Wednesday, December 02, 2009

Ratings agency Moody's, asked why it assumes 225 events a year at the AY arena, won't discuss it

Given that a Moody's analyst told the Bond Buyer that its just-above-junk rating for $500 million in Barclays Center PILOT bonds depended in part on 225 events a year, I thought it was worth following up.

Noting that the arena sponsors most recently predicted 200 events a year (an 11% difference), I asked if Moody's was confident of the stated total of 225 events and, if there were 200 events, how might that change the rating.

(More precisely, the sponsors predicted "over 200," but had previously, with much more confidence, predicted larger numbers. And, as we've known for years, the original projection of 225 events a year depended on the closing of the Meadowlands Arena (now the Izod Center) and no construction of an arena in Newark.)

Moody's spokesman John Cline responded, "I'm going to have to direct you back to the release. That is our comment."

The ratings agency release said nothing about the number of events; that was elicited in an interview.

My take: Moody's made a mistake.

Were there only 200 events a year, that doesn't mean projected revenue would go down 11%, given that naming rights and sponsorships are separate from ticket sales. But revenue would go down somewhat, which adds to the risk of an already risky deal.

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