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Kings will borrow from NBA credit line
By Melody Gutierrez
Published: Thursday, Feb. 26, 2009 - 3:39 pm
Last Modified: Thursday, Feb. 26, 2009 - 4:08 pm
The Kings are among 12 teams set to borrow from a credit line of $200 million that will be extended to the NBA today.
The amount each team can borrow ranges from $13 million to $20 million of the newly secured money depending on previous borrowing, NBA officials said. The $200 million supplements an existing $1.7 billion leaguewide credit facility, which was established in 2003 to assist franchises in attaining secure loans using the NBA's media contracts as collateral.
The Kings will be extended at least $13 million at a time when they are struggling with operating losses. Highly placed Kings sources recently projected the franchise would lose between $25 million and $28 million before the team dumped several salaries during last week's trade deadline.
The league and its lenders do not restrict how the money can be used. The Orlando Magic is also among the teams planning to borrow, the SportsBusiness Journal reported. The NBA will not release the names of the 12 teams.
Mitch Germann, the Kings' vice president of business communications, confirmed today the team will participate.
The SportsBusiness Journal, which originally reported 15 teams would borrow, first reported the story Feb. 16. The NBA initially was set to borrow $175 million, but an additional $25 million was secured.
The Kings have been hampered by the bad economy and sagging attendance, which hit a new low Wednesday against the Charlotte Bobcats. The announced attendance of 10,439 at Arco Arena was the smallest ever in the building.
The Kings average an NBA-worst 12,264 fans a game.
League officials said teams did not go to the NBA looking for financial assistance. Nor did the NBA seek an extension of its credit facility. Instead, the NBA was approached by JPMorgan Chase and Bank of America. The league polled its teams and found a need, in part because of limited borrowing opportunities.