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U.S. Tennis Open Seeks Muni Investors for Ashe Retractable Roof

U.S. Tennis Open Seeks Muni Investors for Ashe Retractable Roof
An artistic rendition of the retractable roof over Arthur Ashe Stadium. Source: USTA via Bloomberg

Investors in the $3.7 trillion municipal-bond market may be asked as soon as next year to help pay for a retractable roof on New York’s Arthur Ashe Stadium, where Novak Djokovic will meet Rafael Nadal in the U.S. Open Tennis men’s final today.

The United States Tennis Association, the sport’s governing body in America, wants to spend $100 million on a Teflon cover for the Queens stadium, whose seating capacity of 23,771 makes it the world’s largest tennis venue. Another $450 million will go to erect two arenas, one with a folding roof. The U.S. Open is the fourth and final grand slam event on the global tour. Wimbledon in the U.K. and the Australian Open already have retractable roofing, while the French Open plans a roof on its main arena.

The expansion will attract more fans and boost revenue, said John Mousseau, who helps manage about $2.2 billion of munis as director of fixed income at Cumberland Advisors in Vineland, New Jersey.

“I have no doubt that they’ll be very successful with the financing,” Mousseau said in a telephone interview from the U.S. Open.

Borrowings to fund the U.S. Open plan are set for early 2014 and may include taxable and tax-exempt municipal bonds, Ed Neppl, the association’s chief financial officer, said in a telephone interview from the event’s home, the Billie Jean King National Tennis Center in Flushing Meadows.

The USTA had about $81 million of debt as of Dec. 31, according to a May 17 financial filing. Almost $26 million in securities will mature this year and in November 2014, data compiled by Bloomberg show. The tennis organization may refund the remainder to help draw attention to the new bonds, he said.

Ticket Revenue

Past USTA borrowings have been backed by ticket and broadcast revenue, according to offering documents, and were carried out through the New York City Industrial Development Authority. The loans include taxable debt and private-activity revenue bonds, which are tax-exempt securities sold to finance economic development, student loans and housing.

The tennis organization is considering whether it can use private-activity debt again and which city agency could be the issuer, Neppl said.

“We’re in the process of learning and understanding what exactly is available to us,” he said.

USTA bonds maturing in November 2021 and rated six steps below top-rated securities last traded Sept. 4 at an average price of 100.24 cents on the dollar, the highest price this year, even as yields on benchmark 10-year munis have risen the most since April 2011, Bloomberg data show. Yields move in the opposite direction of prices. The debt is insured by Assured Guaranty Ltd.

More Fans

The tournament, which concludes with the men’s finals today, runs for about two weeks. A roof would allow the grand slam to play during bad weather and avoid scheduling delays. The tournament has suffered delays because of wet weather for the past five years.

Attendance this year is slightly ahead of 2012, when 710,803 visitors attended, Chris Widmaier, a spokesman for the USTA said in an e-mail. The fan count peaked in 2009 at 721,059. With the expansion plan, the U.S. Open will accommodate an additional 10,000 people daily, according to the USTA.

The weighted average ticket price during the 2012 U.S. Open was $136, according to a May 17 financial filing. USTA collected $95.3 million from ticket sales last year, the most since at least 2003.

Construction will begin following this year’s tournament. The tennis association expects the Ashe Stadium roof to be completed by August 2017, with the whole expansion done in time for the 2018 US Open.

New York Governor Andrew Cuomo signed legislation last week approving the expansion plans. The development will create 1,500 construction and full-time jobs during the next 10 years, Cuomo said in a statement.

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