Browns owner Jimmy Haslam currently is dealing with a legal problem and a financial one. But the details regarding the current debt situation involved Haslam’s truck-stop company, Pilot Flying J, remain less than clear.
Last week, the Wall Street Journal published a comprehensive look at the Pilot Flying J mess, including a discussion of the debt the company assumed in part to fund the purchase of the Browns. Those details escaped widespread notice until Terry Pluto of the Cleveland Plain Dealer made them the focal point of a column.
Now, Pluto is backpedaling. Perhaps unnecessarily.
With a Cochran-esque “when you mess up, you have to fess up” lede, Pluto says he incorrectly wrote that Pilot Flying J’s credit rating has been “downgraded.” Pluto now explains that the Wall Street Journal wrote that the credit ratings for the company have been “put on a negative watch for possible downgrade” by Moody’s Investor Services and Standard & Poor’s.
Still, the Journal article plainly states later in the article that action previously was taken after the company’s debt doubled to $4 billion from 2010 to 2012: ”S&P downgraded Pilot’s debt, calling its financial risk ‘significant.’”
While the distinction (if there is one) between a credit-rating downgrade and a debt downgrade may be clear to a financial expert, the Journal article clearly used the term “downgrade” in connection with Pilot Flying J’s debt. And the Journal article clearly pointed out in one section of the article that S&P already had made a debt downgrade.
The issue doesn’t alter Pluto’s broader point. Extra debt was assumed before the federal investigation reached critical mass, under the assumption that through the normal course of business the extra debt would be repaid. With the course of business anything but normal, diminished cash flow resulting from decreased revenues could, in theory, make it harder to make the payments. At some point a fairly significant asset in the world of sports (other than a minor league baseball team) could have to be converted to cash. In theory.
If, as it appears, the Browns asked that Pluto clean up a mess that he didn’t actually make, the end result is that the Plain Dealer has published yet another story that provides even more attention to a problem that will continue to hover over the franchise long after the Patriots have moved on from the Aaron Hernandez fiasco.