The two bidders are reported to be WME-IMG partnering with the Dalian Wanda Group, and China Media Capital. Rumors indicate that the bids are in-between $3.9 billion and $4.2 billion. The highest bidder would purchase the entire company meaning that the Fertitta Brothers, Dana White, and Flash Entertainment would sell off all their voting interests and ownership rights. Investors are also rumored to want Dana White to stay as President of the organization.
WME-IMG is led by Ari Emanuel, of Entourage fame, and has partnered with the Dalian Wanda Group, which is led by China’s Wang Jianlin who is valued at $35 billion. WME-IMG is attempting to fully self-finance the acquisition and has received investments from the Kraft Group and China’s Tencent Holdings, one of the largest internet companies in the world.
China Media Capital is a state-run company that has been buying many sports products such as the TV rights to China’s best soccer league.
When the first rumor came out a month ago I suspected the valuation and bid potential for ownership of the UFC would be a partial sale. The two bidders are based in China and the UFC has struggled for nearly a decade to break into the continent.
Now that it appears that the sale will be for the whole company, reportedly with Dana White staying on, the Fertitta brothers are executing their exit strategy. Any entrepreneurial venture has an exit strategy in mind and the Fertitta brothers plan to get out now. They’ve done an amazing job so far and maybe they think they’ve taken the league as far as they can and that someone else can take it to the next level, or maybe that the league is so volatile that this is selling high.
The UFC has recently hit big with Ronda Rousey and Conor McGregor. But the huge get with McGregor and Rousey is on the same coin as PPV ruts and down swings. Relative to other sports leagues the revenue streams are much more inconsistent for the UFC. The vast majority of the UFC’s revenue comes from PPV buys, which is dependent on certain fighters, and the calendar can be completely unstable due to fighter injuries and sometimes people retiring and saying thanks for the cheese. The UFC is also undergoing several lawsuits and is now fighting a Muhammad Ali Act expansion into MMA, which could have a huge impact on how the UFC does business.
Either way, the bottomline to the current owners made up of the Fertitta brothers, Dana White, and Flash Entertainment, is that they are about to be paid a lot of money. Quite the return on investment for White and the Fertittas who bought the UFC for $2 million in 2001.