Rose Bowl Gets Financial Lifeline as Pasadena Approves $130 Million Bond Refinancing

In a joint action Monday night, the Pasadena City Council and Pasadena Public Financing Authority unanimously approved a $130 million bond refinancing plan that will restructure the Rose Bowl’s debt payments through 2048, providing critical financial stability for the historic stadium.

The refinancing eliminates the stadium’s exposure to federal subsidy cuts that have already cost the facility more than $2 million through sequestration and establishes consistent annual debt payments of $13.7 million, replacing an escalating payment structure that required approximately $400,000 in additional funding each year.

The complex refinancing targets $106.6 million in outstanding Build America Bonds issued in 2010 for major renovations that modernized the century-old stadium with wider tunnels, expanded concourses, improved public safety features, new premium seating areas, and updated broadcast facilities. Those bonds carried significant risk: their interest rates could jump from 4.78% to 7.13% if federal subsidies were reduced or eliminated, potentially adding $2.5 million in annual costs.

The timing of the refinancing capitalizes on current market conditions, particularly the favorable relationship between tax-exempt rates and treasury yields. The new bonds will be issued at an estimated true interest cost of 3.92%, though the refinancing requires a $19,990,613 redemption premium to call the existing bonds.

Under the new structure, the Rose Bowl Operating Company is projected to realize over $12 million in cumulative cash flow savings during the first 10 years and an estimated $40 million in savings through the first 19 years. However, extending the debt by five years will result in $28.8 million in additional total payments if the bonds aren’t refinanced in 2034 — a future refinancing that could potentially generate between $4.5 and $20.7 million in savings.

“We strongly support this. This is very necessary to introduce stability and to get out from under what is sort of a hostage situation,” said Nina Chomsky, speaking on behalf of the Linda Vista-Annandale Association.

A key component involves releasing $11.6 million from an existing reserve fund to pay down current bonds, with the City pledging $6.3 million from its investment portfolio to maintain required reserves — an arrangement saving approximately $270,000 annually in debt service payments. The restructuring creates $4.4 million in present value dis-savings.

The Rose Bowl’s operations typically net between $17.5 to $20.7 million in a typical year from six primary revenue sources: premium seating, advertising/sponsorships, ticket and parking surcharges, concessions, licensee events including soccer matches and concerts, and miscellaneous revenues from meetings and banquets. Future net revenues are projected to increase to between $24.3 and $27.2 million annually.

The refinancing, which received strong support from the Rose Bowl Operating Company Finance Committee on September 25, 2024, comes amid broader context of Build America Bonds nationally. The Internal Revenue Service estimates state and local governments issued over $181 billion in such bonds, with approximately $116 billion still outstanding as of March 2024. The current federal sequestration rate of 5.7% extends through September 30, 2030.

The financing team includes Orrick, Herrington and Sutcliffe as Bond Counsel, Norton Rose Fulbright US LLP as Disclosure Counsel, KNN Public Finance, LLC as Municipal Advisor, and Stifel, Nicolaus & Co. as underwriter. While the Rose Bowl’s revenues secure the bonds, the City of Pasadena’s General Fund ultimately backs them. Officials expect to close the transaction by mid to late November 2024.

The total financing package includes $107,058,848 in par amount, $10,433,727 in premium, and $11,646,347 from the reserve fund, totaling $129,138,922. These funds will cover the $128,320,462 escrow deposit, $550,813 in insurance costs, and $267,647 in underwriter’s discount.