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Volume 20 No. 42
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USTA seeking to borrow up to $500 million to renovate complex

The U.S. Tennis Association is seeking to borrow up to half a billion dollars to fund the $550 million renovation of the Billie Jean King National Tennis Center, a project the group formally disclosed last week and that ultimately calls for roofs over the facility’s two main stadiums.

Earlier this month, the USTA sent a request for proposals to finance firms, seeking a lead lender. The financing would easily be the largest borrowing ever by the USTA, and almost assuredly the largest in the history of the sport.

Rendering shows roof on Arthur Ashe Stadium.
“We don’t have a pile of money to be able to do the things we need to do to make the [National Tennis Center] the pre-eminent sporting venue in tennis, and in sports, so we have to be borrowing some money,” said Gordon Smith, the USTA’s executive director.

The USTA, which operates the tennis complex, will not raise money through the sale of personal seat licenses, Smith said. He decried that approach as burdening the Open’s fans with the cost of the renovation.

According to the plans announced last week, the renovation would include a roof over the center’s main stadium, Arthur Ashe Stadium, at a price of at least $100 million. Plans also call for new show courts two and three (named Louis Armstrong and the Grandstand), with a roof being part of the Armstrong plans as well. A viewing platform for the center’s practice courts is also in the plans.

The Ashe roof would be in place at the earliest by 2016, with the complete renovation project done by 2018. The master planner is Rossetti.

While the USTA is not sitting on any “pile of money,” as Smith said, the group does have substantial resources, starting with the more than $250 million in annual revenue brought in by the U.S. Open, the 2013 version of which starts next Monday. More than half of the revenue is booked as profits, though the USTA spends most of the sum funding its mission to promote the sport of tennis in America.

As of the end of 2011, the USTA claimed assets of $223 million, most of that in liquid form such as investments and savings, according to the group’s most recently filed tax return. The National Tennis Center as of the end of 2011 had assets of $253 million, though the bulk of that was in “accumulated depreciation,” according to the tax return of the center, which files separately from the USTA.

Financial sources said the USTA should have little trouble raising the desired funds. The sources, who asked for anonymity because they might bid on the business, cited the Open’s profit margins, the sizable assets related to the event, and the tournament’s stable position in the sports marketplace.

A top contender to lead the lending is JPMorgan Chase, the Open’s top sponsor. Smith even said jokingly during last week’s press conference about the renovation plans that from an aerial view, the rendering of the new Ashe with a roof has a top that looks like the bank’s logo.