Bridgeview, Illinois’
S&P Global Ratings resolved its CreditWatch on Bridgeview's general obligation bond rating by affirming it at the junk level of BB-minus with a stable outlook after reviewing the revised memorandum of understanding struck early this month between the team and village of 16,000 about 13 miles southwest of Chicago.
Fitch Ratings also affirmed the rating but gave the village some hope that the agreement could eventually help it emerge from junk status.
S&P put the rating on watch with developing implications in May as word spread of negotiations that would allow the team to play elsewhere. Reports have said the team is eyeing the Chicago Park District’s Soldier Field in central Chicago.
Under an amended lease, the team will pay the village $65.5 million over 15 years to permit its departure, although some training and youth leagues will remain at the stadium.
"In our opinion, the agreement, once finalized, will provide marginal budgetary relief to the village and stabilize the credit at the current rating level in the near term," said S&P analyst Blake Yocom.
Bridgeview was facing significant tax increases and/or immediate additional debt restructurings to pay its future scheduled debt service payments on time and in full, Yocom wrote. Additionally, its market access for GO debt was in question as evidenced by the formation of Bridgeview Finance Corp. and the securitization of its sales tax revenues in 2017. S&P does not rate the securitization debt.
The village sold $135 million in 2005 to finance the stadium. It failed to spark development, and rising debt costs and attendance that has fallen short of expectations have dogged the village, driving tax increases and debt restructurings.
The stadium fund has annually generated about $1.45 million in revenue over expenditures available for for debt service and general operations. Under the MOU, the village will receive $3 million annually through 2033. The full scheduled debt service is approximately $15 million to $16.5 million in the next five years. The agreement does nothing to reduce the village's extremely large debt burden that S&P called unsustainable.
An upfront $10 million will be used to forgo planned tax increases and eliminate the immediate need for additional scoop and toss debt restructurings.
“The village represents that restructurings will no longer be needed due to this agreement. In our view, they are likely over the long term,” S&P said. Long term risks of the agreement include potentially fluctuating future revenue caused by lack of payment from the Chicago Fire, a shortfall in naming rights revenue and continued weak stadium event attendance.
"The stable outlook reflects our view that the signed MOU with Chicago Fire has stabilized the credit at the current rating level by providing marginal budgetary relief and we do not expect to change the rating within the one-year outlook period,” Yocom said.
After reviewing the new MOU that is expected to be finalized in the coming weeks, Fitch Ratings affirmed the $47.5 million Bridgeview Finance Corp. securitization rating of BBB-plus and junk level BB-plus issuer rating, one notch away from investment grade, on $51 million of general obligation debt. Outlooks are stable.
The village has about $260 million of debt.
“If the village does not receive the near-term payments as expected, this could place pressure on operating performance. Conversely, if management is able to use the proceeds of the agreement to fund its fixed costs while making progress towards long term structural balance, including actuarially determined pension contributions, there could be an improvement in the rating,” Fitch said.
The ultimate rating impact of the agreement, however, will likely not be fully known for several years as the village still has a looming structural budget gap.
“The agreement would provide some more near-term budgetary relief, but management would still have to address future budget gaps,” Fitch said.
