Kid Nate has a very good article available at BloodyElbow.com where he analyzes recent reports that Zuffa’s credit rating was lowered based in large part because of disappointing performances during the second and third fiscal quarters.
The UFC is by no means in any sort of long-term trouble. And, whether they are in short-term trouble is very relative as they remain a highly profitable company.
However, there is a risk that their 2007 fiscal campaign might not be as profitable as 2006. It shouldn’t be a surprise if it turns out that 2007 wasn’t as financially rewarding as 2006 because Zuffa undertook several measures to build towards their financial future. These measures, such as the acquisition of PRIDE, expansion into Europe, and the developing the WEC were not cheap.
So while Zuffa deserves some slack because they made moves this year to invest in their future, Kid Nate raised a valid question as to whether those moves are smart after all.
At the top of Nate’s list is the PRIDE acquisition:
The disastrous PRIDE acquisition
I think this is the fiasco most of the others follow from. Ironically, as much as Dana disses internet fan boys, he’s one himself. Only a fanboy would pay what Zuffa shelled out for a mortally wounded promotion whose scandals had already cost them their TV deal. Only a fanboy would be so threatened at the prospect of PRIDE mounting a financially disastrous Las Vegas show that they panic and start offering money. Clearly due diligence wasn’t performed or Zuffa would have figured out BEFORE the sale that PRIDE’s contracts with its fighters weren’t transferrable. Basically, Dana and his crew got played. And while they were busy getting screwed they took their eyes off a lot of other important matters.
On a whole, Nate did a great job with his piece and I highly recommend you check it out in its entirety. However, I’m not really sure anyone should be saying the acquisition of PRIDE was a failure or a success.
First, the numbers reported by the Associated Press in regard to the purchase price ($65-70 million) may not be entirely accurate.