Every time I start to worry that FightOpinion is just turning into a link farm (a link farm for the MENSA members of the MMA community nevertheless), the site kicks into overdrive with some awesome articles you’d never be able to find anywhere else. One of those awesome articles this week is on the financial status of the UFC as determined by Standard & Poors, a premiere financial company charged with assessing lending risk. One interesting tidbit of info:
Operating costs have more than doubled thanks to production costs associated with the two events held in the U.K and an aggressive marketing campaign to establish the brand in the U.K., the scale of which was criticized by the company’s financial officers according to Dave Meltzer. As result the company’s EBITDA as a percentage of gross revenues has fallen to roughly 20 percent for the year thus far.
The fact that the company’s financial officers were not happy with the cost of expansion might explain a few things as to why Zuffa backed down from Japan so quickly. With the cost of doing business in a new country revealed, could it be that Zuffa realized how big of a money pit Japan could be?
The UFC is still doing well on the gates in the UK, and they’re picking up some okay money off TV rights for those shows as well. How well would they have done in Japan? The prospect of no local TV deal and a tiny crowd is enough to make any company rethink it’s plans to enter a market.