Who's on the hook for the NBT loans?
I have to give credit where credit is due — in one of its editorials on Friday, the Democrat & Chronicle took a fairly firm stand about public access and accountability regarding the Rob Clark Rhinos deal.
"This time, all the finances should be on the table from the get-go and there should be no doubt that the (new) ownership is capable of meeting its requirements regarding the team and the stadium without leaning on the taxpayer. Again," the editorial stated.
It was pleasantly surprising to see the local daily have some spine and take such an aggressive stand on this matter. However, the editorial did not address specific questions about the Clark deal and his finances. And in my mind, there is one HUGE question that needs an answer, and needs it now: Who exactly is going to pay back the $10.8 million in overdue owed to NBT Bank?
So far, the coverage of the Clark deal hasn't been completely clear or emphatic on the matter. In a March 14 article in the D&C, Jeff Diveronica reported that "Clark has received 'conditional approval' from NBT to take over payments on the loans ..." However, at least in the reports I've seen, the paper hasn't directly addressed the issue of who will take over the NBT loan payments.
In addition, it has been reported numerous times that Clark will not take over the debts of DuRoss/Donner/Economides (DDE), but the coverage I've seen hasn't specifically discussed which debts are or aren't included in that fact, i.e. So will Clark/Adirondack Sports Club LLC (ASC) assume the NBT debts or not?
It might also be legally possible for NBT Bank to go after DDE for the remaining debt. However, that could be unlikely because DDE don't have millions of dollars lying around. NBT trying to extract money out of them would be trying to get blood from a stone. As a result, NBT would look elsewhere for the money.
It's crucial to understand that, in the days before the Clark deal went through — actually, it still hasn't technically gone through completely — NBT was in control of the Rhinos and PAETEC Park (as I suspected weeks ago that the bank would), which means Clark is buying the teams and the stadium from NBT Bank.
So if Clark/ASC are, in fact, assuming the NBT debts, that essentially means that the $10.8 million — or $8.7 million, if you subtract the $2.1 million Adirondack Bank floated. Whatever — now effectively becomes Clark/ASC's mortgage on the stadium.
So what happens if Clark can't make his mortgage payments on time? Everyone involved in the deal — Clark, the city, the USL — says repeatedly that Clark has the necessary funds to take care of all his new financial obligations. Clark also believes that the Rhinos can make money.
However, to be frank, I seriously don't think the team will make much, if any money, at least not the firsts couple seasons. So if Clark can't make his payments to NBT, what happens then?
That's where the proposed lease between Clark/ASC and the city of Rochester comes in. It's been reported that the proposed lease — which still has to be approved by the City Council — is for 15 years, with an option for another 15.
First, it's asinine for both sides to have a lease that long. It makes more sense to have a short term lease that's renewable every year or so. That provides a lot of flexibility and room for give and take between the two sides.
But second, aside from that, will the lease somehow bind the city and its taxpayers to the $8.7 million that's owed to NBT Bank, especially if Clark can't make payments the debts themselves? Does, for example, the new proposed lease have a provision that allows — or requires — the city to assume control of PAETEC Park if Clark fails to meet his financial obligations?
If so, and if the city does take over the stadium, that very likely would mean that the taxpayers would be on the hook for that $8.7 million.
The bottom line is that NBT Bank will want its money, period, and it'll go after anyone it can to get it. If DDE can't provide it, and if Clark/ASC can't provide it, then who's left? The city.
That's why the proposed lease between ASC and the city must must must be made public as soon as possible. Once the Duffy administration submits the lease to the City Council for approval and the lease is placed on the agenda for a council meeting, the city absolutely should provide the public a chance to scour the proposal.
As of this afternoon, nothing had been submitted to the council's office, so it's unclear if and exactly when the council would vote on the lease.
Phew. That's enough for tonight. I'm wiped out, and I have to work on the mighty Webster Herald the rest of the night. Hopefully I'll have a little more on the Clark/ASC deal tomorrow evening.
