NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a rating of 'A' to Major League Baseball's (MLB) Club Trust Securitization consisting of:
--$65.35 million series 11 term notes (due 2020);
--$47.35 million series 12term notes (due 2023);
--$127.4 million series 13 term notes (due 2025).
--$22.75 million series 14 term notes (due 2020);
--$7 million series 15 term notes (due 2023);
--$7 million series 16 term notes (due 2025).
Additionally, Fitch affirms the 'A' rating on the MLB's outstanding approximately $801 million term notes (series 1 - 10) and the outstanding approximately $800 million syndicated revolving credit facility.
The Rating Outlook is Stable.
KEY RATING DRIVERS
Solid Underlying League Economics and Governance: Debt Service is supported by large contractual revenue streams from investment grade counterparties. MLB's five-year collective bargaining agreement (CBA) runs through 2016 and includes some additional strengthened core elements that promote financial stability and competitive balance. Major League Baseball continues to maintain a stable domestic fan attendance and viewership base and growing international fan base. The league has demonstrated willingness to step in and aid 'distressed' franchises. For example the league assisted the Texas Rangers and Los Angeles Dodgers during ownership issues.
Long History of Television Contracts: MLB entered into new eight-year television contracts with ESPN (Disney, rated 'A' with a Stable Outlook by Fitch), FOX Broadcasting Company (NewsCorp., rated 'BBB+' with a Stable Outlook) and Turner Broadcasting System (TBS) (Time Warner, Inc. rated 'BBB+' with a Stable Outlook) in 2012. The contracts extend through the 2021 season and represent a 100% step-up in rights fees (commencing in 2014) over the prior contract and will deliver $12.4 billion in combined revenue.
Solid Legal Covenants and Demonstrated Bankruptcy-Remote Structure: Structural provisions ensure timely debt service. The MLB Club Trust structure utilizes a bankruptcy-remote securitization of pledged revenues consisting of long-term national broadcast contracts in place through 2021. Noteholders benefit from the bankruptcy remote structure, which eliminates team related risks; however, they remain subject to all the fundamental operational risks of MLB.
Low Debt Per Club, Refinancing Risks: Fitch views the league's per club debt limit of $100 million under the borrowing programs as conservative; however, total allowable club debt is viewed as moderately-high. Debt service is supported by large contractual revenue streams from investment grade counterparties. The bullet maturities associated with the notes and bank renewals associated with the revolving facility expose clubs to potentially higher interest costs. Low facility related debt combined with television contracts through 2021 provide an important mitigant to financial market risks.
Positive Fan Support and Growth Initiatives: The league continues to positively promote the game domestically and internationally, demonstrated by the strong support and participation globally of the 2013 World Baseball Classic (WBC). Growth in key league level sponsorship and advertising contracts further support the strength for MLB related content. MLB Advanced Media (MLBAM) continues to grow and develop new content that provides additional diversity to overall league revenues.
--A significant decline in national television contract rights fees, due to the termination of the newly signed agreements, although unlikely, could negatively impact the financial profile and metrics of the borrowing programs;
--A material change in near-to-medium term leverage on the facility;
--A substantial change in individual and corporate spending on MLB related content.
The notes and revolving credit facility of the MLB Club Trust Securitization rank pari-passu and are secured by, among other things; rights to receive certain payments shared among MLB clubs, including, primarily, the aforementioned national broadcast revenues from national media contracts, and, to a lesser degree, revenues under licensing, and sponsorship and international television deals received by Major League Baseball Properties, Inc.
Proceeds from MLB's Club Trust Securitization series 11 - 16 senior secured term notes will provide 10 MLB clubs with additional funding for general corporate purposes as permitted under the MLB Club Trust Securitization.
For more information on Major League Baseball, please see 'Fitch Upgrades MLB Club Trust Securitization Sr. Secured Credit Facility and Term Notes to 'A', dated July 29, 2013.
The MLB Trust is a bankruptcy-remote Delaware statutory trust established and owned by the member Clubs of MLB that choose to participate in the MLB Club Trust Securitization. MLB currently has 30 teams in major metropolitan areas in the U.S. and Canada, of which 21 participate in the MLB Club Trust Securitization.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria & Related Research:
--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012);
--'Rating Criteria for U.S. Sports Facilities, Leagues and Teams' (Aug. 9, 2012).
Applicable Criteria and Related Research:
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for U.S. Sports Facilities, Leagues, and Teams