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Ufc Case Study

1052 words - 5 pages

In order to save a dying franchise, Dana White, now president of Ultimate Fighting Champions, along with his friends Lorenzo and Frank Fertitta, purchased the league for $2 million in 2001 and invested $44 million along the way (CNBC Originals, 2009). Today, according to the organization’s website, they are the fastest growing sports organization in the world (UFC.com). The UFC is operated under the Zuffa, LLC brand, and their global outreach can be rivaled by the major professional sports leagues in the United States. ”UFC produces more than 30 live events annually and is the largest Pay-Per-View event provider in the world, broadcasts in over 149 countries and territories to nearly one billion homes worldwide, and in 30 different languages” (UFC.com). With the potential to become bigger every year, new sponsors are hopping on the UFC bandwagon to reach their target demographics.
What are the target demographics for the UFC? They aim to target males who are in the age range of 18 to 49. “That younger demographic is what the UFC targets and is coveted by advertisers” (“Ratings wins in key demographics at UFC on Fox 5 thrills Dana White,” 2012). In terms of sponsors, as of 2012, their sponsorships include: Bud Light, Ultimate Poker, the U.S. Marines, and Electronic Arts (Cruz, 2012). Video games, beer, poker, and the military are things that can relate to males who are in their teens and heading into adulthood, so those entities advertising with the UFC are getting to their demographics. In order to socially connect with this demographic, the organization is also one of the first leagues to agree to a deal with Facebook to stream live fights. To keep UFC current with social media users, “Dana White has actively encouraged his fighters to use social media, offering an annual bonus pot of $240,000 to be shared out to those who are the most active tweeters” (“Fight Club,” 2012).
For UFC’s income, between ticket sales and Pay-Per-View sales, for 2011, they approximately took in $58.2 million and $202 million respectively. For the amount of events that occurred that year, thats about an average of $2.1 million and $7.5 million respectively. Taking in all the sponsorship deals and the totals above, it comes out to $475 million (Kidd, n.d.).
All may not be well in the UFC finance world. As a private entity, they are not obligated to issue a financial report every year, but since they have issued bonds in the past, they are listed under the Standard and Poor’s rating system, and it may be skeptical at first. Currently, they have a rating of BB. What does this mean to those who follow the S&P?
“an obligor rated ‘BB’ is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitments” (Manuel, 2012).

Also, the organization has a $425 million loan...

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