Question

2. The New York Yankees is one of the most successful sport franchises ever. However, though the corporation is privately held, the Yankees sought additional funding in municipal bonds to build their $800 million stadium. Would these bonds be considered part of their capital structure? Considering that every team needs a stadium and the Yankees are legendary for their success, is this project of extreme or merely average risk?

Answer 1

It can be seen that New York Yankees has sought additional funding in form of municipal Bond and the bonds will always be considered as a part of the overall capital structure because these bonds even though they are debt free in nature, but they will always be having a cost associated with them and there will be a cost of debt associated with these municipal bonds and they will be considered into the overall capital structure as a part of debt capital.

This is low average risky project because this has been funded with municipal bonds and municipal bonds are generally risk free in nature so they will be said to be have a very low risk attached to them due to backing by the Federal Government and New York Yankees are exposed to low risk Project