Surety bonds (not Barry Bonds) were the recent heroes for the Pittsburgh Pirates.
PNC Park, home to the five-time MLB World Series champion Pittsburgh Pirates, was due for a technology renovation — specifically, an upgrade to its video production capabilities. The project included new high-definition cameras, switchers and wiring, a $4.3 million project that would enhance the use of the stadium’s massive, relatively new scoreboard.
The team bid out the job and selected the best fit, Texolve Digital, a niche specialist in the design/build of video production systems. There was one catch: Texolve didn’t fit the profile for a standard contract surety bond. That’s where Old Republic Surety was able to deliver.
Off-Site Construction
Most contract bonds are written for construction companies that make buildings, roads and bridges. But Texolve is a boutique video tech firm, one of a couple dozen in the country and even fewer in Pennsylvania. It designs video production systems and builds and tests them at its own facility. Usually, the only part done on the project site is the installation, according to Texolve’s president, Mike Gianutsos.
Of course, installation is no small matter. Once the 2022 baseball season ended, Texolve took apart the control room at PNC Park, pulling out all the old equipment and wires and installing the new, sophisticated elements. By March 2023, the job was complete.
But before all that work could begin, a contract bond was needed, and Texolve’s model presented interesting challenges for underwriting the bond.
Large construction or installation projects put the owner of the property at financial risk due to the possible income loss and devaluation if a contractor substantially delays completion or can’t complete its work. A surety company is needed to financially back the contractor, in essence providing a monetary guarantee that the contractor will finish the job and adhere to an agreed-upon schedule. That guarantee comes in the form of a bond (or a set of bonds) provided by the surety and payable to the project owner if the contractor fails to perform.
Sureties commonly deal with construction companies and have a fairly standard methodology for evaluating their eligibility for a bond. But for a small tech company doing an installation? That was something new.
With a conventional surety contractor, you’re looking at three or four years of construction-oriented financial statements, work-in-progress reports and job schedules to see if the profits have held up.
The kind of job-costing for such contractors, such as a percentage-of-completion basis, was not going to work for the Texolve bond. This case required looking at Texolve’s expertise, longevity in the business, references from prior customers and previous job performance. Strong financials just weren’t enough.
The great news for Texolve was that, beyond its solid financial qualifications, their clients absolutely loved them. Additionally, Texolve had a long history of success at PNC Park. The firm was a known entity, having provided tech support for every home game since 2001, when the park opened.
Star Performance by the Team
Texolve hadn’t had experience with bonding before, and the nine-person firm wasn’t really staffed to handle bond procurement. That could have been a daunting — and potentially problematic — situation. With the help of surety bond producer Rich Taylor of ACS Surety Bonds in Pittsburgh, who was the intermediary connecting Texolve Digital with Old Republic Surety, the experience was “stellar,” according to Gianutsos.
“Not every surety would be willing to work with a Texolve Digital,” said Taylor, “but Old Republic Surety stepped up and showed us they can do more than just construction. ... It’s impressive.”
Being a relative unknown, as Gianutsos said, “It means a lot” to have a surety step up and provide the guarantee of a bond. By demonstrating strong financials, a great history of work, stability and longevity in its niche, and endorsements from clients, Texolve gave Old Republic Surety what it needed to do just that.
The story doesn’t end there. Having dipped its toes into the bond market on the PNC Park contract, Texolve dove into a similar contract at the PPG Paints Arena, home to the NHL’s Pittsburgh Penguins. And of course, Gianutsos said, Texolve turned to Old Republic Surety once again.
