Somewhere Tony Soprano is smiling. To get through the pandemic shutdown, at least two owners of huge sports assets are borrowing at interest rates the crowd would take.
The Ultimate Fighting Championship, owned by Endeavor, recently staged a mixed martial arts event in Florida with no crowds. A month ago, Endeavor-a global entertainment company whose portfolio also includes WME (talent agency), WME IMG (entertainment, sports and fashion) and On Location Experiences (stadium and event hosting) – had its lowered credit rating by S&P Global. The same day, S&P lupped the show-level ratings on affiliate WME IMG but maintained its rating for the UFC at B with a negative outlook.
The the Wall Street newspaper reported yesterday that Endeavor arranged a $ 260 million term loan at just under 11% with JP Morgan as lead arranger. The entertainment company, which was already in debt of $ 4.5 billion, has seen its revenues fall by about 70% this year as the pandemic has cut incomes for people attending sports, concerts and festivals, as well. than to film and television production. For the UFC, the good news is that, even though they host events without fans, they will continue to raise money from ESPN, which is valued be at least $ 500 million per year, or about half of total UFC revenue.
Another heavily indebted sports owner, Tilman Fertitta, is paying an even more onerous interest rate. Recall that Fertitta bought the Houston Rockets from the NBA for a record $ 2.2 billion in 2017 by selling $ 1.4 billion in bonds secured by its Landry’s restaurant and Golden Nugget casino operations. End of March, Forbes‘Christopher Hellman reported, “The Golden Nugget-backed bonds (wholly owned by Landrys) maturing in 2024 and 2025 have traded this week at 62 cents and 52 cents on the dollar.”
Beginning of April, Bloomberg reported: “Fertitta offers potential lenders an interest rate of at least 15% to participate in a new $ 250 million loan for its Golden Nugget casinos and hundreds of restaurants under the Landry inc. umbrella that have been ravaged by the coronavirus, according to people with knowledge of the subject. … The company has already drawn all of the $ 300 million in existing credit lines, and Fertitta is injecting $ 50 million of her own money into the business, said one of the people, who asked not to. be named because details are confidential.
The shutdown of live sports and the tanking economy have made it difficult for some owners to keep their businesses. But it’s a good deal for the Sopranos.