Standard & Poor's downgraded to BB from BB-plus its underlying rating on nearly $700 million of Queens Ballpark LLC bonds used to backstop the construction of the New York Mets' Citi Field, while retaining a negative outlook.

The new rating is two levels below investment grade. Standard & Poor's had assigned a negative outlook late last year.

Affected by last week's downgrade are the New York City Industrial Development Agency's Series 2006 $547.6 million payments-in-lieu-of-taxes, or PILOT bonds, $58.4 million installment purchase bonds, $7.1 million lease revenue bonds, and Series 2009 $82.28 million PILOT bonds.

The issuers backed the bonds with such revenue streams including luxury suite income, concessions, advertising, naming rights and parking proceeds.

The rating agency cited the cash-flow decline of Queens Ballpark since 42,000-seat Citi Field opened in 2009 amid the recession, four straight losing seasons by the Mets and New York-area competition for an increased amount of premium seating.

Queens Ballpark is a wholly owned subsidiary of Sterling Mets, the holding company of the team's owners, Fred Wilpon and Saul Katz. The Industrial Development Agency owns the park and leases it long-term to Queens Ballpark.

"The negative outlook reflects our expectation that the project cash flow will have slight cash flow declines in the near future before it begins to stabilize," said Standard & Poor's credit analyst Jodi Hecht.

Exposure to the Bernard Madoff scandal has hurt the team financially. In March, Wilpon and Katz settled a $303 million lawsuit by Irving Picard, the trustee for Bernard L. Madoff Investment Securities LLC. Picard had originally sought $1 billion. Wilpon and Katz agreed to pay back $162 million in "fictitious profits," beginning in 2015.

Madoff is serving a 150-year sentence for his Ponzi scheme.

The Mets raised $240 million in the spring by selling 12 minority shares in the team, and paid off $65 million in emergency loans.

Moody's Investors Service cited the share sale last month in revising its outlook to stable from negative for Queens Ballpark, while and affirming its Ba1 rating.

But finances have still affected the team's personnel decisions. The Mets lost star shortstop Jose Reyes to the Miami Marlins via free agency after the 2011 season and two weeks ago traded R.A. Dickey, who won the 2012 Cy Young Award for best pitcher in the National League, to the Toronto Blue Jays after contract talks reached an impasse.

"We continue to believe that team performance will drive attendance and stadium cash flows, which will be a factor if the team continues to perform poorly," Standard & Poor's wrote in its report on the downgrade.

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