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Posts tagged lorenzo fertitta

UFC

The Future Of The WME-IMG UFC

On July 10th reports hit the web that the UFC sold for $4 billion making it the biggest transaction in sports history. For perspective, the Los Angeles Clippers were sold for $2 billion. The only sports entity that is considered to be in the neighborhood of a $4 billion valuation is the Dallas Cowboys. What differentiates the UFC from the Cowboys is that the team in Dallas is a part of a larger organization. When one owns the UFC they nearly own the entire sport.

Below is a summary of information and insights I have onto the possible future of the new WME-IMG UFC covering the new roles of the owners, the business acumen of the investors, the marketing power of WME-IMG, what the purchase means to athletes, what global expansion will look like, what the new revenue streams are, and what the biggest risk is to the sport:

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UFC

UFC Sold For $4 Billion

Rumors have swirled for the last two months that the UFC was being sold in the neighborhood of $4 billion.  Chris Maathuis at CBS KLAS-TV in Las Vegas, says the UFC sold for $4 billion to outside inverstors.  Dana White and Lorenzo Fertitta are scheduled to make an appearance at 5 am on KLAS-TV.

According to LasVegasNow:

“The new owners include an alphabet-soup partnership of WME (William Morris Endeavor), the internationally known talent agency,  IMG (International Management Group) a global sports and entertainment company based in New York, and MSD, a private equity group headed by Michael Dell.  Also involved as a strategic partner is KKR, a global investment firm.

According to persons familiar with the deal, Lorenzo Fertitta will remain as chairman of UFC for 6-8 weeks during the transition but will step down after that. UFC president Dana White, who currently owns 9% of the organization, will continue in his role with UFC and will have a smaller ownership stake.”

ESPN reporter Brett Okamoto had some texts with Dana White that he posted on twitter:

Ringside Analysis:

The UFC selling for $4 billion would be the biggest deal in the history of sports.  The company has come a long way from when the Fertitta brothers purchased the UFC in 2001 for $2 million.  Last year Lorenzo Fertitta told CNN that the UFC had made $600 million in revenue, so the sale is going for seven times the reported revenue.

There is a lot more money behind the UFC with the new investors.  Between one of the largest sports and entertainment marketing companies and private equity and investment firms that have billions more dollars behind it the sport, as Dana White says, will be going to the next level.  The extreme money and unparalleled expertise now running the sport could really push the UFC to the mainstream, a goal that the Fertitta brothers and Dana White have been saying since they bought the company.

Personally, I’m extremely excited to see where this sport goes.

 

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Lorenzo Fertitta And Dana White Speak With LA Times About Sale And UFC 200

There have been two stories that have dominated the talk in the MMA world: the possible sale of the UFC and UFC 200.  In a recent interview with the LA Times, the head of the UFC, Lorenzo Fertitta, was quick to dismiss any rumors about the UFC being for sale and deflected the question in favor of UFC 200.  The two owners wanted to strongly emphasize the growth of the company since UFC 100.

Lorenzo said on selling the UFC:

“Look, if we bring on an investor or something happens, we’ll let everyone know,” Fertitta said. “I sat here as I got back from the Fourth of July weekend and went through every piece, every second, of what’s been created for UFC 200.”

“I’ve never been more bullish on the business. I still have massive love for the sport. I never said I was walking away.

“What’s happening — this is standard. Any company, this size and magnitude, you don’t talk about things you’re working on in strategical terms. So there’s nothing to report.”

UFC 200 is just 36 hours away and while Jon Jones has been pulled from the fight the card remains stacked with huge names like Daniel Cormier, Miesha Tate, Anderson Silva, Jose Aldo, and Frankie Edgar.  Brock Lesnar makes his UFC return to fight Mark Hunt.  Their 3-round fight is now the main event for UFC 200.

On the growth of the company Fertitta said:

“The spectrum and brand of the sport has come a long way. You don’t take time to look at the accomplishments and appreciate how the sport has grown when you’re doing this every day – but there’ve been a lot of changes.”

Ringside Analysis:

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Jon Jones Pulled From UFC 200

Today the UFC announced that Jon Jones has been pulled from UFC 200.  USADA notified Jon Jones that he failed an out-of-competition drug test that took place on June 16th and will be unable to compete Saturday night.  There is an appeal process but it takes 72 hours for it to be completed and the process would not be done by the time of the fight.

This is not Jon Jones’ first issue with testing and adds onto his history of out-of-competition incidents.  Jones was stripped of his light heavyweight title after a felony hit-and-run charge in April 2015.  Before fighting Daniel Cormier, Jones also failed a drug test a month prior to fighting when testing found cocaine in his system.  In January of 2015 Jones had a brief stint in rehab.

Jon Jones is still on probation so if it is found that he did something illegal, such as using steroids, he will be in violation of his probation and will go to prison again.  Recreational drugs are not tested out-of-competition so the positive test must be a result of a performance enhancing drug (PED).  If there is in fact a PED violation Jones is also looking at a two year suspension from fighting.

