UFC Sold
Fifteen years after a floundering Ultimate Fighting Championship was purchased for $2 million, the promotion has been sold for approximately $4 billion to a group led by Hollywood talent agency WME-IMG.
The agency and UFC on Monday confirmed the sale, believed to be the largest for a sports team or franchise in history. It surpasses the $2 billion price tag for the NBA"s Los Angeles Clippers in 2014 and Major League Baseball"s Los Angeles Dodgers in 2012, and the $1.47 billion for Manchester United soccer club in 2005. The deal is backed by private equity firms Silver Lake Partners, which owns WME-IMG, and Kohlberg Kravis Roberts, along with the investment firm of billionaire Michael Dell, founder of Dell Computers.
UFC"s long-time CEO Lorenzo Fertitta said he is confident that the new ownership group, "with whom weve built a strong relationship over the last several years, is committed to accelerating UFCs global growth. Most importantly, our new owners share the same vision and passion for this organization and its athletes.
According to The New York Times, which first reported the completion of the long-rumoured sale, the deal was officially signed on the weekend following the landmark UFC 200 in Las Vegas, which drew 18,202 fans paying a live gate of $10.8 million both company records for an event held in Nevada.
"We"ve been honoured to have UFC and a number of its athletes as clients and couldn"t be happier to take our relationship to this next level as the organization"s owner and operating partner," WME co-CEO Ari Emanuel said.
Were now committed to pursuing new opportunities for UFC and its talented athletes to ensure the sports continued growth and success on a global scale.
Lorenzo Fertitta and brother Frank Fertitta will step down from day-to-day operations but will retain a small minority interest. UFC president Dana White, one of the faces of the promotion, will continue on in his current role. Prior to the sale, the Fertitta brothers owned approximately 80% of the company, while the Abu Dhabi government owned around 10% (which it will continue to hold) and White had a 9% share.
No other sport compares to UFC, said White in a statement. Im looking forward to working with WME-IMG to continue to take this sport to the next level.
UFC was created by Semaphore Entertainment Group in 1993 as a pay-per-view entity, introducing early stars like Royce Gracie, Ken Shamrock, Dan Severn and Tank Abbott. The company was initially wildly successful, drawing upwards of 300,000 buys on pay-per-view without television programming at a time when the PPV universe was just a fraction of what it is today. Its controversial bouts at first, there were no weight classes and only a handful of rules soon attracted the attention of powerful foes such as Sen. John McCain and cable executive Leo Hindery, however. When UFC was pulled from most pay-per-view systems in 1996 and 1997, it started a financial downturn that nearly ended the promotion.
In 2001, Dana White, at the time representing fighters Tito Ortiz and Chuck Liddell, went to his high school friends the Fertitta brothers, who were then big players in the casino business, and suggested purchasing UFC from SEG owner Bob Meyrowitz. After a brief period of negotiations, the $2 million sale was completed.
Though UFC was finally sanctioned in Nevada and back on cable systems" pay-per-view, it took four years and approximately $40 million in losses before the new ownership Zuffa LLC finally hit the jackpot. With stars such as Ortiz and Liddell, Randy Couture and Matt Hughes, the company signed a cable TV deal with Spike TV and scored big with reality-TV competition The Ultimate Fighter. By 2006, UFC surpassed boxing and professional wrestling as the top entity on pay-per-view.
Over the past decade, UFC has been sanctioned across the United States and Canada, while taking events across the globe, from Australia to Brazil, Japan to Germany, Macao to United Arab Emirates. Stars such as Georges St-Pierre, Anderson Silva, Forrest Griffin and Brock Lesnar have been replaced in recent years by Conor McGregor, Ronda Rousey and Jon Jones, with Lesnar returning after a five-year absence to anchor UFC 200.
Although the UFC has received occasional criticism from fighters for its pay scale, its ability to control talent costs is a major factor in its profitability. Its position atop MMA also allows it to match the sport"s top fighters against each other consistently, setting it apart from the hopelessly fractured world of boxing.
The UFC"s price tag has drawn gasps since it was first rumoured earlier this year, but the consortium is getting a sports property with a unique niche and ample growth potential.
WME purchased IMG, the sports and event management group, in 2013, and the talent agency has evolved into a multifaceted entertainment company. The organization already made moves into niche sports properties last year by buying Professional Bull Riders and forming an e-sports gaming league with Turner Broadcasting.
With more than 500 athletes under contract, the UFC stages roughly 40 events per year and is broadcast in more than 150 countries, reaching 1.1 billion television households. The promotion has built a large roster of endorsement deals and sponsorships with A-list companies like Bud Light and Harley-Davidson, and its subsidiary ventures include everything from its Fight Pass digital streaming service to more than 100 branded fitness centres.
The UFC also recently began construction in Las Vegas on a 180,000-square-foot, campus-style corporate headquarters that also will house training and rehabilitation facilities for its fighters.
The UFC appears on the Fox network and cable affiliates as part of its seven-year broadcast deal, which ends in 2018. With rights to live sporting events considered prime programming, UFC"s next contract is expected to be extraordinarily lucrative, with both Fox and ESPN among the likely bidders.
Said White: Our goal has always been to put on the biggest and the best fights for our fans, and to make this the biggest sport in the world."
With files from The Associated Press
Source: http://www.lfpress.com/2016/07/11/ufc-sold-for-us4-billion-report
