Premium Member Diesel Posted September 5, 2003 Premium Member Report Share Posted September 5, 2003 http://www.dfw.com/mld/startelegram/news/state/6699067.htm AOL Time Warner's sale of the Atlanta Hawks and Atlanta Thrashers to a Dallas businessman has been complicated by a provision in the bond sale that built their home arena, which uses the Hawks as a form of collateral. When the arena was built with government-backed bonds, Turner Broadcasting put up the Hawks as collateral up to a limit of $60 million, in case the company defaulted on an obligation to make the annual bond payments of about $12 million over 30 years. The newspaper said people familiar with the sale negotiations said McDavid would be obligated to continue the payments, but a lender likely would require Turner to replace the collateral in order to sell an unencumbered team. ALSO http://www.ajc.com/sports/content/sports/0...434582101610626 The lease on Philips, signed between Turner Sports and local government officials in 1996, is a good deal for the teams' owner, according to industry experts. It allows whoever owns the teams to comfortably fulfill their obligation of making the annual payment on the $140 million in government-backed bonds used to build the arena. In exchange for that payment -- $12.5 million a year for 30 years -- the owner manages the arena and gets all revenues from events there. That includes 82 regular-season basketball and hockey games, plus over 100 other events each year, from concerts to skating shows. Revenues from ticket sales, luxury suite rentals, sponsorships, concessions, merchandise, advertising and parking add up to tens of millions of dollars a year and account for much of the clubs' total operating revenues. Out of those revenues, the owner pays players salaries and the annual debt, plus the fees and percentages that go to non-sports acts and their promoters As part of the deal, Turner put the Hawks up as collateral. If Turner had ever defaulted on the payments, the club would have been be sold and the proceeds used to pay off the bonds. It was a rather remarkable condition for a team to make, even in a world of creative financing. But if McDavid were to be successful in managing the arena, as AOL-Time Warner has been, he should never be in position to have turn over control of the club. __________________________________________________ I don't see a problem? What it's really saying is that it looks like McDavid may have problems making the payments of 12.5 Million per year over the next 25? Does that mean that he's BROKE or does it mean that he's trying to liquidate everything after he gets here. It sounds very suspect to me. Link to comment Share on other sites More sharing options...
Premium Member Diesel Posted September 5, 2003 Author Premium Member Report Share Posted September 5, 2003 More of a reason for the holdup is MONEY... http://www.bizjournals.com/dallas/stories/.../05/daily3.html Dallas businessman David McDavid will pay about $230 million for the Atlanta Hawks and Thrashers and operating rights to Philips Arena, should the transaction come to fruition, a source said. He also will pick up the $140 million of outstanding debt on Philips Arena and assume all other team and arena-related obligations on the shoulders of current owner AOL Time Warner http://www.ajc.com/business/content/busine...aolmeeting.html The company has also struck a preliminary deal to sell the Hawks, the Thrashers and operating rights to Philips Arena to Texan David McDavid for an estimated $350 million to $400 million. AOL Time Warner is shopping the Braves and has hired investment bank Allen and Co. to help find a buyer. ___________________________________________________ I always felt that the deal was a 400 million dollar deal. The problem is that there is a difference between what AOL is saying and what McDavid is saying. Here's a thought though... Maybe McDavid thought... 400 Million - 140 Million (debt for Phil) = 260 Million Actual. While AOL thought.... 400 Million total. Hmm. WHY pay some fancy Lawyers millions of dollars when the old dieselputer can work out the problem. Here's what you do. Sale McDavid the Thrashers for 160 Million. Put the Hawks/Phil up for Sale with the terms of the lease made by Turner. That would make everything SIMPLE. Link to comment Share on other sites More sharing options...
