Standard & Poor’s revises Zuffa outlook to negative

November 20, 2014

The Standard & Poor’s Ratings Service has revised Zuffa, LLC’s financial outlook to negative from stable on weaker operating performance.  It has indicated that it anticipates a 40% decline in EBITDA in 2014 and credit measures will weaken due to the decline.

In a press release disseminated by S&P, it stated that the negative rating reflects its “belief that Zuffa’s operating performance will deteriorate significantly in 2014, resulting in very weak leverage in the high-5x area.”

In addition to the change to the negative outlook it is affirming its “BB-“corporate credit rating.  The “BB-“ credit rating was assessed last month.  The concern for Zuffa is that a negative outlook may mean that S&P may lower Zuffa’s “BB-“ rating.

More from the press release:

“The negative outlook revision reflects our updated forecast for 2014 EBITDA to decline approximately 40% (compared to a decline of 30% previously), primarily due to a change to a marquee fight card in the fourth quarter of 2014 as a result of another fighter injury causing anticipated pay per view (PPV)  buys and event ticket prices to decline further, as well as higher remarketing expenses for the event, and additional costs related to the company’s international expansion,” said Standard & Poor’s credit analyst Stephen Pagano.

S&P now expects Zuffa’s cash flow/debt leverage to increase to the “high-5x area at the end of 2014.”  In its October 2014 report, it had predicted Zuffa to be in the 3 range.  The cash flow/leverage is based on a scale of 1-6 with 1 being minimally leveraged to 6 being highly leveraged.  Zuffa is now pegged as 5 whereas S&P had forecasted it being a 3.

Payout Perspective:

Obvious bad news for Zuffa as the change in outlook is based on Cain Velasquez’s injury forcing him to drop out of UFC 180.  It ties in directly to the assumption that the PPV buy rate will be low once again – an issue that Dana White recently acknowledged.  What the change in outlook to negative means is that it will increase the cost of borrowing by Zuffa.  As the company falls deeper into debt, its ability to obtain credit will get harder.  The forecast painted by S&P reflects the fact that it no longer believes that the company will be able to turn it around this year or next to address its debt obligations.

With the new lower, negative outlook on its debt, Zuffa will have a lot of pressure to forge new television pacts overseas and push the profitability of Fight Pass.  We may also see initiatives like a formal drug testing policy put off if costs are too high.  We will also see if Zuffa attempts to address the issue of fighter injuries which causes the instability and uncertainty of events.

MMA Payout will keep you posted.

35 Responses to “Standard & Poor’s revises Zuffa outlook to negative”

  1. The Greatest on November 20th, 2014 4:42 AM

    HAHAHAHAHA

    Go ahead and spin this one D.
    Looks like the UFC is going out of business.

  2. tops E on November 20th, 2014 4:46 AM

    HahahahahA…..sinking ship…schedule for 2015 act of desperation for dw….ufc bubble about to burst…creditors not buying dw b.s.

  3. tops E on November 20th, 2014 4:49 AM

    Its going down big time…..hahahaha…..bigger than soccer lol

  4. LeonThePro on November 20th, 2014 5:11 AM

    One has to wonder how many fights the UFC is obligated to put on for FOX. This has to be the only reason they are pushing forward with a massive amount of events again in 2015, spreading themselves thin, and decimating their North-American fan base.

    With a hefty amount of fight cards, and regularly occurring injuries, the UFC cannot maintain 13 stacked PPVs. Which really, is what a customer who shells out $60 deserves. What a disaster it has been in 2014. If there were 6 big PPVs, each selling 500-750k in 2015 it would be more sustainable, and have a better buy rate than this year’s mess. Seems like 13 is way too much, they’ve cancelled a PPV for the past 2 years and 2015 will likely not be any different. The UFC is not obligated to put on 13 PPVs so if hasn’t been working, why not welcome a change.

  5. Jack Torrance on November 20th, 2014 5:29 AM

    Does this mean the Zuffa paid posters on here are going to take a paycut?

