Just to be clear, that is 7% (probably more) per year. 10yr Treasury Bills with the highest rating are ~2%. That is not an interest rate to buy the Rockets. That is an interest rate for the corporate bond (loan) to Golden Nuggets/Landry's Inc, and it is a generous guess on my part. If Landry's Inc defaults on that bond, because the interest rate is too high, how will the success of the NBA help any? Are the Rockets going to loan money back to Golden Nuggets/Landry's? Is Tilman going to sell off part of his stake in the Rockets to cover the bonds? Tilman will be paid a $1.6b ownership dividend from that. He will pocket that, and use it to buy the Rockets. It's like cashing out on stocks, except he's leveraging his business at a high corporate bond interest rate to do so. No one who buys the bond will have any ownership of the Rockets. So, the rise in value of the NBA is irrelevant to the buyers. Golden Nuggets/Landry's Inc must continue succeeding as restaurant chains and casinos in a highly leveraged state. And what does Moody's think of that prospect. Moody rated that a B2 bond with "Outlook Negative" to pay it back. It is because they are at a 7.2x leverage ratio. It is rated as "Highly Speculative." The interest rate could even be higher. I'm making a guess, because his current bond is 6.75%. You can call that a low interest rate, but you'd be disagreeing with Moody's. And we might even find that Tilman can't sell enough bonds to even buy the Rockets, given Moody's negative rating.
Are we sure about this? His net worth is $3b. The ownership dividend he's getting from issuing the corporate bonds is $1.6b. I assume that is essentially him mortgaging his business to buy the Rockets. Maybe you're right, and he actually has $1.6b sitting in other liquid assets somewhere, which he now can draw upon for paying Luxury Taxes, etc. And the bonds are actually a new credit line....ie new money. But that's not what it sounds like to me. Sounds like the issuance of the bonds is him liquidating his primary assets, as a loan.
In that case you should be extra happy. It sounds like if he doesn't make the Rockets a success then he is personally F#$cked. Looks like his motivation will be through the roof.
Sorry, I'm not following this. It sounds like if Golden Nuggets/Landry's can't cover the bonds, Tilman is personally f#cked, and he'll have to sell major stack in the Rockets to cover it. Hey, I'm not criticizing Tilman here. That's @IBTL's job. I just don't see how you are spinning leveraging his business into something better than having cash on hand.
Titman Fertiltta' s defenders will be screaming bloody murder when he cuts a rotation player or promising prospect to save luxury tax.
Are you saying fans should have blamed Leslie Alexander all of this time?! You cut Shaun Livingston over Scott Machado!? You cut Rob Covington?! You cut Tarik Black over Joey Dorsey?! Daryl, not Tilman, will take the blame per usual.
I didn't read heypartners / CH amazing posts. My Friends saw TF at Chapman n Kirby this weekend. Said he's excited to make this team global. This team needs better marketing. It does come with players, but our new owner understands that.
Didn't even ask, but great question! I have a feeling he's going broke, so he will keep it the usual strip club prices. $8 bud lights, free buffet from 4-6.
No, doubt it. I was being facetious, like Swapshop was by saying he's personally fkced if Rockets fail. If the bonds default for lack of Golden Nugget/Landry's being able to pay, then I'm sure they can just go into bankruptcy, or whatever, but he'd be personally protected.
Why would the league not approve it? They don't like you taking on debt to buy a team, even when your net worth is more?
This team has always been global with players catering to various markets eg. Asian markets especially.
Ah I guess so. States wise we don't see it. Not a popular team. Sounds dumb but seriously it starts with our jerseys n logo first. Horrible
Regardless to why the owners place a maximum debt ceiling, it looks like Tilman might get around that, for reasons mentioned in previous posts. He's not too much over the limit. What he might have trouble with is still raising the cash part of the purchase, though. The new article in Forbes that IBTL posted, and the Moody's article I posted, say Tilman is still trying to raise the money via selling corporate bonds of $2b. I bet he'll try to sell some to Hakeem, Dikembe and Beyonce and tell them he'll later convert the bonds into actual stock in the Rockets....lulz.
Speaking of SC's. is he opening one in Golden Nugget in LC. There is one shitty SC there by Sulphur and that's about it....
