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PORTLAND, OR-An affiliate of billionaire Paul Allen's Vulcan Inc. has signed a letter of intent with Portland Arena Management LLC to repurchase Rose Garden Arena, which he gave up in bankruptcy proceedings in 2004. The arena is home to the NBA's Portland Trail Blazers, which Allen has continued to own. The sale price was not disclosed.
Allen, co-founder of Microsoft Corp., built the Rose Garden in the mid-1990s without public money at a cost of $262 million and owned it through Oregon Arena Corp. Oregon Arena Corp. declared bankruptcy in 2004. Allen chose to give ownership of the arena back to its lenders rather than continue to pay above-market interest on the construction debt, which originally amounted to $150 million.
As a result, Allen lost revenue from courtside seats and other sources. Last year at this time, Vulcan estimated that the basketball team could lose $100 million over three years because of the "broken financial model." Last year, there was speculation that the team and the arena could be sold in a package deal.
"With this letter of intent, we've taken a positive step forward. Assuming this deal gets finalized, it will be a major milestone which will strengthen the long-term financial health of the Trail Blazers," Allen said in the statement. Thomas Luther, chairman of Portland Arena Management, says in his own statement that the deal will "ensure that the Trail Blazers will remain in Portland."
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