LOS ANGELES — In less than 16 years, the UFC has grown from a money-losing company in a widely reviled sport into a global entertainment property worth $4 billion.
While the UFC and its new owners figure out the company’s next steps, Lorenzo and Frank Fertitta are tapping out of mixed martial arts with a remarkable return on a $2 million investment.
The UFC has been sold for approximately $4 billion to a group led by Hollywood entertainment conglomerate WME-IMG, both companies confirmed Monday.
The sale will spectacularly benefit the Fertitta brothers and UFC President Dana White, who first persuaded his wealthy high school buddies to buy the cage fighting promotion in 2001. White also owned 9 percent of the company, and he isn’t going anywhere despite his own windfall: He’ll remain the boss and public face of the UFC while keeping an ownership stake.
“No other sport compares to UFC,” White said. “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. I’m looking forward to working with WME-IMG to continue to take this sport to the next level.”
Since their purchase of IMG three years ago, WME co-CEOs Ari Emanuel and Patrick Whitesell have been pursuing properties throughout sports and entertainment ahead of a possible initial public offering. The UFC is their biggest buy yet — and the deal appears to be the largest single financial transaction in the history of sports.
“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,” Emanuel said.
In their first public comments about the deal, White and the new owners have suggested little will change at first for the promotion. The UFC has a full slate of fights scheduled this year, all building toward its long-awaited debut at Madison Square Garden in November after New York legalized MMA earlier this year.
But the UFC’s new financial backing and WME-IMG’s marketing dexterity seem certain to lead to even more growth and global prominence for MMA’s dominant promotion, which has bought out or eliminated many of its competitors in the sport.
“UFC has experienced tremendous growth over the last decade and we are looking forward to helping the organization and its athletes identify new opportunities to develop and further establish their global footprint,” Emanuel said.
Few companies do that better than WME, but the UFC has also been pretty good at building stars in its own violent milieu.
After helping Chuck Liddell, Randy Couture and Tito Ortiz to straddle the line between sports and entertainment, the promotion now boasts a stable of elite athletes with mainstream fame, including Conor McGregor, Brock Lesnar and Ronda Rousey, who is represented by WME.
It’s too soon to tell whether the deal will lead to more money for the UFC’s non-unionized athletes. The promotion regularly receives criticism from mid-level fighters for its pay scale, but its ability to control talent costs is a major factor in its profitability.
For instance, Lesnar made a disclosed $2.5 million along with probable millions in undisclosed bonuses for his victory over Mark Hunt at UFC 200 last Saturday. T.J. Dillashaw, the promotion’s former bantamweight champion, made $50,000 for his fight, and that includes a $25,000 bonus only paid because he won.
McGregor, who makes multiple millions for each of his fights, congratulated the Fertittas on his Twitter account. Other UFC fighters took to social media on Monday to speculate hopefully about the impact of the deal.
“Perfect time to change the revenue split to 46/54 percent to be equal to the other major sports,” tweeted featherweight Jeremy Stephens, with the hashtag “weallneedtoeat .”
Cristiane “Cyborg” Justino also tweeted her congratulations. The vaunted Brazilian fighter signed with the UFC in March despite acknowledging she struggles to make the 135-pound limit on the UFC’s largest women’s weight class.
“Big things coming!” Justino said. “Hopefully a few new (women’s MMA) weight classes too! I’m ready.”
The UFC’s price tag has drawn gasps since it was first rumored earlier this year, but the consortium is basically buying an entire sport, given the UFC’s omnipotence atop MMA. Bellator and other ostensible competitors draw a fraction of the UFC’s revenue and attention.
With more than 500 athletes under contract, the UFC stages roughly 40 events per year and is broadcast in more than 150 countries, reaching 1.1 billion television households. The UFC is frequently described as the world’s largest pay-per-view event provider, and it also has a prolific digital streaming service, UFC Fight Pass, that it describes as “Netflix for fight fans” and is a key component of potential growth.
What’s more, the UFC’s broadcast deal with Fox also ends in 2018, and the next contract is expected to be lucrative.
Talent agency WME purchased IMG, the sports and event management group, in 2013 with goals of growing into an omnivorous entertainment company. The organization already made moves into niche sports properties last year by buying Professional Bull Riders and forming an e-sports gaming league with Turner Broadcasting.
The Fertitta brothers will retain a passive minority interest in the UFC, and the Abu Dhabi government still owns 10 percent of the company.
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