Coronavirus disrupts sports events, affects stadiums' revenue: Fitch

New York [USA], Feb 27 (ANI): The novel coronavirus has led to postponements or cancellations of various sports events, primarily in the Asia Pacific which will put pressure on affected stadiums' revenues, according to Fitch Ratings.
"We expect the impact on Fitch-rated portfolio of stadium transactions to be limited as many of them have sufficient liquidity reserves to absorb short-term revenue disruptions, but much will depend on the authorities' ability to control and contain the virus," it said.
Several high-profile sporting events scheduled to take place in China have been postponed, cancelled or relocated including the Formula 1 Grand Prix, some Olympic qualifiers, and football, tennis, athletics and golf events.
There are also restrictions on public gatherings which is likely to reduce attendance at sports events. Furthermore, events in some Asia Pacific countries are at risk either due to health concerns in the areas affected by the virus or because of travel restrictions.
Ticket sales usually represent a significant portion of stadiums' revenues and are an important rating consideration. Rated transactions historically demonstrated high attendance.
For example, average attendance at English Premier League matches has been at least 96 per cent over the past five years. While a postponed event simply delays revenue generation, events that are cancelled, relocated or proceed with low attendance lead to lost income.
However, transactions in Fitch portfolio typically include debt service reserve funds that can be drawn down if needed to pay debt service.
Reserves covering six months to one year of principal and interest payments are typically included in transactions with investment-grade ratings. These reserves should be sufficient to cover a period of reduced revenue lasting several months.
"We expect Asia Pacific stadiums, mainly those in China, to bear the brunt of the outbreak. Cancellations and postponements have started in Europe, Middle East and Africa (EMEA) stadiums while those in the United States have been the least affected," said Fitch.
"However, if the outbreak were to be prolonged or uncontained, resulting in further cancellations of major events such as the Tokyo 2020 Olympic Games, the negative effect on stadium transactions will be deeper," it added.
(ANI)