OREANDA-NEWS. Fitch Ratings has assigned an 'A' rating to the Major League Baseball (MLB, or the League) Club Trust Securitization's approximately \$120.9 million senior secured notes consisting of \$45 million (series 17), \$17.5 million (series 18) and \$58.4 million (series 19). Fitch also affirms the 'A' rating on the outstanding \$826 million in senior secured term notes (series 3-16 maturing through 2025) and the \$1.016 billion senior secured credit facility. The Rating Outlook is Stable.

KEY RATING DRIVERS
The rating reflects the trust's core underlying business fundamentals including MLB's unique operating model and environment, which continue to perform positively including during the most recent economic downturn. Television contracts renewed in 2012 at extremely favorable levels correspond to near-term projected leverage of 2.0x, declining over the medium-term. Additionally, the diversity of MLB revenues from MLBAM and revenue sharing have bolstered individual team financial health. Despite the discretionary spending nature of sports, MLB has maintained solid attendance levels and corporate support at their respective facilities. In addition league level sponsorship and advertising partnerships have grown over recent seasons notwithstanding tepid economic conditions.

Solid Underlying League Economics:
Debt service is supported by large contractual revenue streams from investment-grade counterparties. A collective bargaining agreement (CBA) is in place through the 2016 season, which includes core elements that promote financial stability and competitive balance, which Fitch addressed at the time of the new CBA. Major League Baseball continues to maintain stable domestic fan attendance and viewership base, and a growing international fan base.

Established League Oversight and Governance:
The league's has demonstrated willingness to step in and aid 'distressed' franchises. For example, the league assisted the Texas Rangers and Los Angeles Dodgers during ownership issues.

Solid Legal Covenants and a Demonstrated Bankruptcy Remote Structure: Structural provisions ensure timely debt service. The MLB Club Trust structure utilizes a bankruptcy-remote securitization consisting of pledged revenues derived from long-term national broadcast contracts in place through 2021. Noteholders benefit from the bankruptcy remote structure, which eliminates team-related risks (as was demonstrated in bankruptcy filings of the Rangers and Dodgers); however, they remain subject to all the fundamental operational risks of MLB.

Long History of Television Contracts:
In 2012 MLB entered into eight-year television contracts with ESPN (Disney; rated 'A' with a Stable Outlook), FOX Broadcasting Company (NewsCorp.; rated 'BBB+' with a Stable Outlook) and Turner Broadcasting System (TBS) (Time Warner, Inc; rated 'BBB+' with a Stable Outlook). The contracts, which took effect in 2014 and run through 2021, represented a 100% increase in annual rights fees and will deliver \$12.4 billion in combined revenue.

Refinancing Risks Expose Teams to Potentially Higher Costs: The bullet maturities associated with the notes and bank renewals associated with the revolving credit facility expose the teams to potentially higher interest costs.

Peers: MLB's current leverage of around 2.0x, migrating toward 1.8x in the future, is comparable with the NFL's leverage of 1.6x and lower than the NBA's 3.92x. A unique feature of the MLB facility is that it benefits from a bankruptcy remote structure which isolates noteholders from team-level financial risk.

RATING SENSITIVITIES

Negative: A significant decline in national television contact rights fees, due to termination of new contracts.
Negative: A substantial change in individual and corporate spending on MLB related content materially weakening financial metrics.
Negative: Future additional debt, without offsetting revenue increase, that causes leverage (on a team basis) to materially increase above 2.0x.
Positive: Given near-term projected leverage under the borrowing program, additional near-term positive movement is unlikely.

SUMMARY OF CREDIT
Paid attendance declined slightly in FY2014, coming in at 73.7 million, with an average attendance per game of more than 30,000. This was down just 0.3% from 2013, ranking as the seventh best attendance in league history. Steps continue to be taken to make the sport more popular, and to get more fans through the gates at games.

Robert Manfred became the new Commissioner of Baseball in January, 2015 after previously serving as MLB's COO and having been with MLB since 1988. Keeping the game up to date and relevant with fans is among Commissioner Manfred's top priority since being named Commissioner. Specific initiatives thus far have focused on pace of play and more kid-friendly initiatives, and an effort to encompass a more diverse fan base and players. Fitch views favorably the continuity at the senior ranks of MLB as well as efforts to expand the baseball's overall appeal to fans. In addition to the outward initiatives, Commissioner Manfred has reorganized MLB's organization itself in order to better align revenue-generating functions and eliminate some redundancy.

The current CBA between MLB and the Major League Baseball Players Association (MLBPA) runs through 2016 and essentially guarantees 21 straight years of labor peace when combined with previous agreements. The CBA includes a number of the economic and competitive fundamentals from prior agreements including a salary structure that includes a 'competitive balance tax' system, free-agency structures and a high level of revenue sharing among member clubs. The competitive balance tax system was slightly altered, and the tax is 17.5% of the actual dollars spent for clubs exceeding the threshold for the first time, but the tax as applied to repeaters will increase to 50% of that same figure for clubs that have spent above the predetermined level at least four consecutive years. An increase in the minimum salary will also be implemented.

Fitch views MLB's economic model and financial policies favorably, although a wide disparity exists between the revenues generated by the largest and smallest teams. A team's reliance on local revenues, which fluctuate significantly between small and large markets, and their discretion to spend on player salaries can result in greater financial disparity among MLB teams. This disparity has the potential to lead to a less competitive framework for MLB. However, Fitch acknowledges that this disparity is partially mitigated by a revenue-sharing transfer in excess of \$360 million for 2014. Additionally, Fitch recognizes MLB's long history of viability in good and bad economic times and, more recently, the diversity of MLB clubs that have participated in the postseason since 2000 as important mitigating factors. Furthermore, Fitch notes, despite the range of financial disparity among participating clubs, noteholders are insulated from team level operations given their rights to national broadcast contracts to service debt prior to distributions to teams for operations, which was tested and validated in the recent bankruptcy proceedings of the Los Angeles Dodgers and Texas Rangers.

The sizeable increase in the national television contracts, representing a 100% increase over the previous contracts, has helped team finances across the league. In particular, teams facing increased financial pressure due to weak economic conditions in their local markets are now somewhat isolated from the risk due to the size and length of the national television contracts. Additionally, to a lesser extent, the high percentage of multi-year contractually obligated local broadcasting revenue and stadium-based revenues such as luxury suites, club seats, sponsorship and advertising agreements partially offset volatility associated with game day ticket sales. Nevertheless, potentially lower renewal levels of key revenues at the league and individual team levels, should economic conditions worsen may financially constrain the league and member teams. Local broadcasting agreements provide additional revenues to support underlying financial stability of the teams.

The MLB Trust is a bankruptcy-remote Delaware statutory trust established and owned by the member clubs of MLB that choose to participate in the MLB Club Trust Securitization. MLB currently has 30 teams in major metropolitan areas in the U.S. and Canada, of which 22 participate in the MLB Club Trust Securitization.