The Krafts have brought in a financial heavy hitter for a soccer stadium plan
By Adam Vaccaro
Boston.com Staff | 08.05.15 | 9:54 AM
The Kraft family, which owns the New England Patriots and New England Revolution, is working with investment banking giant Goldman Sachs to finance a soccer stadium in Boston. Representatives of the Krafts most recently met with city officials in early July.
Goldman Sachs has developed a reputation in sports circles as a hub of venue financing deals. Before he got to Goldman Sachs, the leader of its stadium financing team worked with the Krafts to help finance Gillette Stadium, according to a January profile by Bloomberg.
Goldman Sachs helped the Yankees finance a controversial and complex stadium deal in New York, and the company has been involved with venue financing for the Orlando Magic, Sacramento Kings, European soccer teams, and more.
As Major League Soccer has grown, most clubs have begun playing in soccer-specific stadiums, seating 30,000 or fewer fans. Urban settings with public transit access are considered ideal for attracting soccer fans. The Revolution have been touting an urban stadium as a goal since 2006. They currently play at Gillette Stadium, which seats more than 65,000 and is located in suburban Massachusetts.
Since last year, the Krafts have had their eyes on a parcel of land owned by the city on the South Boston/South End border.
The Krafts shared simple renderings of the stadium site with state officials last year. MLS Commissioner Don Garber said last week that he had seen more recent renderings. The Revolution have also in the past looked at sites in Roxbury, Revere, and Somerville.
Kraft representatives met most recently with city officials on July 8. That meeting was attended by the city’s CFO, David Sweeney, and Mayor Marty Walsh’s chief of staff, Dan Koh, according to a city spokeswoman. The two sides had previously met in December and March.
Goldman Sachs has been working with the Krafts on the stadium plan since at least the December meeting.
The city received a packet of documents prepared by Goldman Sachs at the July 8 meeting. Most of the pages provided to Boston.com through a public records request were redacted. In non-redacted portions, the packet noted Goldman Sachs’s intentions of “serving as underwriter on a future transaction.”
A section about how the new Yankee Stadium was paid for in the Bronx was also left un-redacted. The financing mechanism in New York was tricky, and replicating it in its exact form may no longer be an option for cities and sports teams.
The team and the city found a loophole, allowing the Yankees to finance the stadium with low-interest, tax-exempt bonds issued by a public economic development agency, similar to the Boston Redevelopment Authority.
The Yankees are covering that debt with private money, but by using the low-interest bonds available to the city, they save a whole lot of money on interest compared to other forms of debt.
The stadium land is owned by the city, and the structure itself is owned by the economic development agency. The Yankees set up a new corporation to operate the stadium and make payments to the city through stadium revenues, which are then put toward paying off the debt.
New York used similar strategies to help finance the new Mets baseball stadium and the Brooklyn Nets basketball arena.
The Yankee Stadium deal was criticized by some as a taxpayer subsidy for the stadiums; even if the Yankees cover all the costs of the stadium, the tax-exempt bonds carry a federal cost.
The loophole was made harder to thread by the IRS in 2008, with new, more stringent, regulations on these sorts of deals.
It’s not clear why the example was included in the packet—whether Goldman Sachs is proposing a modified version, or whether the example was included just to show examples of its prior work financing stadiums. Anything specific about how Boston or the Krafts would pay for a soccer stadium was removed prior to being provided to Boston.com.
City Hall declined to discuss the contents of the Goldman Sachs packet, with a spokeswoman saying: “The city is in preliminary conversations on this proposal and it’s too early at this point to discuss specifics.” Stacey James, a spokesman for the Krafts, also called the discussions “preliminary” in a brief phone call.
The Boston Globe previously reported that the Krafts once proposed having the city pay for the stadium, with the Krafts paying the debt off through a tax on ticket sales. City Hall has been said to be cool to the idea.
The city’s recent rebuff of a 2024 Olympic bid—for which the proposed Olympic stadium was competing for space with the Krafts’ soccer venue plan—also showed a region that has little patience for the idea of publicly financed sports venues.
Robert Kraft is no stranger to stadium struggles in Boston. His efforts to bring the Patriots to town in the 1990s were fruitless, leading him to build Gillette Stadium near the team’s old stadium site in Foxborough.
http://www.boston.com/business/news...tadium-plan/75FQsSLG5OJO8wCPgu8g7L/story.html
