Capital Markets

Yanks Beat Mets 4.51 to 4.57

In the 40-year bond game, the Bronx Bombers scored a better yield.
Stephen TaubAugust 17, 2006

The New York Yankees beat their cross-town rivals again. No, they did not just complete one of those inter-league series. And a possible Subway World Series is still at least two months away.

Rather, when both teams went to the capital markets this week to raise a combined $1.57 billion to help finance their respective new stadiums, the Yankees wound up with a lower yield than the Mets, according to Bloomberg.

Each of the two teams issued 40-year bonds with the same credit ratings, interest coupons, and insurance against default, the wire service pointed out. The only significant difference: The Yankees’ paper was priced to yield 4.51 percent while the Mets wound up with a yield of 4.57, noted to the report.

One major reason for the difference is that the Yankees and the team’s underwriters — led by Goldman Sachs Group — moved up the sale of the bonds by a day, to Wednesday, to take advantage of a rally in Treasuries, Bloomberg said. The difference in yield works out to about $142,000 a year in interest.

To bring a bit of perspective to the interest sum, Bloomberg points out that the total is less than the $154,320.99 that Yankees third-baseman Alex Rodriguez earns in a game. “As always, the sun shines on the Yankees,” Gregory Carey, Goldman’s lead banker on the sale, told Bloomberg. “We got two strong moves in the marketplace, and figured we’d take advantage of the wind at our back.”

There were nearly $3.5 billion of orders for the roughly $955 million of bonds sold by the Yankees, allowing the banks to lower yields on the debt by as much as 3 basis points, added Bloomberg.

For their part, the Mets attracted about $3.2 billion of orders for $613 million of bonds, enabling the banks to cut yields by 6 basis points. Citigroup Inc. was the lead underwriter in Mets deal.