NBA dribbling toward disaster?
Filed under: Extracurriculars
The Sports Business Journal reported recently that the National Basketball Association will take out a $175 million loan from Bank Of America and JPMorgan to bolster its ability to prop up teams suffering from the economic downturn. The money comes at a whopping 8.27% interest rate. Perhaps the NBA could have received better terms by borrowing the money from LeBron James.
Brands in Trouble
Posh Tots, the purveyor of some of the most extravagant baby and child gear we've seen, is in financial trouble. Posh Tots is a subsidiary of the Parent Co., a Denver-based online retailer of products for children and babies which filed for bankruptcy protection recently. The company listed assets of $20.6 million and debt of $35.7 million in Chapter 11 documents filed in U.S. Bankruptcy Court in Wilmington, Delaware. The reason for the problem, that old bugbear, lack of sales. Bloomberg reports that net sales were about $20 million in the first half of fiscal 2008, compared with about $106 million for all of the previous year. Parent Company had about 946 employees at the beginning of December and now has just 103 people people. Other subsidiaries in the filing include Etoys Direct, BabyUniverse, Dreamtime Baby, Gift Acquisition and My Twinn. The company plans to sell its assets at auction.
Posh Tots
Mall favorite children's store KB Toys filed for bankruptcy protection two weeks before Christmas, 2008, and will be closing their stores.
Prefab home builder Empyrean International, the builder of Deck Houses, Acorn Homes, and Dwell homes is the latest victim of the credit crunch. The Massachusetts-based company closed in late October and two weeks ago, a court-ordered receiver took control of the company. The owner of Empyrean, Patrick Gilrane, blames the failure of Lehman Brothers as well as the weakening economy for the closure. He had hoped to restructure and reopen the company next year but the home builder has defaulted on a $7 million loan and has not paid its utility bills or taxes for months. The Boston Globe reports that the receiver, attorney Stewart Grossman plans to put the company up for sale once he puts its affairs in order. The company's roots go back to 1947 with the founding of Acorn Structures. Deck Houses and Acorn homes have crated entire neighborhoods. Over the last few years Empyrean has worked with Dwell magazine to create boxy modernist homes. Dwell plans to continue working on prefab homes with a different builder.
Empyrean International
The latest luxury company to hit trouble is Waterford Wedgwood. The Dublin-based company announced on Monday that 10 British units and four businesses in Ireland have been placed into administration after running out of money and failing to find a buyer. The NY Times reports that the other subsidiaries in the U.S., Germany, Canada and elsewhere are not affected. The company has been in talks with lenders for months while a suitable buyer was sought. After takeover talks failed on Friday a group of lenders decided to suspend a covenant that is part of Waterford's loan agreement. Waterford is famous for their crystal and for making the ball that drops each New Year's Eve in Times Square. Waterford Wedgwood was created in 1986 when the Irish crystal maker Waterford acquired the British ceramics company Wedgwood. Wedgwood was founded in 1759 by Josiah Wedgwood and Waterford was founded in 1783 by the brothers William and George Penrose. Sales for the year ending in April 2008 were down 9.4 percent from a year earlier and the company posted a loss of 231 million euros, up from 71 million euros.
The home goods store Linens N Things is going out of business and is still in the process of closing their stores.
Circuit City filed for bankruptcy protection in November, 2008.
Mervyn's is going out of business and has been liquidating their stores and assets.
Six months ago, 16-year-old Russian fashion designer Kira Plastinina was having her U.S. launch party. Her pink-festooned stores opened in New York and Los Angeles and she appeared on MTV's TRL. Fast forward to now, TRL is no more and Kira Plastinina is closing almost all of her 12 U.S. outlets after being open less than a year. Sergei Plastinin, Kira's rich father, tells Bloomberg that the numbers of shoppers in the U.S. fell significantly and because of the banking crisis it also become much harder to get money for growing the chain. The U.S. backing company has filed for bankruptcy.
