Office of the City Manager - March 25, 2014
City and Dash Negotiating New Lease for BB&T Ballpark; Chicago White Sox Part of Investment Group That Would Become Majority Owner of Dash
The city and the Winston-Salem Dash are in negotiations on a new 25-year lease on BB&T Ballpark that includes provisions to restructure the debt on the baseball ballpark to better protect the city’s investment.
As part of this new lease structure, the Chicago White Sox would be part of a new ownership group of the Dash that will invest more than $7 million, which will be used in part to pay down the existing debt on the ballpark.
If the agreement is approved by the City Council, the new investment group that includes the White Sox will become the majority owner of the Dash. Current management will continue to operate the team. The group’s investment in the Dash is contingent upon obtaining a revised long-term lease on the ballpark, which is owned by the city.
The Dash is a Single-A farm team for the White Sox. A group of local investors currently owns the team.
The new lease agreement and other steps being taken will provide long-term financing for the ballpark to replace a short-term $15 million construction loan the Dash secured in 2009 at the height of a difficult lending environment. That loan used the ballpark as collateral and matures this year. From the beginning, it was clear that this short-term loan would have to be restructured when lending conditions were more favorable. The current ownership group will pay down the existing debt to $13 million.
Under the proposed new lease, the city will refinance the remaining $13 million of the short-term construction loan. It, and the $18 million in loans that the city provided, will be repaid over 25 years with annual payments starting at approximately $1.8 million. This payment schedule will cover all of the city’s debt costs and has the potential to net the city an extra $4 million over the life of the 25-year lease. No taxpayer funds will be needed to subsidize the ballpark or the debt payments.
In addition, the Dash will provide a letter of credit to the city to guarantee the lease payments. The existing private investors in the ballpark will leave their funds in the project and will not receive any money from the ownership change other than to pay down operating debt.
The proposed agreement will be reviewed by the City Council Finance Committee at a special meeting on March 31, City Manager Lee Garrity said.
“Our primary goal is to strengthen the city’s position and control with respect to its financial interest in the ballpark,” Garrity said. “Although the city would assume additional debt by paying off the short-term loan, it would not be assuming any additional financial liability because the loan was secured by the ballpark.
“This greatly simplifies the financial structure of the project, and the Dash will have the additional financial strength and stability with the new ownership group that includes the Chicago White Sox,” Garrity said.
Dash President Geoff Lassiter said, “This proposed investment is the result of the community’s incredible support for the Dash and the tremendous success of our team. The new arrangement also guarantees that Winston-Salem will have a Minor League Baseball team for the term of the lease, and it secures our team’s long-term player development contract with the White Sox. Thank you to the more than 1.2 million fans who have entered the gates at BB&T Ballpark and made this exciting announcement possible.”