S&P Downgrades Citi Field Bonds to BB
With one glaring exception, the Mets appear to be in cost-cutting mode this winter. Yes, David Wright agreed to an eight-year, $138 million contract this month.
But the Mets traded their ace, R.A. Dickey, over what amounted to a few million dollars, and unloaded Jason Bay and a host of other underperforming players. The Mets are the only team that had not signed a major league free agent this off-season.
Sandy Alderson, the team’s general manager, has said the Mets are simply being prudent after years of signing high-priced flops. But he has also said the Mets do not have unlimited funds, something most fans have long suspected even after the team’s owners settled their legal standoff with the trustee representing the victims of the Bernard L. Madoff Ponzi scheme.
Others have come to the same conclusion. On Dec. 21, Standard & Poor’s lowered its rating on the almost $700 million in bonds issued to finance Citi Field, and it said the outlook for them remains negative. The bonds are now rated BB, from BB+. That’s two notches below investment grade, junk bonds in the parlance of the debt market.
Jodi Hecht, an analyst at Standard & Poor’s, cited “cash flow volatility,” noting that “a large portion” of the money pledged to pay off the bonds is “game-day revenue,” which includes sales of club-seat tickets, concessions and parking. How the Mets play will affect the prospects for this revenue, she said. Standard & Poor’s “may lower the rating if cash flows continue to decline due to a combination of poor team performance, slow economic recovery, overcapacity in the New York region,” she added.
Attendance has fallen three straight seasons, and the Mets have finished in fourth place four consecutive years.
Despite the dim prospects for the team in 2013, the Mets may get a boost in ticket sales if fans buy season-ticket packages as a way to secure tickets to the All-Star Game, which will be played at Citi Field in July.
The downgrade by Standard & Poor’s is unlikely to affect the Mets much in the short-term unless they issue new debt. The team currently makes semi-annual bond payments of $22 million using revenue from sales of suites, club seats, concessions and other items.
S&P Downgrades Citi Field Bonds to Bb
The mets downgraded themselves to a small market team about three years ago.