    Keep your chin up guys.

  6. FightBusiness on November 20th, 2014 6:53 AM

    the UFC is in trouble. It needs to just have 3 ppv’s a year and give the rest away to Fox. They can get consistant capitol by doing that. They also have a recruiting problem. No one wants to be an mma fighter any more. why would they? all they will get paid is 100k a fight and if there awesome 3 million.

  7. Jack Torrance on November 20th, 2014 8:24 AM

    People need to pay attention to the Poker company folding, some people have said they bought a technology company to develop the poker software and that cost them $25-30 million alone.

    The good news is if the Fertitas run the UFC into the ground they will just declare bankruptcy and re-buy the company on pennies on the dollar like they did station casinos.

  8. saldathief on November 20th, 2014 8:38 AM

    you don’t need to read Standard and Poor’s to find this out! just read my, and others posts!!! So fucking easy to see this, only a true IDIOT would believe otherwise. We have a few Idiots in the cowed here I see. Too bad for Zuffa they fucked themselves!

  9. LeonThePro on November 20th, 2014 8:50 AM

    *my mistake they cancelled a ppv in 2012 and 2014.

    @FightBusiness I would say maybe 4 PPVs would do, 4 giant ones filled with only champion and contender bouts. Something to really hype up and this way when a fight or 2 is canned it wouldn’t be so devastating.

  10. d on November 20th, 2014 8:55 AM

    Hey, the GAYEST is back.

  11. d on November 20th, 2014 8:56 AM

    As is SalDaQueef!

  12. d on November 20th, 2014 8:58 AM

    Leon is desperately trying to use jedi mind tricks for the UFC to cut back on their ppv’
    s in 2015, so that he doesn’t have to either cut and run or call himself the Schmo by the end of 2015. He is too stupid to realize all of those injured fighters will be back and they will be doing another good year of ppv buys, unlike the injury riddled 2014, regardless of the fact that they will have basically the same number of shows that they had in 2014.

  13. Anti Trolls on November 20th, 2014 9:07 AM

    wow this site shoud be named ufchater.com

  14. LeonThePro on November 20th, 2014 9:27 AM

    Classic DforDelusional blind to the writing on the wall. Nothing new here. 5M ppvs hahaha.

  15. d on November 20th, 2014 9:28 AM

    Yeah, it is a non stop troll fest with people who hate mma, yet obsess about it.

  16. LeonThePro on November 20th, 2014 9:35 AM

    Actually it’s just fun watching Zealots like you (D) squirm. LOL. Get ready to start counting down the days for your new nick name.

  17. Pink Pig on November 20th, 2014 9:48 AM

    Ahahahahahahaha.

    Zuffa is pure caca

  18. saldathief on November 20th, 2014 10:31 AM

    Yea, borrow, borrow and keep borrowing!! Singes of a company going down the toilet. Spin that anyway you want, anyone with a brain knows the truth. More excuses and even more excuses. The injury thing is an amateur excuse!! A real professional business has alternate plans to not get financially hurt by unforeseen surprises. The UFC hasn’t figured out how to get out of their own way. Heads up their asses just like D bahahahahahaha D will be looking for another job soon! PATHETIC! Dana will spin it and lie even more. He likes to insult the fans intelligence the same ones that spend their hard earned money on his crumbling house of cards. Foreign TV deals wont take them out of their hole, no one is watching in the USA and even less will be watching in some shit country where they have even less extra money to spend on overpriced UFC tickets. Suck another dick Dana!

