Wednesday, June 8, 2011

Forbes, on Bank of America and Jim Crane

Taking a break from the Draft, let's link to a Forbes article by Mike Ozanian, reporting that Bank of America (who has my meager checking account) is "only" financing $220m of Jim Crane's $680m purchase of the Astros, with BoA learning a deep lesson that probably impacts me as a BoA user:

With bankruptcy being mentioned as possibility, who knows if Bank of America will get its money back from McCourt?

BOA has apparently learned its lesson. The bank is reportedly loaning Jim Crane just $220 million towards his $680 milli0n purchase of the Houston Astros from billionaire Drayton McLane, or only about one-third of the enterprise value. Although the deal is still highly leveraged by MLB’s guidelines, it is much better capitalized than McCourt’s purchase of the Dodgers.

BOA’s prudence may come in handy given attendance for the Astros at Minute Maid Park is down 4% from last season.

1 comment:

Anonymous said...

Mike Ozanian is usually great at analyzing these deals, but this was a shoddy article. By all accounts, Jim Crane is borrowing at least $300 million, not $220 million, and there are other gimmicks involved in the deal as well. Bank of America might have capped its loan at $220 million, but apparently Crane has other banks loaning him money, too.