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Fitch Rates MLB Club Trust Securitization Notes 'A-'; Outlook Stable

Friday, May 10, 2013 10:11 AM


Fitch Ratings has assigned a rating of 'A-' to Major League Baseball's (MLB) Club Trust Securitization consisting of:

--$43.725 million series 8 term notes (due 2020);

--$5 million series 9 term notes (due 2023);

--$85.275 million series 10 term notes (due 2025).

Additionally, Fitch has affirmed the 'A-' rating on the MLB's outstanding $669.16 million term notes (series 1 - 7) and the outstanding $500 million syndicated revolving credit facility.

The Rating Outlook is Stable.

KEY RATING DRIVERS

Solid Underlying League Economics: Debt Service 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.

League Oversight and Governance: League's demonstrated willingness to step in and aid 'distressed' franchises. For example the league assisted the Texas Rangers and Los Angeles Dodgers during ownership issues.

Solid Legal Covenants and a 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.

Long History of Television Contracts: MLB recently entered into new eight-year television contracts with ESPN (Disney rated 'A' with a Stable Outlook), FOX Broadcasting Company (NewsCorp., rated 'BBB+' with a Stable Outlook) and Turner Broadcasting System (TBS) (Time Warner, Inc. rated 'BBB+' with a Stable Outlook). The contracts have been renewed through the 2021 season with a 100% step-up in rights fees commencing in 2014 and will deliver $12.4 billion in combined revenue.

Refinancing Risks Expose Teams to Potentially Higher Costs: The bullet maturities associated with the notes and bank renewals associated with the revolving credit facility expose the teams to potentially higher interest costs.

RATING SENSITIVITIES

--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 may lead to positive rating movement.

--A substantial change in individual and corporate spending on MLB related content.

SECURITY

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.

TRANSACTION SUMMARY

MLB's Club Trust Securitization series 8, 9, and 10 term notes will refinance a portion of MLB's outstanding series 1 and 2 term notes.

For more information on Major League Baseball, please see 'Fitch Affirms MLB Club Trust Securitization Sr. Secured Credit Facility and Term Notes at 'A-'' dated May 1, 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. MLB's extensive international marketing efforts, the success of MLB Advanced Media, MLB Network and the 2013 World Baseball Classic are viewed favorably as additional future potential for the sport.

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Rating Criteria for U.S. Sports Facilities, Leagues, and Teams

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685897

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=790885

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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 ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

(Source: Business Wire )
(Source: Quotemedia)

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