The sport of mixed martial arts has seen it’s fair share of ups and downs over the last twenty some odd years. At the present moment, we are in a downturn that is unprecedented in the modern era of MMA.

While MMA is a sport, it’s also an entertainment product. The overall pulse of the MMA market can be measured with an analysis of the organization with the greatest stake in the game, the UFC.

When fights fall through due to injuries and other circumstances fans groan in dismay and their lack of trust in fight announcements is reaffirmed. The media will touch on that sentiment as well, but there is often talk of the financial losses that take place do to fights falling through.

The majority of that conversation is based on the short term profits losses that take place. With a focus on pay-per-view numbers, ticket sales, and television ratings it can be easy to lose sight of the larger financial damages that can take place.

What isn’t alway’s discussed, primarily because it’s dry subject matter that fans may not want to listen to, is the impact on UFC’s credit rating. In November of 2014 Standard and Poors (S&P) released a revised profit outlook for Zuffa, LLC, the parent company of the UFC. The projection was showing that Zuffa, LLC could be facing as much as a forty percent profit loss for the year. That kind of drop in profits could certainly cause a credit downgrade which would impact the UFC’s global expansion and even their domestic business.

S & P released a statement stating, “A negative rating action could occur if we are not confident that Zuffa’s operations are recovering meaningfully by the first quarter of 2015.”

It’s now the end of February, and it has been a rough few months since the initial profit loss projection issued by S&P. Toward the end of December it was announced that the UFC was be faced with a class action lawsuit. Former and then current UFC fighters were members of the class action case, siting anti-competitive business practices as the basis of the case.

Once the press died down a bit on the class action case, yet another story broke that would bring a negative light to the UFC and the sport as a whole. Jon Jones, the UFC lightweight champion and one of there biggest stars had tested positive for cocaine in a pre-fight drug test.

With Jon Jones out of rehab and his brother winning the super bowl things once again seemed to be returning to normal in the world of mixed martial arts. Not for long though as more controversy broke around welterweight contender Hector Lombard testing positive for a designer steroid following his fight at UFC 182 against Josh Burkman.

Just when you thought it couldn’t get much worse, the news broke that Anderson Silva had tested positive for two different steroids in a pre-fight drug test. Nick Diaz, his opponent also tested with levels of marijuana metabolites that grossly exceeded the allowable limits. Weeks later we would also find out that Anderson Silva failed his post fight test with two more banned substances in the cocktail, Oxazepam and Temazepan.

While the shows still went on and undoubtedly generated high profits and great numbers. How will S&P view the UFC and their abilty to generate long term profits with all of this fall out?

Aside from keeping the shows in place the UFC has done some great things this year too. Perhaps in response to the threat of a credit downgrade and massive financial losses, but great things none the less. Just this week the UFC announced their plan to combat p.e.d. and banned substance use by their athletes. Implementing and lobbying for longer suspensions and more frequent random tests.

Toward the end of last year the UFC also announced their landmark deal with Reebok. The deal is an exclusive apparel deal which has ruffled the feathers of many managers and fighters stating concerns around losing sponsorship income. The deal goes into affect in July of 2015 and the proof will be in the results, but it looks to be a step in the right direction for the sport.

So many promotions have failed or been acquired by the UFC over the past two decades. There are many reasons for it, but one factor is certainly the cost of doing business. Zuffa, LLC has provided financial backing to the UFC that has kept them afloat through some much trying times. The events of the past year have shined a light on the cost of doing business and the trials that these organizations face.

The UFC has been the most pro-active , resilient, and well funded of all of these organizations allowing them to flourish to what they are today. They are one again reacting to the issues that face them and only time will tell how they fair, and how the sport as a whole fairs.

About The Author

Michael Davis
Director, Business Development/Senior Staff Writer

Michael Davis is a seasoned professional in the world of finance. In recent years, he has worked for Fortune 500 companies and consulted at one of the largest hedge funds in the world. After working closely with a mixed martial arts management company, he realized he could apply his skills to the sport he loved. The culmination of his professional experience and passion for MMA have led him to his role as Senior Staff Writer and Director of Business Development at The MMA Corner.