Thx. I recommend watching the video interview in that article too to anyone interested in explanations of NBA revenue streams coming down the pipeline and benefits of operating rights to stadiums. @pgabriel Local Streaming is mentioned, too, as well as fantasy league gaming revenue.
Leslie hiring Morey was definitely a gutsy move and a great legacy to leave behind. Let's hope Fertatta keeps everything as is and pays up!
Thanks can someone explain better: " Moreover, how could Fertitta close the deal without an end-run of the NBA's $250 million debt limit? Turns out the true enterprise value is indeed $2.2 billion: $1.75 billion cash; $175 million of assumed debt; $275 million in seller financing (a personal note from Alexander), according to sources familiar with the deal. The personal loan from Alexander does not count as team debt." Les is lending Fertitta 275 million? Wtf? Maybe Les really is an idiot and fertitta continues to be one of the best at getting credit of all time. I think I could get Les more than Fertitta if he could front me 275 million to do it..lol Well maybe not since I dont own some trashy pier in gtown...but we dont know what other future arrangements and deals les is making with fertitta. I wouldnt be surprised if there is all kinds of backend situations. To fertittas credit its worked. Les is getting 275 million in bed with fertitta? Am i reading this right?Can someone smarter than me break this down? Aelliott? Bimathug? I presume Les could sell that 275 million debt and walk with a flat sum of that. I suppose 200 million or some number less than that? Help me out here gurus
Good question. The Forbes Sports Business expert raises it but doesn't address it after that. So I assume he doesn't know either. This isn't a CBA thing, so would be part of the more secretive owner-to-owner rules. I guess he's saying the owners could vote it down or they adjust the debt ceiling rules to matchcurrent valuations. Four thoughts come to mind Maybe they will make the case that the debt ceiling is too restrictive on prices nowadays, and the sports investment bankers will probably back that. I'm assuming 250m is an arbitrary number and not a calculated one from a debt ceiling based upon a %. Maybe Les actually thinks Tilman will be denied by an owner vote due to debt ceiling, so is using this agreement as a way to set market price for another offer that will pass. As for why Les would go through with giving him a loan, that's gotta mean Les believes in the loan investment, and could mean this turned out to be the only way for Les to get the asking price he wanted. Maybe he got no offers over $2b, for instance, so the extra is an acceptable risk, that could make him even more money than $2.25b based upon interest. If there were other offers at $2.25b, you'd think Les's terms must be better than a sports investment bank for Tilman to go that route. Oh also, maybe it's technically two sales The Nets were recently allowed to split their business in two. One for basketball operations and one for stadium operations. Prokhorov has same rights to stadium operations that Les has. He is allowed to sell each independently. So, maybe Les got the same OK, and the Stadium operating rights are being sold separately, thus getting around the debt ceiling for the sell of the actual team...that is, this is technically two sales.
good thinking hp, that sounds like the most likely scenario to me and i'll take your pondering one step further even and surmise that it seems very much a moreyesque type of structuring twist/wrinkle
Could also mean that Les, besides helping to get the deal done at the price he wanted, is getting a good interest rate on that loan, with Fertitta willing to pay a premium to close a deal that's stretching his finances. Also, if the deal blows up for whatever reason, Les could garner a handsome sum as a penalty for going to the trouble. Pure speculation, of course. They keep the details of these transactions secret, and do a better job of that than the Defense Department when buying a weapons system.
imo, your hate for Tilman is showing, because now you're calling both him and Les stupid business men. You seem to be saying the sports investment banks want none of this action, so Les is stepping in as some kind of shark with a non-prime rate, which means he's stupidly gambling where the banks won't. The majority of deals involve sports investment banks. I don't know why 12% of the sale being financed would be so scary. It could simply mean Tilman preferred not to liquidate another asset that he sees increasing in value faster than the debt interest. And I don't know why you'd assume Les is getting away with a higher rate than the investment banks offered. I'm sure Tilman had options on financing and chose the best one for him. I was actually thinking the opposite, that Les gave him a cheaper rate to outbid the banks on a sure deal Why would Les, a guy basically looking to cash in for retirement, take on a risky investment vs just waiting for a better deal.
Makes zero sense to me. Why would the sports investment banks that live for these deals not want to get in on the action and outbid Les with a better rate. And I don't buy this "to close the deal faster" nonsense. No bank is going to fail to get their bid in on time, and no buyer is going to take a higher rate on something that can wait a little. And if the sale really is two technically separate sales like Prokhorov is trying to do with the Nets, if I were Tilman, I'd very much consider financing the Operating Rights to TC part of the sell at 100% if Les gave me a cheap rate. And if I were Les, I'd offer a cheap rate for the TC rights because I consider that a can't miss, safe money deal. Tilman would just have to give me a yield that outperforms a top rating municipal bond. Because if there is one thing Fertita will be great at, it will be making money off the downtown indoor stadium/concert venue in the 4th largest city in the US. That's easy money for him.That $275m could all be the Rights to TC deal, for all we know.
No it's not one of the shittiest schools to get an education. Just because it's not Ivy league doesn't mean it's a shitty place. Also Tillman has been huge in pushing UH athletics and puts up his own money. Pushing hard for p5 status. That tells me he wants to be a winner not just a business investment.
Maybe but wouldnt you agree - At lowest of levels if your new owner is doing credit gymnastics to get a hold of the team that is not a good thing. We deserve a real guy that has the coin. Not a ponzi schemer. You cant tell me this is good news. Tell me how it is when ballmer is dropping 6% of his net worth to make it happen. Knowing the details around the 275 million is interesting.if im following correctly there is a 275 million dollar loan from alexander to fertitta
Maybe Les has an investment lined up for the 2bil, or otherwise to be tied up. He took the financing so he will have some cash flow. You know, so he can feed his family.
