Plain Dealer revisits report of Pilot Flying J debt “downgrade”


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.

17 responses to “Plain Dealer revisits report of Pilot Flying J debt “downgrade”

  1. the sad part is that the Patriots will win and the Hernandez thing will go away.

    the Browns will lose and everyone will talk about the owner’s legal troubles.

    winning and losing have nothing to do with these problems but they will define the discussion.

  2. Roger Goodell is trying his hardest to sweep this under the rug just like Spygate.

    Goodell fast tracked Haslams purchase because he was one of the crooked Steelers ownership group. The league looked the other way when Haslam had to put his company in debt just so he could buy the team. That just doesnt sould like a good business decision on the leagues or Haslams part.

    He doesnt have the money to sustain ownership and it is becoming apparent to all except Goodell

  3. Really, your gonna include Hernandez situation on a Browns article. That’s like mentioning Ben Roethlisberger is a serial rapist on a Miami Dolphins article.

  4. The PD doesn’t let their writers have a negative or even objective viewpoint of the Browns ownership, otherwise they cut you loose. Ask Tony Grossi.

  5. 1) The Pittsburgh Steelers are one of the most solid and well run teams in the league. To label them as “crooked” without any supporting factual basis is irresponsible.
    2) What would you have Goodell do? Should the league take ownership of the Browns? With 20/20 hindsight it appears that it was a mistake to approve Haslam as owner. But, they did, all 31 of the other teams. Now they have to wait until this thing shakes out before a reasonable course of action can be determined. Let’s remember that Al Davis tied the league up in legal knots for years. Shooting from the hip will give Haslam the same opportunity.
    3) Hernandez was certainly a Patriots mistake, in retrospect. They will take their cap lumps and proceed. Even if they lose, they have solid ownership and a loyal fan base.
    4) The history of the Browns since they came back into the league should vindicate Art Modell and his decision to leave Cleveland. The Ravens now have solid ownership, a loyal fan base and 2 Super Bowl trophies.

  6. Yeah they would love to sweep this mess under the rug, kind of like how the NFLPA swept those 4 cases under the rug yesterday for some pretty paltry fines.

    I find it hard to believe that all of these agents are earning their money, but just to quell that concern, they take 4 nickles from 4 people. Yep it’s all fair and perfectly well monitored that these agents are always lawful and doing a fantastic job with nothing to be concerned about. Totally believable. Yep, nothing to see here except what might be under this 100,000 square foot rug. What? I like a large rug in my living room. It fits fine.

  7. The history of the Browns since they came back into the league should vindicate Art Modell and his decision to leave Cleveland. The Ravens now have solid ownership, a loyal fan base and 2 Super Bowl trophies.


    The day is young, but that’s EASILY the dumbest thing I’ve read so far…

    Care to expand? I can’t wait…..

    The history of an expansion franchise formed after Modell moved his, vindicates him?

  8. Caption under the picture: “…and I’m this close to having my ass handed to me on a platter.”

  9. The NFL let him leverage his company to purchase a franchise?

    Like really? Did Haslam just hand Goodell his AmEx Black card and say, “I’ll take that one”…?”

  10. I thought the NFL had rules saying you have to be liquid for the purchase price.

    Say what you want about Woody Johnson but when he sneezes, $100 mil comes out of his nose.

    Giants are really the only ownership partnership in the NFL and Mara is Mara and Tisch owns every movie theater in this country.

    How did the NFL let this Haslam guy buy a team? He borrowed capital against his company, from an investment bank, and then his leveraged to the hilt company ended up in a massive fraud lawsuit…

    Lloys Blankfeld and Jamie Dimon are about to be the proud new owners of the Cleveland Browns.

    And if Jamie Dimon owned the Browns, they’d win a Super Bowl.

  11. kd75 says:
    Jul 3, 2013 2:14 PM
    The NFL let him leverage his company to purchase a franchise?


    It’s his company, more or less(he owns 35% of PFJ, his family about 60%).

    of course, someone with a estimated self-worth of $2 billion wouldn’t be diversified at all. Of course he has ALL his money tied up in one company. Right?

    Bunch of morons.

  12. I doubt the Browns have any responsibility for the debts of Pilot-Flying J. It also wouldn’t be surprising if the Haslam family has no personal liability for the PFJ debts either.

    Haslam is certainly leveraged, as the Glazers were when buying Manchester United. It’s been reported that PFJ borrowed a lot of money to pay a dividend to the shareholders (the Haslam family). Jimmy Haslam used his dividend payment to buy the Browns. An NFL team is a license to mint money so it’s not a bad investment. The question is whether PFJ’s business is so damaged by the charges that they are unable to repay their debts.

  13. Haslam can be as diversified as he wants. But at the end of every other Friday, his paychecks have to clear.

    He needs to be liquid. If you lever up two times your net worth to buy a NFL Franchise and the collateral becomes insolvent, you are proverbially over a barrel without any vaseline.

    This is like Corporate Finance 101.

    Look. Pilot J is a sting of truck stops. Those are commercial leases. That’s a liability. Not an asset. In a Chapter 11 the debtholders take over. In a Chapter 7 the chair gets sold from under your butt before you even know what happened. For $0.30 on the dollar.

    Sounds to me like Haslam walked into Goodell’s office and bought the browns with a no cash down mortgage and a silent second lien and then took out a HELOC on top of everything.

    If they are handing out NFL Franchises for zero equity…I am in. Let’s go. I will even take the Jags. Maybe not…

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