Standard and Poor’s has maintained Zuffa’s credit rating at “BB” based on the belief that the company’s strong EBITDA margin and healthy cash flow are sustainable over the “near-to-intermediate term” as Zuffa continues to grow and benefit from it’s well-recognized (UFC) brand and dominance in market position.
On the other hand, the following S&P concerns kept Zuffa’s credit rating from being upgraded:
- Risk of revenue and EBITDA volatility given the company’s primarily event-driven business model
- Vulnerability to changing consumer preferences and susceptibility to variability in discretionary spending
- Management’s aggressive financial policy
- Although the UFC has a strong fan-base, in order to maintain their advantage, they need to continue to develop fighters that appeal to the 18-34 demographic.
- Preserve current regulatory acceptance of the sport. Fatal injury or change to the rules and regulations governing the sport and legal status could have meaningful impact to the company’s business model and long-term viability.
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November 2007 – S&P Cuts Zuffa Rating, BB to BB-
July 2008 – Zuffa Rating Goes Negative to Stable
July 2009 – Cuban Now a Zuffa Bond Holder
October 2009 – S&P Re-Affirm BB-, Slide Recovery Rating Down
December 2010 – S&P Raises Zuffa Rating, BB- to BB
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