Bangkok--30 Apr--Standard & Poor's
Standard & Poor's Ratings Services raised its long-term rating to 'AA+' from 'AA' on Indiana Development Finance Authority's revenue bonds, issued for the National Collegiate Athletic Association (NCAA). The outlook was revised to positive from stable on April 21, 2010. Based on new and significant information subsequent to the release of the outlook revision, Standard & Poor's is now raising its rating to 'AA+'.
The rating upgrade is based on Standard & Poor's assessment of the NCAA's favorable new $10.8 billion multimedia agreement announced on April 22, 2010, with CBS Sports and Turner Broadcasting System Inc. for the telecasting of the Division I Men's Basketball Championship covering the period from 2011 through 2024. Standard & Poor's expects this sale of broadcast rights to support the organization's continued growth of financial resources, which have been improving at an impressive rate for the past several years.
The rating reflects the NCAA's dominant position in college sports; strong growth in television rights revenues, with a long-term contract guaranteeing growing levels of annual revenues through 2024 as well as strong financial resources and good liquidity levels, with expendable resources equal to $433 million, or 66% of operating expenses and 623% of debt (including the National Invitational Tournament (NIT) payable) as of fiscal 2009. Also supporting the rating is the NCAA's strong and innovative management team that has produced good operating results and increased reserves in each of the past five years; high level of budgetary flexibility in the event of a sharp drop in revenue; and low maximum annual debt burden at slightly less than 2% of operating expenses.
Partially offsetting the credit strengths in Standard & Poor's opinion is the revenue concentration from a single sport (basketball) as well as guarantee payment by one corporation -- Time Warner Inc. (BBB Stable).
"The stable outlook reflects our expectations that this new contract will allow the NCAA to continue to increase its levels of unrestricted resources and cash and investments relative to both operations and debt," said Standard & Poor's credit analyst Marc Savaria. "We expect that operations will continue to remain strong since the NCAA has indicated it does not currently anticipate any significant change to its distribution formula, which would affect operating performance," said Mr. Savaria.
At this time, Standard & Poor's does not expect the NCAA to issue additional debt. Post issuance, the NCAA will have approximately $49.5 million in debt outstanding and approximately $20 million in payable.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Non-Traditional Not-For-Profits, June 14, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Marc Savaria, Boston (1) 617-530-8315
Bianca Gaytan-Burrell, Dallas (1) 214-871-1416