Sports Finance Deal: New York City FC Stadium
Chop shops to hot shots After a long hunt for a home, New York City FC will be the anchor tenant for a big regeneration project at Willets Point in Queens with a state-of-the-art stadium. The smoothly arranged deal that funded the construction of a home for the club is IFR’s inaugural Sports Finance Deal of the Year.
New York City Football Club’s new stadium has been a long time coming. Despite winning the US Major League Soccer championship in 2021, NYCFC hasn’t had much of a home. In the 11 years since the club was formed, the team has been passed around to play home games at Yankee Stadium in the Bronx, Citi Field in Queens and even in Harrison, New Jersey.
But in March 2027, a new 25,000-seater stadium is due to open in Queens, close to the home of the New York Mets and the USTA Billie Jean King National Tennis Center to create a new sports hub. NYCFC will be the anchor tenant for a major redevelopment of Willets Point, an industrial area once dubbed “The Valley of Ashes” by F Scott Fitzgerald and mostly known today as the home of "chop shops", a knacker's yard for cars.
Ground broke on the stadium in December. The construction cost has been estimated at US$780m, but with capitalised interest and other costs the final bill is expected to be more than US$900m. That’s a hefty price for a moderate capacity stadium that is getting significant tax breaks, but a reflection of the cost to build in New York City.
While MLS is growing and has big ambitions, the stadium marks a step change. It is the largest stadium project for an MLS team and the US$425m construction loan taken out to help finance it is the biggest ever MLS financing deal.
Perhaps the most remarkable aspect is that the stadium has even landed. Local politics and approval processes in New York can be challenging, and more than 20 other sites were considered before Willets Point was approved.
The 17-acre site is part of a US$3bn regeneration plan, which includes 2,500 affordable homes – New York’s largest affordable homes project in 40 years – a 250-room hotel, a public school for 650 pupils, and shops. NYCFC has a 49-year lease on the site of the stadium.
The stadium’s US$425m construction loan was arranged and led by JP Morgan. The bank will retain about half the loan, and the remainder was syndicated to HSBC, Citigroup and Bank of China. Law firms Paul Hastings and DLA Piper advised NYCFC.
It is a floating-rate delayed draw loan, with funds drawn as construction proceeds and the money is needed. It is a non-recourse loan, secured by the stadium and lasts five years to span construction and stabilisation of the asset. As revenues start coming in, the project pays debt servicing, and that has already started. Naming rights have been sold to Abu Dhabi's Etihad Airways – the stadium will be called Etihad Park for the next 20 years – and the sale of other sponsorship and premium seating has also started.
As revenues step up, the loan will be replaced with long-term financing in the bond market, probably in about three years.
“The stadium company has quality assets going into it, such as the naming rights, the sponsorship and long-term contracts, and then the team is separate from that in a different legal entity,” said Tim Self, head of public finance and infrastructure direct lending for JP Morgan.
“That gets the stadium asset to a more stable profile that will facilitate an investment-grade takeout on the debt.”
The rest of the finance for the stadium is coming from equity. About 80% of NYCFC is owned by City Football Group, which owns 13 football clubs around the world including Manchester City, winner of the English Premier League for the last four seasons.
CFG is majority owned by Abu Dhabi billionaire Sheikh Mansour bin Zayed Al Nahyan. Private equity firm Silver Lake owns 18% of CFG. The New York Yankees is also a long-term partner of NYCFC and owns 10% of the club, and billionaire Marcelo Claure has the remaining 10%. The investment by Claure, the former CEO of Sprint who previously invested in MLS rival Inter Miami, was sealed as the stadium plans were being finalised.
NYCFC has pledged not to move for several years (a perennial risk in the US sports, where new owners frequently up sticks for another city) although that would seem unlikely anyway given the appeal of being based in New York.
“New York is a very wealthy consumer market overall, but there’s a huge amount of competition for the dollars that people want to spend. You’ve got pretty much every sports team and form of entertainment available, so it’s a crowded field,” Self said.
MLS is clearly on the rise, and there’s hope that enthusiasm will build ahead of the US co-hosting the men’s FIFA World Cup in 2026. There is also talk Etihad Park could be home for a women’s football team and host concerts and bring other sports to “the world’s borough”.
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