The New York Mets at times have been taking a beating on the field in this young baseball season, underperforming with their soft hitting and lackluster pitching. But off the field, the baseball franchise hasn't been faring well either, making a handful of errors that would leave any Mets fan cringing. The latest off-field snafu involves an announcement from rating agency Moody's Investors Service of a possible downgrade to junk of municipal bonds sold in 2006 to finance the Mets' new stadium Citi Field.
Moody's placed about $613 million of Queens Baseball Stadium LLC tax-exempt and taxable bonds (rated Baa3) sold through New York City's Industrial Development Agency under review for a possible ratings cut. The agency is concerned because the insurer backing the bonds -- Ambac Assurance Corp. -- was downgraded last month to Ba3, the third-highest junk grade.
But all that money spent on the stadium has forced the club to recoup costs partly through higher ticket prices, especially in prime seats. With the economy in a downswing, the result is many seats intended for corporate big wigs remain empty, prompting Major League Baseball commissioner Bud Selig to speak last month to Mets and Yankees officials to possibly lower ticket prices. So far, the Mets are not budging, continuing to charge $175 to $495 for 1,567 seats in the Delta Club, which includes 20 rows between the dugouts.
This follows the brouhaha several months ago of a public backlash led by politicians denouncing the club for continuing its $400 million, 20-year naming rights deal with Citigroup Inc. (NYSE:C), after the bank had received a total of $45 billion in U.S. government bailout money. Citigroup and the Mets contend their contract will be maintained because the deal was signed before the bailouts.
But that's not all: Business journalists were just as busy as sports reporters when Mets co-owners Fred Wilpon and Saul Katz reportedly admitted they lost $500 million to Wall Street fraudster Bernie Madoff, triggering speculations that a stake in the team would have to be sold. Jeff Wilpon, the son of Fred, responded that the loss would not necessitate a divestment of the team by the Wilpon family.
Now the team's financial success seems to be centered around its new stadium, and that component of the equation is not adding up. Losing doesn't help. After all, who wants to watch a faltering team play, even if it is in a new stadium. ... It's simply not worth it, especially at the level of current ticket prices. And that's what Mets' management fears. - Gerald Magpily
Bloomberg article
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