NFLPA Will Block League Attempts to Cut Debt Levels 27/11/2008 |
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The National Football League Players Association said it would try to block any attempt by the league to reduce debt levels and limit the amount teams can borrow.
At the NFL’s meetings last month, Commissioner Roger Goodell said the league had an “obligation” to examine its debt level each year and the current global financial crisis only increased that obligation.
The players’ union filed a complaint in 2007 that stopped an attempt by NFL owners to cut the amount each team could borrow by $30 million, to $120 million. The NFLPA said this week that limiting club debt is a “concern” because it effects contract negotiations.
“The NFLPA has legally challenged debt limits in the past and will do so again if the league moves forward on this,” the union said in a weekly message on its Web site.
NFL owners voted unanimously in May to end their labor agreement with the players’ union after the 2010 season. Goodell said at the time that increased borrowing costs were one factor putting pressure on owners to renegotiate the deal.
“The NFL is not immune to the economic realities facing our fans and corporate America,” league spokesman Brian McCarthy said in an e-mail. “Everyone is feeling it and we continue to be responsive with prudent planning and management of our finances.”
The NFLPA said league-imposed debt ceilings that limit available cash make it harder for players to get a large signing bonus, which most free agents seek in new contracts.
Changes in CBA?
“Players may hear clubs say that player salaries are too high and there needs to be changes in the CBA to give financial relief to the owners,” the NFLPA said. “‘But meanwhile, they are not willing to open their books to show their true financial situations. We can therefore assume that their $25 million average annual profit per club is not in jeopardy, and there is no need to be concerned about club debt.”
The NFL and its 32 teams have become “very reliant” on cheap, available credit to maintain cash flow, expand business and pay players, said Marc Ganis, president of the Chicago-based industry consulting firm Sportscorp Ltd.
The NFL recently closed almost $2 billion in financing as governments and banks struggle to find lenders.
The most-watched television sport in the U.S. is borrowing $1.4 billion through a four-year term loan and another $460 million with a 10-year term note that will guarantee teams’ operating money through credit-market turmoil, Chief Financial Officer Anthony Noto said on Oct. 31.
The league two days ago sold $460 million of senior secured term notes due in 2018 to refinance debt for various franchises, said Fitch Ratings, which called the NFL’s economic model “strong and highly regarded.”
The NFL’s credit is supported by “multiyear television contracts, significant revenue sharing among member clubs, a proven track record of conservative financial policies, and a stable current collective bargaining agreement with its players union,” Fitch said.
(Source: Bloomberg)
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