Muni Bond Watch Turns to Sports Facilities
In recent years a handful of top-level teams have gone through or flirted with bankruptcy. This is a global phenomenon, with a list including the Rangers in Texas, Portsmouth in England, and Valencia in Spain. It should not be a big surprise then that debt-laden teams in the minor leagues face challenges as well. Apparently that list may bre rather lengthy, according the the WSJ’s Muni Bond Watch column. Here are a couple of snips from the article:
Last week, bond trustee U.S. National Bank filed a regulatory notice indicating bondholders would receive a partial payment on a portion of the Memphis Redbirds Baseball Foundation’s $50 million in muni bond debt.
“We struggled for the first 10 years to stay current with our debt,” Pontius says. “But basically the model was broken, and sustaining that model of revenue in Triple-A baseball was impractical.”
….Revenue bonds for New Hampshire’s Manchester Multipurpose Entertainment Facility, now known as Verizon Wireless Arena and the home of the Manchester Monarchs minor league hockey team, went into technical default in July, and investors have since been notified that reserve funds will be used to make payments on a portion of the $50 million in tax-free debt. Moody’s Investor Service cut its rating on the bonds in November and dropped its outlook to negative.
…Robert Kane, chief executive officer of BondView, a New York municipal bond data company, notes that of the 4,408 stadium bonds traded in the last 30 days, 78% carried 2-star ratings and below.
That last stat refers to a flow of trading, and not the entire stock of stadium bonds. Nevertheless, 2 stars out of 5 is pretty low, which suggests tough going ahead in financing minor league stadiums. This is just a hunch, but the “new normal” may not have room for many $50 million minor league facilities.
Thanks to Pete Toms for the link.