On financial field, Sun Life Stadium surges ahead

Rendering of proposed changes to Sun Life Stadium, showing partial roof covering.
Rendering of proposed changes to Sun Life Stadium, showing partial roof covering.

Despite the Miami Dolphins’ half-decade playoff drought, Sun Life Stadium’s three biggest revenue streams — premium seating, non-NFL events and sponsorships — all grew in the last fiscal year.

That’s according to Fitch Ratings, which on Thursday made public financial information that pro sports franchises usually keep private (Fitch and other ratings firms regularly review the financial health of entities offering debt on the public markets, which includes the Dolphins). The agency affirmed the stadium’s BBB debt rating, suggesting that the expectations of default risk are currently low.

The stadium, which along with the Dolphins is owned by Stephen Ross, is currently carrying roughly $210 million in debt — a number expected to grow by $100 million with the upcoming renovations, according to Fitch.

The two-year facelift is expected to cost more than $400 million. Of that, $350 million is to be paid for or borrowed by Ross. The Dolphins have also applied for $50 million in state funding. The project is eligible for $100 million in loans from the NFL.

Ross is expected to make a significant contribution to the project from his private wealth, estimated by Forbes magazine to be in excess of $6 billion.

“Fitch views [Ross’] equity contribution to the project as evidence of a strong commitment to the franchise, the Dolphins’ brand and the upkeep of the fan experience,” Fitch wrote.

The NFL has preliminarily signed off on the financing package, which not only includes new debt but also re-marketing of the existing 1985, 2006 and 2007 bonds.

Fitch was bullish on the stadium’s debt situation because its fundamentals are trending in the right direction.

Most encouraging for the organization: operating revenues increased by 8.7 percent in the 2014 fiscal year, which ended in March.

Fitch found that premium seating revenue grew 11.9 percent, as more club seats and suites were sold on a one-year or single-game basis. Revenue from mega concerts and other events was up by 12.5 percent.

South Florida Stadium, LLC, as the company is formally known, did experience a 28.1-percent spike in operating expenses in the last fiscal year, but that was a result of “one-time expenses related to the pursuit of public funding for stadium improvements.” They are expected to fall back to normal levels going forward.

Fitch wrote that the debt rating affirmation “reflects Sun Life Stadium’s status as a premier venue in South Florida and host to the National Football League’s Miami Dolphins, the core anchor tenant at the facility since 1987. It also reflects the strong commitment to the franchise and the stadium from its owners.”

The report supports anecdotal evidence that suggests the team’s financial health is improving. The Dolphins’ average paid home attendance this year is 70,722, 12th-best in the NFL. That’s up 10 percent over 2013 and a 23-percent increase over 2012, when the attendance averaged just 57,379. The biggest driver of growth has been an increase in group sales.

The renovation project, which will begin in earnest after the season ends, includes a weather canopy and upgrades to suites, premium seating and entertainment space, along with a redesign of the main seating bowl.

Additionally, high-definition scoreboards will be placed in each corner; each screen will have a “founding partner” that will generate additional advertisement revenue. The Dolphins also are adding a permanent stage to the parking lot for smaller-scale concerts.

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