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Declines in TV viewership early in the NFL season have turned out to be little more than an election-related blip and will not adversely affect the stable outlook in place for U.S. sports finance next year, according to Fitch Ratings in its 2017 outlook for U.S. sports.
The primary reason is the long-term national television agreements in place for all four major U.S. sports leagues. The NBA’s new national television contract (now in effect) represents a roughly three-fold increase and follows significant renewals by the NFL, MLB and NHL. Also helping matters is continued stable attendance at most major stadiums. ‘Leagues and teams face facility reinvestment needs to maintain attendance levels and attract corporate sponsorship, making rehabilitation and renewal programs key to drive both overall interest and prices,’ said Senior Director Chad Lewis.
Labor peace is another major driver in Fitch’s stable outlook for U.S. sports. Strengthening the picture is the MLB’s tentative new five-year collective bargaining agreement reached last month. The lone potential outlier is the NBA, which can opt out of their CBA next week. That said, owners and players have many incentives in place so as to avoid missing games given strong revenues, making this ‘What If’ scenario unlikely.
Where the sports sector could experience some future headaches is around funding for new sports stadiums, particularly among state and local governments saddled with budgetary issues. Nearly all of the new professional stadiums and arenas received sizeable funding contributions. But the spotlight is getting brighter on the national infrastructure funding gap, which could place increased scrutiny on public funds toward new sports facilities. ‘As construction costs continue to increase, the few remaining major league teams may face difficulty financing a new facility in absence of some public funding,’ said Lewis.
‘2017 Outlook: U.S. Sports’ is available at www.fitchratings.com.