SBJ/November 10 - 16, 2003/Forty Under 40
Published November 10, 2003
In discussions over what fueled the tremendous growth in the sports business over the last decade, the answers one usually hears are lucrative sponsorships and TV contracts. True enough.
But if sports leagues and teams did not have access to debt on good terms to finance stadiums, acquisitions and even to fund payrolls, the gains in these other areas of the sports business would have been muted.
Given Wall Street's historic bias against sports, Dan Champeau's role in helping to propel the business into the 21st century is particularly magnified.
While obscure to many in the world of sports, Champeau and his employer, Fitch Ratings, have been indispensable in rating sports loans and bonds. The lenders, who put up the bucks to teams and leagues, frequently want to ensure that they are making good decisions, so they turn to rating agencies to grade the credits.
Because the other two main rating agencies, Moody's and S&P, have largely begged off sports, much of the sports landscape could be different today had Fitch and Champeau not focused in a positive way on the sector.
"Without Champeau's work getting Fitch's group started," a lot of the finance progress in the business may have been impeded, said Sal Galatioto, head of Lehman Bros.' sports practice. "He really was one of the first ones to get up the learning curve. He has probably looked at as many if not more sports financings than anyone."
Many of the debt investors that lend the dollars to finance sports projects are Fitch clients. So, for Fitch to give the debt a thumbs up has been a huge development in sports' quest to borrow money at low rates.
"There has always been some negative bias against sports as a business," Champeau said. "It was a lot more prevalent in the early days. ... A lot of it has been eliminated."
Those early days started in 1995 when Champeau, newly arrived at Fitch, began rating stadium debt sold to build such facilities as Joe Robbie Stadium and the Fleet Center. He convinced his managers to let him focus more on the burgeoning area.
The big breakthrough came in 2001, when Fitch rated the NFL loan pool, or credit facility, "A+", a grade many top corporations would love to snare. That has allowed the NFL to borrow billions of dollars for its teams at low rates.
Still, the Wall Street bias that sports is not a sound business is not entirely stamped out. Champeau recently had to visit the National Association of Insurance Commissioners, a self-regulatory agency that graded two NFL loans subpar, to argue the financial merits of football.
Building the heretofore nonexistent business of grading sports debt was not easy for Champeau. While creating the practice, he moved to San Francisco from New York to help open Fitch's office in that city, and then, five years later, moved back to the Big Apple. All the while he was getting his M.B.A. at night. It would take him eight years and two colleges on two coasts before he picked up his diploma.
Perseverance is not new for Champeau. Born into a large family, he was a top baseball player in high school. But in order to pay the bills, Champeau had to give up any hope of playing college ball.
"With six [other] siblings, everybody is on their own," he explained of funding school. He worked his way through the University of Maryland waiting tables at the Mexican restaurant chain Torito's. In the summer he interned at a bond insurance company.
Today, Champeau is far removed from that earlier struggle. He sits comfortably in his office with its dazzling view of New York harbor. His wife is due to give birth later this month to their first child. The eager, expectant father has been reading the children's book "One Hungry Monster" to his unborn child.
As for his other baby, Champeau expects the business of rating sports bonds and loans to continue to grow strong and thrive and win the complete respect on Wall Street it deserves.