Wednesday, December 02, 2009

Ratings agency Moody's says its estimates are based on 225 events a year at the Brooklyn arena, but that total's overblown

An updated article in the Bond Buyer, headlined Atlantic Yards Debt Gets Rated, quotes a ratings agency analyst explaining why the PILOT bonds for the planned Barclays Center got an investment grade.

But the number of arena events is inflated:
Out of the 225 days a year the arena is expected to hold events, only 40 to 45 of those will be Nets games, [Moody’s analyst Richard Donner] said.

“While the Nets are important as an anchor tenant, the arena is reliant upon other revenues,” Donner said. “We view that as a positive.”
However, a 9/16/09 Barclays Center press release stated, "Overall, the arena will host over 200 events annually."

And, as we've known for years, the original projection of 225 events a year depended on the closing of the Meadowlands Arena (now the Izod Center) and no construction of an arena in Newark.

But there's an arena in Newark.

So, does Moody's know what it's doing?

Louisville comparison

According to the Donner interview in the Bond Buyer, the ratings agency compared the revenue streams to new stadiums in New York and a new arena in Louisville.

Why tax-exempt bond total was reduced

Also, now we know why the amount of tax-exempt bonds was reduced:
Last week the Brooklyn Arena LDC approved up to $825 million of bonds for the project, of which up to $650 million was to be PILOT bonds. The deal was sized down to improve the senior debt’s coverage ratios, Donner said.
A "debt service coverage ratio" is "the amount of cash flow available to meet annual interest and principal payments on debt."

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