NBA Debt Grows 7.4 billion

National Basketball Association’s (NBA) total debt will rise to US$7.4 billion (AU$10.3 billion) when the league sells tranches of its senior secured notes worth around US$254 million ($353 million AUD).

According to Sportico’s latest NBA franchise valuations, the league will leverage media contracts to support the debt, which are intended to provide funds for three undisclosed franchises.

League Subsidiary Hardwood Funding (LLC) will be selling three notes at US$137 million (AU$190 million), US$90 million (AU$125 million), or $26 million (AU$36 million).

Credit rating company, Fitch Rating, made a statement on Monday indicating the league’s marketability and profile have been growing around the world with broadcasting contracts also keeping up with other sporting leagues in the US.

“The NBA’s business model and financial profile are consistent with the other A category ratings for the National Football League (NFL) and Major League Baseball (MLB),” the statement read.

“In terms of league business model, the NBA has demonstrated perhaps the strongest global growth in popularity in recent years, and renewal risk for its broadcast contracts is similar to that of peer leagues,” it said.

Additionally, Hardwood Funding is using it as a safety cushion to allow a continuous flow of money from NBA accounts to lenders in case a team declares bankruptcy.

The announcement comes after cryptocurrency businesses powered the NBA’s sponsorship revenue to US$1.6 billion during the 2021-22 season.