Letter to Editor New York Times. 2015

Letter to Editor
New York Times

December 10, 2015
I thought it might be helpful to put the $1 million annual cost to rent “Eagles” stadium in perspective (assuming this is a long term lease with locked in cost). Debt service on a 30 year $100 million bond issue at today’s low rates and assuming a favorable bond rating could exceed $5 million annually. And this cost does not include maintenance, overhead etc. etc. (In the best of worlds net revenues from concessions etc. could cover these costs). The elephant in the room is whether revenue from seats, boxes, advertising etc. can cover the cost of a $100 million bond issue. Obviously, it is not so much an issue when it comes to covering the rent. The history of other college stadiums being built on the back of bond issues has not been particularly good (the last time I looked. Of course I have been out of the bond issuance business for while). The only winners in those instances were the bond underwriters, consultants, construction contractors etc. ie. those who get paid upfront and are not dependent on annual net stadium revenue. History does not necessarily repeat itself. But many questions should be answered before this decision is made.- After all- if the bonds cannot be paid back in a timely manner, the impact on the university’s credit rating and cost of borrowing could be catastrophic for future generations.

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