Is the sale of the UFC on the horizon?

Underground
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http://www.awfulannouncing.com/2013/june/is-a-sale-of-the-ufc-on-the-horizon.html

Lenne Hardt posted this link on FB

 

Three and a half years ago, the UFC sold a 10% share of their company to the Abu Dhabi-based Flash Entertainment. It was the first sale of UFC equity since Zuffa bought the company nearly a decade earlier. But could another sale of a much larger piece of the company be on the horizon? It might not be as far-fetched as you think.

The UFC has a $425 million loan due in 2015. A Bloomberg post from last summer claims that the UFC makes $500 million per year in revenue, and while the Fertitta brothers (who each own 40.5% of the company) are billionaires, that's still a huge chunk of revenue that would be needed to pay the loan. Having some capital infused into the company via a partial or full sale could ease the burden on the company's current owners and not cripple the future financial flow of the UFC.

There's the matter of the Fertitta-owned Station Casinos, which entered bankruptcy in 2009 but managed to exit two years later, Revenues for the first quarter of 2013 were down 2.0% from a year ago, and the company still has over $2 billion in debt due to long-term loans (though the Fertittas sold off a chunk of the company to escape bankruptcy).

As for the company itself, the UFC is seemingly plateauing a bit. The company has reportedly had seven pay-per-views crack 500,000 buys since the beginning of 2012, down from 13 over the 2008-09 time period and 15 over the 2010-11 time period. There's also a lack of marketable stars being built, as of those seven high-selling PPVs, all have involved one (or two) of Georges St Pierre, Anderson Silva, Junior dos Santos, or Chael Sonnen. With St Pierre dabbling in movies, Silva aging, and Sonnen's allure as a contender gone, there's not a lot of stars to carry the mantle. The UFC's cards on Fox, FX, and Fuel haven't really moved the needle since their debut either, though the UFC's presence on Fuel has at least prevented the channel from being a barren wasteland.

So who would be a logical buyer for the UFC? The immediate name that comes to mind is Fox. Viacom bought a majority piece of UFC competitor Bellator and is attempting to build them up the same way the UFC was built up in 2005 on Spike (it's not working so far). With the potential resources of the Fox machine behind the UFC, money and promotion wouldn't be a problem at all going forward. There would probably also be more motivation from Fox to position the UFC prominently as one of the seven pillars on Fox Sports 1, and that could force more mainstream media to accept the UFC as more than just a trend, and something that's here to stay.

Now, keep in mind that this is all hypothetical. If anyone pitched this idea to UFC president Dana White, he'd probably unleash a series of expletives in response along with descriptions of our current mental state. But everything seems to be sliding into place for something to happen with the ownership of the UFC, and I'd bet on it happening near the high water mark as opposed to when or if a freefall begins.
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the Fertittas will sell off another portion of the company but not for the reasons this article states.

The Fertittas only need 51% of the company to maintain control so they have roughly 30% they can sell.

They will eventually sell that 30%... the question is when. Im sure they would love to sell 30% to fox.

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Teehehe!- There's some financial ignorance in this thread. That bank loan they have can and probably has been refinanced. There has been a HUGE glut of corporate bank loan refinancings in literally the past two months. This is due to the ultra low re-fi rates and the premonition of rising rates in the coming months. The lending syndicate may demand slightly higher rates of interest from Zuffa if they are not doing as well as usual but that's about it. Bank loans are typically structured to mature in 6 years but they typically only last ~2.5 years before they are refinanced, etc. Do you really think the Fertitas are going to cash out right before Fox Sports potentially provides serious competition to ESPN and Zuffa has one of the premiere assets on their channels? Phone Post

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It's a retarded concept.

That loan due in 2015 is meaningless. Zuffa will pay it off the same way every company pays off maturing debt ... with new debt. They aren't going to make a balloon payment of $425 million. They're going to take a new loan to pay off the old one and continue 'business as usual'.

Debt is a good thing for owners. It limits their personal financial exposure. Station Casinos is a perfect example of that. When the company got overextended in 2007 and was on the verge of bankruptcy, the Fertittas worked out a sweet deal where most of their debt just went 'poof' and disappeared. The bankers were faced with a choice of being hardasses and possibly getting none of their money back, or cutting the Fertittas a sweetheart deal in exchange for being certain of getting most of their money back. The bondholders got fucked, but the banks got most of what they wanted and the Fertittas made out like bandits.

They might sell Zuffa one day, but it won't have anything to do with debt. When they sell, it will be because they are tired of the MMA business or because someone makes them a ridiculously lucrative offer that is too good to pass up.

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^With all of that said Lorenzo seems bright enough to realize that the Fed and the shithead President have utterly fucked our economy with monetary stimulus and he is trying to cash out before the piper must be paid. Once the stagflation and/or the economic depression kicks in nobody is going to be buying PPV's anymore. Fertitta ain't no dope so it's always possible. Phone Post

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Steve4192 - It's a retarded concept.

That loan due in 2015 is meaningless. Zuffa will pay it off the same way every company pays off maturing debt ... with new debt. They aren't going to make a balloon payment of $425 million. They're going to take a new loan to pay off the old one and continue 'business as usual'.

