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Volume 21 No. 1
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Eagles borrow $190M over new longer term

The Philadelphia Eagles earlier this month borrowed $190 million, and notably secured a 25-year maturity on the debt.

The Eagles will soon begin the first phase of $125M in renovations at Lincoln Financial Field.
Photo by: AP IMAGES
Before the most recent collective-bargaining agreement in 2011, the NFL did not allow teams to borrow over terms of more than 15 years, but in a little-noticed change after the owner-friendly labor pact, the league made exceptions to the policy that allowed for 25 years.

Before the 2011 labor deal, the NFL was so aggressive in trying to minimize teams’ debt amounts, it sometimes forced principal paydown of debt even before the agreed upon maturity had elapsed, such as in the case of the Houston Texans.

Now, the Eagles can go to 2038 to pay off the team’s new debt.

The money refinances $120 million of existing stadium debt, with the other $70 million for renovations to Lincoln Financial Field, said Don Smolenski, the team’s president. In finance parlance, the debt is called a private placement, and is lent by financial institutions like insurance companies. Bank of America arranged the deal but is not lending the money (its official title is placement agent). The rate, Smolenski said, is less than 5 percent.

Large NFL team debt deals have been slim in recent years, largely because there have not been big stadium projects. That now appears to be changing.

The San Francisco 49ers raised close to $1 billion for their new stadium, and the Minnesota Vikings and Atlanta Falcons are moving toward raising debt. The 25-year term opens up further financing options because traditional bank or bond debt matures earlier.

With the league secure financially and enjoying labor peace, and with stadiums having three-decade-long life spans, finance sources said it makes sense that teams borrow for longer terms.

Rob Tilliss, a sports adviser and former lender, said given the fear that rates might rise from their historic lows, it makes sense for the Eagles to lock in rates for as long as possible. While the NFL has a large debt profile, he added, it also is a large enough business to cover it.

The Eagles hosted the financial institutions for a preseason game in August to pitch the debt, and closed on the deal Oct. 4.

Lincoln Financial Field opened in 2003, with the Eagles borrowing $180 million in 2001 to begin construction. The team will begin the first phase of the $125 million renovations after this season and the final stage after the following season. The upgrades include seating expansion, new video boards, Wi-Fi and connecting bridges for upper levels.