Miami Dolphins

Hard Bank Stadium: Revenues spike as Dolphins maximize renovated facility

Hard Rock Stadium has been sold out every week this Dolphins season, and is expected to be the same Sunday.
Hard Rock Stadium has been sold out every week this Dolphins season, and is expected to be the same Sunday. dsantiago@miamiherald.com

Business is good at Stephen Ross’ Hard Rock Stadium.

How good?

The building’s total revenue — driven mostly by Dolphins games, soccer matches, mega concerts and rent from the University of Miami — was up 39.7 percent in the fiscal year that ended on March 31 from the 12 months that preceded it.

That’s according to Fitch Ratings, who for the third year affirmed a BBB rating to the nearly $190 million remaining still owed by Ross, who used those funds to help pay for his half billion dollar stadium renovation. The Miami-Dade County Industrial Development Authority issued taxable and tax-exempt bonds, and South Florida Stadium, LLC, or Hard Rock Stadium, is the obligor for all debt service payments.

The stadium’s BBB rating is not perfect (the scale goes up to AAA), but reflects Fitch’s belief that Ross and Hard Rock are “a relatively low to moderate credit risk.”

The credit outlook on all bonds is stable.

Here are a few reasons:

”Hard Rock 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, and also the strong ownership commitment to the franchise and the stadium.”

”The NFL’s strong underlying league economics are supported by the NFL’s structure, which promotes financial stability and competitive balance through a high percentage of revenue sharing and supplemental revenue sharing.”

”The Miami Dolphins maintain a stable fan and corporate base and have played in Miami since 1966. Recent economic uncertainty and team performance have caused attendance and premium seating renewals to be uneven, though trending favorably in recent seasons.”

(The Dolphins would add another strength: The quality of their management team, led by CEO Tom Garfinkel, who has delivered on every expectation made of him upon his hiring five years ago.)

Fitch rightly considers Hard Rock “the most prominent outdoor venue” in South Florida, and explains how Ross’ investment into the building over the past few years has opened up new streams of revenue.

That includes last July’s El Clasico, the friendly between FC Barcelona and Real Madrid that was the highest-grossing soccer match ever played on American soil.

Hard Rock also secured Super Bowl 54 because of the upgrades, will be the permanent home of the Miami Open tennis tournament beginning in 2019 and will host college football’s national championship game in 2021. And there’s an overwhelming chance at least one World Cup match will be held at Hard Rock in 2026.

Furthermore, Hard Rock has become an elite concert venue, hosting huge draws such as Taylor Swift and Beyonce and Jay-Z in the past few months alone.

All that new money wasn’t pure profit. Hard Rock’s total expenditures grew by 31 percent in 2017-2018, Fitch added.

Dragging down the rating? The stadium’s “100 percent unhedged variable rate capital structure and elevated leverage when compared with other standalone stadium facilities.”

(Granted, Ross’ net worth is north of $7 billion, and he could simply write a check to settle the debt if the stadium’s revenues dropped significantly.)

Going forward, Hard Rock Stadium is anticipating 2.5 percent annual increases in stadium-related revenues for 10 years and 2 percent thereafter. Expenses are projected to grow 3 percent annually.

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