With growth in the sports business, banks are getting more and more into the financing game.
Witness the announcement last week by Fleet Financial Group in Boston that it would supply a $405 million credit line to Major League Baseball. Any of the 30 major league teams may draw on the facility to refinance debt, cover operating shortfalls, and, in a growing number of cases, help finance that most visible manifestation of the new economics of sport: stadium construction.
"What we've seen is a drive by media for rights to broadcast these teams," said George Cole, a managing director at First Union Capital Markets in Charlotte, N.C. "That has driven the value of these sports teams way up and created a financing need."
Most stadium-project funding remains public. But with the latest generation of sports facilities designed to benefit team owners through lucrative revenue-generators like luxury suites and boxes, taxpayers are increasingly reluctant to foot the bills.
That has created an opening for syndicated loans. They are more flexible than private placements or bond issues because they can be drawn down immediately or in increments. And they have become cheaper for borrowers as major league sports have grown more financially stable, lenders say.
Syndicated loans for sports buildings have ballooned from just two deals worth a combined $100 million in 1994 to 39 worth $3.9 billion last year, according to Securities Data Co.
Mr. Cole said First Union entered sports finance in the early 1990s. It joined Wachovia Corp. and NationsBank Corp. in financing Ericsson Stadium in Charlotte for the Carolina Panthers, a National Football League expansion team.
"We got involved kind of ad hoc," Mr. Cole said. "It was really a function of our geographic footprint."
Soon First Union became a kind of banking free agent. In 1996 it did a $60 million private placement for a new National Basketball Association franchise, the Vancouver Grizzlies. It was the first expansion-team financing with an investment-grade rating.
But First Union was a relative latecomer. Sports specialists could also be found at NationsBank, BankAmerica Corp., Sumitomo Bank, and Chase Manhattan Corp.
Banks have made nine sports-business loans worth $958 million since January, including the Major League Baseball loan and smaller financings for health clubs and sporting-equipment makers.
Fleet, through its Sports Lending Group, has financed $700 million of sports projects in recent years. It has led or participated in deals for the Tampa Bay Ice Palace, Fleet Center in Boston, and MCI Center in Washington. It syndicated a $185 million loan for a new stadium for the Baltimore Ravens football team.
Syndicated-lending powerhouse Chase has not been idle. It arranged $220 million for the San Francisco Giants baseball team and the new PacBell Park under construction in that city. About 25% of the funding was in the form of a syndicated loan.
PacBell Park will be the first privately financed sports facility since Dodger Stadium was completed in Los Angeles in 1962.
Municipal bonds continue to be the main means of financing stadiums and arenas. Four such deals totaled $88 million in 1988; last year there were 39 deals, worth $1.85 billion, said Securities Data.
Lenders trace the construction boom to the 1992 opening of Oriole Park at Camden Yards in Baltimore.
It combined an early-1900s architectural charm and intimacy-a throwback to such as Ebbets Field in Brooklyn and Wrigley Field in Chicago-with amenities such as corporate skyboxes and gourmet food.
Camden Yards also became a focus of attention in its own right, at least as much an attraction as the games scheduled on its field, and it contributed to the revival of downtown Baltimore.
"It all goes back to Baltimore," said Patrick McAuliffe, who heads Fleet's sports-lending division. "Everyone wants to emulate what was done there."
Now it seems stadium and arena projects are cropping up in every city. New football stadiums now stand in St. Louis, Charlotte, and Washington, and baseball parks, in St. Petersburg, Fla.; Phoenix; Cleveland; Chicago; and Denver.
Minnesotans are wrangling over whether to build a new ballpark for the Minnesota Twins, and citizens of North Carolina are debating how to finance a stadium to lure away the Twins. Seattle, Milwaukee, and San Francisco are building new parks.
Jim Nash, a managing director at NationsBank's sports financing group, said the amenities in the new parks supply revenue to owners to help pay skyrocketing player salaries.
"The old parks were publicly financed, bare-boned, and cavernous," Mr. Nash said. "The new ballparks take into account demographic elements that can be catered to."
Through its sports financing group, NationsBank and Mr. Nash syndicated a loan to build the AirCanada Center in Toronto, and they led a $175 million loan for Speedway Motorsports Inc., which builds and owns racetracks.
"Sports financing has grown tremendously," Mr. Nash said. "Public money just isn't the trend currently."
Mr. Nash said asset-backed securities, high-yield bonds, and private- debt placements are finding their way into the market with more frequency. But favorable interest rates and the rising value of sports franchises are making the syndicated loan the most popular borrowing vehicle.
"If an owner is confident of income, a short, two-year loan followed by the five-, seven-, or 10-year term loan is very attractive," Mr. Nash said. "Right now things are very financeable."