If you can borrow money at 3.5% and leave your cash flow in investments that gain 12-15-20% then yes you borrow the money.
ZUFFA is not on the Dave Ramsey plan. 
It is normal they have significant debt since they have significant investments in for exampme their new HQ - I doubt that is paid in cash :)
The also most likely have significant assets.
The question is what is the enterpise value of the company.
Im other words: how positive are the UFCs future cashflows and if these easily can cover tgeir debt repayments while having significant assets then they r doing good business.
Also if they have big loans tgis can b seen as negative but also as positive since they would never get a big loan from a bank if this bank didnt believe they could pay it back. How? Yea with cashflows.
End of class.
Dougie -
I remember reading that they borrowed against the company to 1) get cash to do other things they want so they increase their business, and 2) discourage people from buying the company.
The way I heard the story is that Station Casinos were going under, Fertitta quickly became CEO of UFC, was behind the curtain in the Xyience scam and took loans in the name of UFC to bail out Station Casinos. Now people are paying top dollar for ppv's to pay back the money that was used to save Station Casinos, not on development of UFC/MMA.
Tombmatter -Dougie -
I remember reading that they borrowed against the company to 1) get cash to do other things they want so they increase their business, and 2) discourage people from buying the company.
The way I heard the story is that Station Casinos were going under, Fertitta quickly became CEO of UFC, was behind the curtain in the Xyience scam and took loans in the name of UFC to bail out Station Casinos. Now people are paying top dollar for ppv's to pay back the money that was used to save Station Casinos, not on development of UFC/MMA.
LOL at the Fertittas using their own money to bail out Station Casinos. That is not what happened at all. They cut a deal with their bankers to declare bankruptcy, take the company private, guarantee the banks got their money, and royally fucked over all their bondholders in the process. They wound up owning a higher percentage of a much more financially sound company without putting any of their own money at risk. It was a brilliant (and incredibly slimy) business move.
Lux Fixxins -Borrowing to invest in expansion is completely normal. You develop a plan to see how much your potential return could be off said investment, and weigh the risk/reward. It could be building a new UFC gym in another state, investing in new mats, etc.Dougie -That makes 0 sense.
I remember reading that they borrowed against the company to 1) get cash to do other things they want so they increase their business, and 2) discourage people from buying the company.
Not really that big of a deal. Lots of companies gets loans 
Fighter health insurance costs more than we were originally told.
Be funny if they couldn't pay and bailiffs came round and took mcgoober and rousey away as payment.
Station Casinos got the loot.
They have hundreds of millions to build their business and if they can't pay off their loans they just declare bankruptcy. It's a win win.
ChippewaBJJ -The Winter Soldier -
a lot of business majors in this thread.
LOL, no kidding. VTFU.
I laugh every time someone posts how much money the UFC 'made' based on the gate receipts. Or the genius above that posted how the Fox deal was worth $900 million. Yeah buddy... that's gross revenues. Deduct all of the expenses that the company incurs as a result of putting on their performances (of which you have no idea how to even guesstimate) as well as their SGA expenses and then you've got a rough idea of their net income before interest and taxes. Have you ever seen a set of financial statements from a large company before? Little more complicated than balancing your checkbook.
More than likely, the loan due will be rolled into another loan after a large balloon payment of some kind. You think a billion dollar company doesn't have any debt on its books? They've probably got a line of credit for tens of millions of dollars they could tap into at any moment. Microsoft retired (paid off) $1.25 billion in long-term debt in 2012 alone.
Threads about what the UFC is 'worth', or how much they 'made' based on PPV buys is a hilariously stupid conversation. They're privately held and will likely never divulge the financial statements necessary for you to have any clue what they are worth from a financial stability perspective. Any statement about their outstanding debt (better known as 'liabilities') is virtually useless without knowing what their current assets, total assets, and owner's equity numbers are.
The U.G is full of trailer park math majors and trailer park CFAs lol
JOB -Vu for a new phrase I hope to implement in near futureTravis Bickle -JOB - Fuck no, they are an extremely profitable company.
ok shill
Have a cup of fuck off, KKM.
Maybe the company doesn't make as much as people think on here. People fail to mention so many things such as international expansion, 500 employees, employee benefits, insurance, etc... If UFC made as much as people think, someone like Mark Cuban who access to the books would of started a competing business when he wanted to get in the business.
