Economic Factors Affect MMA, UFC

Fronted by Luke Thomas.

From MMA Payout:

As reported earlier on MMAPayout.com, the Fertitta’s Station Casinos bond rating recently placed on CreditWatch with negative implications. The company is being monitored due to it’s increasing level of leverage that violates certain covenants of its’ bonds. The leverage covenants aren’t being met due to more recent turmoil in the financial markets and continued weakening of economy, which is bringing down performance in the Las Vegas locals market more than previously thought.

The Station Casinos stake may not be the only portion of the Fertitta empire to be hitting on hard times. MMAPayout.com has learned that the UFC has recently went through a round of layoffs in their operations. The UFC looks to be cutting away the fat to make itself lean and mean and capable of weathering an extended time period of financial stress and lowered performance.

When capital formation is difficult and consumers are forced to significantly curb their spending, most all industries suffer.  MMA and its most powerful brand are no exception.  The positive aspect to take from the above excerpt is that the UFC looks to be proactive in their approach.

It's my opinion that the demise of ProElite and their EliteXC brand was accelerated by the current financial situation.  CBS, Viacom, and their peers are experiencing tough times:

Paramount's trims also come at a time of turmoil for Viacom, as the advertising downturn has pressured its worsening financial outlook. Recent market swings even forced media mogul Sumner Redstone to sell a $233 million chunk of his holdings in Viacom and CBS Corp. to head off debt problems at his family's holding company.

Cutbacks are also beginning to show up elsewhere in the entertainment industry. NBC Universal Chief Executive Jeff Zucker told staff in a memo Friday that the company would be cutting its budget by $500 million next year.

Make no mistake, ProElite had an almost impossible route to survival.  The 'Standgate' debacle made this a difficult sell for CBS, and a tight credit scenario probably eliminated any other interest outside the broadcaster. 

Let us not overlook the UFC's relationship with Spike, a Viacom brand.  I can't see much changing with that relationship, but who knows what will happen if control of Viacom changes hands?  Although much of this news is troubling, these challenging economic times will test MMA's popularity.  Upstart promotions will undoubtedly have a difficult time surviving, but I think Zuffa's ability to withstand their financial challenges will give us some insight into where MMA is headed in the years to come.