UFC By the Numbers: “It’s a Business”

August 3 | By fightersagenda | Filed in: Uncategorized.

UFC By the Numbers: “It’s a Business” “It’s a business.” This is a common refrain heard with respect to the UFC. But what does it really mean? Here are some basic figures we know about the UFC as a business.
Ownership of Zuffa LLC [1]

  • Frank and Lorenzo Fertitta: 81%. Approximately 72% is owned by Fertitta Business Entertainment LLC, which is wholly owned by Fertitta family trusts. In addition, a family trust of each of the two brothers owns an additional 4.5% of Zuffa, bringing the total to 81%.
  • Dana White: 9%. Family trusts of the UFC President, who is often considered the face of the UFC,[2] own approximately 9% of the company.
  • Abu Dhabi: 10%. January Capital, an investment vehicle that is indirectly owned by the Executive Affairs Authority (EAA) of Abu Dhabi, owns 10% of the company. The EAA is a government agency that provides strategic policy advice to the emirate’s government.[3] Martin Edelman , a New York lawyer with an extensive history representing Abu Dhabi interests, sits on the board of Zuffa.[4]
  • Zuffa employees: 0.08%. The remainder of the company is owned by Zuffa Pipco 1 LLC, an entity  for the company’s “employee Participation Interest Plan” (an employee incentive plan).

Balance Sheet The balance sheet shows how much a company owns (assets) and how much it owes (liabilities). The difference – assets minus liabilities – is the owners’ equity in the company. Because Zuffa is a private company, it does not publicly disclose its detailed financials. While we do not know all of Zuffa’s assets and liabilities, we know some facts about its balance sheet from on credit rating analysts who provide regular updates on Zuffa’s syndicated bank loan, which is held by various institutional investors.

  • Cash on hand: $7.5 million (as of 12/31/2014). This was down from $14 million on 9/30/14.[5]
  • Debt: $475 million term loan (as of Oct. 2014, according to S&P).[6] Zuffa’s term loan is due 2/25/2020. The company also had available a $60 million credit facility that remained undrawn as of 2/19/2015.

A term loan B is a bank loan which is sold in bits and pieces to institutional investors. We have found Zuffa debt in the portfolios of mutual fund managers like Eaton Vance,[7] Franklin Templeton,[8] and Columbia (Ameriprise).[9]

Income statement The income statement tells you how much money a company makes by selling its products and services (“revenues”), how much it has to spend in the same time period to achieve the sales figure (“expenses,” such as event production costs, executive and employee salaries and benefits, fighter compensation, advertising and marketing), and what’s left over is “profits” (revenues minus expenses) for the owners.  EBITDA (earnings before interest, taxes, depreciation, and amortization) is a commonly used measure of a company’s profitability, and EBITDA margin (EBITDA divided by total revenue) is a way to measure how efficient a company is at making profits. Based on Moody’s 2/19/2015 credit opinion on Zuffa LLC, we can arrive at a general picture of the company’s 2014 income statement.[10]

  • Revenues: $522 million (over the twelve-month period ending 9/30/2014)
  • Expenses: We do not know how much Zuffa spends on production costs, executive compensation, employee salaries and benefits, advertising and marketing or any other expenses, nor do we know what depreciation and amortization expenses it has.
  • EBITDA: $99.2 million (over the twelve-month period ending 9/30/2014, based on a reported EBITDA margin of 19.0%)
  • Interest expense: $28.7 million (based on a reported EBITDA/interest ratio of 4.1x, that is, the company’s EBITDA is 4.1 times that of its interest expense over the same time period.)

Employees and Employee Benefits Not counting its fighters, who work for the company as independent contractors, in 2013 Zuffa LLC had approximately 300 employees in Las Vegas.[11]

  • 401(k): At the end of the year 2013, 268 of its employees were eligible for its 401(k) plan, with 159 or 59% with savings in their accounts. [12]  Zuffa’s 401(k) plan provides for matching contributions by the employer. In 2013, employees contributed $1,051,106 in their Zuffa 401(k)’s, and the company made additional contributions totaling $320,128.
  • Health insurance: In addition to a retirement savings plan, Zuffa employees also had a health insurance plan. As of 3/30/2013, 227 of the company’s employees were participants in its employee health plan.[13] The plan provided for dental and prescription drug benefits with a total employer-paid premium of $2,103,065. Vision care was also covered.

[1] Zuffa’s Certificate of Interested Persons and Entities, filed 2/13/15. Cung Le et al vs. Zuffa LLC, 2:15-cv-01045-RFB-PAL (District of Nevada (Las Vegas)
[2] http://www.sportsbusinessdaily.com/Journal/Issues/2014/10/06/In-Depth/UFC-main.aspx.31% of correspondents in a Turnkey Sports poll pick Dana White when asked “At this moment who is the face of UFC?”
[3] http://www.eaa.gov.ae/Sites/EAA/Navigation/EN/about-us.html
[4] http://www.zuffainvestoralerts.org/2014/12/who-is-martin-edelman.html
[5] Moody’s Credit Opinion, 2/19/2015.
[6]  S&P, “Zuffa LLC Downgraded to ‘BB-‘ On Greater EBITDA Volatility; Outlook Stable,” 10/6/2014.
[7] For example, Eaton Vance Floating-Rate Income Plus Fund, as disclosed in SEC form N-CSR filed by Eaton Vance Floating-Rate Income Plus Fund on 7/28/2015
[8] Franklin Real Return Fund, as disclosed in SEC form N-CSRS filed by Franklin Investors Securities Trust on 7/6/2015.
[9] Columbia Strategic Income Fund, as disclosed in SEC form N-CSRS filed by Columbia Funds Variable Series Trust I on 7/2/2015.
[10] Moody’s Credit Opinion, 2/19/2015.
[11] http://www.reviewjournal.com/business/commercial-real-estate/owner-ufc-buys-land-parcels-new-global-headquarters
[12] 2013 Form 5500 by Zuffa LLC 401(K)  Profit Sharing Plan & Trust.
[13] 2013 Form 550 by Zuffa Employee Group Health Plan.

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