Standard & Poor’s lowered its outlook to negative from stable on bonds issued for the New York Mets’ ballpark, Citi Field, affecting $695.4 million of debt.
“The negative outlook reflects our expectation that current trends may continue, with poor team performance and slow economic recovery driving attendance and stadium cash flows,” Standard & Poor’s said.
Standard & Poor’s, in a Wednesday report, affirmed its BB-plus underlying rating on the New York City Industrial Development Authority’s $547.6 million of Series 2006 bonds secured by payments in lieu of taxes; $58.4 million of installment purchase bonds; $7.1 million of lease revenue bonds; and $82.28 of Series 2009 PILOT bonds, issued on behalf of Queens Ballpark Corp LLC.
The move occurs as the team, coming off three straight losing seasons and declining attendance, seeks minority investors. The trustee for convicted Ponzi-schemer Bernard Madoff’s defunct firm is suing Mets owner Fred Wilpon to recover any investment gains made by the team and the Wilpon family.
Revenues generated at the ballpark, in the city’s Queens borough, support the bond obligations. “While ballpark cash flow has been declining, the Mets’ financial difficulties do not directly affect the stadium,” Standard & Poor’s wrote.
Messages were left with the Mets seeking comment.
Corporate suites, box seats, concessions, merchandise, and advertising, not payments from the Mets, generate the revenues supporting the bonds.
“The Madoff-related problems shouldn’t directly affect Queens Ballpark, although if the team were sold and an aggressive [majority] owner were to suddenly put the team on a winning path, that could improve revenues,” said Alan Schankel, a managing director at Janney Capital Markets in Philadelphia.
In affirming its rating, Standard & Poor’s cited sound security for bondholders, including Queens Ballpark’s obligation to make annual PILOT payments and a nonrelocation agreement,
The recession and the team’s on-field struggles have pushed cash flows down every year since the ballpark opened in 2009, Standard & Poor’s said. The team generated more negative headlines three weeks ago when free-agent star shortstop Jose Reyes signed with the Miami Marlins.
In addition, the glut of stadium construction and renovation in metropolitan New York the past few years has increased the competition for premium seating, according to the rating agency.
Madison Square Garden underwent a major renovation over the summer, while football’s Giants and Jets opened MetLife Stadium in New Jersey’s Meadowlands last year. Also in New Jersey, the Prudential Center opened in Newark in 2007 and soccer’s Red Bulls christened their namesake stadium last year.
Next year, Barclays Center, scheduled to open in downtown Brooklyn, N.Y., will welcome the relocated New Jersey Nets basketball team.
Stadium revenues dropped 12% in 2011 from the previous year. Debt service coverage is projected to be down to 1.8 times, compared with 1.94 times in 2010.
