Endeavor files paperwork for IPO

May 23, 2019

Endeavor, the company that currently owns the UFC, has filed paperwork with the Securities and Exchange Commission to become a publicly traded company on the New York Stock Exchange.

Endeavor states that it plans to raise $100 million in the offering which is a standard figure for companies until it provides an actual figure at a later date.  Proceeds from the company receives from this offering will go towards working capital and general corporate purposes.

According to the S-1 filed today, it reported revenue of $3.6 billion.  The company posted a net income of $231.3 million in the year ended December 31, 2018.

Endeavor is the combination of Ari Emmanuel’s company with Patrick Whitesell’s IMG sports and modeling agency in 2013.

According to the filing, Goldman Sachs will be the IPO’s lead banker.  KKR Capital Markets, J.P. Morgan, Morgan Stanley and Deutsche Bank are also underwriters on the IPO.

Zuffa is included in the voluminous S-1 statement.  It includes information on its finances, debt as well as information on the UFC antitrust lawsuit as a potential liability.

MMA Payout will take a look and provide a further in-depth analysis of the S-1.  But, as for now, it looks like the UFC may be a part of a publicly-traded company in the near future.  How does it affect its business?  We will see.

Show Money 28 talks UFC PPV buys, Endeavor buyout rumors and ONE

May 22, 2019

Its once again that time when we talk with John Nash and Paul Gift about the business of combat sports.

Wilder-Breazeale peaks at 990K viewers on Showtime

May 21, 2019

The Deontay Wilder-Dominic Breazeale fight drew 791,000 viewers Saturday night on Showtime. The ratings reflect the fight alone on the network.  Including streaming, the average live viewership drew 886,000 viewers.

The bout peaked at 990,000 viewers and there was not time to peak as Wilder knocked out Breazeale in 2 minutes and 17 seconds of the very first round.

The first fight of the telecast between Juan Heraldez and Argenis Mendez drew 505,000 viewers.  The two fought to a draw.  The second fight of the night between Gary Russell, Jr. and Kiko Martinez drew 549,000 viewers.  Russell stopped Martinez due to cuts.

Payout Perspective:

The event, based on linear ratings, had lower ratings than other Showtime events featuring Wilder.  His fight versus Luis Ortiz peaked at 1.2M viewers and averaged 1.1M.  It did draw higher than his second fight with Bermaine Stiverne which drew 824,000.  The question some will ask is whether this fight would have done better financially if it was on DAZN or on PPV.  We won’t know, but Wilder should be pushing for a Fury or Joshua fight in the future instead of a rematch with Ortiz or another heavyweight.

UFC signs multiyear sponsorship deal with Aurora Cannabis

May 21, 2019

Sports Business Daily reports that the UFC has signed a multiyear sponsorship deal with Aurora Cannabis of Edmonton, Alberta, Canada.

As part of the deal, the parties will pledge fund research on “CBD products and athlete wellness and recovery, with a view to accelerating CBD product development and education.”

The sponsorship will become visible next month at UFC 238 in June.

According to a report from Forbes.com, CBD sales in the U.S. will surpass $20 billion by 2024.

Payout Perspective:

It seems like every fighter on a major MMA podcast pedaled some CBD company and the UFC finally came aboard.  As a growing industry, it is clear that the UFC wanted to take advantage.  As for the research it will do, one may only suggest that it will look into how it will help athletes without altering its current anti-doping policy.  The deal also shows the continued expansion of the UFC sponsorship portfolio as it is signing up more deals for otherwise untapped industries.

UFC Rochester attendance, gate and bonuses

May 19, 2019

UFC Rochester took place Saturday night with Aspen Ladd and Sijara Eubanks stealing the show for Fight of the Night.  Michel Pereira and Grant Dawson received performance bonuses for their work in the Octagon as well.

Ladd won via unanimous decision over Eubanks with a unanimous decision as the feature bout of the prelim event.  Pereira debut in the UFC was a memorable won as he won via flying knee over Danny Roberts in the first round.  Dawson submitted Mike Trizano via rear naked choke in the second round.

UFC on ESPN +10 took place at the Blue Cross Arena at the War Memorial on Saturday night.  The event drew 8,132 fans for a gate of $644,000.

UFC Holdings follows market trend of reducing ‘debt cushion’

May 17, 2019

The Wall Street Journal reported late last month that the UFC was paying off its junior loan utilizing a senior one in order to reduce its overall debt load.  The move comes on the heels of an exclusive PPV deal with ESPN and the lack of concern that the Federal Reserve will raise interest rates.  The reduction of ‘debt cushion’ is a market trend by some companies to the chagrin of senior debt holders.

