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SBJ/March 3 - 9, 2008/This Weeks News
Yankees to sell another $300M in bonds to finance ballpark
Published March 3, 2008
The New York Yankees are selling another $300 million in bonds to finance their new ballpark on top of the $968 million the club sold in 2006.
The move is not a total surprise: The club last month disclosed that the price tag of the stadium had soared from $1 billion to $1.3 billion. However, the additional money could have come from other sources, such as equity from Yankees partners, instead of a bond sale.
“Quite frankly, the appetite [from bond investors] for sports revenues produced by these facilities has only gone up,” said Greg Carey, managing director at Goldman Sachs, which is managing the bond sale, as it did the 2006 version.
The ballpark cost has risen in part because of an initial delay in obtaining financing, increased security measures required by New York City, and enhancements to the facility, which is set to open next year.
The 53,000-seat stadium is expected to be a new revenue boon for the Yankees. The average ticket price is expected to top $100 per game, according to Standard & Poor’s, which rated the original bonds. The team’s 2007 average price was $47, compared with an MLB average of $22.69, according to S&P.
At a $100 average, if the Yankees were to sell out the stadium for each of 81 home dates, the team would pull in $5.3 million a game just in ticket revenue, or $429 million overall before the playoffs.
The new bonds, like the old ones, are expected to be sold through New York’s Industrial Development Agency, a bond conduit that will own the stadium and lease it to the team in a 40-year deal. While the Yankees are responsible for paying off the bonds, they should be able to offer them to investors tax free by going through the IDA. No timetable is in place to sell the bonds, Carey said, but because of the stadium opening next year, they are likely to be sold soon.