Ring Of Sports Marketing

Posts tagged zuffa

Boxing / UFC

Dana White Says UFC Could Begin Promoting Boxing

On the same podcast that Dana White said that the future of the UFC’s broadcast rights could be on a digital platform, the President of the UFC also said that one day boxing could be under the umbrella of the UFC.

Rumors first began that Dana White was going to expand into boxing last summer.  While promoting Mayweather-McGregor, White wore a shirt that said “Zuffa Boxing.”  White said that he has no plans to leave the UFC because it is his passion.  He also says that he is still under contract and can’t leave per the rules in the contract for WME-IMG acquiring the UFC.

Ringside Analysis

Dana White is a former amateur boxer, boxing trainer, and boxing fan.  When he partnered with the Fertitta brothers to take over the UFC and push it to its $4 billion sale he thought he could make a fight promotion company that avoided the mistakes boxing did.  He has already begun to obtain a promoter’s license.

Some believe that this is a sign that White and the UFC think that the market is softening on MMA and it is time to expand into something that is going to be more lucrative.  I view the expansion into boxing as a way to promote fighters in forms of martial arts they have mastered and also into new revenue streams.  While MMA may be a more long-term mainstream sport, the UFC could also expand into niches like boxing or muay thai.  Mayweather-McGregor has shown that there is a strong desire for cross-over competition if the personalities are right.  In a way, the UFC could really be moving back to its roots of matching wrestlers with kung fu masters.

The UFC is expanding into its first fight in mainland China at the end of this month, is looking for a big increase in revenue for their next broadcast rights, and are getting more international sponsors than they have before.  What the UFC is today could be a fraction of what it is in the next 10 years.


Conor McGregor Won’t Fight Again In UFC Unless He’s Co-Promoter

UFC Lightweight Champion Conor McGregor has not stated whether his next fight will be a MMA match or a boxing match, but before he does another fight in the UFC he demands to be a co-promoter.  At the debut of his biopic, McGregor was asked about his next fight.  He said that Tony Ferguson was a likely opponent in the UFC but also that a few boxing matches were possible and that discussions were open.

Conor McGregor said:

I was promoter on the Mayweather fight, and we’re in current negotiations… I ain’t stepping in that octagon again unless I’m part owner of the whole setup – I’m a promoter.”

“We’re in the contract negotiation stage. It’s got to, they’ve got to entice me now because, I came from a billion-dollar fight. I want equity, I want pay-per-view. I want to be a true partner. You have to entice me now. I want to be a partner. I want to be a promoter and I want to be a fighter for me to continue.”

Conor McGregor has asked for part ownership in the UFC before.  When the UFC was first sold to WME-IMG he wondered why he was excluded from any ownership in the company while WME-IMG sold off shares to celebrities in other sports and entertainment, like Tom Brady.

McGregor was technically a co-promoter in his fight against Mayweather but Zuffa later was legally required to be listed as a promoter in the fight so that they could pay Conor McGregor.

Dana White responded saying:

Dana White basically says that Conor McGregor is such an international draw that they are going to make some exceptions for him.  White also says that Conor McGregor is easy to do deals with and is also a huge asset to the company because he is willing to fight anyone at nearly any time.

Ringside Analysis:

I don’t think in an ideal world that the UFC would ever have a co-promoter because they don’t want to put any other company on par with the UFC.  The UFC has placed a lot of emphasis, especially since Zuffa first bought the company, about establishing the UFC brand.  The UFC is nearly synonymous with MMA but acts more as the NFL.  NFL Commissioner Roger Goodell said that one of his responsibilities is to “protect the shield” and the previous owners, with White, defended the UFC passionately.

The UFC has made exceptions for Conor McGregor before.  In the past the UFC hasn’t let fighters compete outside of the UFC in other sports but they let McGregor fight Mayweather.  McGregor made a lot of money for himself, WME-IMG, and also did a lot of promoting for the UFC.  The UFC had a rule against fighters holding belts in two different weight classes.  Conor McGregor won the UFC Lightweight Championship while simultaneously holding the UFC Featherweight Championship.

