You may have read that Tom Hicks, the principal owner of the Texas Rangers and Dallas Stars, as well as the 50% co-owner of English football club Liverpool, defaulted on $525 million worth of debt. Back on April 3rd, here's what he had to say about it (somewhat paraphrased):
The move was deliberate, a business strategy as part of negotiations with the banks. The company wants changes to the lending agreement including full access to reserve accounts and a revolving credit line. This is a nonevent for the teams, fans, sponsors and vendors.
That line now looks optimistic, as we here at TYD predicted at the time. It turns out that a year ago, getting a revolving credit line would have been relatively simple. Think about your own credit card--just as Capital One is slashing its credit lines to you and me, the consumers, UBS and JP Morgan are slashing the lines they are willing to extend to the high and mighty, including Tom Hicks. As Andrea Ahles writes:
"experts say negotiating with lenders is much more difficult now because of the credit crisis and economic recession. And with the Stars not in the playoffs this year and the Rangers struggling to get fans through the gates, Hicks may also have a hard time attracting cash from new investors interested in buying a minority stake in a team."
"Lenders could force Hicks instead to sell a majority of his stake in one or both of the teams. And if Hicks continues to miss interest payments, lenders could work with the league commissioners and attempt to find new ownership, experts say."
Ain't that a bitch.