On the American Forbes 400 list, both Ferritas brothers are listed.

They are both individually listed as being worth 1.3 billion dollars each (or 2.6 billion combined for anyone to dumb to do basic math).

This does NOT mean this is what they make, it is what they are worth. The UFC is almost definatly carrying some debt, or likely to in he future, if they are reporting to S&B for credit rating purporses. It is well known they spent a massive fortune early on the UFC and took a bath, it is only now that it has become profitable.

The conundrum of business has always been:

1) grow slow and experience less default risk, but risk competitors overtaking you
or
2) grow fast by going into debt but experience much higher risk of default and higher borrowing interests.

Obviously, the UFC feels that MMA is here to stay and is adopting option #2 and cornering the European market before other players (Bodog, Strikeforce) even gets chance to compete properly in the US.

S&P ratings only care about default risk and measuring the risk that creditors would face. They don’t care what the UFC is using its credit for. As far as the S&P is concerned, more debt and higher spending means the UFC’s credit worthiness goes negative.

I don’t think the UFC’s credit rating means anything about its outlook as a business. The fact that the Fertitas want to keep the business private speaks volume of its outlook. They obviously don’t want to share the wealth.

Sometimes pointing out the obvious is what’s required. It’s the other information that’s of value, because Zuffa isn’t posting their financials on the UFC website.

Jeremy – you are the man. I’m hoping to get to work on the article on the details of the financial instruments later tonight.

AB makes a valid point as well. It would be interesting to hear from someone familar with the credit industry (Jeremy…) whether this simple analysis is the rule or not. I imagine that to a degree there is a great incentive to be conservative/bland in the outlook analysis.

Not even close. While the UFC sure helps the positive cash-flow (the casinos are debt-leveraged after the buyout), they are not nearly as important as the Station casinos.

The casino business is a multi-billion dollar enterprise. (It doesn’t get as much publicity as the other casino operators because the Station properties are off-strip and geared toward locals. So the casinos are basically invisible to tourists. Exceptions for the recent OJ Simpson robbery.)

Also, a key part of the Fertitta strategy has been to purchase and control large tracts of real estate. Property values keep going up in Vegas (long-term). And major projects (casinos, shopping centers, residential developments) need large plots of land. The Fertittas control several very important tracts.

As big as the UFC has gotten, there is a long way to go before it even approaches parity with the Fertittas’ “day job”. (Much like Mark Cuban’s Mavericks sideline is far smaller than his other businesses).

Sorry, man. My mistake.