Sports financing to tighten with CIT bankruptcy?

CHICAGO - Sports markets already losing business due to the tight credit markets and weak economy could get worse if embattled U.S. lender CIT Group Inc files for bankruptcy, analysts and sports bankers said on Thursday. Shares of CIT, which lends to hundreds of thousands of small and medium-sized firms including sports teams, plunged more than 74 percent due to investor fears of a failure after the company said last-ditch bailout talks with U.S. Treasury officials had ended. CNBC television, citing a source close to the company, said CIT, which has about $75 billion in assets, is now pursuing a plan that is likely to include a Chapter 11 bankruptcy filing on Friday. While CIT's sports advisory and finance group is only a small part of the company's portfolio, it has arranged financing for a number of hockey, basketball and soccer teams in the United States, Canada and England. While CIT is not considered a major player in the sports finance market, its potential exit would worsen an already tight credit market, especially for teams in the National Hockey League, analysts and bankers said. "It's going to hurt at the edges and it's indicative of how little capital will be available for sports owners, especially if they want to do any kind of refinancing or take on additional debt," said Robert Boland, professor of sports management at New York University. "The pool of sports financing has collapsed over the last few years," he added. Officials with CIT as well as within its sports advisory group could not be reached to comment. Among the teams to which CIT has loaned money or arranged financing over the last few years are the Edmonton Oilers, Ottawa Senators, New Jersey Devils, Nashville Predators and Dallas Stars of the NHL, as well as the National Basketball Association's New Jersey Nets and Manchester United of the English Premier League. Spokesmen for the Senators and the Predators declined to comment, while officials with the other teams could not be reached. NHL officials also declined to comment on CIT, but Commissioner Gary Bettman said on Wednesday that the North American sports league is weathering the recession fairly well. He cited record attendance and revenue, higher TV ratings and continued strong corporate sponsor support. TROUBLES BETWEEN THE PIPES Bankers wonder whether CIT is backing the almost $575 million bid by the Molson family to buy the Montreal Canadiens from George Gillett. A spokesman for Gillett and the storied NHL team declined to comment on the pending deal and its structure, while a spokesman for the Molson family said only that the deal is expected to close by the end of the summer. CIT's troubles are not welcome for the NHL as the bank was one of the few still providing cash for the league, several analysts and bankers said. "Whenever you take a player out, whether they're a lead or a syndicate financial source, these days there are very few substitutes," said Marc Ganis, president of Chicago consulting firm Sportscorp Ltd. "It's really an odd situation for (the NHL) because in many cases the league is as strong as it's ever been, but there are a number of very distressed franchises and there isn't a great pot of gold at the end of the rainbow," he added. In May, the NHL's Phoenix Coyotes filed for bankruptcy, while the month before creditors declared Texas billionaire Tom Hicks' sports group, which owns the Stars and the Texas Rangers baseball team, in default on $525 million in loans. Last year, CIT helped finance half of a Canadian businessman's $200 million purchase of the Edmonton Oilers, while the year before it arranged $130 million in loans to allow the Ottawa Senators to refinance their debt. One sports banker, who asked not to be identified because he works closely with sports teams, said a possible CIT exit "will put yet another dent in sports financing liquidity if it happens."