The Wizards are getting a $30 million cash distribution to help their liquidity this season

On Monday, John Lombardo of Sports Business Daily reported that the Washington Wizards and all other NBA teams received a $30 million cash distribution from the NBA later this month. The funding comes from the private-placement market which totaled $900 million (with each of the 30 teams receiving $30 million).

For those of you who are not finance gurus (and I’m not), here’s what this more-or-less means.

The NBA received $900 million from a round of securities. But unlike public offerings of securities which are stocks, bonds or warrants, this private placement offering is made of securities that are raised and sold to a private group of institutional investors.

The purpose of the $30 million the Wizards (and other teams) receive is simple. Teams need cash to pay the bills, and the mortgage for the arena (the Wizards own their facility so they don’t pay rent). Most arenas will not have fans (or have limited amounts of fans) in the stands due to coronavirus restrictions so that also means that there won’t be much ticket revenue which will further hurt their liquidity.

(I emphasized the word “much” because I am a Wizards season ticket holder and they are still taking money from me for monthly payments through last November. I will have something more on tickets later today.)

Teams are allowed to use the money as they see fit.

Monumental Sports & Entertainment, the company that owns the Wizards has been hit hard since the coronavirus pandemic forced the NBA to suspend its season in March 2020. There haven’t been any live sports and entertainment events at Capital One Arena since then. And they have furloughed over one-third of their employees since Oct. 16.