Fitch Ratings has assigned an ‘A’ rating to the National Football League’s $106.1 million senior secured notes due 2024 (add-on) issued through Football Trust. The Rating Outlook is Stable.
The ‘A’ ratings reflect the NFL’s position as the most popular professional sports league in the U.S. The NFL has a strong and highly regarded economic model, which includes sizable multi-year television contracts, significant revenue sharing among member clubs, a proven track record of conservative financial policies, and its current collective bargaining agreement (CBA) with its players union which includes a ‘hard’ salary cap. Strong forecasted league-managed revenues, primarily national television contracts provide the league-wide borrowing program debt with solid projected debt service coverage ratios and low leverage.
The ‘A’ rating further reflects the mechanics of the lock-box account for the purposes of collecting national television revenues, which are the primary source of revenues that service the debt, prior to any distributions to individual franchises. Additionally, since each club receives an equal share of revenues, no franchise’s share of the national television revenues is affected by its on-field performance. The rating reflects the team-specific nature of the obligations and the lack of a corporate (joint and several) obligation of the NFL; however, Fitch notes the NFL’s oversight and policy of supporting distressed franchises as a key mitigating factor.
However, the first “negative” factor influencing the rating in the press release was the following:
“Higher Concussion Related Costs: Increased direct costs to the NFL from players electing to opt-out of the concussion settlement.”