Daniel Cormier was looking to get revenge from his loss in UFC 182 and was looking at making seven figures from this fight.  Cormier will be missing out on a lot of money given that the fight is no longer happening.  Dana White left open the possibility that the UFC could find someone to fight Daniel Cormier on what is essentially 48 hours notice.

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UFC sale reportedly imminent with two bids in $4.1 billion range (updated)

UFC sale reportedly imminent with two bids in $4.1 billion range (updated)

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Demetrius “Might Mouse” Johnson Signs New Eight-Fight Contract With the UFC

UFC flyweight champion Demetrius Johnson has signed a new contract with the UFC without entering into free agency.  There were two fights left on Johnson’s contract before the new contract.

Johnson defeated Henry Cejudo at UFC 197 putting him at eight straight successful title defenses, just two short of Anderson Silva’s record.

On the MMA Hour Johnson said:

I think when fighters do that, they want to see what they’re worth, but at the same time, if they negotiate with the UFC, and they get what they like, there’s no point going and testing free agency.  And the thing is, even Rampage Jackson said it before, nobody treats you better than the UFC.

Ringside Analysis:

This type of re-signing is similar to restricted free agency where an athlete can re-sign with a team without interference of other offers.  If the athlete believes the contract to be fair then he can agree to it without even bothering to go through the free agency process.

For some reason Johnson has never turned into a PPV star.  Demetrius Johnson has been one of the best fighters in the UFC’s young history.  He has been the champion for as long as the flyweight division has been part of the company.  His dominance over the division and dominance over every opponent he’s faced have resulted in less entertaining fights and a certain amount of boredom around the division as a whole.

Johnson discusses a conversation he had with Lorenzo Fertitta and Dana White were they believed that if Johnson had more competition, or at the least the appearance of competition then he might become more popular.  White points out that Silva didn’t make the jump to super stardom until he fought Chael Sonnen twice in tough fights.

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Dana White Denies Report Of UFC Up For Sale

Yesterday, ESPN writer Darren Rovell reported that the UFC was up for sale to four possible bidders: WME/IMG, China Media Capital, The Blackstone Group, and the reported bidding leader the Dalian Wanda Group.

While Dana White has denied the UFC is for sale Rovell still stands by his report.  Rovell has said that sources told him that Goldman Sachs has been representing Zuffa LLC in the deal.  Also, a company called The Raine Group reportedly prepared the bid book that was sent to possible investors at the end of March.  The Raine Group has advised the UFC in the past and has a connection with both WME/IMG and China Media Capitol.

Dana White on $4 billion estimated sell value:

We’re not up for sale.  We’re always working on deals and our expansion globally. I’ve been saying since this thing came out, no, we’re not for sale, but let me tell you what. If somebody shows up with $4 billion, we can talk. We can definitely talk.

Dana White on a possible partial sale:

Obviously, if I’m in the middle of a deal right now, there’s a lot of confidentiality involved in it.  We’re working on expanding. We’re working on growing the company and moving into other territories like China and Japan, Korea. So, yeah, we’re always working on deals.

White on his role in the company after a possible sale:

I don’t know. I don’t know how that would all work out, but I’ll tell you this.  The day we decide to sell, I probably don’t want to do this anymore. I love this. I love this business. I love the sport. I jump out of bed everyday excited to go to work.

And listen, me and Fertitta brothers have been together a long time.  We’re very close friends. We work well together. Something we did would be a mutual decision and we’d probably all be looking to get out.

Ringside Analysis:

I think it is more likely than not that the UFC is going to sell off some ownership shares in the company.  There is a lot of smoke for there to be no fire.  The UFC sold 10% of the company to Flash Entertainment in 2010.  The partnership was designed to bring in knowledge of the Asian market and getting contact with key decision makers.

As Dana White mentions, there is still room for growth in parts of Asia.  White also said when prompted about a partial sale that there is a lot of confidentiality involved while being in the middle of making a deal, which could lead one to believe the UFC is in talks to bring on another possible minority partner.  It also then comes as no surprise that a Chinese ownership group is in the front running to outbid competitors.

Zuffa LLC, Lorenzo Fertitta, and Dana White have always been secretive of the operations inside the company.  They frequently mention that the UFC is a private company that does not need to share financial information so it doesn’t come as a surprise that they are outright denying any claims of selling.

If one were to look at the UFC like a startup then selling the company would be a solid exit strategy, especially when the selling price is near $4 billion.  At the beginning of any venture an entrepreneur or group will decide on an exit strategy to ultimately cash out on their hard work.  It’s possible, however unlikely, that the Fertitta Brothers and Dana White have decided that it is time to exit.  Something else to take into consideration, while even more unlikely, is that the Fertitta Brothers have decided that they have pushed the company as far as it can go and that someone worth $35 billion by himself can push the company further.

