The corporation that owns the Rose Garden, Portland’s home-away-from-the-probation-office for the Trail Blazer basketball team, has filed a Chapter 11 bankruptcy petition. Paul Allen, co-founder of Microsoft and reputed to be the 5th-richest person in the United States, is the sole owner of the corporation, and says that he isn’t willing to continue subsidizing its losses — about $2 million a year on average since it was built. He’s apparently willing to continue subsidizing the Trail Blazer team, which he also owns, and which loses 10 times the money, however.
He’s also willing to buy the Rose Garden for about $50 million, and to throw in a little extra cash for the bondholders, who are owed $150 million, so that the bondholders — lucky investors! — would get 30 to 40 cents on the dollar on their bonds.
Great solution, unless you’re TIAA and you own the bonds.
If he really can’t afford the debt service on the Rose Garden, then he should give it back to the bondholders and let them decide whether to sell it or try to operate it. That’s the real world of finance: pay your debts or lose your collateral. But if that’s not an option, I propose a more audacious idea.
Tear it down.
That’s right: tear the Rose Garden down and send the Blazers and their probation officers back to Memorial Coliseum. Keep the parking structure, so there will be plenty of parking for the remaining fans. Do something more productive with the space. Let Homer Williams have a crack at the site — he couldn’t do any worse than Paul Allen did, and he might do a lot better.
If the nation’s 5th-richest man finds the burden of the Rose Garden to be too much, then it’s undoubtedly too much for a mere pension fund to take on, let alone the local government. Off with its head!
UPDATE (March 29, 2004): Jack Bog agrees with the result, but for slightly different reasons.