Rams wide receiver Tutu Atwell, left, celebrates running in a second quarter pass for a touchdown past Steelers as Rams wide receiver Cooper Kupp, #10, celebrates at SoFi Stadium in Inglewood Sunday, Oct. 22, 2023. (Allen J. Schaben / Los Angeles Times via Getty Images)
Los Angeles Times via Getty Images
In mid-October the NFL increased it debt limit for teams to $700 million from $600 million and for a buyer of a team to $1.2 billion from $1,1 billion.
Yesterday, Fitch Ratings released a report affirmed the league’s credit ratings on its various lending facilities:
NFL Ventures, L.P (venture capital arm of the league).
— $1.2 billion senior notes (G-4 Stadium Finance Program) at ‘A+’.
NFL
—$24 million senior unsecured notes (G-3 Stadium Finance Program) at ‘A+’.
Football Trusts
—$6.8 billion senior secured leaguewide credit facility (LWCF) term notes at ‘A’.
Football Funding II LLC
—$4.1 billion senior secured credit facility at ‘A’ (leaguewide credit facility (LWCF)).
Fitch said the rating outlook on all debt is “stable.”
Underpinning the NFL’s strong ratings are its national media deals, which could bring in more than $126 billion ($3.92 billion per team) by 2033. and the league’s collective bargaining agreement with the players. Fitch: “ The extensions of the NFL’s CBA through 2030 and major media contracts through 2032-33 provide superior long-term revenue and cost visibility compared to other leagues.”
The NFL’s ‘hard’ salary cap on player expenses has similar characteristics as the NHL, but differs from the NBA and MLB where player salaries have some restrictions in which teams can elect to go above predetermined levels by paying a ‘tax’. The media contracts and strong viewership numbers confirm the NFL as the most popular sports league in the U.S.
Also of note in the report was the mention of the addition of beg tech companies to the NFL’s media partnerships. Per Fitch: “The agreement with Amazon
AMZN
GOOG
Bringing in tech to distribute content is something the NBA is likely to do in its next media rights deals that would begin with the 2025-26 season. and is a significant reason why the Phoenix Suns sold for an NBA record $4 billion in February.
The league-wide credit facility borrowing facility and notes benefit from the league lock-box account that collects national television contracts revenue, among other revenues, and services debt prior to distributions to participating clubs. Under this structure, each club receives an equal share of national television revenues, so no franchise’s share of these revenues is affected by its on-field performance.
Other metrics that support the NFL’s high credit ratings, according to the ratings agency, are rising team valuations (the Washington Commanders were sold for a record $6 billion in July), stadium improvements at many football stadiums that will bring in more revenue from premium seating paid attendance was 99% of stadium manifest capacity for the 2022 regular season and viewership trends remain strong in the current season to date, with many networks reporting record-breaking viewership levels for certain games.
One reason the additional debt could come in handy is that unlike MLB, NBA and MLB, the NFL does not permit institutional investors to buy pieces of teams.
