(Bloomberg) -- The US Soccer Federation is set to borrow $200 million this week through a sale of municipal debt that will help the organization finance the construction of a new national training center and headquarters in the Atlanta area.
A municipal development agency for Fayette County outside Atlanta is set to issue the tax-exempt bonds on Aug. 1 on USSF’s behalf to fund the roughly $225 million project, which will draw on support from a package of state and local tax incentives and donations. The contributions include $50 million from Arthur Blank, a co-founder of Home Depot Inc. and owner of the National Football League’s Atlanta Falcons and Major League Soccer’s Atlanta United FC.
The venue in Fayette County will feature over a dozen soccer fields and 200,000 square feet of office space. US Soccer will shift there after more than three decades in Chicago. The debt will be secured by the deed on the training facility and a lien on gross revenue from the federation’s sponsorship and media contracts, ticket sales and game-day revenue. The bonds are rated BBB by Fitch Ratings, two steps above speculative grade.
The federation, the sole representative of US soccer in international competitions like the World Cup and the Olympics, is expected to generate $193 million in revenue in fiscal 2024, according to bond documents. Its rating is constrained in part because higher-graded leagues have more established fan bases and longer histories of corporate support than US Soccer, according to Fitch.
“Soccer is on an upward trajectory in the US,” but it’s still growing at the professional level there, unlike in Europe where it’s well-established, said James Pruskowski, chief investment officer at 16Rock Asset Management. “Today’s favorable market environment won’t hurt,” but investors will need to be wary of the risks, he said.
Construction broke ground in April and the plan is to open the facility before the 2026 Men’s World Cup, which the US, Canada and Mexico will host jointly.
This will be the federation’s first national training center to operate fully under its control and it will serve as the home of 27 men’s and women’s US soccer teams, spanning various age groups.
USSF has most recently been training at facilities owned by MLS’s Los Angeles Galaxy and Sporting Kansas City, while most of its roughly 1,400 staff have been based in Chicago. The vast majority of US Soccer staff will move to the new center, according to USSF.
The new facility will further cement metro Atlanta’s status as a national soccer hub.
Blank has helped facilitate the sport’s growth in the area. He brought MLS to the city when he paid a $70 million dollar expansion team fee for the rights to a new franchise in 2014. Mercedes-Benz Stadium in downtown Atlanta, which is operated by a company owned by Blank, will host matches for the 2026 World Cup.
The new facility will bear Blank’s name and a designated number of US Soccer games will be played at Mercedes-Benz Stadium over the next 15 years.
“The participation of Arthur Blank provides a good vote on confidence for the project, but my guess is that there is no assurance of additional support in the future if the numbers disappoint,” said Pat Luby, a municipal strategist at CreditSights.
Chick-Fil-A Chairman Dan Cathy and Atlanta-based Coca-Cola have also made financial commitments to the training facility.
In addition to the tax-exempt debt and donations, the county and state are providing about $7 million in incentives for the national training center project, according to bond documents. US Soccer will also be eligible for a 10-year property-tax abatement from the county.
©2024 Bloomberg L.P.