UFC Holdings, the official name of the entity for the UFC, sold $435 million of an add-on to an existing $1.44 billion loan that was due in 2023 and now has been extended to 2026.  The addition to the loan was sold at $99.75 on the dollar which included a discount to where the existing debt traded.  The company also paid existing loan holders a modest fee to allow the transaction.

The new debt will be used to pay off a more junior loan which eliminates a ‘debt cushion’ for senior lenders as junior debt (i.e., bonds and loans) are typically the first pieces of debt to absorb losses in bankruptcy.  Essentially, if the company were to go bankrupt the junior loans would be the most vulnerable in not being paid back as the most senior creditors would have the first chance at the assets which may leave junior debt out of luck in repayment. In this case, the junior loan had a higher interest rate than the senior loan.  The floating interest rate on the junior loan has been the London interbank offered rate plus 7.5%, or 4.25 percentage points higher than the rate on the senior loan.  Thus, the move aids in eliminating interest on the junior debt.

The transaction seems to be a growing trend in debt financing as more companies are reducing ‘debt cushion.’  This occurs in instances of speculative grade loans and instances where the junior loan has a higher interest rate than the senior loan.  To the chagrin of senior debt holders, paying down a junior loan is not favored as one might recognize that paying down a junior debt means that in the worst-case scenario for a senior debt holder, if a bankruptcy were to occur, assets previously used to pay off the junior debt will not be there to pay off the senior debt.

Via WSJ:

Last year, buyers of first-lien loans were paid 0.83 percentage point above the benchmark London interbank offered rate for every multiple the loans exceeded a measure of borrowers’ cash flow, according to LCD. That was the smallest amount since 2007, when lenders were paid just 0.69 percentage point.

Also, according to WSJ, 27% of first-lien loans, mostly held by senior type of debt held by investors were not backed by companies that didn’t have junior outstanding debt.

If you were wondering, this is analogous to using a credit card to pay off one with a higher interest rate.  Using a loan to pay off another might not seem like the most financially secure way to address debt load issues for a company and concerns senior debtholders that hold priority over the junior debtholders.  But a number of factors (as outlined above) likely made this move prudent.  First, Disney’s 7-year agreement to pay a “fixed license fee” to air its PPV fights exclusively in North America was seen as to “dramatically reduce the volatility” of UFC’s business.  Secondly, the market to purchase debt is on an uptick.

Here’s another reason that reducing debt cushion is a thing.  According to Moody’s, the company’s debt to EBITDA would fall to 5.5 times from 7.8 times which is said to potentially put lenders in a stronger position even without a debt cushion.  UFC Holdings’ existing loans in 2016 were said to have an EBITDA of $170 million by one measure and $300 million by another which was based on speculative future TV revenue.  Regardless, it borrowed another $100 million in 2017.

Of course, we may now know a little more about the TV revenue since its deal with ESPN.  Moreover, the deal likely assuages lenders about the debt.  Essentially, the speculative nature of the deal became less speculative.

The move pays off the interest rate of the junior debt but senior debt holders are weary as there is potential for not being made whole at the end.  But, it lowers its overall multiple which would allow it to be more lucid in investing and future debt restructuring.

PBC on Fox attendance, gate and payouts from this past Saturday in Virginia

May 16, 2019

MMA Payout has obtained from the Commonwealth of Virginia Department of Professional and Occupational Regulation the attendance, gate and payouts from the PBC on Fox event at the Eaglebank Arena in Fairfax.

The main card which aired on Fox and took place at the Eaglebank Arena in Fairfax drew a gate of $283,941.25 with 6,713 in attendance.  Of the attendance, 2,850 paid while there were 3,863 comps.  Of the tickets sold, 675 were purchased via discount.

Payouts were as follows:

Jarrett Hurd:  $1,250,000

Julian Williams:  $300,000

Mario Barrios:  $100,000

Juan Velasco:  $20,000

Matt Korabov:  $80,000

Immanuel Aleem:  $40,000

Stephon Fulton:  $20,000

Paulus Amwaunda:  $20,000

Drayvontay Rawls:  $6,000

Jonathan Perez:  $6,000

Aaron Anderson: $3,000

Carlos Galindo:  $1,500

Mark Duncan:  $4,000

Kevin Womack:  $1,200

Alexandry Mann:  $5,000

Luis Concepcion:  $5,000

Greg Outlaw:  $4,500

Martin Motomala:  $6,000

Payout Perspective:

The numbers reflect a disparity on the pay roster and also the fact that there were more comps and discounted tickets than sold infers that this event catered around the television broadcast.  This had to be a money loser for PBC but it fulfills its event obligation for Fox which eventually compensates them through this loss.

