Yankee Stadium Bond Ratings Reveal Ballpark’s Revenue Expectations

The New York Yankees, absent Aaron Judge for much of the season, are currently in last place in the American League East, three games out of a wild card playoff spot.

But the team’s revenue expectations remain strong.

Yesterday afternoon, Fitch Ratings affirmed the BBB+ rating on the New York City Industrial Development Agency’s PILOT revenue bonds (series 2006, 2009 and 2020, Yankee Stadium Project) and the NYCIDA’s rental revenue bonds (series 2006 and 2009, Yankee Stadium Project), issued on behalf of Yankee Stadium LLC (StadCo). These are the bonds that were used to finance the ballpark that opened in 2009. Fitch also said the rating outlook is stable.

The Yankees are baseball’s most valuable team, worth $7.1 billion. In 2022, the team generated $657 million in revenue, net of revenue sharing and PILOT payments, the most in MLB.

The value of the team’s brand and consistently strong support from fans and stadium revenue comes through in the Fitch report, which states: “The strength of the Yankees as a premier franchise within the MLB and the historically robust demand for premium seating driven by the deep New York City economy have resulted in a history of strong fan support through previous economic downturns. The robust pledge of assigned proceeds provides strong coverage of StadCo operating costs and stadium PILOT and lease obligations, with the average debt service coverage ratio (DSCR) at the StadCo level (treating StadCo’s PILOT and rental payments as debt obligations) of 2.6x from 2023-2040.”

Indeed, the Yankees recently inked the most valuable jersey patch deal in baseball. The team’s deal with Starr insurance will pay nearly $190 million through 2030, averaging $25 million a year through 2030.

Perhaps most illuminating are the rating agency’s revenue expectations for the Yankees’ ballpark from tickets and premium seating. Thus far in 2023, “performance is tracking comfortably ahead of 2022 levels, led by strong demand for premium seating and suites at the stadium and reflecting continued strong fan support for the Yankees,” according to Fitch. Specifically, the rating agency points out that “non-premium seating demand also remains strong and reflects an increase in full-season ticket sales over 2022 levels. Regular season assigned proceeds in 2023 are expected to exceed prior-year levels.”

According to the report: “Fitch’s base case assumes that the strong year-to-date trends observed in the 2023 season will result in total assigned proceeds of $341 million, down slightly from 2022 levels. Fitch’s base case assumes that assigned proceeds decline to $301 million in 2024, reflecting a modest drop in general admission and premium seating, and playoff assigned proceeds of $20 million.”

But the Yankees are still doing better than their crosstown rivals, the New York Mets, who were expected to compete for the World Series this year but instead find themselves with a record of 49-54 and a longshot to make the playoffs. The Mets play at Citi Field, which also opened in 2009.

The Yankee Stadium bonds are a safer bet than Citi Field, according to Fitch. “Both transactions (bond financings) have similar structures including PILOT and lease-backed debt and a pledge of tickets. Yankee Stadium is rated one notch higher than QBC, reflecting the franchise strength of the Yankees and the more stable and robust levels of attendance and ticket revenues, despite QBC’s broader range of available revenues than Yankee Stadium, including sponsorships, parking and concessions.”

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