power to refinance debt for some of these teams in debt trouble. They can use the franchise as collateral anyways.
Not after the stunt they pulled in St Louis in 1983... http://www.stlouisgametime.com/2009/...lues-the-story

Quote:
Faced with the ultimatum that one of its franchises would be liquidated, and that it probably faced yet another lawsuit from the players union, the NHL Board of Governors took action on June 13. The NHL rejected Ralston's tender offer and "terminated" the St. Louis Blues franchise, stripping the entity from Ralston for violating provisions of the NHL's constitution.
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Ten days before the NHL's deadline, Ornest's bid was conditionally approved. Six days later, after extended negotiations with Ralston, Ornest reached an agreement to purchase the Checkerdome. The NHL granted Ornest "a new St. Louis Blues franchise, free of any legal incumbrances," on July 27, 1983.
If the NHL can dissolve a franchise, and create a "new" one in the same location with the same name/logo/players/etc, it's useless as collateral.

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08-08-2013, 11:01 AM
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Originally Posted by hisgirlfriday View Post
I kind of wonder if this is Devils related, especially with the amount added being $200 million.

A couple weeks ago Forbes reported that the Devils had missed a $3 million payment on a $170 million debt restructuring deal and the owner has $230 in debt on the team and the building.
Bumping for todays devils news.

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08-08-2013, 11:09 AM
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I can bet that teams needing a LOC would take advantage of this due to more advantageous rates than they might be able to get themselves.

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08-08-2013, 11:16 AM
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Quote:
Originally Posted by Fugu View Post
They may choose to finance RSE for that amount of time, but they have to keep servicing the debt that they incur.

Some of the money could be going to teams who take advances on the revenue sharing money. The NHL would draw on its line, then repay it when the monies are audited at the end of the season (or whatever payment plan they have in place).

The article says the money could also be available to individual teams as the pool has a better rate than what a team could get individually.

NJD's owner is in some financial difficulty as well. Maybe more financing there? (And before DevilChuk []or any other NJD fans jump on me--- no, I don't have proof, just speculating why the NHL would want a $600 MM LOC.)
Quote:
Originally Posted by hisgirlfriday View Post
I kind of wonder if this is Devils related, especially with the amount added being $200 million.

A couple weeks ago Forbes reported that the Devils had missed a $3 million payment on a $170 million debt restructuring deal and the owner has $230 in debt on the team and the building.
Quote:
Originally Posted by hisgirlfriday View Post
Bumping for todays devils news.
I mentioned them first!

I also thought about this thread. $85 MM loan to Phoenix, plus NJD currently owes the NHL ~$25 MM. If the league is going to take over operations, they will have to start paying staff/operations and the team payroll once the season starts. Eyeballing it-- that's $170-ish MM, plus if you count the loan, we're up to $200 MM. There may be a few other teams that ask for advances on revenue sharing as well.

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08-08-2013, 02:08 PM
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Yes you were first on that train of thought fugu. My apologies for looking like I was trying to steal your thunder.

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08-08-2013, 02:34 PM
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danishh@12:30AM
fugu@12:33AM

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08-08-2013, 02:40 PM
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Quote:
Originally Posted by danishh View Post
danishh@12:30AM
fugu@12:33AM



I wrote a longer post, so I was in the Writing Post mode when you sneaked yours in!!!

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Yes you were first on that train of thought fugu. My apologies for looking like I was trying to steal your thunder.

I'll overlook this once.

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08-08-2013, 02:40 PM
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leasing private jets ain't cheap either.

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