Home Run! A Case Study of Financing the New Stadium for the St. Louis Cardinals

Abstract

A structured financing that was closed in late 2003 for the new St. Louis Cardinals Stadium was the largest private placement of debt for a Major League Baseball (MLB) stadium, the first MLB stadium transaction using a bankruptcy-remote structure, the first set of cash flows from a baseball stadium to be rated investment grade by both Moody?s and Standard and Poor's and insured to ‘AAA’ by Ambac Assurance, and only the third privately financed MLB home stadium. A special-purpose vehicle formed by the Cardinals will originate the contracts giving rise to the contractually obligated income (COI) pledged to support the ballpark financing. The SPV holds the naming rights, rights to conduct concession activities, rights to license luxury suites, and certain sponsorship (signage) rights, all collectively called dedicated property. The Cardinals conduct MLB games under a license agreement with the SPV. The dedicated property is isolated from the credit risk of the Cardinals because it is not owned by the Cardinals. COI from the dedicated property pledged to bondholders was sufficient to earn the bonds an investment-grade credit rating.