The outlook on $695.4 million of debt issued to build the New York Mets' Citi Field was cut to negative by Standard & Poor's after the team's third straight losing season and falling attendance.
S&P, which rates the bonds BB+, one level below investment grade, also cited the
recession and competition from other new stadiums in the region with luxury amenities.
“We believe the project faces cash-flow volatility as a large portion of pledged revenues are game-day revenues with less than one-half of the revenues under short- to medium-term contracts,” the rating company said yesterday in a report.
Major League Baseball's Mets sold tax-exempt bonds in 2006 and 2009 backed by revenue such as luxury suites, concessions, naming rights and parking fees. Cash flow has declined each year since the 42,000-seat stadium opened in 2009. Since 2009, annual attendance has fallen 27 percent to 2.29 million, S&P said.
According to the website Baseball-Reference.com, Citi Field attendance declined 35 percent to 2.35 million last year.
Citi Field is more dependent than other stadiums on the renewal of premium season tickets and advertising because 44 percent of its revenue is secured by contract, a smaller percentage than other venues, S&P said.
Madoff Troubles
Mets owner Fred Wilpon is being sued by the trustee for Bernard Madoff's defunct firm to recover investment gains from the team and the Wilpon family. The team is offering minority stakes to raise additional capital. The Citi Field bonds don't rely on revenue from the Mets, S&P said.
“The key issue looking forward is that any unfavorable change in team financial operations may hurt team performance and reduce turnstile volumes and revenue,” S&P said.
Citi Field revenue fell 12 percent in 2011 from the prior year, the rating company said.
Season tickets, which make up about 40 percent of Citi Field's total revenue, declined 22 percent, S&P said. Merchandise and food and beverage receipts, which make up 1 percent and 7 percent of revenue, respectively, fell 20 percent, the rating company said.
Danielle Parillo, a spokeswoman for the Mets, didn't immediately return a call and e-mail seeking comment.
A $20,000 block of Mets stadium bonds backed by payments in lieu of taxes with a 5 percent coupon and maturing in 2046 traded yesterday at 83.3 cents on the dollar to yield 6.2 percent.
--Bloomberg News--
