Citi Field Bonds Get Upgrade Even Though Mets Are Last Place

(Bloomberg) -- The New York Mets have the second-worst record in the National League, but investors in Citi Field bonds still have reason to cheer.

Moody’s Investors Service this week boosted the credit rating on $650 million of municipal bonds issued to build the 42,000-seat ballpark to Baa2 from Baa3, citing the stadium’s "resiliency through periods of variable team and economic performance" since it opened a decade ago. That’s left them two steps ahead of junk grade.

While the Mets may be in a free fall on the field, investors can still count on revenue from naming rights, sponsorship contracts, concessions, parking and premium seats Moody’s said. A little more than one-third of stadium revenue pledged to the bonds, about $60 million, comes from those sources, providing a relatively predictable cash flow. Stadium costs are stable and debt service is level, Moodys’ said.

“Attendance at Mets games is definitely more up and down," said Moody’s analyst John Medina. “But because it’s a smaller proportion of total revenue it has less of an impact on coverage, on the financial resiliency of the project."

Since Citi Field opened in 2009, the team has finished fourth in their division five times; they made it to the World Series in 2015, losing to the Kansas City Royals.

The Mets’ team batting average is the second-worst in Major League Baseball after the Baltimore Orioles and its bullpen is prone to blowing leads. Still, fans haven’t totally abandoned them. The Mets have the 13th-best home attendance, averaging 29,646 people per game, according to ESPN.com.

As Moody’s puts it, the team has a "core level of demand."

Meanwhile, the Yankees, the Mets’ cross-town rivals who are second in the American League East and have the third-best record in baseball, had the outlook on their stadium debt raised to stable from negative. Moody’s cited improving ticket sales and the "strength of the Yankees franchise." Moody’s rates $1.2 billion Yankee Stadium bonds Baa1, one level higher than Citi Field.

In contrast to the Cit Field bonds, the revenue pledged to Yankee Stadium debt comes solely from ticket sales, Medina said.

The rating on both clubs’ bonds benefit from non-relocation agreements that tie the teams to their stadiums and their location in the strongest and most affluent media market in the U.S.

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