Crain’s Detroit Business reported today that the Pistons have been borrowing money to meet operating expenses and that Tom Gores will assume that debt as part of purchasing the team:
How much the team has borrowed and how far it is in the red are unknown because those involved have declined to comment.
For some time, the National Basketball Association’s team owners have said they are losing money, and the Pistons are said to be among the 19 franchises to borrow from the leaguewide $2.3 billion low-interest credit facility. The league caps borrowing against the facility at $125 million, and most of the teams that have tapped into it are thought to have taken up to the limit.
Additionally, New York-based Citi Private Bank Sports Finance and Advisory was selected last year by current Pistons owner Karen Davidson to broker a sale of the franchise in part because it was willing to subsidize the team’s operations.
“We were looking to see if the investment banker would finance the operation of the team,” Joseph Aviv, co-managing partner of Bloomfield Hills-based Honigman Miller Schwartz and Cohn LLP, told the trade publication Michigan Lawyer’s Weekly this month. He was part of the Honigman team retained by the estate of the William Davidson, who bequeathed the team to wife Karen Davidson after his March 2009 death.
When asked by email today by Crain’s about the situation, Aviv declined to comment beyond their previous statements.
Citi has declined to comment throughout the sale.
This report doesn’t suggest that the sale of the team is in jeopardy, but it might explain why the negotiations took longer or were more complicated than expected.