The Sharper Image filed for bankruptcy in February, 2008, and is continuing to close down stores and sell off assets.
Discount clothing chain Steve & Barry's filed for Chapter 11 bankruptcy protection in July, 2008, and later decided to liquidate their stores.
According to another SBJ report, the NBA expects gate receipts to stagnate, while sponsorships for events, venues, publications and team-related products have become a very tough sell. The players are also suffering, with many endorsement contracts bringing in half of what they did during the recent boom times.
Overall sponsorships for the league are also up for renewal, and only a Hail Mary bucket could help it avoid a sharp decline in the revenue from these rights.
The NBA is not alone in this decline. All pro sports, from the NFL to NASCAR, are struggling to find replacement sponsors for companies that can no longer afford the cost and the perception of fiscal irresponsibility of sports sponsorships. Minor sports such as arena football have already canceled entire seasons, and I expect that before the economic crisis is over, we'll see some pro teams in the three major sports on life support.
Reader Comments (Page 1 of 2)
3-02-2009 @ 8:23PM
Mike said...
I Wonder what kind of collateral the NBA put up; probably a years worth of unwashed game jerseys and used sneakers that BOA and MS executives think they can sell on ebay to cover their $175M of loans. For all of you investors out thre, watch out for these loans when your financial advisors tell you they have a hot CDO for you to buy.
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3-02-2009 @ 8:11PM
Bob said...
The interest in black basketball players has gone by the wayside just like black Presidents. Both are boring and failures. We can do without them. They are all selfish and conceided and add nothing to our society. Go away, please.
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3-02-2009 @ 8:44PM
ding dong said...
Bob you are a fucking idiot. Bush created this mess we are in due to the stupid war. Hey dumb ass it cost 300 million a day to run that war. Deregulation is the other factor dumb ass!
3-02-2009 @ 8:56PM
Joe said...
What racist nonsense! We've had one black president for less than a month and you already declare him a failure! All the president and basketball players have in common is that they are good at what they do.
3-02-2009 @ 8:54PM
Jude said...
You are 100% right. Thanks you go !!!!!!!!!!!!!!!!
3-02-2009 @ 9:05PM
CB said...
First of all it was the BLACK PLAYERS that built the game and second, before you go slandering someone's ethnicity learn how to spell you IGNORANT B! Go to school, please!!
3-02-2009 @ 10:44PM
fwhateva said...
F**K U BOB!!!!
3-02-2009 @ 9:33PM
Lois said...
Don't be a do do Bob..Our president only been there a month and cannot perform miracles! Give him a chance and be more American and support our president even if he was chinese!Race has nothing to do with it..its the person ! I think he will make one of the best presidents in year..wait and see !
3-02-2009 @ 8:21PM
Frank said...
They are so over payed and high priced tickets it's no wonder.I use to go to games, but not anymore.
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3-02-2009 @ 9:14PM
Bill said...
Maybe Barak can get involved and cap athlete salaries and end signing bonuses, bonuses for making playoffs etc;
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3-02-2009 @ 8:23PM
Peewee said...
Looks like all of the outlandish money that the NBA has been paying these players is catching up with them. No one can afford the high priced tickets to go watch games. When it takes almost $300.00 to take a family of four to a basketball game, what is wrong with this picture???
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3-02-2009 @ 8:23PM
Jim Jamher said...
Why didn't the NBA just go to the government, they're handing out money to people who don't deserve it like it's candy. Bank of America and Chase can hand out $175 million to the NBA, but the banks refuse to give money to anybody else which will really get this economy going? The NBA gives it's money to the players and CEO's who do nothing to this country really. Why don't the players and owners just take pay cuts, and here's a thought.....why don't the players play for the love of the game like they used to, and just get a real job. Baseball, Basketball, and Football players of the past used to have a second job, and play to boost the morale of the country, especially durring the depression and WWI. Will we see that today? NOPE!!! The players will continue to get their millions and the banks will continue to hold on tho the real money that will get this country going. I am a contractor, and have 7 jobs on the books, but need to float a payroll of 80 men. The banks will not even consider me, even though I have always made good in the past. So, instead of borrowing sto omeone who really needs the money, that will stimulate the economy, I, and 80 other working class americans are jobless, while the NBA still gets its bailout. This will be the downturn of this country if something doesn't change.
