When Stacy Sonnenberg started at Goldman Sachs in 2003, she was given pause by one client: the New York Yankees. As a former director of technical services at the New York City Department of Parks & Recreation – owner of Yankee Stadium – she had served as landlord of the legendary baseball club for three years. “I called the Yankees,” she recalls, “and said to them, ‘I was your landlord before. Would you be OK with me joining your banking team?'”
They accepted, and at age 32, Sonnenberg helped her old tenant finalize the financial arrangements for the Yankees’ new $2.3 billion stadium. The deal was the first of more than 30 new stadium deals that helped her cement her current title as global head of sports finance at Goldman Sachs. They include the 2010 opening of Met Life Stadium – home of the NFL franchises Giants and Jets – and the Tennessee Titans’ new stadium, scheduled to open in 2027.
Sonnenberg says she feels a personal connection to every stadium she’s helped build, but one stands out in her mind these days. This stadium – FC Barcelona’s Camp Nou – is not only the home of the legendary football club, but also a textbook example of how to leverage the capital available to teams in any sport almost anywhere in the world.
“We’re currently talking to NFL teams and Major League Baseball teams about this idea,” Sonnenberg says. “As they build new stadiums or upgrade their stadium, they can generate more revenue from the building, and as they generate more revenue from the building, they can afford to pay more for the players.”
FC Barcelona’s billion-dollar problem
FC Barcelona is one of the most famous sports franchises in the world and is valued at billions of dollars. Its former members include legendary players such as Lionel Messi and Diego Maradona. But in recent years, the football club has suffered from mismanagement.
The team is in financial trouble, with costs and debt service far exceeding revenue for years. In the midst of all this, the team has committed to a $1.6 billion remodel that will add 7,000 seats to the stadium and build a museum and new shopping center.
In theory, the larger stadium should mean more fans at each game and therefore more revenue, easing the club’s financial burden. But when the team wanted to implement the plan, there was a catch: FC Barcelona’s special ownership structure. Part of the team is owned by 150,000 dues-paying fans, known as socios, who refused to approve a traditional mortgage that entailed the risk of losing their team if it ran into financial difficulties.
And that’s where Sonneberg came in. After running hundreds of financial models, Goldman came across an obscure Spanish regulation that would allow the team to securitize what the bank calls “extraordinary revenues” in the form of future ticket, food and beverage sales. “We wanted to securitize contracts that would only come into effect when the stadium was completed,” Sonnenberg says. “And that’s never been done before.”
In practice, this means that FC Barcelona will do what cities like New York have long done when it comes to selling bonds backed by claims on future revenue. But instead of money from parking meters or bridge tolls, the football club’s creditors will have claims from the sale of plates of patatas bravas and other Catalan snacks found at Camp Nou. Most importantly, the agreement does not involve a mortgage, thus keeping the stadium safe from foreclosure.
To create the trust, FC Barcelona entered into a purchase and sale agreement with the Espai Barça Stadium Financing Trust (formerly known as Espai Barça, Fondo de Titulización), agreeing to sell securities representing some of its rights, titles and interests in future revenues. Twenty private placement companies, including a number of American insurance giants, purchased securities valued at €1.5 billion and will collect an average of more than $50 million per year for 23 years, paid out in five tranches.
Courtesy of Stacy Sonnenberg
The foundations for the new form of stadium financing date back to 2009, when the Union of European Football Associations (UEFA) introduced Financial Fair Play rules that tied teams’ spending to their revenues – a way to limit the influence of billionaires who want to win at all costs and whose spending could upset the competitive balance. Building new stadiums – and renovating old ones – has proven to be one of the most popular ways to grow in this new business paradigm.
It’s no coincidence that far-sighted insurance giants are among the investors backing the stadium financing fund. Such steady, slow-growth investments have long been the bastion of stodgy companies like Met Life and New York Life. But faster-moving private equity investors are increasingly looking for ways to hedge their bets with longer-term commitments, according to Sonnenberg.
She cites the recent acquisition of insurance newcomer Athene by private equity firm Apollo as an example of the strategy. And just in 2021, broader private equity investments in insurance companies reached an all-time high, according to S&P Global. Since their clients are the stadiums and not the private equity firms, their job is to keep interest rates low.
“If I do my job well,” she says, “it’s not an attractive investment unless they have a life insurance company through which they can invest. And we’re seeing more and more of that.”
From the swimming pool to the stadium
Sonnenberg grew up in the Chicago suburbs in the ’80s. Her brother and sister would race their bikes to the local pool. After playing until sunset, they would stop by the local candy store to buy something. She has never forgotten those memories. “I actually went into parks because I have a passion for our public pools,” she says.
After graduating from MIT with a degree in civil engineering, she was asked by the New York City Parks and Recreation Department to find a better way to finance repairs to the city’s swimming pools. Her solution, which drew on experience from specially designed contracts the Environmental Protection Agency used to quickly repair broken water pipes, earned her the respect she received for her largest contract yet.
That same year, she was assigned the Yankees, who had been playing in the old Yankees Stadium under a temporary permit since a renovation in the 1970s. A year later, she was finished. “I started working on the project in late 1995 and we got it in 1996,” she says. “After 23 years without a permit.”
Such a promising start in city government suggests that Sonnenberg may have followed the path of Robert Moses, another park developer who used his extraordinary ability to sway government bureaucracy to become the “power broker” described in Robert Caro’s 1974 biography.
Instead, the rising infrastructure star accepted an offer to study at Harvard Business School in 2001. On the first day of her internship in the Office of Public Sector and Infrastructure—where she still works—she met future Goldman Sachs CEO David Solomon. From him, she learned that her former employer, New York City Parks & Rec, was working with Goldman Sachs to finance the new Yankee Stadium.
“For me, things have come full circle,” she says, laughing. “Suddenly my career made sense.”
Today, Sonnenberg leads Goldman Sachs’ global sports finance team, which is housed in the Public Sector and Infrastructure office and chaired by Goldman veteran Greg Carey. She says stadium finance is “the heart and soul” of her work, and most recently she helped close a $750 million financing round for the new Titans stadium.
Since the successful experiment with FC Barcelona, Goldman Sachs has been looking for other jurisdictions with the appropriate securities infrastructure that can support the model. Last year it struck a deal with French football club Lyon that combines current and future revenues, and Goldman has begun offering the future revenue model across Europe and wherever securities regulations allow.
The introduction of FC Barcelona-style financing models also comes at a time when the $42 billion American sports industry has fully recovered from the pandemic-induced downturn and American family offices and private equity firms are vying for a piece of the pie. Both Goldman and Sonnenberg will be busy for the foreseeable future.
“These buildings become destinations and places where people come together to share experiences that can’t be recreated at home,” she says. “Stadiums are fundamental to our humanity, and there’s a reason we’ve been building them for thousands of years. We crave that shared experience.”
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