On the 41st floor of a downtown office building here, representatives of 25 major banks from the United States and Japan recently gathered to talk baseball stadiums.
They were vying to participate in financing the 42,000-seat stadium planned for the San Francisco Giants, which is scheduled to be opened in 2000.
"I thought to myself, 'If I were one of these bankers, I would be figuring out how to get a piece of this deal,'" said John F. Yee, chief financial officer for the National League baseball team.
In unprecedented numbers, professional sports teams are scrapping their old stadiums or arenas for newer and better facilities - usually costing $200 million or more. And a handful of big banks - including Chase Manhattan Corp., Fleet Financial Group Inc., NationsBank Corp., and J.P. Morgan & Co. - are stepping up their efforts to become lead lenders to such projects.
"Banks tend to go where there is demand," said Jeff White, chief financial officer of Major League Baseball. "And there's obviously a lot of demand here."
In the past four years alone, 23 professional football, hockey, basketball, and baseball teams have built stadiums or arenas. More are in the pipeline; 31 other teams have announced intentions to build facilities.
The flurry of construction has been triggered by, among other factors, a realization that a new stadium with amenities such as luxury sky boxes can be a huge revenue source, as well as a means of keeping a cherished team from leaving town.
What's more, many of today's stadiums were built more than 25 years ago and have become "economically obsolete," Mr. White said, meaning they cannot generate enough income for their owners.
Banks are getting more action in this area than before because a growing number of stadium owners are opting for private financing, to avoid the political obstacles that come with revenue bonds.
"What we're seeing is a tremendous building boom out there," said Robert J. Tillis, vice president in charge of the national sports group at Chase Securities Inc., the investment banking subsidiary of Chase Manhattan. "So we will stay adequately positioned to capitalize on that growth."
Chase was selected by the Giants from about a dozen bidders this month to lead the syndicate helping finance the team's new stadium. The New York money-center bank beat out BankAmerica Corp., the San Francisco superregional that handles the Giant's more routine borrowing needs.
"It was a difficult decision," Mr. Yee said, "but the project transcends the team's normal financing needs."
Chase will arrange financing for $140 million of the park's estimated $255 million total cost. The remaining $115 million is to come from personal seat licenses, concession rights, naming rights - Pacific Bell has paid $50 million to get its name on the park - and a local redevelopment agency.
"Generally speaking, real estate construction lending is not especially lucrative," said Raphael Soifer, a bank analyst at Brown Brothers, Harriman & Co., "except for the banks that arrange the deals. The merged Chase is No. 1 in the country in loan syndications, so they're taking advantage of that stature."
Chase's sports group, which was assembled by Mr. Tillis six years ago, has more than doubled its staff in recent years, although he wouldn't reveal how many are involved. The group has been involved in financing nearly a dozen sports facilities, he said.
NationsBank also does well in this area. It was lead bank, along with First Union Corp. and Wachovia Corp., for a loan to finance the $164 million Ericsson Stadium, home of the National Football League's Carolina Panthers.
Fleet, with a three-year-old, four-member sports lending group, estimated it has about 10 deals for sports facilities in the works.
"There are only about 110 franchises in all four major sports, so we know who the people are and call on them actively, as do our competitors," said David Henderson, a Fleet vice president in arena and stadium financing.
However, stadium financing can be "an acquired taste," said Robert B. Albertson, a bank analyst at Goldman, Sachs & Co.
In addition to the limited number of potential clients, the loans are too risky for some banks, he said. Collateral usually consists of anticipated stadium revenues, which largely depend on the success of the team playing there - never a sure thing.