Part of me is wondering if the UFC is killing the golden goose by giving so much power to McGregor.  It is unlikely, but certainly possible, that the UFC is giving Conor McGregor what he wants because now McGregor knows how much money he could be making boxing or fighting as an independent MMA fighter and running his own shows, taking fighters from other MMA promotional companies.  The UFC has been behind in revenue goals for the last year and I hope that the short term money they’re chasing now, which remind me of some of the mistakes boxing made in its decline, don’t hurt the long-term success of the UFC.

International Business / MMA / UFC

UFC Signs New TV Deal in Russia

The UFC has partnered with Match TV in Russia to air UFC programs in the country.  At multiple points the deal looked like it would end without an agreement between the UFC and Match TV.  The previous UFC owners had an agreement nearly finalized for $500,000 to be paid annually for the program licensing.  However, once WME-IMG became the owners the annual fee increased substantially.  When WME-IMG looked to Russia to increase profits they sold the TV rights to Telesport.  Telesport became the mediator between Match TV and the UFC that led to the agreement.

CEO of Match TV Tina Kandelaki said:

“The negotiation process was difficult, and we are grateful to our partners for their mutual interest in staging UFC broadcasts in 2017. We are seeing increased attention for this tournament, not only in the media, but also among viewers… We are confident that all broadcasts will bring great pleasure and enhance sports viewership. We believe that the start of the season with the fight of Khabib Nurmagomedov will lead to even greater increase in the audience to the sport.”

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Entertainment Business / UFC

Celebrities Invested In The UFC

WME-IMG hoped to self-finance the transaction to obtain the UFC from Zuffa and some of the investors are well-known celebrities.  When negotiations to buy the UFC were ongoing there were reports that the Kraft Group, run by Robert Kraft who also owns the New England Patriots, and other famous individuals including those represented by Ari Emanuel were willing to invest in the venture.

The celebrities invested in the UFC are:

Abel “The Weeknd” Tesfaye, Adam Levine, Anthony Kiedis, Ben Affleck, Calvin Harris, Cam Newton, Conan O’Brien, Flea, Guy Fieri, Jimmy Kimmel, Li Na, LL COOL J, Maria Sharapova, Mark Wahlberg, Michael Bay, Rob Dyrdek, Robert Kraft, Serena Williams, Sylvester Stallone, Tom Brady, Trey Parker, Tyler Perry and Venus Williams are the latest to join UFC’s ownership group. In July 2016, global entertainment and sports leader WME | IMG – joined by Silver Lake Partners, KKR, MSD Capital, L.P. and MSD Partners, L.P. – announced it would acquire UFC®, the world’s premier professional mixed martial arts (MMA) organization.

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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.


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.


New York Judge Denies Injunction to Legalizing MMA in New York

Judge Kimba Wood denies injunction requested by Zuffa LLC and the UFC.  The UFC wanted to put on UFC198 at Madison Square Garden on April 29th.  A request was made for an injunction against the current law banning MMA in the state.

MMAFighting says:

Their suit against the law banning MMA continues, but must work its way through the state’s Second Circuit before any further judiciary action can be taken. Legalization efforts have historically been pushed through the legislative chambers in the state, albeit unsuccessfully to date. More recently, New York Governor Andrew M. Cuomo included language in his budget that would allow the UFC and other promoters to host MMA events. However, if MMA authorization is still included in the final budget, the deadline for approval isn’t until March 31.

UF COO Lawrence Epstein commented:

We are disappointed by the District Court’s denial of our motion for a preliminary injunction and its effort to redirect the litigation to the state courts.  One thing, and one thing only, prevents Madison Square Garden and other New York venues from hosting UFC events that are allowed in the other 49 States in the Union – that is the New York law that we believe violates the federal Constitution. Today’s decision, while disappointing, only underscores the importance of UFC’s pending appeal to the Second Circuit. UFC will evaluate this decision with an eye to pursuing every effective avenue to bring New Yorkers the same live events available to spectators throughout the United States.

Ringside Analysis:

I found it highly unlikely that the courts would allow an injunction against an active law.  The UFC asked for an immediate decision on the ruling to put on the event so the company will continue to fight for legalization on the issue through legislation.  It is not surprising that on a shortened timeline a judge will deviate from the current status quo.