http://blogs.forbes.com/sportsmoneyblog/2008/11/nfls-high-debt.htmlIn May, the owners of the National Football League notified the players union that they had exercised their right to opt out of the current collective bargaining agreement, which ran through the 2012 season.
This means there will be no salary cap in 2010 (unless a new agreement is reached before that season), the last year of the contract. While still robust, NFL profit margins have been trending down due to higher player salaries and debt payments. Many speculate the owners will lock out players before the 2011 season unless there is a new agreement more favorable to the owners in place by then.
But the NFL’s big debt load makes this highly unlikely. By my count teams owe more than $6 billion, tied to its franchises and stadiums. This month the NFL rolled its $1.4 billion credit line into a four-year term loan, meaning the league will have to pay back $350 million in 2011. It is hard to see why owners would cancel a season they have to pay back a nut this size. Sure, the NFL could refinance, but interest rates are more likely to rise than fall given the Federal Reserve’s apparent attempt to monetize our economy out of the banking and mortgage mess.
The Cowboys, Jets and Giants--three of the league's most high-profile, big-market franchises-- have a mountain of debt tied to new stadiums scheduled to open during the next two seasons. No football would mean their owners would have less money to pay debt expenses. Plus, the league’s broadcasting deals with Fox and CBS expire after the 2011 season. The billions of dollars the networks pay the league in multi-year deals help the NFL borrow at comparatively low interest rates. It would be pure folly for the owners to spit in the eyes of the networks a year before they had to negotiate new contracts.
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
