NFL Shows Financial Muscle With $3.2 Billion Of New, Highly-Rated Debt

The pandemic—along with the possibility that having games this season with no fans could trim 30% to 40% of the league’s $17 billion in revenue—is not impacting the National Football League’s ability to borrow big chunks of money.

This afternoon Fitch Ratings announced it was giving credit ratings of ‘A+’ and ‘A’ to $3.2 billion of new NFL debt.

The breakdown consists of $350 million of debt for NFL Ventures, L.P that is rated ‘A+’ that will part of the league’s G-4 stadium finance program. This debt, used for building new stadiums or renovating existing ones, is repaid through the visiting team’s share of club seat revenue. Football Trust is borrowing $1.7 billion of senior secured notes that Fitch has rated at ‘A.’ And Football Funding II LLC has secured a $1.0 billion senior secured term loan that is also rated ‘A’.

The $3.2 billion of debt was assigned a ‘stable outlook” by Fitch, mostly based on the league’s media contracts with broadcasters Comcast
CMCSA
(NBC), Walt Disney (ABC and ESPN), Viacom
VIAB
(CBS
VIAC
) and News Corp. (Fox). All told, the average annual value of the NFL’s league-wide (equally shared) media deals, including AT&T’s Sunday Ticket and smaller ones like its own NFL Network, pay out an average of $7.5 billion a year over the life of the deals.

Moreover, the NFL is the most-watched league in the U.S. As a result, its next round of media deals, which it is currently negotiating, are likely to pay out an average in the neighborhood of $15 billion annually beginning in 2023.

According to Fitch “The ‘A+’ and ‘A’ ratings reflect the NFL’s position as the most popular professional sports league in the U.S.; its strong and highly regarded economic model, which includes multiyear television contracts and other significant revenue sharing among member clubs; a proven track record of conservative financial policies; and a new collective bargaining agreement (CBA) with its players union that includes a ‘hard’ salary cap.”

This season, NFL teams will be allowed to sell advertising and sponsorships on seat covers to potentially offset against lower gate and other stadium revenues resulting from stadiums having significantly reduced fans or no fans for the upcoming season. According to some team executives I have spoken with, this could equate to about one-third of normal stadium advertising revenue.

This is a touchdown for the NFL because it shows that banks are willing to lend to the league even during a pandemic, and because the NFL can typically borrow money at a lower rate than its individual teams.

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