AEW finds television home at Turner

May 16, 2019

The upstart wrestling promotion, All-Elite Wrestling, has found a television home with Time Warner.  The announcement was made official when AEW appeared at the Turner upfronts on Wednesday.

AEW signed a deal with WarnerMedia that will give the promotion which has its first show Memorial Day weekend, a weekly television show on TNT primetime beginning later this year.  It will be the first time that professional wrestling has aired on TNT since the days of WCW in 2001.

In addition to TNT, AEW will stream on the B/R Live app.  The media rights deal was negotiated by AEW president and CEO Tony Khan and Bernie Cahill, co-founder of Activist Artists Management, LLC.

The television deal is an enormous benchmark for the nascent promotion which has gained momentum since its independent show, All-In, revealed an independent wrestling base willing to support non-WWE wrestling.

Payout Perspective:

Maybe not the redux of the Monday Night Wars which was the heyday of pro wrestling on cable networks.  With WWE now a publicly traded company and a central part of Fox’s network plans this fall, AEW’s television deal seems to be an homage to independent wrestling.  With a lot of expectations from the fans that have followed the Young Bucks, Kenny Omega and Cody, it will be interesting to see how the company seeks to differentiate itself from the WWE, and how it will draw sponsors and build an audience.  Also, interesting, what will the WWE do to retain talent from jumping to AEW and how it will produce its shows based on its new competition.

 

Magny reveals reason for withdrawal from Luque fight

May 14, 2019

UFC middleweight Neil Magny revealed that the reason that he had to pull out of his scheduled bout this Saturday was due to notification from USADA that he was being flagged for a potential violation.

Magny announced via social media that he received an email from USADA that an “out of competition” test on May 5th revealed the banned substance of Di-Hydroxy-LGD-4033.  It is an investigational Selective Androgen Receptor Modulator (SARM) for treatment of conditions such as muscle wasting and osteoporosis.  Notably, University of Florida quarterback (at the time) Will Grier was suspended for testing positive for the substance.  NBA player (also UF alum) Joakim Noah was banned twenty games for testing positive for the use.

 

View this post on Instagram

 

As many of you know, I had to withdraw from my sceduled bout against Vicente Luque on Saturday, May 18th. I want to apologize to him, as I know how difficult it is to lose an opponent days out from a fight. Throughout my MMA career I have been very transparent. I am not afraid to admit when I am in the wrong. On Saturday, May 11, 2019, I recieved an email from USADA stating that I have failed an “out of competition drug test” due to the banned substance “Di-Hydroxy-LGD-4033”. I am fully cooperating with USADA to determine how this substance was found in the sample I provided them on May 5, 2019. I have always been an advocate for the strict drug testing in the UFC, even to the extent of opting for my collected samples to be used for research purposes by USADA. I know without a doubt that I have done everything according to the standards set by USADA. I have faith in USADA that this situation will resolved in a timely manner and that I will be cleared of any wrong doing. To all of my fans and supporters, thank you. I assure you that I have not let you down.

A post shared by Neil Magny (@neil_magny170) on

In the example of Noah, an article reporting on the finding claimed he had unintentional made a mistake and that certain dietary supplements may contain the banned substance.

Payout Perspective:

Due to the rule which precludes the announcement of flagged tests, it was not known why Magny pulled out of his co-main event fight against Vinente Luque.  Like other fighters in this position, Magny decided to make the announcement himself rather than let speculation continue over his status.  He is working with USADA so one would hope that if the finding is through a tainted supplement, he is given the benefit of the doubt like others before him.  Magny’s public reveal of this issue shows his transparency which makes him much more credible with USADA and the fans.

UFC 237 Prelims draw 813,000 viewers as lead-in for Top Rank Boxing which drew 740,000

May 14, 2019

The UFC 237 PPV Prelims on ESPN drew 813,000 viewers according to Nielsen via ShowBuzz Daily.

The event featured BJ Penn-Clay Guida at the top of the telecast and ended with Ryan Spann’s KO of Antonio Rogerio Nogueria.  UFC 237 took place at Rio de Janeiro Brazil.

The event drew 425,000 viewers in the A18-49 demo and a 0.53 share.

It’s interesting to note that the UFC served as the lead-in to Top Rank Boxing on ESPN which drew 740,000 viewers and 354,000 in the A18-49 demo.  The event from Tucson, Arizona featured Miguel Berchelt as he took on Francisco Vargas.

Payout Perspective:

It was a busy night of combat sports and its interesting to see that the viewing audience really stayed on the channel as there was little dropoff from the UFC as the ‘lead-in’ into Top Rank Boxing which lost out on less than 100,000 viewers.

Next Page »