New York’s baseball teams, the Mets and Yankees, got positive rating calls from Moody’s Investors Service on bonds that financed their stadiums.
Moody’s upgraded Queens Ballpark Company LLC — responsible for the Citi Field stadium bonds for the Mets’ park in Queens — to Baa2 from Baa3, affecting roughly $650 million of outstanding rated debt among payment in lieu of taxes, or PILOT revenue bonds, lease revenue bonds and installment purchase bonds. The outlook remains stable.
Separately, Moody’s revised its outlook for Baa1-rated Yankee Stadium LLC to stable from negative, affecting about $1.2 billion in debt.
Both ballparks opened in 2009. The New York City Industrial Development Agency issued both sets of bonds.
Alan Schankel, a managing director at Janney Capital Markets, called Thursday’s announcements “positive news for New York City’s stadium bonds.”
Competitively, the teams are at opposite ends. The Yankees’ 62-33 won-loss record at the All-Star break is the second-best in Major League Baseball, while the Mets' 39-55 mark is second-worst in the National League.
According to Moody’s, the outlook change for the Yankees recognizes improving ticket sales that will support strong debt service coverage ratios in line with the current rating level over the long term of the debt.
“The Yankees’ proven resiliency through variable team performance provides a balance to the inherent cyclicality of the sports industry,” said Moody’s. “[Debt service coverage ratios] have remained strong despite higher debt service costs that stabilized in FY 2018."
The upgrade for the Mets recognizes that even in down years resulting in attendance drops, the ballpark company is able to post strong debt service coverage ratios.
“This is in part due to one-third of revenues being derived from contracted naming rights and sponsorship contracts that help insulate the revenue losses related to poor attendance when the team is bad,” said Moody’s.