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Ebitda of more than 400 million last year, 100 mil to service debt. That's not an unreasonable ratio for a company attempting to grow via acquisition as quickly as they are.
WME-IMG has to pay $100mill/year just on interest
- Thread starter OneGloveGracie
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Ebitda of more than 400 million last year, 100 mil to service debt. That's not an unreasonable ratio for a company attempting to grow via acquisition as quickly as they are.
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You don't need to be a business savant to know that this was a terrible investment. The UFC/Zuffa being sold for a little over 4 billion will go down as one of the worst ventures in entertainment history.
Remember when just about every other person predicted that the Amazon Fire phone would fail? How did that go again? Oh right... Amazon lost close to 200 million on that silly pet project.
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Serious question, wouldn't it be a B.S. in Finance? Is finance considered an art or science?
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Surely not.
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I know, Sherdogger are savvy business men, dick pill experts, PPV analysts, brazilian hating bunch
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Well there goes the theory that the Fertita's where the ones responsible for the UFC investment.
They had so much confidence in their product that they put OTHER PEOPLES money to bet on it......That way if it goes belly up, the Fertita's don't lose.
They had so much confidence in their product that they put OTHER PEOPLES money to bet on it......That way if it goes belly up, the Fertita's don't lose.
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I guess you know something different than the dozens of professional analysts with all of the private financial data from Zuffa don't know. Something that the board of directors also don't know. What is it that you know? I would be very interested.
I remember a time back in the 1990s when everyone thought ecommerce was a stupid idea because nobody would ever enter their credit card information into a website. The folks at Amazon sure were dumb fucks for trying that idea.
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Eh, just be glad its not another 'is Conor's dick bigger than Floyd's' threads. Inb4 Jin.
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You are right, it is a science. I think what he meant was he had a BS/BA or a bach of science in business administration, with an influence in finance. That'd be my guess.
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I agree, and I'm not being sarcastic. I sincerely do love these threads. They're always unintentionally hilarious.
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Well no - that is the projection they made up to get the deal done within leverage guidelines. In fact the projection is 300m. They got a 'watch it' from the Fed because of it.
EBITDA was 170 million. (source: WSJ)
Regarding TS, WME-IMG is owned by Silver Lake, or more specifically they own 51% of WME-IMG. They manage 26+ billion in assets.
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The integrity of the sport is being flushed down the toilet each and every day because WME-IMG bought a business they can't really afford. But they bought it, using someone else's money, due to the fact that they can pay themselves hundreds of millions on bonuses and management fees if they hit certain financial targets.
The UFC is going down the shitter. Lorenzo cared about his wallet, but also about the sport. WME-IMG care nothing for the sport. And we see it over and over again. To be honest, it is turning me off MMA. The thing I like about MMA is that it is the opposite of boxing. Well, we are headed in the direction of boxing at a frightening pace.
I am losing interest. Phoney belts. 'Divisions' that are jokes. Stupid matchmaking. Fights announced just weeks before they take place. Cards coming together at the last minute.
2017 could be a year with devastating implications for the sport we know and love.
The UFC is going down the shitter. Lorenzo cared about his wallet, but also about the sport. WME-IMG care nothing for the sport. And we see it over and over again. To be honest, it is turning me off MMA. The thing I like about MMA is that it is the opposite of boxing. Well, we are headed in the direction of boxing at a frightening pace.
I am losing interest. Phoney belts. 'Divisions' that are jokes. Stupid matchmaking. Fights announced just weeks before they take place. Cards coming together at the last minute.
2017 could be a year with devastating implications for the sport we know and love.
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Sorry, I mean't WME-IMG's number. I was talking about their ability to service their debts. Not the UFC deal specifically.
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That means what exactly? You're qualified to assess a business? GTFOH.
There is plenty of information available. It's been widely reported they borrowed approximately half of the 4.2B for the purchase. If you take $2bil and use a 5% interest rate you come to $100,000,000. Assuming this debt (The $2 billion or so) is amortizing on a 7-10 year amortization and you get some pretty stiff debt payments annually.
If memory serves it was being pretty heavily reported the Net operating income for the UFC was $200MM last year meaning they did infact pay a fairly steep price for the cash flows they were receiving. Any financial professional would have been able to tell you they were going to look to offset that by trimming fat and with the potential of new contracts. I assure you they would not have paid $4.2B for $200MM a year in returns and no plan to significantly grow that. That amount would leave them struggling to even cover overall debt service.
I believe there is significant risk the enormous purchase price of the UFC and the crippling debt that accompanies it may be an overwhelming burden. I hope I'm wrong.
Source: Bachelors in Finance/Economics, Graduate Degree in Banking, Senior Vice President of a Bank
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And how many of the people commenting in this thread and voicing their opinion about this deal have the background and education you do and have researched that information?
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LOLOLOL..I didn't know it was as easy as looking at financials.
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I'm sorry, I am not normally one to criticize an OP, but as someone with a finance background, I can't help myself. First off, if you have $100M in interest payments annually, you are well past the point of "falling into debt"....perhaps bankruptcy is the word they are looking for, but you definitely already owe creditors if you are paying interest!
Furthermore, assessing the price paid for the UFC at $4.2B is hard to do without detailed financials; same goes for interest. $100M in annual interest payments is not hard to manage if you have $10B in pretax income; likewise paying $4.2B for the entire organization means nothing without any idea of the adjusted cashflow (money that would otherwise be profit, that can be used to repay interest and debt).
If we go on the assumption that revenue was tracking at approx $600M, with $200M in EBITDA, then I would tend to find the alleged $4.2B price high, personally, however this could depend on a lot of different factors. Are large TV broadcast deals coming up soon? Is there a lucrative Reebok contract inked that we don't know about? Is a big cut to the roster likely to help the bottom line? We don't know.
20X Ebitda is very, very high for an LBO, almost unbankable without leads me to believe there is further information not being shared. Most banks/Subordinated creditors would not be interested in financing a buyout with interest coverage at 2:1 or less, but anything is possible in such a low interest world....
Furthermore, assessing the price paid for the UFC at $4.2B is hard to do without detailed financials; same goes for interest. $100M in annual interest payments is not hard to manage if you have $10B in pretax income; likewise paying $4.2B for the entire organization means nothing without any idea of the adjusted cashflow (money that would otherwise be profit, that can be used to repay interest and debt).
If we go on the assumption that revenue was tracking at approx $600M, with $200M in EBITDA, then I would tend to find the alleged $4.2B price high, personally, however this could depend on a lot of different factors. Are large TV broadcast deals coming up soon? Is there a lucrative Reebok contract inked that we don't know about? Is a big cut to the roster likely to help the bottom line? We don't know.
20X Ebitda is very, very high for an LBO, almost unbankable without leads me to believe there is further information not being shared. Most banks/Subordinated creditors would not be interested in financing a buyout with interest coverage at 2:1 or less, but anything is possible in such a low interest world....
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