Yankee Stadium bondholders have something to cheer about, even if fans of the floundering team don’t.
About $1.3 billion of municipal debt issued to finance the new Yankee Stadium was upgraded by Moody’s Investors Service based on the “resiliency” of the arena’s revenue despite the team’s uneven performance and the economy’s ups and downs.
Moody’s raised the rating on the bonds to Baa2 from Baa3, the lowest investment-grade rating. The securities are backed by ticket revenue and luxury-suite license fees.
The New York Yankees, who have won 27 championships, the most of any Major League Baseball team, are in second-to-last place in their division. Still, the team ranks fourth of 15 American League teams in attendance, according to Baseball-Reference.com, drawing about 1.3 million fans so far this season.
“The Yankees have a long history of loyal attendance that provides a base level of demand to support stadium operations, debt service and distribution of excess revenues,” Moody’s said in a news release.
Attendance at the 50,287-seat stadium, which opened in 2009, peaked in 2010 at 3.75 million fans and has fallen in four of the last five seasons. The Yankees, however, did return to the post-season last year following a two-year absence.
In addition, “the team will have significant payroll flexibility following the expiration of player contracts over the next couple of years, which could facilitate potential roster changes that may drive up future fan interest, leading to increased ticket sales,” Moody’s said.
One risk on the horizon is the December 2016 expiration of Major League Baseball’s collective bargaining agreement. Failure to renew it could result in a strike and trigger payments to New York City’s Industrial Development Agency, which owns the park and leases to the Yankees. Moody’s considers the scenario "unlikely at this time.”
The new ballpark was designed to resemble the original 1923 Yankee Stadium before it was renovated in the 1970s, with a limestone-based exterior, arches and a roof-top frieze. The new stadium is across the street from the site of the old ballpark in the Bronx.