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SBJ/December 12-18, 2011/FinancePrint All
The Arizona Diamondbacks will save up to $12 million over the next five years as part of a three-pronged, $140 million financing the club wrapped up earlier this month. Through 2024, the savings could top $30 million.
The cash infusion is a boon for a midmarket team like Arizona, which is often struggling to stay in the black.
“The money will be reinvested in the stadium, players or scouting,” said Tom Harris, the team’s chief financial officer. “All will go into the operations of the team.”
The heart of the deal is the buyback of bonds sold to finance Chase Field’s construction.
Photo by:GETTY IMAGES
The heart of the deal is a buyback of some of the bonds sold to finance the construction of Chase Field, which opened in 1998. Those bonds, set to expire in 2025, are non-callable, meaning the team does not have the automatic right to buy them back early.
But JPMorgan Chase, which executed the financing, commenced a bond tender, which is essentially contacting individual bondholders to see if they would be willing to sell.
Of the $97 million in ballpark bonds, the team bought back $45 million, somewhat less than the 50 percent rate Chase had hoped for, said Scott Milleisen, the bank’s managing director in charge of sports. The original bonds carried a rate of nearly 7 percent; the new, five-year financing charges the team 3 percent.
The $10 million to $12 million savings over the next five years, which is after the bank fees, comes from this part of the transaction, Harris said. He expected the same rate of savings through 2024. In 2025, when the bonds are due to be repaid, there is a balloon payment due that could affect the overall savings, but that payment can be deferred, he said.
The team also refinanced a $60 million loan pool, or credit facility, and added a $35 million seasonal line of credit.
All were rolled into the $140 million financing and syndicated, meaning other financial institutions bought pieces of the loan.
Harris said several banks bid on leading the financing, but he was impressed with JPMorgan’s ability to execute both a private loan and municipal bond deal, perhaps underscoring this to suggest the bank did not get the business just because its name is on the ballpark.
NFL owners are slated to vote this week on creating the first league-run venture capital fund in sports.
A league spokesman said last week that a vote was scheduled for Wednesday’s half-day owners meeting in Dallas.
The $32 million fund, which would invest in football-related startups, would be a first in professional sports. It was unclear last week if the league had selected an outside venture capital firm to partner with and invest alongside — a prospect the league noted when the fund’s development was first reported (SportsBusiness Journal, Oct. 17-23).
“It is currently on the agenda,” league spokesman Brian McCarthy wrote via email. “As you know, as in life, everything is subject to change.”
Also on the agenda is approval of the sale of the Jacksonville Jaguars to Illinois businessman Shahid Khan. The league’s finance committee approved the sale last week, so approval by full ownership is anticipated.
Khan, who would succeed Wayne Weaver, is expected to address the media after the vote.
The league also is expected to brief owners on the latest round of TV contracts with Fox, CBS and NBC. Those deals are nearing eight-year renewals with rights-fee increases of 60 percent, but it was uncertain whether the deals would be ready in time for a vote this week.
— Daniel Kaplan