SUMMARY
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MANILA, Philippines – Following a board meeting on Thursday, March 6 discussing the applications of potential new franchises, the Philippine Basketball Association (PBA) will be conducting a due diligence and evaluation of the 3 companies that applied to join the professional basketball league.
The 3 companies hoping to join the 39-year old league are the Columbian Autocar Corporation (CAC) for KIA, Ever Bilena Cosmetics, Inc. for Blackwater, and the Metro Pacific Investments Corporation (MPIC) for NLEX.
CAC is the exclusive distributor of KIA Motors in the Philippines, while Ever Bilena and MPIC are the parent companies of Blackwater and NLEX, respectively. Both Blackwater and NLEX have teams in the PBA Developmental League or D-League. On the other hand, KIA is known to be a supporter of football in the country, which is best exhibited through its sponsorship of the Philippine Azkals, the national men’s football team.
All 3 companies have submitted letters of intent to the PBA, with NLEX submitting theirs a day before the board meeting.
The PBA Ofc. of the Comm. as of yesterday has received 3 letters of intent to join the league next season as expansion teams/new franchises.
— pbaconnect (@pbaconnect) March 6, 2014
According to PBA Chairman Ramon Seguismundo, the board officially accepted the letters of intent during Thursday’s meeting and the next step is to conduct due diligence.
Commissioner Chito Salud will handle the due diligence – the primary purpose of which is to gauge the financial capabilities of the prospective team owners.
In a separate interview, Seguismundo explained the specifics of due diligence.
“We look at the financial capability, we look at the willingness of the prospective team owners. Do they really have a genuine interest in basketball, do they really want to help the country?”
To join the PBA, a prospective franchise must pay the franchise fee of P100 million. Building, running and maintaining a team, according to GlobalPort Batang Pier team owner Mikee Romero, can cost “anywhere from a hundred to P200 million” depending on each team. READ: The road to PBA expansion
Aside from letters of intent, financial statements are also required from the companies.
Once Salud has completed the process of due diligence he will then decide whether or not to recommend the teams’ acceptance to the board. After which the board will take a vote.
According to Seguismundo, 8 out of the 10 members of the board will have to vote in favor for the teams to be accepted.
Seguismundo also said in a text message to Rappler the “vote may happen as early as end of March” and that a “decision (is) expected in late March.”
Should the applications be approved, the new PBA teams can officially join, according to Seguismundo, “as early as the first conference of the next season.”
He added: “It takes time to build a team. And you’ll have to secure the necessary requirements, documentation. It takes at least 4 months or 5 months.” – Rappler.com
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