Hold the Hype, Face the Facts
Posted by Buzz Beeler on 18th September 2017
Photo credit:  Under Armour/Baltimore Sun



Don’t celebrate project’s huge investment until you read this

All is not “golden” regarding the news of Sachs $233 million investment into UA’s Port Covington


The Baltimore Sun reported that Goldman Sachs will invest $233 million toward UA’s Port Covington project, which would make the investment banking firm co-owners in the $5.5 billion development.

For me, that raises some very interesting questions on several fronts. This column will examine some of those questions.

First, just what do we know about Goldman Sachs? You may be surprised at the firm’s history in the investment business. With that said, let’s pull back the curtain on a key component of the UA deal.

I know UA is focusing on the dollars and cents, but does this deal make sense for UA? Do the math, folks: a $233 million portion of the $5.5 million price tag gives Goldman Sachs 1/2 ownership at a 1.2% investment, according to the Sun article.

How that equals fair is something inquiring minds may want to know.

There are some interesting quotes in the Sun article that should be noted:

Sagamore has secured $660 million in public financing for the project — the largest of its kind in city history — and has begun work to transform the once-industrial peninsula. The developers had said they were working to attract an equity investor to accelerate plans.

With that in mind, let’s take a look at UA’s financial outlook, which may give bigger investors some pause:

Photo Credit: The Motley Fool | www.fool.com
Here’s another quote from the City Paper on the status of UA’s bond ratings:
The next day, Standard & Poor’s downgraded Under Armour’s credit rating to junk. Ouch.
Another interesting barometer may be found in the column the Post previously published regarding UA’s planed lease agreement with Trade Point Atlantic. That means, with the price tag for the development approaching the $6 billion mark, finding investors may be more difficult than UA had anticipated. Couple that with the largest tax credit in the history of Baltimore, and many people may be wondering if the shovel will ever go into the ground.
Baltimore is not considered to be a business-friendly community with its high tax rate, terrible crime, and rapidly declining infrastructures. One would think that these factors alone would cause a major investor concern.
UA has until November 1, 2017 to sign the lease with TPA for the supposedly brand-new logistics center located on the old steel mill property. This could be a clear indicator of a move forward on Port Covington, or it could signal more shadows being cast upon this ambitious project.Only time, and money, will tell. In this case, the amount of money for the project is mind-numbing. Just who else is willing to roll the dice and take the risk of backing the project?Ultimately, the news of Goldman Sachs’ investment is about 1.2% fact, which trumps the 98.8% hype.Just how many other investors will be willing to follow Kevin Plank’s dream remains to be seen.

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