WME-IMG has to pay $100mill/year just on interest

Well, irc, Rupert Murdoch and other incredibly successful businessmen invested in Theranos, so it's not like people never make huge mistakes.
Same thing for, let's say, Goldman Sacks or JPM setting, all the time, a completely different target price to a stock and so on.

Anyway, I'm interested in seeing how they'll be able to significantly grow those 200M a year in returns.
 
That is why the Fertitas and Dana are still laughing their asses off...horrible investment. Frank and Lorenzo were smart to sell when they did to avoid all this union, Ali Act, and whatever else is coming the UFC's way.
 
dsdoubled said:
Serious question, wouldn't it be a B.S. in Finance? Is finance considered an art or science?
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It would depend on the school he got it from and what courses he took to complete his degree, if he supplemented his business courses with mostly classes from English/History/Sociology etc he could have received a B.A. in Finance.
 
DanaWhitesButler said:
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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A company which has a record profit year of 150 million that has large fluctuations yearly due to it's dependence on generating a large amount of its profits/revenue from an unpredictable source such a PPV doesn't scream out being worth 4 billion to me.
 
One MMA Fan said:
Well that's what it is to the root of it.. the current ones and the projections for the future.

What do you think they did ? some black magic or what.
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If all your doing is looking at financials for a merger, and thus think that is the be all and end all, you're going to lose your ass. There's a reason 80% of mergers fail, and I'm pretty every single one of them has come up with some type of financial reason to support their decisions.

That doesn't mean they know what they know are doing, and in the case of WME-IMG, it seems they are completely out of their depth with what they project this thing can be and how fast.
 
Siesta said:
Loan was for 1.8 not 4.2.
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Ah, so WME-IMG had 2.4 bill on hand and took out a 1.8 bill loan? Hmm, that changes things. That would be right around a 5.6% interest rate, not including what they have to pay of the loan itself. Still, could be worse.
 
Well I mean if you look at the peripherals and expound on the compounding of the variables taking into account current rates and inflation along with depreciation as well as the values of expiring contracts and costs of living raises that will kick in over the coming years I think they are either in too deep to Maintain current levels of profitability. Or these payments might be completely manageable and actually advantageous to the companies continued strong growth. It's really tough to say.
 
paying interest isnt necessarily a bad thing as long as they make more money off it.
 
Fertittas should've sold UFC to Tencent Holdings($206 billion market value).
 
Thick_Strong_Tight said:
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....
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Well said. Was about to go into my normal tirade on this subject but you covered it all.

The main thing of significance from your post is the question about other possible revenue streams these guys have sighted. Even though we don't know the details, it's truly hard to fathom how they would buy this at that price without drastic plans to diversify their income.

They have something big up their sleeve. Whether it pans out or not is anyone's guess, but I think it's safe to say these guys did not pay $4B banking on PPV, Fox, Merchandise, UFC Gyms and a terribly panned Reebok deal to make money.
 
One MMA Fan said:
Well I'm sure there not all stupid... as much as we like to make fun of them.

They looked at the financials and said this can be done and come out good in the long run.
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HP said the same thing with Compaq and Palm; NewCorp said the same thing with MySpace...businesses much larger and more successful than WME-IMG have made poor acquisitions.
 
BForrester said:
HP said the same thing with Compaq and Palm; NewCorp said the same thing with MySpace...businesses much larger and more successful than WME-IMG have made poor acquisitions.
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Yea show me the competition for UFC ?.. there is none.. that's the beauty of it.
 
Grappleboxing said:
Looking the total though, 4.2 billion, wouldn't 100 million be just less than 2.5% apr? Not terrible, considering the loan amount?
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That's assuming they financed the whole amount though.

That APR seems too low so they probably had some cash they used.
 
BForrester said:
HP said the same thing with Compaq and Palm; NewCorp said the same thing with MySpace...businesses much larger and more successful than WME-IMG have made poor acquisitions.
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Yup.

And the people that knew the absolute most about the UFC - the Fertittas - decided the UFC wasn't worth as much as the offer they got.

These business deals are super hard for even the smartest and most knowledgeable to know the outcomes of.
 
NotoriousMillions said:
If all your doing is looking at financials for a merger, and thus think that is the be all and end all, you're going to lose your ass. There's a reason 80% of mergers fail, and I'm pretty every single one of them has come up with some type of financial reason to support their decisions.

That doesn't mean they know what they know are doing, and in the case of WME-IMG, it seems they are completely out of their depth with what they project this thing can be and how fast.
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They are the only real big player in the world of MMA.

Fighting / live sports / no competition alright.. UFC will be here for many years to come enough for WME to get their money back and make a profit.
 
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