Seven years after moving into new Yankee Stadium, the New York Yankees are seeking to refinance their share of the ballpark’s debt.
In order to help pay for the ballpark, the Yankees borrowed $1.2 billion and have since faced rising annual payments–costs that are expected to jump from $73 to $76 million between now and 2018. Those who have followed the Yankees this year will note that the team, for the first time in years, seems to be hedging its bets on future success, and some believe that restructuring the current Yankee Stadium debt would provide more financial flexibility for future seasons.
Current estimates suggest that the Yankees would save roughly $10 million annually by refinancing. This option is being heavily considered by owner Hal Steinbrenner, but because of the funding package that allowed for Yankee Stadium to be built, it will not be a straightforward decision. Rather, the Yankees will need assistance from the City of New York. More from the New York Post:
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 Post goes on to note that the Yankees are not concerned about the potential loss of parking, because of the addition of a Metro North stop at Yankee Stadium. The Industrial Development Agency will consider the team’s proposal on September 15.