Like everyone else on the planet with a mortgage, the New York Yankees owners are looking around at record-low interest rates and considering refinancing, in their case on their stadium debt. The twist here is that it’s not actually their debt — in order to take advantage of an IRS tax dodge, the team had the city Industrial Development Agency issue bonds and pays them off with rent payments labeled “payments in lieu of taxes” — so they’d need the city to reissue the debt to take advantage of lower interest rates.
That could actually be tricky, since the IRS loophole was partly closed several years ago: Any new bonds would have to be paid back based on the actual year-to-year property taxes that the stadium would be paying if it paid taxes, not based on an annual flat fee. That would likely mean somewhat higher interest rates since bondholders like certainty in their bond payments, and could wipe out any benefit from a refi. Also, there’s a new mayor since the original stadium deal was put in place, one who might not rubber-stamp a new bond deal quite so quickly, at least not unless the Yankees, say, turn some of their unused parking garages into affordable housing that isn’t necessarily all that affordable.
And if you’re wondering why the Yankees need to save money on their bond payments, take it away, New York Post:
Shaving perhaps as much as $10 million annually from the stadium loans could make the team profitable, said a source familiar with the team’s finances…
The Yanks are roughly breaking even now. That’s just the team and doesn’t include other businesses, such as the YES Network or Legends Hospitality.
Now that’s what we expect from a business whose owner once hid profits by paying himself a consulting fee to negotiate his own cable deal. Keep on keeping on, Steinbrenners.