“The downgraded rating and negative outlook reflect an increased likelihood of default as the company is highly leveraged and has maturities approaching 2023,” Moody’s said in a rating note. said. “While multimedia, ticket and license revenues began to recover relatively quickly from the pandemic, multimedia contract rights fees also rose rapidly, negatively impacting profitability in 2022.”
The rating agency has downgraded Leahfield’s corporate family by one notch to Caa2. Ratings in the Caa range are defined by agencies as “determined to be in poor condition and exposed to very high credit risk.” Rearfield’s first lien credit facility was downgraded one notch to Caa1, and its second lien term loan was downgraded from Caa3 to Ca. The business outlook also turned from stable to negative.
“Rearfield is experiencing record revenue growth,” the company said in an emailed statement. “Innovative and integrated business models across events, licensing, fan engagement and brand promotion offer partner institutions unparalleled opportunities within the university environment. Reflecting both the impact of the pandemic on its business and the significant recovery in revenue, Learfield’s continued investment in data infrastructure, branded content, direct-to-fan platforms and NIL development has enabled the company to achieve continued growth, Sustainability, with the ability to meet the needs of our partners.”
The company added that it provided an update to credit agencies last week in line with standard business practice.
According to Moody’s, Leahfield has a prominent position in college athletics, a strong college fan base, and media rights Growth in college compared to professional sports. Cost-cutting measures planned by management and the continued post-pandemic recovery in multimedia are also positives, the agency said.
However, Leahfield is heavily in debt. The agency said the business had a debt of more than 30 times its earnings before interest, taxes, depreciation and amortization (EBITDA) for the year ended June 30. According to its recent annual report, Leahfield posted a net loss of $164.3 million in calendar year 2021 on earnings of $1.09 billion. From 2019 to 2021, Rearfield posted a net loss. $1.8 billion.
In addition to its high debt ratio, the business will pay out $183 million in two loans in September 2023, with additional loans due in December 2023 and December 2024, according to Moody’s. is scheduled for The rising interest rate environment presents a risk that Leahfield may not be able to refinance some or all of its debt at favorable interest rates, according to the ratings notes. A competitive business environment requires cash to be diverted from other activities in order to pay off debt on time.
Moody’s said, “Despite Leahfield’s strong position in the industry, competition for college sports rights remains intense and colleges will continue to push for higher fees for media rights.”