"This time, all the finances should be on the table from the get-go and there should be no doubt that the (new) ownership is capable of meeting its requirements regarding the team and the stadium without leaning on the taxpayer. Again," the editorial stated.
It was pleasantly surprising to see the local daily have some spine and take such an aggressive stand on this matter. However, the editorial did not address specific questions about the Clark deal and his finances. And in my mind, there is one HUGE question that needs an answer, and needs it now: Who exactly is going to pay back the $10.8 million in overdue owed to NBT Bank?
So far, the coverage of the Clark deal hasn't been completely clear or emphatic on the matter. In a March 14 article in the D&C, Jeff Diveronica reported that "Clark has received 'conditional approval' from NBT to take over payments on the loans ..." However, at least in the reports I've seen, the paper hasn't directly addressed the issue of who will take over the NBT loan payments.
In addition, it has been reported numerous times that Clark will not take over the debts of DuRoss/Donner/Economides (DDE), but the coverage I've seen hasn't specifically discussed which debts are or aren't included in that fact, i.e. So will Clark/Adirondack Sports Club LLC (ASC) assume the NBT debts or not?
It might also be legally possible for NBT Bank to go after DDE for the remaining debt. However, that could be unlikely because DDE don't have millions of dollars lying around. NBT trying to extract money out of them would be trying to get blood from a stone. As a result, NBT would look elsewhere for the money.
It's crucial to understand that, in the days before the Clark deal went through — actually, it still hasn't technically gone through completely — NBT was in control of the Rhinos and PAETEC Park (as I suspected weeks ago that the bank would), which means Clark is buying the teams and the stadium from NBT Bank.
So if Clark/ASC are, in fact, assuming the NBT debts, that essentially means that the $10.8 million — or $8.7 million, if you subtract the $2.1 million Adirondack Bank floated. Whatever — now effectively becomes Clark/ASC's mortgage on the stadium.
So what happens if Clark can't make his mortgage payments on time? Everyone involved in the deal — Clark, the city, the USL — says repeatedly that Clark has the necessary funds to take care of all his new financial obligations. Clark also believes that the Rhinos can make money.
However, to be frank, I seriously don't think the team will make much, if any money, at least not the firsts couple seasons. So if Clark can't make his payments to NBT, what happens then?
That's where the proposed lease between Clark/ASC and the city of Rochester comes in. It's been reported that the proposed lease — which still has to be approved by the City Council — is for 15 years, with an option for another 15.
First, it's asinine for both sides to have a lease that long. It makes more sense to have a short term lease that's renewable every year or so. That provides a lot of flexibility and room for give and take between the two sides.
But second, aside from that, will the lease somehow bind the city and its taxpayers to the $8.7 million that's owed to NBT Bank, especially if Clark can't make payments the debts themselves? Does, for example, the new proposed lease have a provision that allows — or requires — the city to assume control of PAETEC Park if Clark fails to meet his financial obligations?
If so, and if the city does take over the stadium, that very likely would mean that the taxpayers would be on the hook for that $8.7 million.
The bottom line is that NBT Bank will want its money, period, and it'll go after anyone it can to get it. If DDE can't provide it, and if Clark/ASC can't provide it, then who's left? The city.
That's why the proposed lease between ASC and the city must must must be made public as soon as possible. Once the Duffy administration submits the lease to the City Council for approval and the lease is placed on the agenda for a council meeting, the city absolutely should provide the public a chance to scour the proposal.
As of this afternoon, nothing had been submitted to the council's office, so it's unclear if and exactly when the council would vote on the lease.
Phew. That's enough for tonight. I'm wiped out, and I have to work on the mighty Webster Herald the rest of the night. Hopefully I'll have a little more on the Clark/ASC deal tomorrow evening.
posted by Ryan Whirty at
2:54 PM
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