TEXT-Fitch: NHL agreement positive, fan support uncertain

Mon Jan 7, 2013 4:22pm EST

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Jan 7 - Fitch believes the decision by the National Hockey League (NHL) and
the NHL Players' Association to end the lockout and restart the season is
positive for arenas and the sport. The tentative 10-year agreement (with an
opt-out clause for both sides after eight years) must still be ratified by both
sides. A 48-50 game season (usually 82 games per team) is expected to begin
between Jan. 15-19 depending on when the new collective bargaining agreement is
finalized. In total, the league missed approximately 500 games, including the
NHL's Winter Classic and All-Star games.

Professional sports work stoppages risk alienating sports fans and corporate
sponsorships and advertising partners in the short-term and may lead to
increased revenue volatility. The missed games and brand impact are likely to
negatively impact revenues from ticket sales and other game-day revenues as well
as sponsorships. Despite positive television rights fees renewals in other
professional sports and at the collegiate level, the NHL will face pricing
pressure related to rights fees and may have increased difficulty securing a
future long-term television rights partner.

In our view, bondholders in Fitch-rated arenas with an NHL anchor franchise are
protected in the short-term; however, financial performance of the arenas will
be affected. In some cases, a significant portion of contractually obligated
income (COI) that is required to pay even in the event of a work stoppage. We
believe that this work stoppage could pressure the financial structures of some
arenas with less COI and/or a large percentage of renewals coming due this year.

While a potentially brand damaging full-season stoppage was averted, Fitch still
has concerns related to possible harmful long-term effects to the NHL brand and
fan support. NHL franchises have a solid dedicated arena fan base, as
demonstrated by solid arena attendance after the 2004-2005 season work stoppage.
However, fan attendance and corporate support for the 2013 season, as well as
2013-2014, could be materially different, given the combination of weak and
uncertain national and regional economic conditions and various sport
entertainment options.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market
commentary page. The original article, which may include hyperlinks to companies
and current ratings, can be accessed at www.fitchratings.com. All opinions
expressed are those of Fitch Ratings.
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