Zuffa (UFC) enters the year 525 million in debt - report

Standard and Poor’s February report states that it has maintained Zuffa’s credit rating at “BB” following a $50 million add-on proposed to it’s senior secured term loan, which now has a sum of $525 million.

The issue-level rating on the term loan in ‘BB’, which is the same as the corporate credit rating, with a ’4′ recovery rating (in case of a payment default). The $50M add-on brings the total size of the senior secured credit facility, which includes a $50M revolving credit facility, to $525M. The intent of the additional debt is for Zuffa to use the proceeds in order to repay the outstanding balance on its revolving credit facility.

As always, the ‘BB’ credit rating from Standard & Poor’s reflects the assessment of Zuffa’s business risk profile (‘fair’) and the company’s financial risk profile (“aggressive”).

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 (high level of distributions in recent years & high debt leverage)
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.

The concerns stated above are mostly offset by S&P’s belief that Zuffa’s strong EBITDA margin and healthy cash flow conversion rate are sustainable over the near to intermediate term.

http://mmapayout.com/2012/06/zuffa-maintains-bb-credit-rating-after-50m-add-on/

They 'entered the year $525 million in debt'? That doesn't bode well considering their recent ratings lows.

bodes well for MMA fans. I dont mind Bellator gaining prominence. So long as MMA fighters have somewhere to go to.

I guess we are gonna have to bail them out soon.