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
--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
--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
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.
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,
--'Rating Criteria for U.S. Sports Facilities, Leagues and Teams' (Aug.
Applicable Criteria and Related Research
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for U.S. Sports Facilities, Leagues, and Teams
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Copyright Business Wire 2013