Debt is a good thing for owners. It limits their personal financial exposure. Station Casinos is a perfect example of that. When the company got overextended in 2007 and was on the verge of bankruptcy, the Fertittas worked out a sweet deal where most of their debt just went 'poof' and disappeared. The bankers were faced with a choice of being hardasses and possibly getting none of their money back, or cutting the Fertittas a sweetheart deal in exchange for being certain of getting most of their money back. The bondholders got fucked, but the banks got most of what they wanted and the Fertittas made out like bandits.

They might sell Zuffa one day, but it won't have anything to do with debt. When they sell, it will be because they are tired of the MMA business or because someone makes them a ridiculously lucrative offer that is too good to pass up.

This man is dead on accurate. Phone Post

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Another silly concept in the article is that the UFC has plateaued. That might be true of their domestic PPV business, but they have done a bang-up job over the last few in diversifying their revenue streams. Their Fox deal pays them nearly triple what Spike used to pay them, Brazil and Canada have turned into ridiculously lucrative markets, and they are signing new TV deals and opening new markets every month.

Their PPV business may be down since it's BROCKLESNAR peak, but everything else is way up.

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Hm interdasting Phone Post 3.0

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Great thread- i love when people who actually know their shit post here! Phone Post 3.0

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Willin and Steve4192 have been voted up for dick slapping the correct

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Steve4192 - Another silly concept in the article is that the UFC has plateaued. That might be true of their domestic PPV business, but they have done a bang-up job over the last few in diversifying their revenue streams. Their Fox deal pays them nearly triple what Spike used to pay them, Brazil and Canada have turned into ridiculously lucrative markets, and they are signing new TV deals and opening new markets every month.

Their PPV business may be down since it's BROCKLESNAR peak, but everything else is way up.


This.  the PPV business has def peaked imo but they are still doing decent numbers.  But like you said its the Fox deal, the Globo deal, the new tv deal in Mexico, deals in China and new UK tv deal.  They are growing and making revenue from that so even if PPV numbers are down from 2010 which they are, they still are making more money in other areas. 

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I'll bet Anderson Silva, GSP, Chael Sonnen and Cain Velasquez could buy up that 30%.

Dana already says those guys are paid a lot and no one here is privy to those PPV bonuses or locker room bonus checks.

Those guys buy up 30% and start a NWO faction.

That's what happens. Phone Post

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JetSetter - That $500 million debt means nothing. With rates as low as they are there is now way any smart businessman would pay that off with cash from a sell of a portion of the company. Phone Post 3.0

Why sell off a portion of the business for 500 mil when it could be worth a billion in 10 years. A smart business man would restructure the loan at a low rate. Just like someone previously posted they will pay off old debt with new debt or if they have the money pay it off. I think selling it would be a horrible decision especially with how rapidly it is expanding, the fox deal they are just starting to tap into, and potential new countries they are bringing into the game like Africa, Russia, the mass expansion in Brazil etc. Phone Post

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how much did they sell that 10% for?

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Their debt was already refinanced. Their term loan goes until 2020 now.

I just saw this a bit ago from a CRA.

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JeffersonDArcyChoke - I'll bet Anderson Silva, GSP, Chael Sonnen and Cain Velasquez could buy up that 30%.

Dana already says those guys are paid a lot and no one here is privy to those PPV bonuses or locker room bonus checks.

Those guys buy up 30% and start a NWO faction.

That's what happens. Phone Post
Lol...no, they don't make that much that they could afford to buy up 30% of the UFC. Phone Post 3.0

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Absolutely. Soon as GSP, Silva and Jones are retired, that will be it. They will def sell then. Phone Post

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Leghound -

Willin and Steve4192 have been voted up for dick slapping the correct

Thank you, kind sir. Yea I'm sure Zuffa would have no problem securing a much larger loan if they needed it. No sweat. Debt isn't going to be the cause for a sale. The imminent unwinding of the monetary stimulus based upon Ben Bernanke's comments yesterday and the resulting inevitable global economic malaise/depression could sure inspire a sale. Like I said, Lorenzo has a very keen mind based upon what I've heard in interviews. Buy low, sell high! They should offer it to the enormous purse-strings of Viacom and saddle them with a stinker within the next two years while Lorenzo, Frank, and Dana take a TRT fueled death defying motorcycle ride into the sunset. Phone Post

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Willin - ^With all of that said Lorenzo seems bright enough to realize that the Fed and the shithead President have utterly fucked our economy with monetary stimulus and he is trying to cash out before the piper must be paid. Once the stagflation and/or the economic depression kicks in nobody is going to be buying PPV's anymore. Fertitta ain't no dope so it's always possible. Phone Post
Yes.. That is why all the immenent economist seem to agree with the presidents policies. That 's why the market respons favorably. And that is why letting a company go bust or agressively restricting the money supply and cutting cost like where doing in the EU works so well. Phone Post 3.0

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I think the UFC dropped a brick by building the brand over the stars.

Rory, Mendez, Reem etc could have been today what Chuck, Randy & Tito were yesterday. But they chose to build the brand instead..

The UFC needs a whole new facelift. From a live show to the DVD release, it's just seriously outdated.