BRADENTON, Fla. — The owners of the National Hockey League’s Atlanta Thrashers plan to sell the team to a group that will move them to Canada, leaving a void at the $213 million bond-financed Philips Arena.
Atlanta Spirit LLC announced Tuesday that a deal had been reached with a buyer, True North Sports and Entertainment, which will move the team to Winnipeg. The sale still must be approved by the NHL board of governors on June 21.
The Thrashers, named after Georgia’s state bird, began playing as an expansion team in 1999 at the newly opened Philips Arena in downtown Atlanta.
Atlanta Spirit, which operates the arena under subsidiary Arena Operations LLC, also owns the National Basketball Association’s Atlanta Hawks, the Women’s NBA Atlanta Dream, and holds various entertainment events at Philips Arena.
To build the multi-use facility, the Atlanta and Fulton County Recreation Authority sold $70.7 million of tax-exempt and taxable bonds secured by a car rental tax for public improvements in 1996, which were refunded in 2005.
Another $147.5 million of taxable bonds were sold in 1997 with debt service paid by then-Hawks owner and arena operator Turner Arena Operations Inc. Turner later sold the team to Atlanta Spirit.
Last November, the Recreation Authority sold $124.5 million of bonds to refund the outstanding 1997 bonds, and to pay certain recreation and cultural program costs for Atlanta and Fulton County, according to the official statement. The city received $2.3 million from the deal and the county received $1.2 million, according to the official statement.
The refunding bonds were insured by Assured Guaranty Municipal Corp. They received underlying ratings of Aa2 from Moody’s Investors Service and A from Standard & Poor’s.
Under the payment scheme for the bonds, Arena Operations pays the principal and interest from a first lien on gross revenues.
The bonds are also secured by full-faith-and-credit backup pledges from the local governments, with Atlanta paying two-thirds of any deficiency in revenues and Fulton County paying the remaining one-third.
Arena Operations does not disclose information about its outstanding bonds and payments, said Ailey Penningroth, vice president of corporate communications.
Penningroth was asked generally if there could be difficulty making debt service payments after the Thrashers leave.
“No, we will not have a problem making our bond payment,” she said.
The arena operator has never missed a bond payment, said Douglass Selby, a partner at Hunton & Williams LLP, the Recreation Authority’s bond counsel.
Selby said the issuer, the city and the county monitor the arena’s performance closely and that collateral posting is required if coverage falls below 150.
As of Dec. 31, Arena Operations’ debt service coverage was 185.
Atlanta officials did not respond to a request for a comment about the Thrashers leaving.
Fulton County Controller Ray Turner said there have been no communications from the operator regarding any potential payment shortfalls. He noted that the facility is used for other games and events that “generate significant revenues.”
“To date, the county has never had to fund the debt service under existing agreements,” he said.
The Thrashers struggled financially for several years and had seen a decline is attendance since 2007.
In a letter to fans on the team’s website, owners Bruce Levenson and Michael Gearon said the need to sell was disappointing but it had been necessary for some time. The team reportedly lost $130 million since 2005.
The owners said they tried to keep the team in Atlanta but “after extensive effort” nobody came forward, so they worked with the NHL and found a buyer in Canada.