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UFC’s credit rating goes up

Standard & Poor’s is the big dawg amongst financial analysis companies and they regularly provide credit ratings that give investors an idea of how risky investing in a business is. Since 2007, Zuffa has been rated as BB-, which means ‘more prone to changes in the economy’. In non-creditor speak, that means Zuffa looks stable barring a shift in the economy (lol yeah right USA #1) or shift in consumer taste (aka this all turning out to be a fad).

Now S&P just upgraded Zuffa from BB- to straight up BB and included a bunch of interesting info on how the company makes it’s money to justify the switch. Here’s some of that via MMA Payout:

-Specific mention is made of the UFC-WEC merger as potential source of incremental ticket and ppv sales growth.
-The volatility of consumer tastes and preferences continues to be a slight concern as these may impact PPV revenues, but the report also cites the development of new fighter talent and regulatory acceptance as additional risk factors.
-However, the company’s strong EBITDA margin and healthy cash flow conversion rate are reportedly sustainable over the near to intermediate term and partially off-set concern over volatility in PPV earnings and risk factors mentioned above.
-The report reinforces that 75% revenues are event-related; PPV buys account for nearly 60% of all PPV event revenue while gate and sponsorships account for the rest.
-The remaining 25% of revenue comes from live and taped broadcasts on SpikeTV, merchandise, and digital media revenue; much of that is broadcast revenue, but an emerging portion is merchandise and digital media.
-EBITDA margins are expected to track within a consistent range in the future, even with expansion into new markets like Brazil.
-Liquidity remains strong due largely to limited capital spending requirements.
Debt: $50 million credit facility expiring in 2012; $425 million term loan due in 2015.

Considering how much money the UFC rakes in off PPV, it’s pretty impressive to hear that it only accounts for 60% of the money made off an event. We all know about the UFC’s great gate sales, but this shows what kind of sick, sick sponsorship money the company has rolling in. I wish there was more of a breakdown of the non-event chunk that makes up digital media and merchandise … I’d love to know what kind of dough the UFC makes off locking it’s prelims up in that terrible vault of theirs. Considering money isn’t a concern but ‘development of new fighter talent’ is, you’d think prelims could do more than net the company 2$ a pop from a tiny number of hardcore fans.

  • Nyfeh

    Great coverage! I haven’t seen this anywhere else but fightlinker. Thanks for this.

  • iamphoenix

    or mmapaypout.

  • Nyfeh

    Yeah no shit sherlock. Sorry its not on my daily digest.

  • iamphoenix

    You wanna go buddy? You wanna go? Lets take this outside! THIS MEANS WAR!!!

  • Remco Pardoel

    Be cool! Teacher’s coming!!

  • G Funk

    We’ll set it up at recess by the jungle gym! Whoever doesn’t show is a pussy.

  • FiveBoltMain

    I’m betting my juice box on phoenix. Don’t let me down!!

  • Omomatta

    I say they both end up in tears and hug it out before it’s all said and done.

  • iamphoenix

    I’m still waiting for a response fartknocker. You’re lucky my boys are holding me back! What, what what what!