TheHouston Texans, a new National Football League franchise, signed a $150 million secured credit facility to go toward its league entrance fees totaling $700 million. Scott Schwinger, cfo, said the facility also funds general start-up costs for the team, which replaces theOilers in Houston. Each year the Texans will sign a new facility, paying league fees in installments.
As a new football team, the Texans had some difficulty finding a lender. "Last year we made our first payment with equity. It was impossible to find debt capital," he said. "Getting a deal shows the progress we've made: We've sold season tickets; we've signed naming rights for the deal. All of it gives [the lenders] more comfort." The team is scheduled to play its first game in late July.
J.P. Morgan Chase leads the three-year deal. There are eight banks in the syndicate. Schwinger says the bank offered the best pricing, which he would only say was between 100 and 150 basis points over LIBOR. The football team did not go out to bid. "We interviewed several firms, and [J.P. Morgan Chase] rose to the top. They have experience with NFL lending and were able to provide flexibility," he explained, adding that other banks may be considered for future deals. "Once we're up and playing, we're going to look for long-term financing," he said. "J.P. Morgan Chase has the leg up because they know us well, but they've still got to be competitive." Schwinger says the team is always open to new banks approaching it.