clock menu more-arrow no yes mobile

Filed under:

Portland Trail Blazers Remain Optimistic About Moda Center Naming Rights

The Blazers don't foresee a change in corporate sponsorship despite Moda Health losing millions.

Yesterday Beth Slovic from the Willamette Week wrote a short piece on the relationship between the Portland Trail Blazers and Moda Health, corporate sponsors of Moda Center, the Blazers' home arena. The naming-rights agreement between the team and the insurance company runs through 2023 and is believed to be worth $4 million annually. Whether Moda Health will survive until 2023 remains an open question.

As Slovic notes, the Oregonian has reported repeatedly that the company finds itself in dire financial trouble after over-speculating in the individual insurance market and was placed under state supervision last week. Government regulators monitor and approve the company's transactions and are demanding a new business plan from Moda's leadership. This came after a disastrous 2015 fiscal performance:

It was clear before Thursday's order that the broken federal promises and high claims experience had pushed Moda to a financial precipice. The company lost more than $30 million through the first nine months of 2015. In the same period, Moda saw its capital reserve, a key indicator of financial strength, plummet from $120 million to $53 million. Moda's capital would have been much lower has it not borrowed $50 million from its parent company in November.

A year earlier, in November 2014, Moda quietly borrowed another $50 million from business ally Oregon Health and Sciences University.

Although capital reserve has nothing to do with revenue per se, being only one indicator among many that define a business, losing essentially 100% of anything is bad news. Moda Health is flailing, trying to keep afloat.

Despite this, the Blazers remain optimistic that their agreement with Moda will remain intact.

"The Trail Blazers' partnership with Moda Inc., which includes Moda Health and other subsidiaries, remains strong," the team tells WW in a statement. "We don't anticipate any changes in that partnership following the recent news."

Truthfully, the Blazers can't say anything else. A public vote of no-confidence, or even expression of worry, about your contracted corporate partner would be bad practice. Nevertheless the organization could find itself facing a reality that even the lowliest handshake-deal participants understand. The person receiving the money can be as confident as they want. If the person paying the money doesn't fork it over, it's not paid. This feels like a high-stakes, ultra-corporate version of the old street story where Jimmy owes Jack money but when Jack confronts him, Jimmy says, "I was gonna get it to you, honest, but Billy didn't pay me!" In this case Billy is the federal government and the Affordable Care Act, Jimmy is Moda Inc., and empty-handed Jack is the Trail Blazers.

Naturally the two entities have a contract. Presumably that will keep the $4 million annual payment rolling to the Blazers as long as Moda remains solvent. But with insolvency a real threat and with Moda opting out of the individual insurance market instead of trying to attract new customers through popular advertisement, chances are that naming rights on the Trail Blazers arena will be the first expense cut if there's any way to do so. The Blazers may end up as part of a line of frustrated creditors if Moda goes under, but that's not going to keep the money rolling in or the signage lit. Moda Health's financial troubles are immediate and omnipresent, while 2023 is a long ways away.

Help us send 2000 underprivileged kids to see the Blazers play the Sacramento Kings on March 28th!

--Dave / @DaveDeckard@Blazersedge