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UFC Possibly Up For Sale and Estimated at $3.5-4B

According to reports the owners of the UFC have been in talks to sell the copmany.

The Ultimate Fighting Championship was purchased by Zuffa LLC in 2001 for $2 million.  Zuffa LLC and the UFC is a privately held company with the Fertitta Brothers owning 80% of the company, Dana White with 10%, and the Abu Dhabi government under the name of Flash Entertainment owns another 10%.

According to the article by ESPN’s Darren Rovell:

At least four bidders are believed to have submitted bids for the organization, including WME/IMG, China Media Capital, The Blackstone Group and Dalian Wanda Group. The winning bid, should things proceed, is expected to be for a valuation between $3.5 billion and $4 billion, multiple sources with knowledge of the negotiations told ESPN.com.

The Dalian Wanda Group is run by the richest man in China, Wang Jianlin, who is estimated to be worth $35 billion.  The group has been buying sports and entertainment companies in the last few years.

The company has slowly been getting into sports. Last year, Wanda bought a 20 percent stake in soccer superpower Atletico Madrid for a reported $48 million. In March, amid the FIFA scandal, the company agreed to sign on as a FIFA partner, the highest level of sponsorship, through 2030.

In January, Dalian Wanda Group became the first Chinese company to become owners of a major Hollywood film studio when it agreed to buy Legendary Entertainment from Pittsburgh Steelers minority owner Thomas Tull for about $3.5 billion.

Ringside Analysis:

The UFC has come a long way since it was first purchased in 2001 for only $2M.  What started as what seemed to be a passion project has turned into a monolith in the sports and business world.  In an interview with CNN, Lorenzo Fertitta said that the UFC made around $600 million last year.

The UFC has been valued as one of the largest companies in sports.  The Los Angeles Clippers sold for $2 billion a few years ago and the Dallas Cowboys are also valued near $4 billion.  If the UFC does sell for at least $3.5 billion then it would be more valuable than Real Madrid ($3.26 billion), the New England Patriots ($3.2 billion), and the New York Yankees ($3.2 billion).  

The UFC had their best year financially with the rise of Conor McGregor and Ronda Rousey making a full-on push into the mainstream.  However, there are also questions about the sustainability of the company given the sport, revenue model, and class-action lawsuit that the company faces.  The new television rights deal with FOX that renews in 2019 is going to earn the UFC $250 million. 

For years the UFC has tried to make a push to break into the Asian market so it is interesting that the favored buyer is a Chinese Conglomerate.  The price at which the UFC is projected to sell for is a strong indicator that among the wealthy investors and buyers the future for the UFC is incredibly bright.

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RUMOR: Floyd Mayweather Exploring Possibility of Fighting Conor McGregor

In the last week rumors began to swirl that Mayweather and McGregor might fight each other.  It seems that every week there is a new rumor about Floyd Mayweather coming out of retirement.

Allegedly, Mayweather became angry after McGregor said that he would knock Mayweather out in 30 seconds.  McGregor’s comments were the result of Mayweather saying that when black people talk trash they draw scorn from fans while white fighters who talk trash are revered and put on a pedestal.  

McGregor is under an exclusive contact with the UFC that prohibits him from competing in other combat sports, including boxing.  For this fight to occur it’s ultimately up to the UFC as to whether McGregor would be eligible.  

Ringside Analysis:

There are a few requirements that would need to be met for Floyd Mayweather to come out of retirement, which I don’t believe he will do.  Based on brand names alone, even though fans of the fight game know this would be a blowout Mayweather win, would probably top $1 million PPV buys.

First, Mayweather would need to be paid.  I think if he comes out of retirement at all he would earn nine figures as a base payment before PPV points.  With McGregor’s personality the buildup to the fight would be huge and would draw significant attention from casual sports fans.

Second, it would be a boxing match and not a MMA fight.  This really goes without saying but there’s no way that Mayweather enters an MMA contest and it is very likely that McGregor’s confidence would carry him to volunteering to fight Mayweather in the ring.

Third, he would fight somebody he knows he would beat.  I believe Floyd would easily beat anybody near his weight class not named Gennady Golovkin, and that’s only because GGG is significantly higher in weight.  In my opinion Floyd Mayweather would handle McGregor.  Mayweather has significantly more experience, is overwhelmingly more skillful, and his ring IQ far surpasses what McGregor’s is.  

Again, the UFC would have to give permission for Conor McGregor to go outside the agreed upon terms in his contract and fight Mayweather.  It is most likely in the UFC’s best interests to not let McGregor fight because a clear loss would most likely kill McGregor’s brand value even when he goes back to MMA fights.

I strongly doubt this fight will happen, but, if it does, the weeks leading up to the fight would be fantastic with the two fighters’ personalities and showmanship.