New NBA owner played key role at company accused of predatory lending

Oregon lawmakers approved $365M in state funding for Moda Center renovation, bringing combined public backing to roughly $870M. Documents obtained by OPB and ProPublica show incoming Trail Blazers owner Tom Dundon pushed a 2013 Santander Consumer policy to waive proof-of-income, a practice tied to a $550M multistate settlement in 2020; Dundon later received a separation package exceeding $700M in 2015. The revelations raise reputational and regulatory risk around a high-profile public-private deal and increase political uncertainty that could complicate municipal negotiations and public financing optics.

Analysis

Regulatory spillover is the highest-probability market channel here: renewed multistate scrutiny of subprime auto behavior can tighten underwriting and increase capital/reserve needs across the subprime ecosystem rather than only at the firms named in the reports. Expect originations to slow and spreads on subprime auto ABS to reprice wider by an incremental 50–200 bps over the next 3–12 months as investors re-assess tail losses and lenders add conservatism to models; that dynamic compresses earnings for pure-play subprime financers and raises funding costs for originators.

Public financing for contentious venue projects creates asymmetric political/legal risk for municipal and project-backed debt: markets typically demand a premium when counterparty conduct or governance is in question, and we should budget a 25–100 bps pickup in yield on near-term, project-tied paper in the affected metro until contracts and indemnities are clarified (12–36 months). Contractors, materials suppliers and regional development managers are the direct supply-side beneficiaries if construction proceeds; their revenue cadence will shift front-loaded into the next 12–24 months but is binary to political outcomes.

Second-order corporate effects include higher insurance and bond surety costs for contractors, and a potential reheating of NBA relocation chatter that can change valuation multiples for the franchise and adjacent entertainment real-estate. The most likely catalyst to reverse near-term pressure is (A) an aggressive, clear remediation package from the incoming ownership (legal indemnities, private co-investment) or (B) a political decision to cap public exposure — either would compress spreads and re-rate both muni and lender exposures within 1–3 months of announcement.

Key Decisions for Investors

• Short Credit Acceptance Corp (CACC) via buy-to-open 6–9 month ATM put spreads (e.g., buy 6–9 month ATM puts, sell lower strike puts to finance ~50% cost). Rationale: direct subprime auto exposure, high sensitivity to reserve and funding-cost shocks; estimated downside 25–40% if regulatory actions force higher loss provisioning. Size 1–2% NAV. Risk: headline fatigue or quick remediation could erase position; use limited-risk put spread to cap loss.
• Dollar-neutral pair: Long Jacobs Solutions (J) and Vulcan Materials (VMC) vs short CACC (equal dollar) over 12–24 months. Rationale: capture construction/material upside from a large local renovation while hedging market/systematic beta with an auto-finance short. Target return 10–25% on the long leg vs 20–40% downside protection on the short leg; keep pair sized to 2–4% net exposure.
• Avoid or reduce purchases of Portland-area project-backed munis and demand explicit state indemnities for any new Oregon exposure. For trading desks, increase spread tolerance by ~25–75 bps for Oregon municipal new issues tied to the arena until contractual protections are published (time horizon 3–12 months). No ticker — tactical balance-sheet asset allocation instruction.
• Event-driven protective: buy 3–6 month out-of-the-money puts on Credit Acceptance (CACC) or buy short-dated protection on any public small-cap auto-finance names (e.g., CACC/ALLY) ahead of likely AG disclosures. Keep position small (0.5–1% NAV) as binary headline risk is concentrated; profit trigger: regulator files or material reserve announcements, loss cap: option premium.