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SBJ/March 22 - 28, 1999/No Topic Name
Broncos bucks: Sumitomo loans $150M for new stadium
Published March 22, 1999
Sumitomo Bank Ltd. has loaned the Denver Broncos $150 million to help finance the team's new stadium.
The approximately $370 million project is being funded principally with public money, largely through a $260 million municipal bond secured by an existing sales tax. But the Broncos are also required to pay $110 million of the tab. The $150 million will cover that amount, plus interest and any cost overruns.
Sumitomo, which financed the Detroit Tigers' ballpark, is syndicating the loan. In a syndication, the lead bank parcels out the loan in smaller amounts to other banks in an effort to distribute the risk. Sumitomo is expected to finish the syndication next month.
The loan's interest rate is at the London Interbank Offered Rate, a common interest-rate index, plus 125 basis points for the first five years, said Allen Fears, the Broncos' chief financial officer. Pricing increases to the London Interbank Offered Rate plus 135 points in the following six years, he said.
It is unclear what team owner Pat Bowlen used as collateral to secure the loan. But under the lease agreement with the city, the team keeps sponsorships, club seats and concession revenue. Project loans like this are commonly secured by expected stadium revenues. It is unclear, however, if the Broncos' share of the NFL's media contract is being used as collateral.
The city will keep the revenue from any naming-rights deal. Sports marketing agencies are now bidding on the right to sell the naming rights for the stadium, which is expected to be ready for the 2001 NFL season.