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Behind the Curtain: Zuffa's Finances Come Into Focus

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grappler0000

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Randy Couture's resignation from the UFC and subsequent speculation about the company's pay scale have shoved Zuffa's finances back into the spotlight.

As a privately held company, Zuffa has no public reporting obligations. The information that is made pubic is carefully screened and released only when convenient to tout the growth and success of the UFC brand.

As a result the company's financial status and business model are largely left to speculation. But recent reports by Standard & Poor's, one of the leading financial services companies in the world, have provided new insight into the finances of the undisputed leader of the MMA world.

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Post #1   10/17/07 8:47:57AM   

mrsmiley

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Very good read.

From what the article stats,and drawing from my own conclusions (though I know very little about finances so i'm probably completly wrong),I wouldn't be suprised to see a larger company buy out the UFC withing 8-10 years.Zuffa could make a nice profit from the sell and gloat over how they exploded MMA into the mainstream.

I could also see Zuffa venturing into a new market and maybe promote other sports(does anyone else know what else Zuffa knows,if anything?) while keeping the UFC their foundation.


Okay please somebody who knows more about this reply.LOL.Very interesting read though.

Post #2   10/17/07 9:47:56AM   

grappler0000

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Posted by mrsmiley

Very good read.

From what the article stats,and drawing from my own conclusions (though I know very little about finances so i'm probably completly wrong),I wouldn't be suprised to see a larger company buy out the UFC withing 8-10 years.Zuffa could make a nice profit from the sell and gloat over how they exploded MMA into the mainstream.

I could also see Zuffa venturing into a new market and maybe promote other sports(does anyone else know what else Zuffa knows,if anything?) while keeping the UFC their foundation.


Okay please somebody who knows more about this reply.LOL.Very interesting read though.



I don't think it is saying that they are in trouble financially...It basically says that while they are making bank on their PPV's, they are reinvesting a lot of their money into marketing and expansion to new regions...and along with that follows some debt and risk.

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Post #3   10/17/07 10:26:47AM   

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I think their PPV estimates are low. Even at 300,000 buys, which is a low PPV estimate in itself, $45 x 300,000 = 13,500,000 multipled by 40% = 5.4 million from a single PPV event, not the 4.8 million suggested. And that is assuming their take is only 40% but likely their take is 60% which would be 8.1 million. These guys are raking in the bucks. But remember they have a ton of overhead like renting out the venues, spike TV commercials and advertisements, staff salaries etc. I'm thinking the million dollar offer to Fedor is not something they can duplicate very often.

This also really shows the worth of fighters like Tito Ortiz who bring in million buy PPV's. 45 x 1,000,000 = 45,000,000 multiplied by 60% = 27,000,000. Interesting why anyone thinks he's being overpaid when he brings the company so much revenue.

Post #4   10/17/07 11:09:48AM   

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Posted by nubby

I think their PPV estimates are low. Even at 300,000 buys, which is a low PPV estimate in itself, $45 x 300,000 = 13,500,000 multipled by 40% = 5.4 million from a single PPV event, not the 4.8 million suggested.



Perhaps it differs with different PPV companies, like if you have DishNetwork, DirecTV, Cable, etc.... but the PPV's I buy cost $39.99

$39.99 x 300,000 = $11,997,000
$11,997,000 x 40% = $4,798,800 or rounded up $4.8 million

To answer to the article, I don't feel that this means the UFC is in process of going under. They have the PPV's to keep them afloat, and expanding their market only means higher revenues given how popular MMA is becoming in Europe as well.

With ANY business, there is initial cost. You have to spend money to make money. Any time you go into business you can bet the first year will almost break you (if not actually break you). The one advantage the UFC has is the current popularity and existing revenue to help even out their initial losses. Once it becomes more popular in Europe, and they start hosting more events in Europe, they will inevitably see more revenue from their European fans for events that take place in the US as well (PPV's, merchandise, etc.). By putting events in Europe and showcasing European fighters, they are appealing to that market. How many American's don't want to watch an American beat a foreign competitor? Not because we're racist, but we are a society that likes a winner. Europe's society shares similar views on wanting a European fighter (or other athlete) to prevail against a US opponent. I can't think of any fan that's more hardcore about soccer than England. Again, it's not racism, it's competition... wanting to think you have the better athlete. Think of the olympics... everyone roots for the athletes from their home country.

