When many of us see the headline, “NBA to borrow $200 million to aid teams,” particularly in this day, we’re inclined to think one thing, ‘bailout’. But NBA commissioner David Stern assures us that it is not. The National Basketball Association is in the process of acquiring $200 million which they will distribute to several teams to help them deal with operating losses incurred because of the economy. JPMorgan Chase and Bank of America initially went to the league and said that $150 million was available, a figure that eventually turned into $200 million, which is what they are set to get. Twelve teams have express interest in the bailout…I mean aid money.
In a time where banks, creditors, automakers, and etc are taking money from the government and several other businesses such as retailers, newspapers, and construction are doing really bad and laying off and closing down, why would professional sports be immune to the economic downturn. Various professional sports teams are already eliminating jobs, cutting salaries, and slashing prices. You may still see superstar salaries with contracts worth millions of dollars, but their business essentially still boils down to the consumer or the fan. Whether through ticket sales or advertisements, they money still has to be generated somehow. The NBA does not have unlimited funds to pay their players and maintain their league and teams.
But it’s not a bailout, insist commissioner Stern, “It’s the exact opposite,” he told the Associated Press. “This was a show of strength in credit worthiness of the NBA’s teams.” Stern believes that it’s sign of confidence that the market is opening up. We all know how hard it is to get a loan these days, being that the credit market is frozen up. But investor’s believe the NBA is a safe bet.
Not for nothin’, but its hard to convince someone that it isn’t a bailout if you are getting hundreds of millions of dollars from the government or any other investor, to help run your business, especially in these economic days. If it looks like a bailout, walks like a bailout, then it’s not a duck.