Yankee Stars Caught In Stanford Financial Mess

Johnny Damon, earning $13 million this season, cannot pay his bills.

Xavier Nady, earning $6.55 million, cannot purchase an apartment in New York.

The Stanford Financial Group scandal extends to Major League Baseball.

The issues facing Damon and Nady — both New York Yankees outfielders and both clients of agent Scott Boras — stem from the alleged $8 billion fraud scheme involving billionaire financier Robert Allen Stanford.

Damon, 35, and Nady, 30, told FOXSports.com on Friday morning that their finances are frozen because of money they have with a Stanford company.

On Monday, the Securities and Exchange Commission froze all assets of three entities — Stanford International Bank, Stanford Group Co., and Stanford Capital Management — all managed by Robert Allen Stanford. Those were the only three entities whose assets were frozen, according to the SEC filing.

"I can't pay bills right now," Damon said at the Yankees' spring training facility in Tampa. "That started on Tuesday. I had to pay a trainer for working out during the offseason. I told him, 'Just hold on for a little bit and hopefully all this stuff gets resolved.'"

Nady faces similar concerns.

"I'm affected in some ways. I have the same (advisor) as Johnny," Nady said. "He said I didn't have money with Stanford (investments). But all my credit card accounts are frozen right now because of that situation. I'm trying to get an apartment in New York. I can't put a credit card down to hold it."

Boras said his clients have no reason to worry about losing money.

"Our personal-management auditors have looked into the financial elements of it," Boras said. "None of our clients is in any financial jeopardy."

Both Damon and Nady said they were told by their financial advisors that the matter could be resolved within a few days. Damon said he was told that his money was insured by a bank in New York, which Boras identified as the Bank of New York.

First baseman Mark Teixeira, another Boras client who is a member of the Yankees, said he did not have money with Stanford. Third baseman Alex Rodriguez, who also is represented by Boras, was not available for comment.

Damon, Nady and other Boras clients use Personal Management Consultants, a division of the Scott Boras Corporation, to monitor their assets.

Players pay PMC a percentage of their earnings on top of the commission they pay Boras. The company employs CPAs who check investments, audit teams, do tax work, and perform other services.

"I talked to PMC, talked to guys at Stanford Financial Group," Damon said. "The first thing they kept saying was, 'You should be OK.' I was like, 'Not should be OK.' They clarified it that yeah, I've got nothing to worry about. But unfortunately, the money is frozen."

PMC does not make actual investments, Boras said.

"We have no link to Stanford, no financial connection to any investment company with any of our clients," Boras said. "We do not invest our clients' money and receive no compensation for it, unlike other agencies."

On Thursday, The New York Post reported that IMG, a sports management agency, quietly agreed to steer clients looking for investment advice to Stanford Financial Group, potentially exposing them to millions of dollars in losses resulting from the financial firm's alleged fraud.

According to the report, which cited three sources with knowledge of the situation, IMG and Stanford have a quid-pro-quo agreement under which Stanford Financial pays IMG a low- to mid-seven-figure consulting fee in exchange for IMG advising its clients to have their money managed by Stanford.

IMG has denied the quid-pro-quo charges.

The SEC alleges that Stanford ran an $8 billion fraud that involved luring customers into buying certificates of deposit that carried "improbable and unsubstantiated high interest rates." Stanford's operation claimed the CDs were backed by the U.S. Federal Deposit Insurance Corp.

"I have not gotten into the CDs," Damon said. "But I will tell you one thing: When I did see the CDs that were that high, I thought, 'Why don't I just do that?' It's a good thing I didn't."

Still, both Damon and Nady said they were uneasy about the state of their finances.

"I hope we're all safe," Nady said. "You're concerned because of things that have happened these last few months. To get that kind of news is never good news. You've got to hope you're OK."

Asked if the situation makes him nervous, Damon responded candidly.

"It does," he replied. "I'm not sure if the banks we owe mortgages would understand our money's frozen, start putting penalties on stuff. The whole financial world is all messed up right now. Hopefully they will go on a case-by-case basis. I'm not sure the mortgage is going to be paid this month. But hopefully it's only a couple of days."

Source: Fox Business News

15 NBA Teams Borrow From The League

As if one needed more proof as to whether or not the economic recession is affecting sports, the NBA announced that they will be borrowing $175M, in a private placement deal, to help “bailout” some of the teams in the league.

The NBA is set to borrow $175 million on Feb. 26, marking one of the first league financings since the crash of the credit markets last fall.

“In general, the NBA has a league-wide credit facility, just like the other leagues do. The league had already utilized the major portion of that,” Martins said. “The league went out to the 30 teams and asked if they were able to get another line of credit, would we be interested? We said, ‘Yes.’ “

The league surveyed its 30 teams, and 15 were interested in acquiring a loan. Each of the 15 teams can borrow a maximum of $11.7 million from the debt proceeds.

