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Wall St. firm upbeat on Fenway financing

By Steve Bailey and Meg Vaillancourt, Globe Staff, 10/6/2000

ontradicting growing doubts about the Boston Red Sox' ability to fund a new ballpark, a big Wall Street investment firm says it is ''highly interested'' in financing the project.

Salomon Smith Barney, one of a number of investment firms and banks the team has been working with, has told the team that it believes a financing package is feasible if several problems can be solved, among them, controlling cost overruns on land-takings for the proposed ballpark site in the Fenway and finding a way to include tax-emempt bonds as part of a financing package.

In an interview last night, Salomon investment banker Thomas H. Green said he thought the team can obtain financing under the terms of the ballpark bill the Legislature passed in July. The bill requires the team to fund construction of the $350 million ballpark and cover cost overruns tied to land acquisition.

Green cited as a positive development for the Red Sox the recent lucrative naming-rights deal signed by the New England Patriots. Green said that deal indicates the Red Sox could also raise more than predicted from naming rights and this would help its efforts to obtain ballpark financing.

Green also said Salomon's analysts believe that the annual debt service payment on the $140 million the city will borrow to cover land acquisition and clean-up costs may not be as high as anticipated. A lower payment could leave more money available for the Red Sox to cover its financing costs.

Salomon's analysis is a good sign for the Red Sox, but it is hardly definitive. Salomon has not committed to the financing and a number of other firms have yet to be heard from. FleetBoston Financial Corp., the team's lead banker has declined to comment, but sources outside the bank say it is doubtful the team has the resources to privately finance construction of the ballpark.

Even if the Red Sox can raise the $350 million it needs, the financing may leave the team so stretched that it could yet decide to walk away from the deal, sources say.

Green said his company, a unit of Citigroup, the largest financial services firm in the country, has put in writing at least three financing options it believes would work. He declined to provide details of those options last night. But he said a number of issues need further ''definition'' before his firm could back any option, in particular what risk investors will bear for any cost overruns connected to the land-takings.

Using tax-emempt bonds to finance part of the deal would help lower borrowing costs, Green said, because they carry a lower interest rate. The team would need an official opinion from a tax specialist on whether such bonds could be utilized to finance the ballpark.

But Green said he believes the issues surrounding the team's financing effort are manageable.

''These risks - timing, costs, process - are common to all sports facility financing,'' Green said. ''They have been addressed successfully elsewhere. They can be successfully addressed in Boston.'

Citing concerns about escalating land costs, financial experts quietly began recommending the team shrink the size and scope of the project almost immediately after the bill passed.

The Red Sox have resisted some suggestions, such as building the ballfield level with the street rather than sinking it 22 feet but the team is now seen as more inclined to consider cutbacks rather than start the process again at another site.

Meanwhile, an effort to make several technical changes to the new Fenway Park bill passed by the Legislature in July turned into potential setback for the Boston Red Sox yesterday as state Representative Byron Rushing stopped consideration of the amendments until lawmakers convene again in January.

A key opponent of the team's plan to construct a $350-million ballpark in the Fenway, Rushing utilized a House rule that allows a single member to block action on any matter when the Legislature is not officially in session.

The South End Democract, whose district includes the Fenway neighborhood, acknowledged that he took the action hoping to stall the team's attempts to get private financing for its share of the project in hopes of encouraging the team to rebuild on its current site or elsewhere in the city.

''I think this will give the team's bankers reason to pause and reconsider whether this project really is a done deal up here at the State House,'' Rushing said. ''It gives everyone time to pause and reconsider.''

But city and state leaders yesterday dismissed Rushing's action as ''political posturing.'' Even if lawmakers cannot consider the amendments until the House formally reconvenes in January, city and state officials said the delay should not put the Red Sox financing at risk.

''The amendments sailed through the Senate because they are not controversial and in keeping with the overwhelming vote in favor of the new ballpark,'' said Senate Ways and Means chairman Mark Montigny, Democrat of New Bedford. ''I'm unpleasantly surprised by Byron's actions because the opponents had their day and lost. But I don't think this will hold the Red Sox bankers up.''

''It's a political maneuver, but it won't stop the project because 99 percent of the bill still stands,'' James Rooney, Boston Mayor Thomas M. Menino's chief of staff said. ''And whether these changes are made now or in January is not going to make or break the Red Sox ability to obtain financing.''

Among the amendments held up because of Rushing's maneuver was one that would have corrected language giving the city as much as $1.5 million a year in meals taxes from the new ballpark.

The meals tax is one of several revenue streams designed to meet Menino's demand for a 100 percent payback on the city's $140 million investment in acquiring and cleaning up the proposed new Fenway site. Without the amendment, Rushing argued, the city may not be able to collect the $1.5 million a year.

Rushing said he would relent if lawmakers agreed to give the Red Sox a ''drop dead'' date on their financing quest. If the team failed to line up financing by Dec. 21, Rushing argued, the ballpark bill that passed should be declared void. He offered a similar amendment during last summer's debate on the ballpark bill, but failed to win enough support for the measure.

Last night, the Red Sox expressed confidence that Rushing's tactics would not block the new ballpark. ''The bill that passed last July was approved by more than a two-thirds margin, which clearly demostrates the will of the legislature,'' said team spokeswoman Kathryn St. John. ''We believe that any necessary technical adjustments will also be supported.''

This story ran on page A01 of the Boston Globe on 10/6/2000.
© Copyright 2000 Globe Newspaper Company.

 

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