March 01, 2004
Portland arena files Chapter 11
This is a bit complicated, so bear with us: The Oregon Arena Corp., which owns the Portland Trail Blazers' Rose Garden but not the Blazers themselves, which are owned by Oregon Arena owner (and world's fifth richest man) Paul Allen but under a different corporate entity - sorry, where were we again? Oh, right: The Oregon Arena Corp. has filed for Chapter 11 bankruptcy, with the intention of getting out of paying bondholders on the remaining $133 million in private debt the team - sorry, we mean Allen - or rather, Oregon Arena - took out to build the Rose Garden. The creditors, primarily securities firm Prudential and pension fund managers TIAA/CREF, had been due their next $3.2 million interest payment today.
While the Rose Garden was primarily built with private money, its bankruptcy filing does point up just how bad an investment new sports facilities can be: 11 years after borrowing $155 million (just 60% of the total arena cost) at 9% interest, Oregon Arena now says that the deal was based on "overly optimistic assumptions about revenue and attendance," and that the arena has lost money in seven of the nine years it's been open. If the arena's bankruptcy reorganization is successful, those wrong assumptions won't Paul Allen another dime - but if your pension plan is held by TIAA/CREF, you might want to check your account balance.