The private-placement deal was arranged by JPMorgan Chase and Bank of America. In a private placement, non-banking lenders such as pension funds and insurers extend the cash, commonly at fixed rates for five- to seven-year terms and at rates higher than what banks offer for floating-rate loans.

Harvey Benjamin, the NBA’s executive counsel for business and finance, said it’s important not to compare the rates with what the NBA had been paying before the credit market collapse — about 200 to 300 interest points less for similar debt, sources said — but rather, what borrowers of similar standing are paying in today’s environment. In that light, he said, the 8.27 percent the NBA will pay on $100 million of the debt, and the 7.45 percent on the remaining $75 million, is favorable.

A New Football League? That's Guts!

It's the most improbable story in the sports business industry so far this year.

While sports leagues try to figure out exactly how they're going to deal with this economic downturn, a new sports league is being announced today.

It's called the United Football League and its season, dubbed "UFL Premiere," is scheduled to kick off in October with four teams that will play a six-game season in at least seven cities.

Led by former NFL executive and agent Michael Huyghue as commissioner and prominent sports marketer Frank Vuono as chief operating officer, the season has been financed through $30 million of capital provided by a group of investors including investment banker Bill Hambrecht, Google senior vice president Tim Armstrong and Paul Pelosi, the husband of the Speaker of the House, Nancy Pelosi.

The cities where the teams will play are: Las Vegas/Los Angeles, New York/Hartford, Orlando and San Francisco/Sacramento. Players are expected to be signed, at what the league says will be salaries higher than NFL minimums, starting this summer. They will be trained and housed in Casa Grande, Arizona, where the league says a $20 million training complex is being constructed.

The league says the average ticket price will be $20 to $25 per ticket and the single-entity league will do its best to lure the crowds by assigning players to areas where they played their high school, college or professional football. The financial model hopes for 20,000 to 25,000 fans per game in the first season.

The announcement comes after the Arena Football League announced plans to fold up for at least the 2009 season, and maybe forever. It also comes eight years after the XFL played its first game. That league, co-owned by the WWE and General Electric, folded after one season.

Asked if he’s scared that people will immediately shoot down the idea of the league being successful given the XFL’s past and the fact that they’ll be playing during the NFL and college football seasons, Frank Vuono told us, “I kind of like that.”

“People have been telling me I can’t do things most of my life,” Vuono said. “That motivates us. That and the fact that the business community doesn’t really know much about what we’re going to do.”

Vuono says there will be advertising on jerseys and sponsors in eight categories will have exclusivity. He also said that when the league is established, the idea is to have it trade publicly. It was Hambrecht who convinced Google to use an internet-based auction for their IPO five years ago.

Unlike the XFL, Vuono says the NFL will be “quietly happy” with the startup. “It will be like putting 200 people on their practice squads,” Vuono said.

League officials say they are in final negotiations with a television network and the venues where the games will be played.

Stanford Financial Caught In $8b Fraud

The sports world is reeling today after the SEC accused Robert Allen Stanford of the Stanford Financial Group of massive fraud.

Stanford made huge investments in the sports sponsorship world, so much so that the London Times recently named Stanford the 65th most powerful person in the business of British sports.

The athlete with the most to lose is golfer Vijay Singh, who signed a big sponsorship deal with Stanford earlier this year. Stanford is the sole logo that appears on Singh's hat and shirt. Singh's agent Clarke Jones did not return calls for comment, so it is not known how much money Singh got up front or whether he invested any money with the firm.

Other golfers said to have relationships with Stanford include Henrik Stenson, Camilo Villegas and Morgan Pressel. Villegas wears the Stanford Financial logo on the side of his cap.

Stanford Financial recently pulled out money from his worldwide cricket tournment called the Stanford Twenty20 Super Series. But there are many more deals that are still active.

Stanford is one of many host sponsors of the 2009 Sony Ericsson Open, the fifth largest tennis event in the world which will take place from March 23-April in Florida. Tournament director Adam Barrett said that it's most likely that Stanford paid up for the majority of its 2009 sponsorship bill. "We're hearing about this along with the rest of the world today," Barrett told us. Stanford Financial has been a sponsor of the tournament for five years.

More exposed, certainly for the future, will be the PGA Tour's Stanford St. Jude Championship, which will be played June 11-14 in Memphis. PGA Tour spokesman Chris Smith said the tour has no comment at this time. The company started sponsoring the tournament in 2007.

There are so many deals here we simply didn't have time to reach out to others before the business day ended. Stanford Financial has a commitment to sponsor the year-ending LPGA Championship and a big naming rights deal with the Miami Heat. The company sponsors one of the entrances to the American Airlines Arena, where the Heat play and they have co-sponsored many events with the team, including a recent Miami Heat Celebrity Cook-Off Event last month.