Dec. 19 (Bloomberg) -- The New York Giants are 11-3 on the field. On Wall Street, they’re down $300 million and counting.

From a bond market collapse and skyrocketing interest rates to the bankruptcy of its investment bank, the Super Bowl champions have taken one hit after another financing what co- owner John Mara calls the world’s most expensive sports venue: a $1.6 billion New Jersey stadium to be shared with the New York Jets when it opens in 2010.

The team, which borrowed $650 million toward its share of the stadium, can’t say exactly how much that’s now costing, according to court papers. Mara sent a bill to Lehman Brothers Holdings Inc. in October claiming the bank owes the National Football League club more than $300 million after defaulting on interest-rate swaps. The team also is subject to rate swings, refinancing charges and legal fees, the papers say.

“We continue to work expeditiously to determine the full extent of our loss,” the club says in documents filed in federal bankruptcy court. Neither Mara, 54, nor co-owner Steve Tisch, 59, would comment on financing issues.

The year-old U.S. recession is hurting efforts by the Giants and Jets to sell million-dollar suites and $20,000 seat licenses, as well as find a sponsor willing to spend tens of millions to name the new stadium, said Marc Ganis, president of Chicago-based industry consultant Sportscorp Ltd.

The Giants may be nursing bumps and bruises for years, missing stadium revenue projections and eating into what the team can spend on players, he said.

“It comes out of their bottom line -- there’s no other source for it -- which may mean at some time they have less money to pay players,” he said. “I think they’ll weather the storm, but it’s a storm.”

Stadium Revenue

Stadium revenue is critical because it’s not shared by all 32 clubs in the NFL, unlike the league’s $3.7 billion a year in television money. The venue is more than twice the size of the 32-year-old one it will replace. While seating capacity will be only 3 percent more at 82,500, the facility will have three times as many concession stands, four about 100-by-30-foot video displays, areas for corporate sponsors and about 200 luxury suites, up from about 120.

The NFL helped pay, emptying a shared stadium-financing account to lend the Giants and the Jets $150 million each. The sum will be repaid from the communal television money and visitors’ club seat fees.

The teams borrowed the rest. In August 2007, the Jets arranged to sell $650 million in variable-rate bonds with Citigroup Inc. and Royal Bank of Canada. The Giants also sold $650 million of such bonds, with Goldman Sachs Group Inc. and Lehman.

Auction-Rate

Both teams mostly used auction-rate securities, billed as a cheap alternative to conventional, fixed-rate bonds. Other NFL stadiums financed that way include those for the Dallas Cowboys, New England Patriots and New Orleans Saints.

Investors bought the bonds at auctions held weekly or monthly. If no one bid, issuers paid a penalty rate to those holding the instruments.

Late last year, credit rating companies began downgrading bond insurers, including Ambac Financial Group Inc. and FGIC Corp., after losses in the subprime mortgage market. The actions cast doubt on the rankings of thousands of U.S. hospitals, schools and even stadium authorities.

The $330 billion market for auction-rate securities collapsed in February. Interest rates on $123.8 million in Giants bonds reached as high as 22 percent.

The Giants redeemed $100 million in debt, according to a notice sent to bondholders in April. The team also had a hedge: betting with Lehman using interest-rate swaps. In these transactions, borrowers sell variable-rate bonds and agree to pay fixed rates to the bank. The bank pays or pockets the difference.

Lehman Bankruptcy

When Lehman filed for bankruptcy on Sept. 15, it defaulted on swap contracts, according to court documents filed by the Giants.

Lehman spokeswoman Kim Macleod declined to comment.

The bank is required “to pay the actual rate of interest on auction-rate securities” over the 40-year term of the bonds, in exchange for a fixed rate paid by the Giants, the team says in court papers.

“If it takes a couple of years to settle the debt markets, that’s going to come out of their cash flow,” said Mike Cramer, a former president of baseball’s Texas Rangers who teaches sports business at New York University. “They will not hit their top- line projections.”

Burress Charged

The stadium, being built in the parking lot of the old one in East Rutherford, New Jersey, is ahead of schedule, on-budget and about 60 percent complete, both teams said last month.

Giants spokesman Pat Hanlon said the financial dispute won’t affect fans, who in recent weeks have watched the team struggle on the field and off.

Receiver Plaxico Burress, who caught the winning touchdown pass in the Super Bowl last season, was charged with two counts of weapons possession after police said he shot himself in the thigh at a New York nightclub on Nov. 28. Each count carries a minimum 3 1/2-year jail term. The Giants suspended him for four games and placed him on the non-football injury list, meaning he can’t play again until next season.

The team dropped two straight games to division opponents, and rushing leader Brandon Jacobs is recovering from a knee injury. In two days, the Giants host the Carolina Panthers, who at 11-3 lead the National Football Conference South Division.

Meanwhile, the Giants await the filing of what may be thousands of similar claims against Lehman in a case that may last years. Asked in October how the Giants, or other teams, can mitigate the market chaos, Mara smiled.

“Borrow less money,” he said.

To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net.

Last Updated: December 19, 2008 00:01 EST