Potential Bank Sell-Off or Worsening Economic Environment Unlikely to Materially Affect Sports Issuers
In this commentary, we discuss the implications of a continuing bank sell-off and a worsening economic environment on the sports sector.Key highlights include:
-- The collapse of Silicon Valley Bank (SVB) and the ensuing failures of U.S. lenders, Signature and Silvergate, as well as the turmoil surrounding Credit Suisse and First Republic Bank have raised questions regarding systemic risks in the global banking sector and led to a sell-off in bank stocks.
-- We do not believe sports franchise or stadium issuers will be materially affected by the collapse of SVB and a continuing bank sell-off.
-- While financial institutions act as corporate sponsors for sports issuers, smaller regional banks rarely comprise a material portion of an issuer's sponsorship revenue.
-- Stadium transactions typically have replacement mechanisms in place if a financial counterparty's credit quality deteriorates.
“If the economy heads into a recession, we believe sports issuers' ratings will remain resilient due to long-term, contracted revenue streams, historically stable gameday revenue, and expenses that are directly linked to revenue,” said Michael Goldberg, Senior Vice President of Sports Finance at DBRS Morningstar.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
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