Fitch Affirms South Florida Stadium Corp. Revs At `BBB+'

Business Wire, May 7, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--May 7, 2001

Fitch has today affirmed the `BBB ' rating for $76,300,000 outstanding Miami-Dade County Industrial Development Authority, FL's tax-exempt series 1985 industrial development revenue bonds.

South Florida Stadium Corp., or Pro Player Stadium, is the obligor for all debt service payments. Pro Player stadium net revenues secure the non-recourse bonds. The bonds are enhanced by a letter of credit guaranty with Societe Generale, whose insurer financial strength is rated `AA/F1 ' by Fitch. The series 1985 bonds are on parity with $21,700,000 series 2000, taxable Miami-Dade County Industrial Development Authority, FL, South Florida Stadium Corp. industrial development revenue bonds.

Fitch's long-term Outlook on the South Florida Stadium Corporation (SFSC), or Pro Player Stadium (PPS), is Stable at the `BBB ' rating level. The long-term unsecured debt rating for the series 1985 tax-exempt industrial development bonds reflects Pro Player Stadium's sound, economically diverse service area, which has yielded consistently solid attendance levels and strong financial results since its opening in 1987. As home to the National Football League's (NFL) Miami Dolphins and Major League Baseball's (MLB) Florida Marlins, PPS' robust revenue generation and strong debt service coverage (DSC), among other factors, would generally place it as a candidate for a positive rating outlook. However, discussions to relocate the Florida Marlins to a baseball-only stadium in Miami and uncertainty relating to the stadium's naming rights revenue stream, offset an otherwise positive outlook for this credit. Fitch considers the Miami Dolphins the stadium's anchor tenant, and given the relatively modest contribution of the Florida Marlins to the stadium's net revenue, Fitch believes that the departure of the Marlins would not materially impact SFSC's rating. SFSC recently completed a broad, cash-funded capital program to modernize PPS facilities, and as such, no additional debt needs are anticipated.

The stadium is a state-of-the-art, multipurpose sports and entertainment facility in South Florida that was completed and commenced operations in 1987. PPS was one of the first stadium projects in the U.S. built to `enhance the fan experience' while adeptly understanding the modern day economics of professional sports. The stadium has generated very high debt service coverage as compared to other sports facility projects - unaudited results for fiscal year 2001 indicating debt coverage of approximately 4.50 times (x) and DSC has been slightly over 5x in each of the last two audited fiscal years (2000 and 1999).

The Dolphins and the Marlins represent South Florida's only professional football and baseball teams, and PPS has virtually no venue competition. The Miami Dolphins - one of the NFL's premier franchises, rich in tradition and historically successful - have a loyal fan base and consequently, have sold out almost 100% of their regular season games since the 1995 NFL season, during which this credit rating was assigned, and many seasons prior. The Dolphins' lease with PPS, a guarantee to play at the stadium through the 2016 season, is a major credit factor that essentially eliminates franchise relocation risk, as the series 1985 bonds mature in 2016.

While PPS benefits from two professional franchises as tenants the Florida Marlins play a much less important role at the stadium in terms of net revenue production. The Marlins' lease currently expires in 2002 and is subject to one-year renewals at that time, which is a principal credit weakness, as noted in Fitch's initial credit report.

Further, the bulk of PPS' contractually obligated income (COI), such as advertising contracts, club seats and executive suites, is largely driven by the Dolphins. COI as a percent of total operating revenue for fiscal years 1999 and 2000 was 57% in each year, which is lower than most other investment grade sports facility projects, but is offset by PPS's very high DSC. At the time of the initial rating in 1995, more than 60% of total operating revenue was COI, a significant credit factor for an investment grade rating. It is important to note that PPS' 1996 naming rights contract was not executed and therefore not a credit factor regarding SFCF at the time of this initial rating. SFSC receives $2 million annually of state sales tax rebate revenue until 2023, which is pledged revenue, providing additional security for the series 1985 and series 2000 bondholders. Series 2000 debt service is approximately $2 million annually.

Pro Player Stadium (PPS) is home to the NFL's Miami Dolphins and to the MLB's Florida Marlins. It seats 75,000 for football games, and 40,000 for baseball games. There are 185 luxury suites, 10,227 club seats, and 15,000 parking spaces for cars and 254 for buses, plus an additional 10,000 parking spaces adjacent to PPS, not owned by SFSC. PPS benefits from a lack of meaningful competition with respect to other facilities and/or NFL and MLB teams, as well as to the outdated Orange Bowl, home to the Miami Hurricanes football team. PPS also hosts concert events and other athletic events such as the Orange Bowl Classic (a college football post-season game and part of the national championship bowl alliance), and recently signed a 3-year lease to become home to Florida Atlantic University's football team.