Adam Swift of MMAPayout.com is reporting that the S&P cut Zuffa’s, the parent company of the UFC, credit rating today from BB to BB-. I’m not an expert on these things but Swift claims it was because of a weaker than expected performance in the third quarter. It was apparently the second consecutive disappointing quarter for Zuffa.
I think this is significant because a lot of Zuffa’s competitors in the MMA industry are not operating from a position of financial strength right now. If the UFC is not turning out great profits, you have to wonder what the other companies are experiencing?
Actually, you don’t have to wonder because all you need to do is look at the SEC filings.
It doesn’t take a genius to know why Zuffa probably isn’t showing big gains right now as they’ve had to incur some major costs like the acquisition of PRIDE, startup costs for re-branding the WEC, and marketing costs for trying to expand business into the U.K.
However, Zuffa’s reduction in credit rating could be an indication that the MMA industry is starting to cool. I’ve said to many in the industry that I felt MMA’s popularity growth had plateaued but few insiders agreed with me.
I’d love to see MMA become the fourth major sport in the U.S. as much as the next guy, but I’m not so sure that’s going to happen right now.
All boats rise with a strong tide but it seems like the tide is starting to subside.