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UFC Investor Paints Bright Future For Brand

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Lorenzo-Fertitta
(UFC CEO Lorenzo Fertitta)

MMAjunkie‘s Steven Marrocco and Ben Fowlkes obtained a 58-page UFC investor document that details some of the inner financial workings of the world’s dominant MMA league. It explained how the new owners WME-IMG intend to increase earnings, who the UFC believes will be bidding for television rightswhen the current FOX deal expires in 2018, and how the league navigated the massive PPV revenue drop in 2014.

Overall, as expected in a document intended to excited investors, it paints a bright picture of the league’s future prospects.

Revenue
2013: $516,000,000
2014: $450,000,000
2015: $609,000,000

Looking forward, gains in EBITDA (earning before tax, and depreciation) or what most of us think of as profit, will be hugely leveraged. The purchase price of the league increases by hundreds of millions of dollars if the UFC can improve EBITA. Knowing that, negotiations with the league’s two biggest PPV stars, Ronda Rousey and Conor McGregor, may become even tougher – the loss of a big PPV could mean not only the resultant loss of profit but also the loss of the increase in purchase price.

However, WME-IMG reportedly regards the UFC as a “somewhat undisciplined ‘family business’ built by UFC President Dana White and former CEO Lorenzo Fertitta.” The new owners intend to cut fat. That is already underway, with perhaps 15% of the company laid off. The document also referenced “more rigorous corporate discipline,” especially in areas such as “compensation practices” and “long-lived consultants.”

And WME-IMG has extraordinary experience in marketing and event production, that will, the document explains, be put to use efficiently raising UFC brand awareness.

New York too was cited as a new source of growth, opening up sponsorship opportunities, and reaping the historically higher ticket pricing in The Big Apple.

Further increases in revenue are expected to come from a new television deal when the UFC’s contract with FOX expires in 2018. Fees from Reebok and EA Sports are also scheduled to increase. Overall, it shows that UFC revenues will rise, and costs will fall; that is where every business wants to be.

Good news for the fans is that there will in all likelihood be more blockbuster PPV events. The hardcore MMA fanbase, which is concerned with fighter pay, is presented with a more nuanced picture. New corporate league owners ferociously intent upon realizing a return on a $4,000,000,000 investment are not likely to be motivated to notably increase fighter compensation.

 

 

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Aaron Portier
Highly passionate MMA Journalist, and I've followed the sport ever since my favorite fighter, Vitor Belfort won the heavyweight tournament at UFC 12. After that I've tried to go to every local MMA event around the Gulf Coast and surrounding areas and decided to make it a point to have a career in some aspect in the fighting sport other than fighting in general (didn't want to ruin my face). I'm currently enrolled at Southeastern Louisiana University working towards a degree in Communication. I cover MMA, Boxing and Football for The Daily Star newspaper in my hometown of Hammond, Louisiana, in addition to working as a promotional writer for a local Boxing promotion known as BoxnCar and I cover boxing for 8countnews.com however SciFighting.com is my home. My main goal is to bring more publicity to MMA in my area and to the sport as a whole as all of us involved with the sport are merely scratching the surface and laying the foundation of what mixed martial arts competition will be further down the road.