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SBJ/November 9 - 15, 1998/No Topic Name
Money, not the games, draw Prudential boss
Published November 9, 1998
At a recent panel on stadium finance in New York, less than a week after the Yankees swept the World Series, Aaron Barman made it clear that he did not like sports. The Prudential Securities banker volunteered that he could not care less about the success of the Yankees.
What really gets the investment banker's competitive juices flowing aren't strikes and base hits, but private placements and bonds. He couldn't tell you David Cone's 1998 ERA, but he sure could tell you the spread over Treasuries that the Miami Heat is paying to finance its new arena.
"I don't really read the sports pages, except for business purposes," said Barman, who has run the sports group at Pru since 1990. "I am not really following what the teams are doing. I have been at a couple of closing dinners where we had the coaches there, and they have wanted to sit me next to them, and I said, 'Don't do that because I'll have nothing to talk to them about.'"
Sitting next to the chief financial officer or the owner, however, would be different.
Barman has made his mark structuring arena financings that sell private debt to investors.
Barman was one of the first to apply this financing technique to sports in 1993 with the funding for the Rose Garden in Portland, the home of the NBA's Trail Blazers. So trendsetting was that transaction that one respected financial magazine named it the deal of the year. Previously, teams raised capital by borrowing from banks.
"Aaron brought a lot of innovation to that project," said Richard Leigh, now a general counsel for the Seattle Seahawks but at the time of the deal a lawyer with the law firm working with Prudential. "There have been a lot of copycats since then."
Indeed, that deal opened the floodgates, and up to a dozen private placements have since been used to fund sports facilities.
Earlier this year, Barman helped obtain bond insurance for a private placement that will fund the new American Airlines Arena in Miami. It marked the first time that new private debt for a sports facility had won the blessing of a bond insurer. Bond insurance grants debt a AAA rating, allowing for low interest rates.
That deal was unique in another way: The $180 million private placement also was issued to help fund the team's operating losses through next year. It was the first time a team had bundled its arena and operational needs into one financial offering.
Barman said that for his group to be successful it must be innovative. Prudential is not a heavy hitter among investment banks. Other Wall Street firms have more renowned names and links to owners through corporate connections.
As a result, Barman said, Prudential realized that to make a difference in sports it would have to commit fully to the industry. The sports unit was formed in 1990, and its six members are one of the largest groups around.
Barman's role is often as much political as financial. He commonly finds himself negotiating among a municipality, a team and lenders, trying to devise a plan that will win approval from all.
He recently helped craft the lease for the Denver Broncos' new stadium. It was part of the package that voters approved last week. He also helped devise plans for the Seahawks' new stadium.
His efforts are noticed. "Prudential is a very good and honest broker among all these parties," said Jay Cross, president of the Miami Heat, which had to win over the local municipality, the bond insurer and the lenders to raise funding for its new arena.