NBA sells $ 193.2 million worth of debt to franchises. Specifically, the subsidiary company Hardwood Funding LLC has put on the market four tranches of bonds amounting to 60 million dollars, 93.5 million dollars, 20.8 million dollars and 18.9 million dollars, respectively, it details Sporty. The debt is guaranteed by the competition’s national television rights contracts.
Fitch Ratings rates the debt in category A-, which indicates a low risk of default with a stable outlook, and advances that the debt issuance is likely to benefit four specific franchises, although it has not disclosed the names of the teams and the NBA has declined to comment on the matter.
The league’s ranking benefits from things like long-term media rights contracts with the Walt Disney Company and WarnerMedia’s Turner Broadcasting; its growing popularity; the salary cap of the players; and the NBA’s willingness to help struggling franchises, according to Fitch. The NBA’s ranking is similar to that of the other major professional leagues, although the MLB and the NFL maintain lower levels of debt.
Fitch rates NBA debt an A-, due to low default risk
Teams can choose to receive advances of up to $ 275 million from the league, according to the information contained in the reports of Fitch Ratings, an international credit rating agency that rate corporate debt, a risk assessment that is often required by institutional investors who buy debt.
With these operations, NBA debt amounts to $ 6.7 billion, having increased its obligations to face the consequences of the coronavirus pandemic. A year ago, the league owed $ 5.4 billion, at which point Hardwood Funding raised $ 457 million on four debt issues. In 2019, the debt was $ 4.5 billion, according to various Fitch debt rating reports.
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