If it ain't Dutch, it ain't much - Maybe the company doesn't make as much as people think on here. People fail to mention so many things such as international expansion, 500 employees, employee benefits, insurance, etc... If UFC made as much as people think, someone like Mark Cuban who access to the books would of started a competing business when he wanted to get in the business.
Cuban did start a competing business (HDNet Fights), but he scuttled it after one event because he realized that promoting MMA is way less profitable than letting someone else take the risks and then buying their broadcast rights. Unlike most of the money marks who entered MMA in the post-TUF years, Cuban figured out early that it is a high investment, low margin business and got the fuck out before he lost his shirt.
It's normal for companies to take out loans as it allows them to invest without taking equity away from the shareholders. Also, for those saying that station casinos will pay off Zuffa's debt, these are two distinct corporations. It's not as simple as taking money from one pocket and transferring to the other. If Zuffa cannot pay its debt, they will file bankruptcy or take out additional loans. Companies don't operate like households.
Steve4192 -If it ain't Dutch, it ain't much - Maybe the company doesn't make as much as people think on here. People fail to mention so many things such as international expansion, 500 employees, employee benefits, insurance, etc... If UFC made as much as people think, someone like Mark Cuban who access to the books would of started a competing business when he wanted to get in the business.
Cuban did start a competing business (HDNet Fights), but he scuttled it after one event because he realized that promoting MMA is way less profitable than letting someone else take the risks and then buying their broadcast rights. Unlike most of the money marks who entered MMA in the post-TUF years, Cuban figured out early that it is a high investment, low margin business and got the fuck out before he lost his shirt.
Man, Cuban must be kicking himself now for missing out on all that driveway snow money.
I think Mark Cuban is doing OK for himself.
The UFC could possibly do just as Stations Casino's did, develop your business to whatever you envision, despite the costs. Once you are completed, declare bankruptcy on everything you owe and settle paying .10 cents on every $1 owed. Trump has perfected this method. It might be unethical but it has proven effective in making the rich get richer.
IT MEANS THEY HAVE A $425MM. CREDIT LINE COMING DUE AND IT WILL LIKELY JUST GET RENEWED THERE OR AT ANOTHER BANK.
DOES NOT MEAN IT IS A FULLY DRAWN $425MM TO BE PAID BACK.
Source: it's my job.
Steven McTowelie - IT MEANS THEY HAVE A $425MM. CREDIT LINE COMING DUE AND IT WILL LIKELY JUST GET RENEWED THERE OR AT ANOTHER BANK.That's something that could be true, but unless you are their accountant, there's no way to know for sure. Lines of credit are a great way to invest in capital and plenty of businesses do it.
DOES NOT MEAN IT IS A FULLY DRAWN $425MM TO BE PAID BACK.
Source: it's my job.
Just curious, what makes you so sure that's what it is? Not questioning your knowledge, just want to hear you reasoning.
MasterofMartialArts -Corporate finance is much different than say a car loan or marriage.Steven McTowelie - IT MEANS THEY HAVE A $425MM. CREDIT LINE COMING DUE AND IT WILL LIKELY JUST GET RENEWED THERE OR AT ANOTHER BANK.That's something that could be true, but unless you are their accountant, there's no way to know for sure. Lines of credit are a great way to invest in capital and plenty of businesses do it.
DOES NOT MEAN IT IS A FULLY DRAWN $425MM TO BE PAID BACK.
Source: it's my job.
Just curious, what makes you so sure that's what it is? Not questioning your knowledge, just want to hear you reasoning.
Unless it is a term loan (it is NOT a $425MM term loan lol) then it is not really intended to ever be paid back.
Most companies run on debt, even if they are profitable, it just makes more sense, but they manage that debt (unless they are burning cash every year and it gets out of control).
UFC doesn't have that many tangible assets really (goodwill?) because they don't make anything. This is likely a cash flow loan and as I said, when it comes due it will either be renegotiated and renewed or UFC will get financed through another bank to pay out the facility at the current one.
If they are fully drawn then they have some issues lol.
I was part of a deal that everyone here would know of that was a $500MM line the company didn't draw a penny against before paying it out a year later. This happens sometimes as well as the debt just shows access to capital for potential investors and what not.