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

[BForrester]

Yea show me the competition for UFC ?.. there is none.. that's the beauty of it.

I'm not claiming it was a good or bad investment. I don't have the numbers nor the savvy to make a claim one way or the other.

Competition or not, the UFC finds themselves in short supply of stars. All it takes is a few cards ruined by injuries, a few defections to Bellator, or a big-name retirement and their PPV numbers go right back to the 2-400,000 neighborhood.

 

[Davemeddlehed]

They’re ? this one we goo now ?

Correct.

There = place(over there)
Their = ownership of something(their left hand)
They're = they are(they're coming right for us, Ned!)

 

[Darkart]

If the Fertittas are selling ANYTHING, and you are buying, you are a dumbass.

 

[One MMA Fan]

(they're coming right for us, Ned!)

Thanks.

Also what happened to Ned. XD

 

[theycallmeskidmarks]

ITT a bunch of pizza delivery drivers who illegally stream fights from their parenys basement, talk business.

 

[capnlarge]

I think the plan was to start seeing major profits after a lot of years. They are banking in the fact that UFC has very little competition and that MMA is a sport that people are still going to want to watch 10, 20, 50 and 100 years from now.

 

[Milgrim]

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....

Wait a minute! You know what you're talking about? You can't post here!!

 

[rjmbrd]

I think the plan was to start seeing major profits after a lot of years. They are banking in the fact that UFC has very little competition and that MMA is a sport that people are still going to want to watch 10, 20, 50 and 100 years from now.

I think somewhat the opposite, they believe they can do it with a fast turnaround.

It's already been widely reported that they are asking for 4x the current rights deal they have from FOX or the highest bidder, and they are free to negotiate starting 2017. They've also made known they are looking to let their partner take over production of those events, giving up control but lowering their costs.

They immediately fired nearly every executive in the entire company, and are now running a skeleton crew. So the goal is off load all of the production to whomever gets the rights deal, increase the stable revenue coming from those rights by up to 4x of what they get now, and do all that within the first year since they've taken over.

It's a big gamble but nothing about it says long play. It's all now.

 

[Grappleboxing]

That was a bit harsh bro.

Sorry, we cool platinum bro?

 

[ArtOfDrowning]

Oh no, Marky Mark will need to make more shitty generic movies to keep money flowing in.

 

[Dana_is_your_GOD]

Sorry, we cool platinum bro?

Yeah bro, plus I'll add you to the PMP army.

 

[Rational Poster]

$4.2 billion was already a terrible investment regardless of Fox deal if you ask me.

Assuming the FOX deal goes through and there is ZERO growth going forward.. they'd still be profiting in less than 20 years..

 

[galleryy]

I love these kinds of threads when the Sherdog business savants just come out of the woodwork to give us their analysis

you are most welcome, madam

 

[ImNotSurpisedDonks!]

$4.2 billion was already a terrible investment regardless of Fox deal if you ask me.

haha and they only got close to 4.2 because of one man, who looks to be leaving. The Fertittas were brilliant at choosing when to sell! They sold before the calamity of 200 and when Conor was fighting on the reg and the UFC was able to do 10mil gates every few months. And then, they also had GSP possibly returning (not happening now), Ronda returning (now news this may be her last fight and no idea what she will draw), Brock fighting (pissed hot), Jones (pissed hot and a total f up) and a fighters union on the rise.

If that is true, if they owe 100m a year in interest, they are ROYALLY f'd. Even if they pay Conor, he's going to want dem BIG bucks and they won't be able to do this 92/8% split anymore. It's no wonder they didn't pay GSP; they couldn't! Big events happen with big cash flow and UFC just did it's worst selling PPV since 191, in a card that would have possibly broke records w/ GSP.

 

[ImNotSurpisedDonks!]

Assuming the FOX deal goes through and there is ZERO growth going forward.. they'd still be profiting in less than 20 years..

Growth based on what? Last year or this years numbers? Because if Conor is gone, GSP is gone, Ronda is gone, then they will be lucky to do in 2017-2018 what they did in one quarter in 2016. And as when Tyson left the HW division in boxing, we could be looking at the same type of nosedive unless some new big stars come around.

2015-2016 was like the Brock years, it was a perfect storm and lightning in the bottle. There was a massive lull in growth after Brock left but the Fertittas weren't 100 mil in the hole a year and believed in the sport. And worse yet for the UFC, they were only ever able to make such profits because they f'd over the fighters so greatly and totally monopolized the sport. They were paying people like Ronda 100k when she was pulling in near 1mil ppvs, paying Conor 3.5 mill on a card that generated near 100 million revenue and those days are gone or going quickly with the fighter's union, the fighters federation, multiple lawsuits, big stars saying "pay me more", more and more fighters wanting a 50/50 split and all this other stuff that is threatening their past profit ratio.

I honestly think the Fertittas knew all this (heck most Sherbros did), they knew they had lightning in a bottle and that the ship was going to nose dive. And like any great businessman, you sell when you think you can get the most. To me, it sounds akin to a bunch of boardroom numbers people buying Don King Promotions in the mid 90's and not understanding any of the other intangibles. And I don't know any of the details, how much money they have and how long they can keep taking hits for, but it certainly seems like it was an incredible risky investment and dependent upon more 'Conor McGregors' frequently popping up and be willing to fight for pennies.