once WME pays off their debt.. what do they do next?

[jeremyemilio]

It's step 1 in WME's plan. You really think they bid that much just to put all the egg's in a single TV deal? We wont know they real plan until 2018 or 2019. Until then they are continuing the old business model. I don't buy that they spent 3.9B unless they had specific ideas on how to expand the company. They are one of the smartest companies in the entertainment world.

You may be right.

But I'll wait to see how it plays out.

In the meantime, "WME is sum smrt!" isn't the sort of argument that quite does it for me.

 

[DragonRising]

Fertitta bros with dana/mac combo are the biggest gangsta in this bitch.
theyre gonna pull this off and get the ufc back at a fraction.

Drive the market up with overrated hype jobs, major risk, sell at highest, overhype some figthers to a sickening degree, watch it crumble, buy at lowest, classic game. Cant believe the Jews got played by the Italians in this deal..

 

[jeremyemilio]

To be fair to WME, they also have the IP. That's huge because they also hold it for all the affiliate companies to a point (depending on their varying deals).

The company I work for would seemingly have little in the way of asset.... unless you know the value of making 90% of all UFC banner and shorts IP for the 6 years leading up to the Reebok deal.

This is true.

But it's also that sort of thing that makes it so hard for me to understand why anyone with $4 billion to spend on a sporting organization would purchase the UFC instead of, say, the Yankees. If you want to talk about an IP goldmine, that's where it's at. I could sell more Yankees caps in New York city alone in a year than I could UFC gear in the entire world.

 

[Dream Evil]

Step 1: Buy UFC
Step 2: ?
Step 3: Profit

They're right on track so far.

Underrated comment, right here.

 

[Based God]

From what I read around the time they bought the company, they paid that price banking on the fact they would be able to get a $400+ million a year TV deal when the current Fox deal expires next year. Lately I've been reading no TV company is willing to give them anywhere near that.

Fox gives them around $90 million a year for pretty mediocre ratings. I don't see why anybody would up that to $400+ million, but who knows, these billionaires know more than me.

 

[DannyNL]

What problems?

-Roster of unhappy, disgruntled employees.
-PPV revenue down.
-Big draws like Ronda and Brock gone, current big draw Conor possibly done after the Mayweather fight.
-Antitrust lawsuit still ongoing.
-Mark Hunt lawsuit still ongoing.
-Bellator stealing fighters away.

Just off the top of my head

 

[Th3PlainTruth**]

its obvious that WME has been milking super fights and immediate titleshots for opponents who are draws rather than those who have worked their ways up the rankings so they can take huge cash grabs and pay off their debt. and even allowing the MAYMAC fight, so they can take a cut. once they finally break even, how do they manage the UFC? what is their big plan with the company that they felt it was worth 4.2 billion?

Fire dana white and find a promoter who is not so emotionally attached to his fighters by coddling them.

 

[blaseblah]

-Roster of unhappy, disgruntled employees.
-PPV revenue down.
-Big draws like Ronda and Brock gone, current big draw Conor possibly done after the Mayweather fight.
-Antitrust lawsuit still ongoing.
-Mark Hunt lawsuit still ongoing.
-Bellator stealing fighters away.

Just off the top of my head

Almost all of those are things they were dealing with before the acquisition.

They have had fighters complaining for a long time, and most of it has to do with money/Dana being a dick. Not a new issue.

Brock has been gone for years, he only came back for a single one-off fight. This is a made up problem.

Antitrust lawsuit was going on long before the acquisition. These things take years.

Bellator isn't stealing any fighters, they are signing talent the UFC is too cheap to pay.

Mark Hunt lawsuit is going nowhere.

The only notable thing you mentioned is ppv revenue being down, which is tied directly to Conor fighting 3 times last year and 0 times this year.

How long have you been following the UFC? It's natural for ppv revenue to have highs and lows. Last year was a banner year, this year is not. You can just look at the names headlining ppv cards and figure that out.

 

[SMYD]

What's going to happen to Sherdog once you stop starting shitty threads?

 

[mmafansince93]

its obvious that WME has been milking super fights and immediate titleshots for opponents who are draws rather than those who have worked their ways up the rankings so they can take huge cash grabs and pay off their debt. and even allowing the MAYMAC fight, so they can take a cut. once they finally break even, how do they manage the UFC? what is their big plan with the company that they felt it was worth 4.2 billion?

Next FOX deal rumoured at 300/M per year instead of 100M/yr. So there's that... also they will probably raise PPV prices by 5.00 again... Better endorsement deals based on The UFC brand awareness continually increasing.

In other words they will be just fine.

 

[86'd]

2.6% of the companies in the s&p 500 carry no debt. that's 13 out of 500. debt is normal.

