As the world is on pause due to concerns over the spread of the Coronavirus, Endeavor Operating Co., LLC and UFC Holdings, LLC may face issues with its credit.
S&P Global put Endeavor Operating Co., LLC and UFC Holdings, LLC, including the ‘B’ issuer credit rating on CreditWatch with negative implications.
According to a report from Forbes via S&P, Endeavor and the UFC will be adversely impacted due to this slowdown based on the cancellation of live events. “Endeavor
very highly leveraged with adjusted debt to EBITDA of about 7% in 2020, incorporating a preliminary estimate of a mid-teens percent drop in events, media and services revenue as well as a substantial decline in UFC’s live ticketing revenue.” While live gate is not a big part of the company’s revenues, the impact the pandemic is having will be felt across the rest of its revenue streams.
The UFC was one of the last major sports to close down due to the health concerns. Earlier this week it postponed its next 3 events. Yet, Dana White remains undeterred with putting on its next PPV this April 18th featuring the long-awaiting fight between Tony Ferguson and Khabib Nurmogomedov.
The global markets are at a precipice right now and the U.S. market is highly leveraged with a potential recession on the horizon. Corporate debt has been easy to ascertain allowing huge swaths of debt that lenders expect to be repaid on time.
This past September, the UFC launched a new $465M leveraged loan which added to its $1.876BN term loan B which matures in 2026. It also cashed out its investors this past February from what Dana White claimed to be based on 2019 being one of the best years for the company.
Diminishing the cash reserves to payout its investors seemed like a fine idea just a month ago. But, with the world and a standstill and the uneasiness of the economy at the moment, the UFC may be concerned about its finances going forward into 2020.
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