Bankrupt? Well, hes the brains É right?
If you've refinanced your home sometime in the last few years Ñ and who hasn't? Ñ you can certainly see where Paul Allen is coming from.
You got a bad interest rate a few years ago, things changed, and you went shopping for a new loan. In essence, this is what's going on at the Rose Quarter. At least that's what they'd like you to think. Hmm. I always thought there was a big difference between a business loan and a mortgage loan, but what do I know?
I just don't quite understand how the Oregon Arena Corp. got stuck with an interest rate up around 9 percent, even in the mid-1990s. But there is a lot about money that I don't understand. I spent all my time in literature classes, picking out the books I would have read for fun anyway and getting college credit for doing so. I left the business and math departments to the smart guys. I was overmatched.
In the last few days, I've talked to many people who know a lot more about money and business than I do, and they assure me that what Allen has done here is common practice. I'm sure it is, it's just not the way I'd choose to go, right from the start.
I mean, if I had $20 billion I wouldn't see much point in borrowing $150 million to build the Rose Garden. Not at 9 percent. Not with a clause in the contract that said I couldn't renegotiate the interest rate. Funny thing, though, I hear the team was able to meet the payments just fine until a couple of years ago, when fans got fed up and revenue began to plunge.
Be that as it may, if I were Paul Allen, I'd at least look to fire whoever talked me into signing such a mortgage. But insiders tell me that won't happen Ñ because it was Allen's sister, Jody Patton, and longtime Allen pal Bert Kolde, who negotiated this one.
This was a bad deal for Allen from the beginning. Figure it out Ñ $150 million is chump change to this guy. He spent $100 million last season paying the salaries of a team that was eliminated in the first round of the playoffs.
You say sinking that much money into an arena is dangerous for his portfolio? This is a man who plunked down $500 million to buy into the movie business, with DreamWorks. He's dropped hundreds of millions into all kinds of risky ventures.
OK, this is just a tool to restructure a company and give it a better chance to survive. I see nothing wrong with this as long as there is no attempt to flee from debts or obligations.
Hey, relax. It's just a little -re-fi, remember?
But there's one more little thing. A lot of people still have a problem with the B-word. That's a stigma a lot of old-timers would try to avoid at all costs Ñ even with a tiny little company that's part of a big empire.
And when the fifth-richest man in the world is declaring it, it's only natural for those of us less privileged to wonder how this could have happened.
Right before we instinctively worry if, somehow, we'll end up paying for it.