I'd like a list of the companies that make up that 2.6%

 

[MikeMcMann]

Almost all of those are things they were dealing with before the acquisition.

They have had fighters complaining for a long time, and most of it has to do with money/Dana being a dick. Not a new issue.

Brock has been gone for years, he only came back for a single one-off fight. This is a made up problem.

Antitrust lawsuit was going on long before the acquisition. These things take years.

Bellator isn't stealing any fighters, they are signing talent the UFC is too cheap to pay.

Mark Hunt lawsuit is going nowhere.

The only notable thing you mentioned is ppv revenue being down, which is tied directly to Conor fighting 3 times last year and 0 times this year.

How long have you been following the UFC? It's natural for ppv revenue to have highs and lows. Last year was a banner year, this year is not. You can just look at the names headlining ppv cards and figure that out.

you need to understand that there is a hardcore number of shertards who will, regardless of reality, always proclaim the UFC is a dying model, and the only way Zuffa cashed out was by scamming and taking advantage of a naive bidders and buyers like WME and Fox Sports.

Lucky for Zuffa such naive business entities exist that do not know how to do the proper diligence that shertards are able to access.

 

[DannyNL]

Almost all of those are things they were dealing with before the acquisition.

They have had fighters complaining for a long time, and most of it has to do with money/Dana being a dick. Not a new issue.

Brock has been gone for years, he only came back for a single one-off fight. This is a made up problem.

Antitrust lawsuit was going on long before the acquisition. These things take years.

Bellator isn't stealing any fighters, they are signing talent the UFC is too cheap to pay.

Mark Hunt lawsuit is going nowhere.

The only notable thing you mentioned is ppv revenue being down, which is tied directly to Conor fighting 3 times last year and 0 times this year.

How long have you been following the UFC? It's natural for ppv revenue to have highs and lows. Last year was a banner year, this year is not. You can just look at the names headlining ppv cards and figure that out.

That's my point, a lot of this stuff was happening before the acquisition, so I'm wondering how they felt about this stuff because they had to think they could overcome it.

In regards to the PPV revenue thing, you're stating the obvious trying to sound like you have some insight. Yeah, no shit PPV revenues have high and lows. But PPV revenue is not like the ocean tide that comes in and out at a set time, or the sun that rises and sets every day. PPV revenue doesn't just roll back in eventually, the UFC is going to have to bring it back with big earners. And since you're taking such a patronizing attitude, maybe you can tell me who the UFC has coming down the pipe that's going to fill the void that Ronda left and the void that Conor might leave, because I don't see it.

Stars don't grow on trees. Boxing knows that all too well, they've had long dry spells. WME-IMG paying over 4 billion for a company that is potentially heading into a dry spot is a big deal, whether you realize that or not.

 

[Paynebringer]

The way the fighters are speaking out, the disrespect shown to certain fighters, the favoritism shown, the all around bullsh!t. This ship sinks if they can't do proper fights and keep their fighters happy & loyal f*king feels like Donald Trump is running things...

 

[rjmbrd]

You may be right.

But I'll wait to see how it plays out.

In the meantime, "WME is sum smrt!" isn't the sort of argument that quite does it for me.

You've made some thoughtful posts in this thread - let me play Devils advocate, just as an exercise thinking through this:

WME were the architects of the existing Fox deal. Arguably they know as much or more about packaging and selling content to all distribution verticals as any other company on earth.

We know there was a little funny business on the EBITA projections, considering the Fed shot a warning to Goldman, but generally speaking its safe to assume all the cards were on the table. WME went in to the bidding process with clear eyes, including their partners at Silver Lake.

So the content property experts, who are among the most successful packagers of entertainment content in existence, convinced their private equity partners - who specialize in growth capital in tech - that this deal made sense.

Presumably, they really believe they can get at or near the 400m they've led on in the press, and that includes off loading production of some events. That is an important point - they aren't attached to the product like Zuffa was, they will happily let a rights partner pay for and control production of televised events.

Over the top content is the future (read: Netflix, Amazon Prime, Hulu) and looks like a rocket taking off on a graph. They haven't announced plans for Fight Pass, but they have mentioned for the right TV deal they would include some or all control of it. That might be another 100m a year, especially for a cable operator that hasn't developed their own over-the-top platform yet.

Outside of that, they own a substantial vault of IP, and there are a lot of partner outlets worldwide that would pay 'something' for the catalog on going. They probably know something there we don't - most likely a few things we don't.

I think it'll be at least another year before their overall plan starts to be revealed.

 

[blaseblah]

And since you're taking such a patronizing attitude, maybe you can tell me who the UFC has coming down the pipe that's going to fill the void that Ronda left and the void that Conor might leave, because I don't see it.

You must be a new fan. This is short sighted. You're saying the same things people were saying when Silva lost, GSP retired.

