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The real ‘Inside the UFC’

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.

  • Tommy

    And people think they should give the fighters more money huh.

  • sonzai

    If the UK is financial risk for them, and a bit of a money pit, then Japan would’ve been disaster. They can’t get any mileage out of the PRIDE name because it’s mud there and fighters alone don’t get ratings (unless their name is Sakuraba). Gomi’s popular, but he ain’t that popular. This also possibly sheds some light on fighter signings. Blow a load on the big names (CroCop, Shogun, Hendo, Nog, Fedor), leave the middle (Kang, Little Nog (based on his reported deal with HCF), Barnett) and get the lesser (Gono, Chonan, Nakamura) with what’s left over.

  • AlexK

    How do you guys manage to remain 3 weeks behind on every rumor and news story? It must require quite an effort ;)

    The S&P rating was issued on September 11 (you can check it out on the S&P site if you have subscription or just search it for Zuffa to see a short summary). It was first reported in blog form around September 18th:

    Damn, maybe *I* should start an MMA news site :P

  • Swedish guy

    damn i’m drunk. sending my love to ryan and jake!

  • Mr. Theplague

    Eh, like the japanese need fighting on TV over there. I hear there are like, ninja battles happening on every street corner.

  • garth

    Swedish guy: I’m horrifically sober. Are you both drunk and in Sweden?

  • Rory

    “They’re backing down from Japan”… tee-hee, not only are you out of the loop there, this S&P thing is old news.

  • Swedish guy

    garth: Well, at the time I wrote that, I was pretty damn drunk.
    I just now opened, went “wow, loads of new content”, then i read every post since the franklin one and got a bit of “where have i read this before?” and just now i saw my comment here and realize that i did read it before.
    And yep, I’m still in Malmö, Sweden. Not drunk any more though, unfortunately.

  • Accomando

    “…could it be that Zuffa realized how big of a money pit Japan could be?…”

    NO, I think they realized the U.S. dollar is at a 15 year low and they would get bent over and raped repeatedly if they wanted to promote and or put on a show.

  • fightlinker

    I surf the web every day, put noteworthy stories into a big text file, and then let them sit until my brain has something semi-worthy to comment on regarding them. If I was just regurgitating what other sites did, sure I could have my articles up a few hours after the original one. But this site isn’t about ‘being the first’, or second, third, fourth, whatever. Usually it takes a few days for a story to flesh out and some perspective gained on it.

  • jeff aka whaledog

    One other interesting thing we discovered after the S&P rating came out was that the UFC has taken out $375 million in loans (a $350 million term loan and a $25 million line of credit).

    While I am sure some people knew about this before, I had not heard about it.