How Goldman Sachs Can Help the Revs
- Updated: August 9, 2015
Photo credit: Jeff Bernstein
Last week, Boston.com reported that the Revolution had hired Goldman Sachs to lead the financing of a new stadium in Boston and that the banking giant had made a presentation to the city of Boston on the team’s behalf.
When it comes to the Revolution talking about a new stadium, I am as skeptical as they get. However, after hearing that Goldman has been hired I am no longer skeptical. This is a very serious move by Kraft Sports Group, which has long been accused of dragging their feet when it comes to building a stadium in Boston.
Investment Banks such as Goldman are often hired by companies to help them recapitalize themselves. Companies recapitalize for several different reasons (e.g. they are acquiring a business, they have ambitious expansion plans, etc.).
A company will hire a bank like Goldman to come in and advise them on their different options. There are different capital structures that can be employed such as issuing new equity, doing a public bond offering, offering a combination of senior and junior debt, etc. Let’s just say there a lot of options out there. Once a capital structure is finalized, it’s Goldman’s job to find investors that are interested in putting up the capital.
For example, the Revs could decide that they want to issue bonds to pay for a new stadium. It would be Goldman’s job to price those bonds and find buyers of those bonds in order to complete the financing.
Hiring an Investment Bank like Goldman is not cheap. The fact that the Revs are paying for the services of Goldman is proof that they are serious about getting something done. If they weren’t serious they wouldn’t hire them.
Goldman also brings to the table their experience with other stadium projects. Investment Banks have dedicated teams for various industry verticals that know their industries like the back of their hand. They know the political environment these companies operate in, how these industries operate, and pretty much anything anyone could ever know about an industry.
A team like the one Goldman has – which is headed by Greg Carey, who actually helped the Krafts attain financing for Gillette Stadium in 2000 before he joined Goldman – can be very valuable for any professional sports club. They can advise the organization on what has worked, and what hasn’t worked for other teams during the negotiating process.
It’s certainly very exciting to hear this news, and I am very hopeful that we will be hearing some more good news sooner rather than later. It certainly looks like we’re going to be getting that stadium that we’ve been waiting for.
Editor’s note: Andrew Carreiro is a senior CPA in Boston.
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