Many small and midsize businesses have been watching the government's negotiations with CIT Group Inc. (NYSE:CIT) closely, but one not-so-small concern is likely keeping abreast of the situation as well: the National Hockey League.
According to a report in Canadian newspaper The Globe and Mail, CIT is a key lender to several NHL teams, including the Ottawa Senators, Montreal Canadiens, New Jersey Devils and Nashville Predators.
The report quoted a financial adviser to several hockey teams (not necessarily the same teams with CIT financing) as saying the lender's liquidity crisis is "going to be horrible for [the NHL]."
The U.S. Department of the Treasury and the Federal Reserve Bank had been in negotiations to rescue CIT from collapse, juggling committing more taxpayer money to a failing lender with the prospects of what a failure to CIT would mean for the hundreds of small businesses that depend on CIT for revolving credit lines. But those talks with those officials have broken off.
If CIT did in fact collapse into bankruptcy, it would not be the first financing crisis to affect the sports landscape amid the recession.
In February, the National Basketball Association raised $200 million in financing to distribute to as many as 12 teams facing operational losses.
Meanwhile, the NHL's Phoenix Coyotes franchise filed Chapter 11 protection on May 5 under the name Dewey Ranch Hockey LLC after losing $36 million since 2006. - John Blakeley
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