Inside_Man Posted September 5, 2003 Report Share Posted September 5, 2003 No, I don't think there is a difference of opinion. the debt plus cash is the total number. The key is that McDavid isn't putting up all cash for the non-debt part of the deal. Which PROVES my point posted earlier that he DOESN'T have the MONEY! He needs to HOCK the HAWKS to make the deal work, but Turner already HOCKed the HAWKS to build the areana. No one will want to lend McDavid money and have junior standing to recover debt BEHIND the city of Atlanta's claim as bond issuer for Phillips arena. Maybe he can HOCK the THRASHERS too! - but with SABRES gone bankrupt I don't know any banker stoopid enough to take a HOCKEYTEAMWITHADRAWL as collateral in a deflationary environment. If he had the $230 mill, it wouldn't be a problem, but he obviously needs to INCREASE the debt above the already stated $130 mil number, or else he wouldn't need new collateral. I said it before, and this article proves my point. HE DOESN'T HAVE THE DOUGH. end of rant Link to comment Share on other sites More sharing options...
Premium Member Diesel Posted September 5, 2003 Author Premium Member Report Share Posted September 5, 2003 I'm in agreement with you that he is not like the Maloofs or Cuban in terms of money... However, he has money. His buyout of the Mavericks deal netted him about 300 million dollars which was a sizable profit for him. I think what we really need to see is if he will try to make the Hawks a very frugal team, live off of NBA rebates and revenues then try to sell the team for more than he bought it. Remember, him and his group are in the business of buying a sports franchise. Any Franchise. That doesn't suggest a love for the game.. That suggest a love for how a team can make money. You have a point about Collateral and the fact that he showed up with only 195 Million stinks. One other point.... The City is making a killing off of the Phil (even though it doesn't get the gate for any of it). The Phil was realitively cheap but between Philips (185 Million), AOL (140 Million), and the City of Atlanta IOC fund (unspecified amount) the city has a deal that is banking it money yearly still. Good Job Mayor Young... i HATE TO SAY Campbell. Link to comment Share on other sites More sharing options...
Watchman Posted September 5, 2003 Report Share Posted September 5, 2003 How does a "lender requiring Turner to replace the collateral" equate to McDavid being broke? Link to comment Share on other sites More sharing options...
KB21 Posted September 5, 2003 Report Share Posted September 5, 2003 Not true. All this proves is that McDavid's financial advisors do not want the Hawks tied up as collateral for the Philip's Arena debt. The process that has been so time staken is the intertwining of the Hawks and the Philips Arena, which is what I and a few others have said all along. This deal is a lot more complicated than most team sales, because of the fact that the Hawks are collateral in the Philip's Arena bond issue. The bonds will be paid one way or another, and some form of collateral will have to be taken. McDavid and his group does not want the collateral to be the Hawks. Link to comment Share on other sites More sharing options...
Guest Posted September 5, 2003 Report Share Posted September 5, 2003 Either that, or he doesn't want to pay 400 million when he thinks he can get it for 260...gee, go think about that one D. Why just go toss out 140 mil... Link to comment Share on other sites More sharing options...
Inside_Man Posted September 6, 2003 Report Share Posted September 6, 2003 "with the sale negotiations said McDavid would be obligated to continue the payments, but*** a lender ***likely would require Turner to replace the collateral " I'm not saying McDavid's broke. I'm just saying he can't pay all cash for the $230 mil equity side of the deal. The articles don't say McDavid doesn't want the Hawks as collateral, it says ****"a lender"**** Who is "a lender"???? It's whoever McDavid is borrowing money from to do the deal. There'd be no need for "a lender" and no need to shift collateral if McDavid was paying 230 mil in cash and assuming the other 130 in debt. No one will lend him the money on something that has already been pledged as collateral. Yes, it's a complicated deal, but it's complicated BECAUSE mcDavid is trying to finance it. If he was a cash buyer, it woulda closed before the draft. Link to comment Share on other sites More sharing options...
Premium Member Diesel Posted September 6, 2003 Author Premium Member Report Share Posted September 6, 2003 McDavid is not like the Maloofs or Cuban. Had he had all the money upfront, this would be over and done. Like I told you last week... It's the same as buying a $30,000 car with cash. If you got $30,000s then the deal is over and done in a matter of minutes. However, if you got $15,000 and want to finance the rest, then problems happen. Link to comment Share on other sites More sharing options...
Watchman Posted September 6, 2003 Report Share Posted September 6, 2003 Yeah, but everyone has known all along that McDavid was partially financing the deal. This is nothing new. Link to comment Share on other sites More sharing options...
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