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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, expansion and relocation, and NHL revenues.

Lockout putting arena bonds on financial Watch list

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12-22-2012, 12:35 AM
  #1
LadyStanley
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Lockout putting arena bonds on financial Watch list

http://www.businesswire.com/news/hom...ions-Privately

Quote:
Fitch Ratings continues to closely monitor the ongoing negotiations between the National Hockey League (NHL) and National Hockey League's Players Association (NHLPA). ...

Fitch has placed one private arena rating with a NHL anchor franchise on Rating Watch Negative and continues to closely monitor the operations of other arenas with a NHL anchor franchise. Fitch publicly rates L.A. Arena Funding's (Staples Center, Los Angeles) $201 million revenue backed notes 'BBB+', Stable Outlook and the Denver Arena Trust's (Pepsi Center, Denver) approximately $46.7 million revenue backed notes 'BBB-', Stable Outlook. Fitch does not rate the NHL league-wide borrowing facility secured by national television contracts and other league revenues.
...
Despite the canceled games Fitch believes that the Pepsi Center, Staples Center and other Fitch-rated private arenas with an anchor NHL franchise retain some, albeit limited, financial flexibility. Fitch notes that the abovementioned arena ratings also have an NBA franchise as an anchor tenant and host a significant amount of other events, providing some level of revenue certainty to support operations. Additionally, the arenas maintain a significant level of contractually obligated revenue in the form of multi-year suites and club seats, sponsorship and advertising and other long-term contracts. However, renewals of these revenue agreements may be impacted in the event of a canceled season. The pressure on renewal rates stemming from local economic conditions and, in some cases, recent on-ice performance could be exacerbated by labor uncertainty.
Fitch's rated NHL arenas are protected in the short term in the event of a work stoppage. Additional bondholder security is provided by a combination of debt service reserve funds, work-stoppage reserves, internal liquidity and, in some cases, a significant portion of contractually obligated income that is required to pay even in the event of a work stoppage. For example, the Staples Center structure requires 150 events annually to meet the threshold that would avoid credits back to suiteholders. This past NBA season, despite the NBA lockout and approximately 20 missed NBA events, arena management was budgeting 220 events before the end of this past fiscal year (June 30, 2012). Using last year as a base and accounting for all NBA events that will occur next season, the Staples Center would still host nearly 200 events next year even in the event of a full-season NHL lockout. The financial structures of several arenas and stadiums include a bullet maturity, which poses refinance risk. Fitch notes the refinance risk is heightened when periods of labor unrest coincide with the bullet maturity due date.
...
Furthermore, in the event of a full season cancellation, Fitch has concerns related to potentially harmful long-term effects to the NHL brand and fan and support. NHL franchises have a solid dedicated arena fan base as demonstrated by solid arena attendance after the 2004-2005 season work stoppage. However, a second full season cancellation could result in a materially different response by NHL fans and corporate partners. Professional sports work stoppages risk alienating sports fans, corporate sponsorship, and advertising partners in the short-term and may lead to increased revenue volatility. The combination of weak and uncertain national and regional economic conditions and the various sport entertainment options could result in a dramatic reduction of fan and corporate support


Last edited by LadyStanley: 12-22-2012 at 12:46 AM.
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12-22-2012, 12:39 AM
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Stickmata
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Whoa, whoa, whoa...are you saying that there are financial implications involved in the lockout? Such as hundreds of millions of dollars invested in the arenas at which the NHL plays its games? I thought it was just a bunch of incredibly talented hockey wizards getting ripped off by greedy owners. Are you saying it actually takes money to run the league? Brother please.

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12-22-2012, 09:42 AM
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Originally Posted by LadyStanley View Post
Fitch is one of the agencies who gave AAA rating to subprime mortgage backed securities that proved worthless only months later. I doubt that their opinion about anything has much value.

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12-22-2012, 10:45 AM
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Originally Posted by Stickmata View Post
Whoa, whoa, whoa...are you saying that there are financial implications involved in the lockout? Such as hundreds of millions of dollars invested in the arenas at which the NHL plays its games? I thought it was just a bunch of incredibly talented hockey wizards getting ripped off by greedy owners. Are you saying it actually takes money to run the league? Brother please.
Apparently it takes other people's money to run the league.

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12-22-2012, 10:51 AM
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i don't know why the leases don't require the nhl teams to pay rent even if there are no games?

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12-22-2012, 11:31 AM
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Originally Posted by atomic View Post
i don't know why the leases don't require the nhl teams to pay rent even if there are no games?
Asked and answered.

Quote:
Originally Posted by THE LINKED ARTICLE
Fitch's rated NHL arenas are protected in the short term in the event of a work stoppage. Additional bondholder security is provided by a combination of debt service reserve funds, work-stoppage reserves, internal liquidity and, in some cases, a significant portion of contractually obligated income that is required to pay even in the event of a work stoppage.

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12-22-2012, 12:48 PM
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Originally Posted by atomic View Post
i don't know why the leases don't require the nhl teams to pay rent even if there are no games?
Given how many of the NHL arenas come with direct or indirect taxpayer subsidies, and given the claims of how much local economic activity is generated by hockey (*cough* Katz *cough*) I'm surprised the taxpayer handouts don't come with significant repercussions for tenants that engage in lockout activity.

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12-23-2012, 07:09 AM
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Originally Posted by Dado View Post
Given how many of the NHL arenas come with direct or indirect taxpayer subsidies, and given the claims of how much local economic activity is generated by hockey (*cough* Katz *cough*) I'm surprised the taxpayer handouts don't come with significant repercussions for tenants that engage in lockout activity.
are you truly surprised governments giving out taxpayer dollars didn't ask owners for more in return?


Last edited by Chairman Maouth: 12-23-2012 at 11:04 AM. Reason: No
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