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Zoltan Poszar's Burner
- Feb 5, 2014
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The rules allowed for Michkov to buy out his contract and the simplest answer is that Michkov was loaned the money to buy out his contract because it's is/was a pretty safe bet for anyone to make because you'll quite easily get your money+interest back on the ELC alone.
It's not that simple. From the lender's perspective you still have to structure an ABL, vs an LOC, because he has no North American income, tax, or credit history.
That didn't matter previously but it does in the wake of SWIFT being shut off &, consequently, NBKI (Russia's credit monitoring agency) no longer playing nice with TransUnion and our credit infrastructure.
Yes, Milstein can find someone to write a loan secured against his future earnings, but the base infrastructure that enables us to transfer that money from a NA, or UK, institution are now completely gone. So your options become conduit in the UK with RUS banking credentials, or conduit in Russia who will accept a non-recourse loan.
To say there was shady stuff going on with the Michkov deal...is just an enormous understatement. Could go on and on.
I'm pretty sure that would be against the rules and a form of cap circumvention.
Any loan has risk and for a lender who knows hockey like an agent, the risk with Michkov was pretty darn low. Can't really go lower save guys like Crosby/Ovechkin/McDavid.
The risk is recourse, not underwriting, in this scenario.