Back to the original topic... it's a smart move... it may not look great on paper today... but as long as the popularity continues, Zuffa will see profit increase in the near future well beyond what they may have ever had. It adds to promotability (Europe vs. America)... it adds more PPV buys, and increases merchandise sales in Europe, not to mention possibly discovering a few more talented athletes. The fact that a fighter is from Europe adds to their possibility of being showcased in a UFC event in Europe.

All in all, I wouldn't pay too close attention to the numbers in regards to their expansion into Europe. The one factor that I could see cause the UFC to face financial troubles would be the Couture/Fedor fiasco. Until the next few PPV shows are broadcast, they will not know exactly what extent Couture and Fedor will financially affect their organization.

Post #5   10/17/07 11:25:45AM   

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Posted by TNunley


Posted by nubby

I think their PPV estimates are low. Even at 300,000 buys, which is a low PPV estimate in itself, $45 x 300,000 = 13,500,000 multipled by 40% = 5.4 million from a single PPV event, not the 4.8 million suggested.



Perhaps it differs with different PPV companies, like if you have DishNetwork, DirecTV, Cable, etc.... but the PPV's I buy cost $39.99

$39.99 x 300,000 = $11,997,000
$11,997,000 x 40% = $4,798,800 or rounded up $4.8 million

To answer to the article, I don't feel that this means the UFC is in process of going under. They have the PPV's to keep them afloat, and expanding their market only means higher revenues given how popular MMA is becoming in Europe as well.

With ANY business, there is initial cost. You have to spend money to make money. Any time you go into business you can bet the first year will almost break you (if not actually break you). The one advantage the UFC has is the current popularity and existing revenue to help even out their initial losses. Once it becomes more popular in Europe, and they start hosting more events in Europe, they will inevitably see more revenue from their European fans for events that take place in the US as well (PPV's, merchandise, etc.). By putting events in Europe and showcasing European fighters, they are appealing to that market. How many American's don't want to watch an American beat a foreign competitor? Not because we're racist, but we are a society that likes a winner. Europe's society shares similar views on wanting a European fighter (or other athlete) to prevail against a US opponent. I can't think of any fan that's more hardcore about soccer than England. Again, it's not racism, it's competition... wanting to think you have the better athlete. Think of the olympics... everyone roots for the athletes from their home country.

Back to the original topic... it's a smart move... it may not look great on paper today... but as long as the popularity continues, Zuffa will see profit increase in the near future well beyond what they may have ever had. It adds to promotability (Europe vs. America)... it adds more PPV buys, and increases merchandise sales in Europe, not to mention possibly discovering a few more talented athletes. The fact that a fighter is from Europe adds to their possibility of being showcased in a UFC event in Europe.

All in all, I wouldn't pay too close attention to the numbers in regards to their expansion into Europe. The one factor that I could see cause the UFC to face financial troubles would be the Couture/Fedor fiasco. Until the next few PPV shows are broadcast, they will not know exactly what extent Couture and Fedor will financially affect their organization.



yeah, you are right, here it is 39.99$ !!!

as for zuffa, well, they are between increasement and decreasement all years long.
it is normal because ,s&p are verifying many time a years what is going on with all the compagnies they have to check.
zuffa, is sometimes in the red a little , but it is only because they are investing there profit to try to grow there further value, so ,sometimes, the profit that you are expecting is not coming imediatly but it does not mean that it will not be a good investment.

Post #6   10/17/07 11:52:13AM   

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This article goes to prove my other comments correct. If the UFC pays its headline fighters 10mil each they don't have enogh money to pay anybody else on the card. So we end up with a fight night rerun and 1 good fight. Too much like boxing for me.

Last edited 10/17/07 1:22PM server time by Darnok
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Post #7   10/17/07 11:54:20AM   

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Posted by Darnok

This article goes to prove my other comments correct. If the UFC pays its headline fighters 1mil each they don't have enogh money to pay anybody else on the card. So we end up with a fight night rerun and 1 good fight. Too much like boxing for me.




The UFC isn't like the NFL that's been around forever, and has all of these stadiums to play at. The UFC has to rent their arenas, pay their fighters, and all other expenses. Sure they may have more gross earnings that many other organizations, but I'm sure their cost is higher than many.

Post #8   10/17/07 12:00:55PM