UFC sold for $4 billion

Posted at 9:23 AM, Jul 11, 2016
and last updated 2016-07-11 09:23:57-04

UFC, the mixed martial arts league, will be sold for $4 billion, making it by far the richest sale in the history of professional sports.

It is being bought by a group led by talent agency WME-IMG which also includes major private equity firms Silver Lake, Kohlberg Kravis Roberts, as well as the private investment firms of Michael Dell, founder of the computer company that bears his name.

“We’ve been fortunate over the years to represent UFC and a number of its remarkable athletes,” said WME-IMG Co-CEOs Ariel Emanuel and Patrick Whitesell. “We’re now committed to pursuing new opportunities for UFC and its talented athletes to ensure the sport’s continued growth and success on a global scale.”

The sale dwarfs previous sales of any sports franchise. The Los Angeles Dodgers purchase out of bankruptcy for $2.1 billion in 2012 is the largest sales price on record for a single franchise. It was nearly matched by the $2 billion purchase of the Los Angeles Clippers by former Microsoft CEO Steve Ballmer in 2014.

UFC, which stands for Ultimate Fighting Championship, was founded in 1993 and purchased for $2 million in 2001 by casino operators Lorenzo and Frank Fertitta. Chairman and CEO Lorenzo Fertitta said it was nearly bankrupt and “literally going of business” at the time.

“We saw an opportunity,” he told CNN’s Rachel Crane late last year. “We felt like there was a void in contact sports. We felt…if we put in the right rules and regulations…we could create an opportunity for business. That’s essentially what we’ve done.”

The company had revenue of about $600 million last year, which Fertitta said was up significantly from a year earlier.

Its largest source of revenue is pay-per-view fees. It also has a $700 million, multi-year broadcast rights deal with Fox, as well as an online subscription package for fans. Its matches are broadcast in over 156 countries and territories, to nearly 1.1 billion television households worldwide, in 29 different languages.

“No other sport compares to UFC,” remarked Dana White, UFC’s President who will continue in that role. “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. The Fertitta brothers will retain a minority stake in the company after the sale.

The price is far above some earlier estimates for the value of the league. The union UNITE Here, which did an analysis earlier this year, put the value of the holding company which owns UFC at $2.2 billion. The closest rival to UFC that is publicly traded is World Wrestling Entertainment, which has a market value of $1.5 billion.

The most valuable sports franchise in the world is believed to be the Dallas Cowboys, which Forbes estimates is worth $4 billion. British soccer team Manchester United is the most valuable publicly-held team with a market value of $2.6 billion.