Fighters come and go. That's not patronizing, it's reality.

 

[jeremyemilio]

You've made some thoughtful posts in this thread - let me play Devils advocate, just as an exercise thinking through this:

WME were the architects of the existing Fox deal. Arguably they know as much or more about packaging and selling content to all distribution verticals as any other company on earth.

We know there was a little funny business on the EBITA projections, considering the Fed shot a warning to Goldman, but generally speaking its safe to assume all the cards were on the table. WME went in to the bidding process with clear eyes, including their partners at Silver Lake.

So the content property experts, who are among the most successful packagers of entertainment content in existence, convinced their private equity partners - who specialize in growth capital in tech - that this deal made sense.

Presumably, they really believe they can get at or near the 400m they've led on in the press, and that includes off loading production of some events. That is an important point - they aren't attached to the product like Zuffa was, they will happily let a rights partner pay for and control production of televised events.

Over the top content is the future (read: Netflix, Amazon Prime, Hulu) and looks like a rocket taking off on a graph. They haven't announced plans for Fight Pass, but they have mentioned for the right TV deal they would include some or all control of it. That might be another 100m a year, especially for a cable operator that hasn't developed their own over-the-top platform yet.

Outside of that, they own a substantial vault of IP, and there are a lot of partner outlets worldwide that would pay 'something' for the catalog on going. They probably know something there we don't - most likely a few things we don't.

I think it'll be at least another year before their overall plan starts to be revealed.

Yeah. I don't disagree with anything here.

I've been saying for a long time that the UFC needs to make a calculated exit from the PPV model at some point here, even if it means a short term loss, or they're going to find themselves on the wrong side of a classic innovator's dilemma. I can't imagine that WME got into this without giving that very issue some thought.

I also think that WME believes the UFC ads value to their other promotional endeavours through crosspromotional opportunities. It will be interesting to see how they leverage Mcgregor v Mayweather.

There are all sorts of things they can do, here.

The only nuance I would add is that each one of those things involves either spending money in the short term, giving up some sort of stake in the company and/or its future profit potential to someone else with cash flow right now, or both.

Which is why I think no matter how you slice it, that $4 B is decades from being paid down.

 

[rjmbrd]

Yeah. I don't disagree with anything here.

I've been saying for a long time that the UFC needs to make a calculated exit from the PPV model at some point here, even if it means a short term loss, or they're going to find themselves on the wrong side of a classic innovator's dilemma. I can't imagine that WME got into this without giving that very issue some thought.

I also think that WME believes the UFC ads value to their other promotional endeavours through crosspromotional opportunities. It will be interesting to see how they leverage Mcgregor v Mayweather.

There are all sorts of things they can do, here.

The only nuance I would add is that each one of those things involves either spending money in the short term, giving up some sort of stake in the company and/or its future profit potential to someone else with cash flow right now, or both.

Which is why I think no matter how you slice it, that $4 B is decades from being paid down.

Emphasis mine, I think this is the most interesting view we get right now. Very well said.

Regarding $4b debt, anyone saying that is getting paid off is out of their mind. I didn't even realize what you were writing was within the context of that, lost that bit of the thread, just noticed you had some good insights.

WME will kick the debt can down the road, just like Zuffa did. Which gives us an interesting case study - The Fertittas famously pulled out the maximum disbursement allowable by the terms of their loan. For anyone else reading this (I know you understand what I wrote) Zuffa pulled ALL of the cash out of the company to pay themselves as profit, while paying down zero debt.

When the company hit a peak, they made a windfall exit.

WME came into this deal knowing they could pull out a substantial amount of cash and do exactly nothing with their debt other than pay interest and keep the wheels turning. A few years from now they probably assume they can exit to some of these other bidders or China if push comes to shove.

Cheers

 

[spinitch]

There debt issuers are aware of the debt repayment risks and naturally don't expect to lose their principal as well as collect the interest.

If business continues well the debtors will be confident the debt can be serviced and will continue loaning. The interest rates may fluctuate accordingly. If situation sours the debtors might become the owners or could resell to other investors like the other bidders.

The debtors will not allow lucrative management fees to be withdrawn like Zuffa unless performance objectives met. They may want more profit towards principal or toward capital if concerns over recovery depending on the convenants which I have no idea what exists.

Anyway the wild swag math presented earlier in the thread suggests could be a while like 40 yrs to service interest and principal which is just a guess. Could be sooner or never.

To those confident in business plans: Iridium! Lehman Brothers, Toshiba nuclear...

There are always risks the folks playing understand and given the market feel UFC an optimistic risk now. There are riskier unicorns out there.

 

[FrankFixer]

Pay it off? Aren't they supposed to sell it back to Lorenzo for 50 bucks in a year