The Real Deal New York

Yankees seeking $1.04B refi for stadium

Team used public funds to construct city-owned stadium in 2009

August 26, 2016 07:30AM
By Rich Bockmann

Yankee Stadium in the Bronx

Yankee Stadium in the Bronx

The Yankees are looking to reload their bases.

The team is looking to refinance Yankee Stadium for $1.04 billion, according to documents filed with the New York City Industrial Development Agency, the financing arm of the New York City Economic Development Corporation.

The agency, which controls the Bronx property through a ground lease with the city and in turn leases the stadium to the Yankees, issued two rounds of tax-exempt bonds in 2006 and 2009 to fund construction of the 54,000-seat ballpark. The initial principal balance of those two issuances totaled $1.2 billion. The sports team is now asking the IDA to issue a new round of tax-exempt bonds to refinance the stadium, according to agency’s upcoming meeting agenda.

The original plan to build a new home for the Bronx Bombers faced pushback on many fronts, not the least of which was controversy over a ruling by the Internal Revenue Service that allowed the sports team to use public debt to finance its stadium.

Sports stadiums were ineligible to use tax-exempt private activity bonds since 1986, when an amendment sponsored by Senator Daniel Patrick Moynihan of New York was enacted.

The city found a loophole, however, by structuring the deal in a way that had the stadium pay off the debt service through payments in lieu of real estate taxes (or PILOT payments) as opposed to rent.

The IRS has since changed its policies, and such a structure cannot be used today to finance stadiums.

A representative for the IDA wasn’t available for comment. Sources said the Yankees are probably trying to take advantage of low interest rates now that the property has become stable.

The credit rating agency Moody’s in June upgraded the stadium’s rating, based in part on its “proven resiliency through variable team performance and economic cycles” and ability to generate excess cash flows.

Moody’s had previously downgraded the stadium’s rating back in 2013, pointing to a three-year decline in ticket sales that resulted in a nearly 20 percent drop in revenues.

The IDA has a public hearing scheduled for Sept.15 to discuss the refinancing proposal.