Quote:
Originally Posted by Flash Walken
It's disingenuous to say the team is putting in 450 million when 250 million of that is in the form of a loan fronted by the city that the team will pay back.
So far, the Flames organization is committed to the idea of spending $200 million dollars with the rest of the financing to be worked out.
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1) we don't know that yet, and
2) let's be clear - guaranteeing a loan is not in fact 'fronting' the money.
When you buy a house and take out a mortgage, you do not 'front' the cash for the mortgage. It isn't even the bank that does. The bank borrows money in the market and lends it to you. You pay the original lenders back (and the bank makes a handling spread).
The city will not have to supply that $250M, they simply put their name on the debt (assuming that is how it ends up) as a guarantee, if it isn't paid.
On that note, there were comments earlier in the thread that such a guarantee comes at a cost because it increases their borrowing costs.
That is not really accurate. It COULD increase their borrowing costs, if it resulted in them oversaturating the market with their debt, or causing their debt levels to become too burdensome.
However, if that were the case, it is HIGHLY unlikely that the city would agree to guarantee it.
Personally, I don't care whether the city or the owners guarantee that loan. Except for the fact that, if the city does, the cost of the debt would be less, thus reducing the overall cost of the project.