The NFL will seek to have the verdict set aside in a July 31 hearingJorge Lemus/NurPhoto via Getty Images
Fitch Ratings will “closely monitor” the NFL’s expected appeal of the
$4.7B verdict returned by the jury in a federal antitrust lawsuit over its “NFL Sunday Ticket” TV package, the agency said.
Analysts expect the NFL’s credit rating to remain stable in the short term, but noted “risks can emerge as any changes to the league’s debt limit rules may lead to higher leverage.” The ruling does not touch the NFL’s primary source of media rights revenue, the more than $110B in long-term deals with NBC, Disney, CBS, Fox, Amazon and now Netflix, but it still is a meaningful threat, Fitch said.
“The size of the jury’s award is consequential, even when factoring the massive revenue strength of the NFL,” Fitch wrote.
If the jury award is tripled to $14.1B as expected under U.S. antitrust law and is upheld on appeal, the pain would be shared equally among the league’s 32 teams. That amounts to $441M per team, or more than double the annual operating income for every team except the Cowboys, according to Forbes estimates.
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The NFL has recently increased per-club debt limit to $700M per team, which most experts believe is still low relative to what banks would lend most teams on the open market. However, Fitch said, the league has promised to maintain its conservative approach to lenders, limiting its ability to further relax debt limits. Currently, Fitch rates the NFL’s various debt as A+ or A.
Fitch also noted that the verdict could have knock-on effects beyond the judgment, such as a major overhaul to the current “Sunday Ticket” deal with YouTube TV (not at issue in the trial) that might lower revenues.
“The jury’s decision is unprecedented for sports league media arrangements and long-term financial implications are not immediately clear,” Fitch wrote.
The NFL will seek to have the verdict set aside in a July 31 hearing. If it fails there, the league will appeal to the Ninth Circuit Court of Appeals, which already handed plaintiffs a win early in this case, and then to the U.S. Supreme Court. Final resolution is still likely years away.
