Image source: UFC Instagram (@ufc)
S&P Global, a financial information and analytics company, have released a tally detailing 107 companies now on credit watch since the coronavirus outbreak. Among those companies is Endeavour the parent company of UFC.
National Amusements, the parent company of ViacomCBS and therefore Bellator was also placed on credit watch by S&P Global.
First reported by Deadline, S&P discussed the reasoning behind adding Endeavour to their credit watch list with a predicted drop in revenue in the mid-teens in events, media, and services revenue with a significant decline in the UFC’s live ticketing revenue.
“The leisure and entertainment economy is currently disproportionately hurt by fears of public gatherings. Endeavor owns, operates, or represents a number of events and entertainment properties, including Professional Bull Riders, Fashion Week, Fortnite competitions, and several European soccer leagues.
[The events] are sensitive to consumer demand for out-of-home entertainment, as well as sponsorship and advertising.”
S&P have also suggested that the UFC is strategically important to Endeavour and the two companies could provide temporary liquidity support to support each other through the crisis. The UFC has an impressive operating performance with a sizable EBITDA (Earnings before interest, taxes, depreciation, and amortization) due to recurring media rights revenue.
Endeavour holds sizable levels of debt due to the acquisition of the UFC and planned to reduce the deficit by taking the company public last year. However, just days before the initial public offering (IPO), Endeavour withdrew due to concerns over low stock prices meaning the capital was not raised and the company remains private.
The insights from S&P Global could explain why UFC President Dana White has been determined to keep the shows going ahead despite the coronavirus outbreak. The UFC was forced to cancel three of their live events, but White is determined to ensure UFC 249: Khabib vs. Ferguson goes ahead as planned.
The S&P Global insights also confirmed that National Amusements has been placed on credit watch after shares of subsidiary company ViacomCBS (parent company of Bellator MMA) dropped so low the that the parent was in technical default on a bank loan.