Yankees team owner Hal Steinbrenner is making a new pitch to return the team to profitability.
With interest rates hovering near record lows, the team is seeking to refinance more than $1 billion in debt that went toward building Yankee Stadium, which opened in 2009.
Shaving perhaps as much as $10 million annually from the stadium loans could make the team profitable, said a source familiar with the team’s finances.
The Yankees borrowed $1.2 billion to build the stadium.
The annual net debt payment will rise from $73 million this year to $76 million in 2018.
The Yanks are roughly breaking even now. That’s just the team and doesn’t include other businesses, such as the YES Network or Legends Hospitality.
Steinbrenner, 46, has been making moves to improve the team’s finances since taking the helm in 2008.
“He’s always looking for ways to cut expenses,” without hurting the marquee franchise, said the source.
To refinance the stadium, however, the Yanks will need some help from the city.
The original financing was controversial because one of the richest sports franchises tapped taxpayers to construct the ballpark.
Sports teams aren’t allowed to use tax-exempt “private activity bonds” to build stadiums. To get around this IRS rule, the New York City Industrial Development Agency issued 40-year bonds to help build the ballpark.
That financial structure means the stadium is city-owned and therefore exempt from city, state and federal taxes. The Yanks make debt payments in lieu of real estate taxes, so-called PILOT payments.
In order to keep the tax-exempt status and avoid running afoul of IRS rules, the Yanks need the city to issue bonds to refinance the stadium.To win support, the team is proposing giving back roughly 2,000 of the 9,000 parking spaces it received from the struggling Bronx Parking Development Co., a source close to the situation said.
The money-losing operator of the Yankee Stadium parking garages could in turn sub-lease the space to a developer for housing or a hotel.
The Bloomberg administration created the non-profit Bronx Parking Development Co. in part by replacing park land to accommodate the stadium.
The Bronx Bombers don’t need all the parking spaces after Metro North added a Yankee Stadium station stop in 2009, the source said.
The New York City Industrial Development Agency has scheduled a Sept. 15 hearing on the proposed refinancing.
Reps for the mayor’s office and the City Council weren’t available to comment by press time.
Moody’s raised the team’s credit rating one notch to Baa2 in June, a move that could help with refinancing the debt. The same report also noted that the team’s revenue is 21 percent below its 2010 peak.
Source : nypost.com