  19. ZUFFA roasted by Standard & Poor’s as UFC profits drop 40 percent in 2014 – My Buffalo Sports on November 20th, 2014 12:53 PM

    […] MMA Payout adds some perspective: […]

  20. tops E on November 20th, 2014 12:56 PM

    Investors like flash ent…..will surely be pressuring dw nd company….”.wheres the money”?hahaha….its all a bubble…a product of huge capital spending+ huge loan spent on marketing (ex paying off and creating journalists etc…) to create the bubble…hoping the product could sustain it….

    as ive said before companies hype a new product and spend huge money for a year or two then slowly decrease marketing spending to see if the product would perform….in contrast ufc has been spending huge huge money up to now…incurring a huge loan…hahaha

  21. tops E on November 20th, 2014 1:05 PM

    Dw is soo desperate in hyping that he mentions they have 100 fitness gyms…..?……as if it would impress.the creditors….lol…..”we will have a record 2015 year,100 ufc gyms,international expansion” hype….and with all that b.s. they stil got a negative outlook hahahaha….

  22. MMAtruth on November 20th, 2014 1:18 PM

    What does UFCs credit rating have in common with D?

    They’re both headed to URANUS for deep shit!

    LMFAOOOO

  23. saldathief on November 20th, 2014 2:48 PM

    Injuries is the new excuse for 2014 bahahahhaa whats it going to be for 2015??
    Dana 2015 “ we are now downsizing the UFC due to the worsening world economy and instability in the countries we expanded in, we will be bringing our USA fans, the ones that we charge out the ass for everything while other fans get free shit, more quality not quantity now, so since we are giving you quality we will be charging double” bahahahha

  24. saldathief on November 20th, 2014 2:51 PM

    Oh WAIT cancel that!!! 100 gyms?? the UFC will certainly be ok with those numbers Bahahahahaha bahahahhha don’t forget Mexico bahahahha

  25. Random Dude on November 20th, 2014 5:42 PM

    Gyms and fitness centers are one of the worst industries to get involved in if one is interested in making profits. It is a tough business and they are up against much larger companies with better prices like 24 Hour Fitness and Planet Fitness.

    The UFC brand is not going to help sell their gyms and fitness centers.

  26. FightBusiness on November 20th, 2014 7:02 PM

    The UFC was only very financially succesful from 2007- 2012 when they had lesnar. Before that they had alot of debt (44 million) and now they have even more (400 million). Stop expanding and keep it small. one event a month, pay fighters well (300k- 5 million a fight) and stick to just fighting. No expanison, no gyms or toys just fighting.

  27. d on November 20th, 2014 8:13 PM

    Even funnier watching all the boxing paid homo trolls on here like Leon the Schmo squirm. Enjoy that name, it will become your permanent home by the end of 2015 you little turd.

  28. d on November 20th, 2014 8:16 PM

    What does MMAFAG, Sampson, Pink Pig, etc have in common? They all suck the same dick every time they fag themselves out because they are the same idiot. Even more amusing when this fag talks to himself on here.

  29. d on November 20th, 2014 8:16 PM

    Saldaqueef!

  30. d on November 20th, 2014 8:19 PM

    “Classic DforDelusional blind to the writing on the wall. Nothing new here. 5M ppvs hahaha.”

    You mean the same 5m, you were very hesitant to take up despite the fact that it would be a significantly bigger number than this year?

    Kind of funny how blind a fucking idiot you are that you can’t see what is going to happen with all of these fighters coming back from injury. No way you man up to the bet though. You will definitely come up with bullshit excuses.

  31. Saldathief on November 20th, 2014 8:42 PM

    All D has been saying is wait wait wait. Bahahahhaha. 2015 will suck for the ufc as well. Maybe 2 or 3 decent ppvs. Boxing will double 2014. Just like I predicted suck on that!

  32. d on November 20th, 2014 10:07 PM

    You still can’t add, nor can you speak English. You are a complete retard who is probably not aware of your surroundings.

  33. Pink Pig on November 21st, 2014 9:37 AM

    Ahahahahahahah!

    🙂

    UFC is on its way down the toilet. Its great to watch happen!

  34. d on November 21st, 2014 10:22 PM

    Sampson, you’ve been saying this for years. You are severely mentally ill.

  35. Pink Pig on November 22nd, 2014 8:33 AM

    I’m so happy to see me (Dana White) squirm like a fat, pink pig on the chopping block. I deserve to be punished for being a loud mouthed PIG!!!

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