Moody's Affirms Baa1 Rating on Yankee Stadium's Debt Obligations

Strategic Insights -

Moody's Ratings has confirmed the Baa1 rating on Yankee Stadium LLC's debt obligations, including fixed-rate bonds issued by the New York City Industrial Development Agency, NY. The outlook remains stable. Approximately $1 billion in debt is outstanding, consisting of various revenue bonds and rental revenue bonds. The rating reflects the team's long history of demand, supporting its sound market position and predictable cash flows.

Key Takeaways:

  • The Baa1 rating is based on the team's long history of demand, supporting its sound market position and predictable cash flows.
  • Strong cash flow resiliency is expected through variable team performance, economic cycles, and shocks like the pandemic.
  • Long-term annual debt service coverage ratios (DSCRs) are forecast to remain strong, allowing the stadium to absorb revenue variability inherent to the cyclicality of the sports industry.
  • The rating incorporates the strength of the Yankees franchise located in the strongest and most affluent media market in the US, coupled with the team's non-relocation agreement that ties the team to the stadium for regular season home games.
  • Ticket sales and suite license fee proceeds assigned to Yankee Stadium LLC by the New York Yankees Partnership (NYYP) support long-term high franchise value.
  • The rating also reflects strong project financing protections, including a requirement to set aside a full year's debt service and operating expenses, the inability to accelerate debt service on the PILOT bonds, and required liquidity reserves.
  • The stable outlook reflects strong forecasted DSCRs and consistent demand coupled with lower annual debt service costs post the 2020 refunding.
  • Factors that could lead to an upgrade include DSCRs consistently exceeding 4.0x on a sustained gross basis and a material reduction in total leverage.
  • Factors that could lead to a downgrade include DSCRs consistently below 2.5x on a sustained gross basis, a material increase in total leverage, and prolonged player work stoppage resulting in materially weaker revenues.

Statistics:

  • Approximately $1 billion in debt is outstanding.
  • $59 million in 2006 PILOT Revenue Bonds, $24 million in 2009 PILOT Revenue Bonds, $927 million in 2020 PILOT Revenue Bonds, $20 million in 2006 Rental Revenue Bonds, and $59 million in 2009 Rental Revenue Bonds.
  • Long-term annual debt service coverage ratios (DSCRs) are expected to remain strong.
  • The Yankees franchise has a non-relocation agreement that ties the team to the stadium for regular season home games.

Sources:

  • Moody's Investors Service: Baa1 rating affirmed on Yankee Stadium LLC's debt obligations (June 10, 2024).
  • Moody's Ratings Methodology: Generic Project Finance (October 2024).
  • New York City Industrial Development Agency, NY: Senior Secured, Affirmed Baa1.
  • Yankee Stadium LLC: Senior Secured, Affirmed Baa1.