(He’s so money. Photo courtesy of Men’s Fitness.)
MMA Payout has an interesting article about the newest S&P credit rating for Zuffa, which has been upgraded from negative to stable. It turns out that the UFC is pulling in more money these days, though it’s not because more people are buying their pay-per-views. Instead, it’s due to their strategy of putting on more shows and charging more for them:
“Overall pay-per-view (PPV) revenues, which represent nearly 75% of total revenues, have trended up in recent quarters, albeit largely due to an increase in the number of events, higher pricing, and more favorable contract terms, rather than an increase in the number of buys.”
By more favorable contract terms, they’re referring to Zuffa’s deal with pay-per-view distributors. Apparently the UFC is big enough now to negotiate better deals for themselves, which is an encouraging sign for the future of he company and the sport. But what’s really interesting is a note near the bottom that relates to the UFC’s plans for expansion.
The high costs of the start-up in the UK may color how they approach international expansion going forward. The UFC UK division required a high level of initial costs (like personnel, office space, legal and regulatory costs). Such high costs had a detrimental effect on the company’s margins and therefore dragged down the bond rating. The company may be reticent to do such a large scale effort in the future, with the accompanying yo-yo effect on margins.