Fitch Rates National Football League's $1.5B Secured Loan 'A'; Outlook Stable.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned an 'A' rating to the National Football League's (NFL NFL abbr. National Football League NFL (US) n abbr (= National Football League) → Fußball-Nationalliga , or the league) $1.5 billion senior secured term loan. The league's $1.5 billion 364-day revolving facility, issued through Football Funding LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , converted pursuant to its term into the term loan on Oct. 31, 2008, and has a four-year maturity. The loan is scheduled to partially amortize in the third year and fully by year four; however, Fitch expects the loan to be refinanced prior to that. In addition, Fitch affirms the 'A' rating to the NFL's $1.3 billion in parity senior secured notes (a several obligation of participating teams) issued through Football Trust and the 'A+' rating on $1.1 billion in senior unsecured notes (league obligation)issued by the NFL. The Rating Outlook is Stable. The parity senior secured notes were issued via private placement in various series between 1998-2008 through various Football Trusts and mature through 2018. The secured term loan and secured notes have been used by participating NFL franchises for general corporate purposes and to provide working capital. Proceeds of the senior unsecured notes were used by the NFL to provide additional private funding for the construction of new football stadiums through support of the NFL's G-3 Stadium Finance Program. The 'A+' and 'A' ratings reflect the NFL's prominent position as a professional sports The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. 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 revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. among member clubs, a proven track record of conservative financial policies, and a stable current collective bargaining agreement The contractual agreement between an employer and a Labor Union that governs wages, hours, and working conditions for employees and which can be enforced against both the employer and the union for failure to comply with its terms. (CBA See Capital Builder Account. ) with its players union which includes a 'hard' salary cap. Strong forecasted league-managed revenues, primarily national television contracts, provide the NFL with solid projected debt service coverage ratios. In addition, the 'A+' rating on the senior unsecured notes recognizes the NFL's first-in-line access to league-managed revenues and team assessments, adequate legal provisions and covenants, and ample reserve levels. The 'A' rating on the secured term loan and notes reflects, in addition to the aforementioned league attributes, 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 'A' rating also reflects the team-specific nature of the obligations and the lack of a corporate (joint and several) obligation of the NFL; however, Fitch considers the NFL's oversight and policy of supporting distressed franchises as a key mitigating factor. The primary risk associated with these transactions is the NFL's current labor environment. In May 2008, the NFL clubs voted unanimously to exercise their option to shorten the labor agreement by two years (so that the term of the CBA will extend only through the 2010 season). For additional information see Fitch's press release 'Fitch Actively Monitoring NFL's Collective Bargaining collective bargaining, in labor relations, procedure whereby an employer or employers agree to discuss the conditions of work by bargaining with representatives of the employees, usually a labor union. Agreement' dated May 20, 2008, and 'Fitch Rates NFL's $500MM Sr. Unsecured Notes 'A+', Stable Outlook' dated June 30, 2008, available on the Fitch web site at www.fitchratings.com. Current national and global economic conditions portend por·tend tr.v. por·tend·ed, por·tend·ing, por·tends 1. To serve as an omen or a warning of; presage: black clouds that portend a storm. 2. heightened risks for the NFL, as well as all of Fitch's sports ratings, as there will likely be increased pressure on individual and corporate discretionary spending levels and renewals of key sponsorship and advertising agreements. This is partially mitigated in the short term by the NFL's multi-year national television agreements with its network and satellite providers which currently run through 2011 and 2013 with ESPN ESPN Entertainment and Sports Programming Network , as well as its current multi-year sponsorship agreements which provide strong collateral for the transactions and to NFL clubs for operations. The NFL has historically had positive renewals of its national broadcast contracts and maintains stable television viewership levels. Additionally, individual clubs may also be partially insulated in the near term given the high percentage of multi-year contractually obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. income generated at club stadiums from luxury suites, club seats and sponsorship and advertising agreements as well as the league's economic model which caps player expenditures - the largest club expense item - to a percentage of league revenues, which contributes to an individual club's strong underlying financial profile. Also, given an NFL's club 10-game (8 regular season, 2 pre-season) home schedule, Fitch assigns a higher level of demand to NFL games as compared to other sports leagues, thus a higher likelihood for continued strong attendance despite weakened economic conditions. Nevertheless, potential lower renewal levels of key revenues at the league and individual club level, should economic conditions worsen, would financially constrain the league and member clubs. The NFL is a not-for-profit unincorporated association of 32 member teams and was originally founded in 1920 with 18 franchises. The NFL's senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. was issued to support the league's G-3 Stadium Finance Program and to refinance borrowings under the Stadium Funding Credit Facility. The G-3 Resolution authorized the NFL to advance up to 50% (with a maximum advance of $150 million per club per stadium) of the total private contribution to a stadium construction project, as evaluated on a case by case basis. The G-3 program will have provided funding to 13 franchise stadium projects, and 21 teams participate in the league-wide term loan and senior secured notes. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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