STAPLES Center's Groundbreaking Finance Package Is Largest-Ever For A Sports Arena
Apr 28, 1999New York, New York - April 28, 1999
Bear Stearns announced today that it has sold a $315 million asset-backed securitization financing for STAPLES Center in Los Angeles. The transaction is the largest-ever financing for a professional sports arena and marks the second time that the asset-backed market has been tapped for building a major sports facility in the United States. The 20,000 seat STAPLES Center is scheduled for completion this fall and will be the first arena serving as home to three major league teams - the Los Angeles Lakers and Los Angeles Clippers NBA basketball franchises and the Los Angeles Kings NHL hockey franchise. STAPLES Center has also been selected to host the 2000 Democratic National Convention and 2002 U.S. Figure Skating Championships.
"We are extremely pleased with the terms of the financing," said Tim Leiweke, President of STAPLES Center. "The interest rate is lower and the final maturity longer than those of any alternative structure we were shown and this method permits greater financial flexibility in the future than a conventional financing. We were especially pleased with the performance of our entire financing team including Bear Stearns, Morgan Stanley and NationsBank in completing this successful transaction."
The taxable notes, sold under Rule 144-A for L. A. Arena Funding, LLC, bear an interest rate of 7.653%, are non-recourse debt and have a final maturity of 27 years with an expected average life of 14.5 years. The financing received ratings of A2 from Moody's Investors Service - the first such rating by Moody's for a sports facility securitization -- and A from Fitch IBCA, Inc. In this asset-backed securitization, the sports facility owner pledged the rights to specific revenues, including the right to renewals of the underlying contracts, to secure the notes.
The future revenue streams used for the securitization come from contractually obligated fees from the arena's naming rights, a portion of the luxury suite and premier seat licenses, the concession leases, the ten Founding Partner corporate sponsorships and an exclusive ticket sales agreement with Ticketmaster-California Inc. Because the securitization structure dedicates only a portion of the arena's revenue streams, it creates significant financing flexibility, leaving other income sources at the company's disposal.
STAPLES Center Financing Package.
"Asset-backed securitization provides a less costly and more flexible way to fund sports facilities compared to conventional financing techniques," said John Gillespie, a Bear Stearns managing director who heads the firm's sports financing group. "The higher credit and broader distribution allowed in the ABS market provide key advantages compared to more expensive and shorter duration project finance loans or high yield bonds that have been used in the past."
The securities being offered in the private placement have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy such securities.
STAPLES Center will be the home of the Los Angeles Lakers, Los Angeles Kings, Los Angeles Clippers, an Arena Football League team, the 2000 Democratic National Convention, the 2002 U.S. Figure Skating Championships, nationally prominent entertainment spectaculars, concerts and family shows beginning when the arena opens this fall.
Michael Roth
Director of Communications
(213) 742-7155
Vanessa Kromer
Public Relations Manager
(213) 742-7156