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3-11-2009 @ 1:05PM
B Gelenter said...
I own a small electronics business for 28 years. The past few years I have rung up my debt to a ridiculous amount, trying to stay in business. After all the tax penalties over the years I was ready to give up and close,when I told my two workers who have been with me twenty years each, they both offered to work for 3 months free, so I might catch up,Then came the perfect storm, when I called the bank of america to do a balance transfer to save some interest, they eliminated my available credit causing my credit lines to be maxed out ,resulting in ruining my credit score,how many little guys have to get screwed to give the NBA that much money,Just remember when all the little guys had enough who will pay to watch the big guys play,that might work out for you because you will have plenty of work, rebuilding all the drive up windows at macdonalds,wendys,burger king and tacco bell for the new wave of 7ft tall employees.
3-02-2009 @ 8:26PM
Gary Brown said...
If the players would stop being so greedy and stop demanding millions of dollars then the price of tickets would go down then more people could afford to go to the games. That goes for the NFL and MLB as well.
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3-02-2009 @ 8:36PM
Drew said...
why don't some of these overpaid athletes take a pay cut to help out...because the greed has overtaken their souls.
It's not just basketball, it's all sports across the board. Would someone who is making $24 million a year for the next 5 years really miss 3-4 million...give me a break !
I don't feel the least bit sorry for the owners or players, they did this themselves, just like the bankers...just a whole bunch of crap.
Suck it up just like the rest of everyday americans trying to make a living !
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3-02-2009 @ 9:02PM
Dark Gable said...
Wow! So many broke, jealous , hatin white boys!
You don't have to be angry! They make pills that can make it bigger!
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3-02-2009 @ 8:36PM
danno said...
good riddence...you get the ticket's down to 5 buck's i may go back...how-ever these player's salary need's a vast adjustment down...way down...
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3-02-2009 @ 8:44PM
VERONIKA said...
FIRST OF ALL THE NBA MOSTLY WHITE OWNED
.SECOND THE PLAYERS ARE LIKE ACTORS WITH A SALARY, THE OWNERS MAKE WAY MORE MONEY . JUST THE OTHER DAY THE HEAD LINES READ NBA TO GIVE OUT 200 MILLION TO BASKETBALL TEAMS THAT NEED HELP.AND 15 TEAMS STATED THEY NEEDED HELP.NOW IT'S ABOUT THEM BORROWING MONEY,GIVE ME A BEAK.AND ALL YOU COMMENTING BANKERS .WISE UP YOU DON'T WALK IN THEIR SHOES.NOR COULD YOU.SO STOP HATING AND KEEP PAYING FOR YOUR SEATS,SHOES,JERSEYS.BEER AND NACHOS
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3-02-2009 @ 8:47PM
Art said...
Prices in all professional sports are way too high for most people. The athletes are selfish and hold out for mega million dollar contracts far out of reality for the product seen by the fans. Hard working people cannot afford to go to games and the major corporations can no longer pay for the over inflated corporate boxes. As a kid in the 1960's, we could go to a baseball game and get bleacher seats for 50 cents, or grandstand seats for $1.25. Athletes then played for the love of the game, today it's to enrich their pockets. Good riddance to all professional sports. I will go to a AA baseball game and pay $9 for a great seat. I no longer care about professional sports due to the greed and over expansion.
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3-02-2009 @ 8:47PM
Bill said...
Hey Bob How come your such a Dick?
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