(SportsRadio 610) -- When Tilman Fertitta purchased the Rockets in 2017, he famously asked a question to which few could relate: “Is there anything else you’d rather buy for $2 billion?”
Today, there are some 45,000 former Fertitta employees who probably wish Fertitta had not leveraged his hospitality empire for the sake of pride and basketball.
To say Fertitta has had a bad couple months is the understatement of the century. To say it will not and has not affected the future of his lifelong passion – the Rockets – is naïve.
As the Covid-19 pandemic continues to ravage the restaurant and hospitality industry, it is becoming abundantly clear that, while on paper the Rockets and Fertitta’s empire are separate, Fertitta’s prideful grip on the club is as unpredictable as the futures of those 45,000 people he furloughed.
Even though Fertitta continues to maintain the Rockets will be his alone now and forever, clearly one solution to his ongoing financial straits and enormous bond debt is on the table.
Fertitta must consider selling the team or taking on ownership partners.
It not only could be the only way Fertitta can regain financial footing, it also could be the easiest. Besides furloughing the 45,000 employees, Fertitta has tried to shore up his empire in desperate, almost unprecedented ways.
According to Bloomberg, last week Fertitta offered potential lenders a huge 15-percent rate in an attempt to acquire a $250 million loan to help his Golden Nugget casinos and hundreds of restaurants. The loan matures in October of 2023.
Fertitta also has drawn every dollar of his $300 million in credit lines, according to Bloomberg, and he reportedly has injected $50 million of his own money.
Previously, Fertitta told employees they no longer would be allowed to take paid time off, a decision he later backed off of amidst huge public backlash. And amidst continued uncertainty regarding just how long Covid-19’s effects will keep the nation essentially on lockdown, Fertitta has pushed hard for businesses to open soon, telling Fox News, “we’ve got to start opening up in May.”
As for the Rockets, it is not a stretch to see how Fertitta’s troubles could indirectly affect their stability. Most notably, when he purchased the club at the highest price in league history -- $2.2 billion – Fertitta sold $1.45 billion in bonds in order to complete the sale, according to Forbes. Some $745 million of those bonds mature in 2024 and $670 million mature in 2025.
Fertitta infused just $300 million of his own money in the purchase and took a $275 million loan from former owner Leslie Alexander to complete the sale. The bonds are obligated to Golden Nugget Inc. and bond holders have no recourse to the Rockets.
Still, these are desperate times for Tilman Fertitta. CNBC reported Fertitta used 71-percent of his assets to buy the Rockets. Now, those assets are unstable and have an uncertain future.
Fertitta’s net worth has dropped by an estimated $1.8 billion and he needs a financial parachute to help get through a financial crisis that has affected his industry more than just about any other.
Sell the Rockets. Or take on partners.
It may be his only way to get back to being the Billion Dollar Buyer we all knew.