www.fitchratings.com July 19, 2012
Global Infrastructure & Project Finance
Sports / U.S.A.
2012 Midyear Outlook: Sports
Special ReportRating Outlook
Labor Peace Moving Forward:
Successful new collective bargaining agreements (CBAs) inthe National Football League (NFL), Major League Baseball (MLB), and National BasketballAssociation (NBA) guarantee games through the medium term. The National Hockey League’s(NHL) CBA expires at the end of this season and, as with any labor negotiations, there areinherent risks related to economic changes that could lead to work stoppages.
Stable Game Day Attendance:
Game day attendance through the end of the NBA seasonand start of the MLB season is tracking very favorably with expectations, despite continuedweak and uncertain economic conditions in the U.S. Fitch Ratings does not anticipate adramatic drop in attendance through the summer or heading into the 2012 NFL season.However, certain teams will be affected by on-field performance and local economic conditions.
National Television Contracts Remain Key:
The NFL and NBA currently have large long-term national television broadcast and cable contracts that provide significant collateral toleague-level borrowing programs and a solid amount of franchise revenues. MLB’s nationaltelevision contracts expire in 2013. The NHL currently maintains less lucrative nationaltelevision contracts in the U.S. and Canada that range in duration and value, but provide somerevenues and stability to its franchises.
Local Media Contracts Show Growth:
Recent favorable new local media contracts in theMLB and the NBA continue to solidify the underlying demand for sports-related television andother media content.
Mixed Revenue Results
: Renewal rates for key collateral pledged to bondholders have beenmixed depending on local economic conditions, leagues, and team performance. Premiumseating including luxury suites and premium seats have faced the greatest pricing pressure,while advertising and sponsorship agreements have generally been stable to positivedepending on league and market.
Focus on Fan Experience:
As television technology continues to improve and providesuperior graphics, maintaining and/or improving the stadium or arena experience going forwardwill be key. New capital and enhancements to cellular networks to allow fans to multitaskacross media during games is likely to partially offset the risk of fans’ staying home for thegame. New scoreboards that also allow for instant replays and highlights of other games couldenhance the experience. Nevertheless, either option involves sizeable costs that will need tobe carefully assessed.
What Could Change the Outlook
Significant Reductions in Game-Day Attendance:
Lower attendance driven by economicfactors, competition, or fan interest may cause some ratings to experience downward pressure.
Changes in U.S. Economic Conditions:
To the extent continued economic uncertaintypressures individual and corporate discretionary spending, ticket sales, premium seatingproducts, game-day revenues, and sponsorships and advertising renewals may face pricingpressure and affect financial flexibility.
2012 Outlook: Professional U.S.Sports, Dec. 16, 2011
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Sports Rating OutlookDistribution