SBJ/20090316/This Week's News

Yanks get new loan for ballpark

The New York Yankees earlier this month borrowed $105 million from a group of banks led by Goldman Sachs to cover final cost overruns at the new Yankee Stadium, sources said.

The loan brings the total debt on the stadium, which opens next month, to more than $1.3 billion. Despite concerns about the economy’s effect on sales at the new stadium, the Yankees, in the loan document, project healthy revenue, sources said.

The collateral for the loan is limited to sponsorships, premium seating and ticket sales, categories that are expected to total $330 million this season, said a finance source who’s read the loan prospectus, which cited the figure. Concessions revenue is housed in the team’s new Legends Hospitality partnership with the Dallas Cowboys.

The Yankees have been aggressively marketing their premium seating, about 70 percent of which is sold, the finance source added.

Yankee Stadium Financing
Category Amount
Tax-exempt bonds
$1.199 billion
Taxable bonds
$25 million
Goldman Sachs-led loan
$105 million
TOTAL
$1.329 billion
Sources: New York Yankees, SBJ sources

Another source said that when adding in the Yankees’ fees from the YES Network and other media, and calculating in concessions revenue, total dollars generated by the team should exceed $450 million. That would make the club one of the highest-revenue clubs in pro sports, if not the highest.

The amount, however, is offset by interest and amortization, a player payroll topping $200 million, steep luxury and revenue-sharing payments, along with the club’s organizational costs, like stadium operations and minor leagues.

Private debt transactions such as the Goldman loan are scarce in sports, as in the rest of corporate America, since the credit markets imploded last fall. Nevertheless, the Yankees’ deal underscores a central tenet of the new order: Only the biggest brands are getting deals done.

The Cowboys, the NBA and the Legends Hospitality concessions partnership have executed debt transactions since the fall.

The Yankees and Goldman Sachs declined to comment.

“All the deals we have been looking at making we are assuming we are not going to get any financing,” said Robert Caporale, an investment banker who is advising Sports Properties Acquisition Corp., a company looking to buy pro sports assets, but not the top brands. “At best, we would assume debt on an existing company.”

The Yankees already had borrowed more than $1.2 billion through the tax-exempt and taxable bond market, nearly all of which was funded through a public bond conduit. The team had planned to borrow another $111 million in taxable bonds but decided rates were too high and went instead with the short-term loan, a source said. This source described the $105 million as a bridge loan that the team would refinance once taxable bonds become more attractive.

The Goldman-led loan charges a rate of 450 interest points over the London Interbank Offered Rate, a floating rate index that traded at 1.33 percent last week. That would put the Yankees’ rate at 5.83 percent.

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