NFL may be able to weather 2-year lockout

By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- National Football League owners will continue to generate much of their revenue in 2011, even if next season's games are cancelled due to a labor dispute, according to a note Monday by rating agency Standard & Poor's.

In fact, some teams may be able to survive two years without any games being played, according to S&P, which said it has confidential debt ratings on various stadium bonds for facilities used by NFL teams and also tracks teams' finances.

If there is a work stoppage, the owners will have to pay most of the money they receive in 2011 back with interest once games resume.

But the continued flow of money from television networks, sponsors and some customers during a possible lockout puts the owners in good position to weather a potential canceled season.

The owners and the NFL Players Association are in negotiations on a new collective bargaining agreement ahead of a Friday deadline. Without an agreement, a lockout of players could start that day.

Even though there are no games scheduled to be played until September, there are fears that the 2011 season could be lost as the league and players fight over how much revenue should be available to players.

Citing the ongoing talks, a spokeswoman for the NFLPA declined to comment on the S&P report. Spokesmen for the NFL did not immediately respond to a request for comment.

S&P said the league's estimated revenue was about $9 billion last year, with the biggest share of that money coming from television rights deals, which it said will provide it with $4 billion in revenue in 2011.

The networks will be contractually required to pay that money to the league even if the games are not played, although the league will have to pay that money back to the networks, with interest, once games resume.

But that revenue stream, which S&P said is being challenged in court by the union, is an important source of funds that would help the owners avoid any default on their own obligations.

S&P also estimates that 50% to 80% of stadium revenues are generated from what it terms "contractually obligated income" from the sale of luxury suites, club seats, and in-stadium advertising.

The contract provisions typically require payment even if football games are not played, although once again, some of this revenue would need to be repaid once the games resume.

In judging the owners' ability to survive a prolonged lockout, S&P also cited a report in trade publication Sports Business Journal, that the league has built up a strategic reserve fund of about $900 million that teams can access in case of a work stoppage. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,162.99 121.45 0.67%
Nasdaq 5,106.59 73.84 1.47%
S&P 500 2,123.48 19.28 0.92%
Treasuries 2.14 -0.00 -0.09%
Data as of 7:08am ET
Company Price Change % Change
Bank of America Corp... 16.74 0.24 1.45%
Michael Kors Holding... 45.93 -14.66 -24.20%
Broadcom Corp 57.16 10.24 21.81%
Apple Inc 132.04 2.42 1.87%
AbbVie Inc 67.38 1.28 1.94%
Data as of May 27
Sponsors

Sections

An overwhelming majority of bank customers said in a recent survey that they'd switch to another firm if their account was hacked. More

Workers with college and graduate school degrees saw their wages fall the most last year. The least educated saw a slight bump in pay. More

Apple's new "CarPlay" system, which allows drivers to use iPhones behind the wheel, is raising concerns among auto safety experts. More

Karlos Dansby, a linebacker with the Cleveland Browns, is bringing his winning strategy from the football field into the startup arena. More

Wealthy millennial women are more likely to make at least as much -- if not more -- than their husbands, and are more likely to be the dominant decision-makers on household finances and investments, according to a new report. More