The league recently sold $900 million in notes in a private placement to institutional investors and will likely disburse the money to teams ahead of the season, expected to start Dec. 22, according to a league source who asked not to be identified because they aren’t permitted to comment on the transaction.
Given the continuation of the pandemic, many teams will be playing games with no fans in attendance, while others will likely have sharply reduced numbers of ticketholders in the stands. The $30 million disbursement is being given to teams to use as they see fit.
A private placement means funds, often insurance companies, will buy and hold the debt through repayment. That means the loan doesn’t require ratings or other disclosures typically required for securities that may be traded or held within investment funds that have credit quality targets or restrictions. This latest transaction is on top of last month’s extension of its $1.2 billion league borrowing facility out to 2023.
NBA franchises experienced a 16% drop in their revenue from tickets, suites and other team-generated revenue, compared to the 2018-19 season, according to information disclosed with the borrowing facility. Overall, about 40% of NBA revenue comes from ticket sales, concessions, signage and other homecourt game-day income. Including the $200 million cost of operating the Walt Disney World bubble, a dispute with the Chinese government that affected TV revenues and other lost income, the league missed its projections for the recent season by $1.5 billion, the Associated Press reported in October.