New Deal Puts RI on the Hook for Pawtucket Minor League Soccer Stadium Bonds
GoLocalProv News Team
New Deal Puts RI on the Hook for Pawtucket Minor League Soccer Stadium Bonds
The rating report unveils that there is a major change in the structure of the bonds versus the bonds that were issued less than two years ago.
Now, the State of Rhode Island stands behind the new bonds. De facto, Rhode Island is now on the hook to finance a private entity — call it 38 Studios with a kick.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST38 Studios was a privately owned video gaming company that was launched by retired baseball player Curt Schilling. Rhode Island poured about $75 million into the company, and it went into bankruptcy in less than two years.
Rhode Island spent years in litigation and recovered, after legal fees, $49 million.
The stadium is privately owned by California-based Brett Johnson and a group of investors. They control the stadium, the team, and the operations.
Many of the promises Johnson has made over the course of the project have proven false, including the project's cost, timeline, revenue it would generate, concerts, women’s soccer, and viability as a World Cup training facility.
The team has refused to disclose its financial performance.
Last Thursday, GoLocalProv was the first to unveil that a new bond deal had emerged.
The new bond documents issued by the Pawtucket Redevelopment Agency to refinance the Pawtucket soccer stadium are more than $6 million higher than the bond package in 2024. The offering document is 384 pages.
But what has not been disclosed is not only the new bond package for a higher amount, but the S&P rating report confirms that the State of Rhode Island now stands behind the new bond package.
The bonds two years ago were unrated due to the risk, and the state and Governor McKee’s administration had refused to pledge a full moral obligation to backstop the bonds. The structure did require the state to make bond payments totaling more than $140 million over the life of the bonds.
Now, Rhode Island’s commitment has secured a bond rating by S&P of a AA-.
“We rate the series 2025 state appropriation revenue refunding bonds at 'AA-', one notch lower than Rhode Island's general creditworthiness, as reflected in our ‘AA’ issuer credit rating (ICR), to account for the appropriation risk associated with the payments due under the agreement,” S&P writes in the bond rating.
“We view Rhode Island's involvement as obligor as moderate given the state’s commitment to annually appropriate funds by the Rhode Island general assembly from any legally available funds of the state, although there is no clear linkage between the Tidewater Landing Phase 1A project and the basic function of the state,” states the S&P.
“Last, we view political and administrative support as strong given the state's demonstrated commitment to repaying similar appropriation-backed obligations,” writes S&P.
“The series 2025 bonds are special obligations of the agency payable solely from and secured solely by the series 2025 trust estate. Pledged revenues consist of Tidewater Landing Phase 1A Project designated baseline taxes, collected and appropriated by the state for the Phase 1A Project annually, and other monies, if any, actually appropriated and transferred to the trustee for the series 2025 bonds. Although pledged revenues appropriated for debt service are expected to consist of baseline taxes, other monies can be appropriated from any legally available source of the state of Rhode Island," S&P continues.
And what is the security — the obligation of the Rhode Island taxpayers — according to S&P?
It cites, “Rhode Island, the Pawtucket Redevelopment Agency, and the city of Pawtucket entered into a state Economic Activity Taxes (EATs) agreement related to the Phase 1A Project that requires the governor to include an annual appropriation within the state budget for the payment of debt service for fiscal year 2027 and thereafter for the bonds once the Phase 1A Project has been placed in service. The placed-in-service certificate was executed on Aug. 18, 2025.”
The one benefit for Rhode Island taxpayers is that the new financing scheme may secure a lower interest rate and reduce the annual appropriations the McKee administration committed to for the initial bonds.
The Rhode Island Commerce Corporation and the Pawtucket Redevelopment Agency have refused to comment on the new financing scheme.
The initial bond package issued in February of 2024 was for $54,285,000
The new bond refinancing package is for $60,220,000.
Reality - And Bottom Line
Rhode Island, according to S&P, is now firmly behind financing for a stadium that it neither owns nor can it control the facility's operation.