Hollywood talent agency William Morris Endeavor, in partnership with private equity firms Silver Lake Capital (WME’s owner), KKR and MSD Capital have announced their acquisition of Ultimate Fighting Championship, the largest promoter of mixed martial arts fighting in the world, for a reported $4 Billion.
This marks the largest sports-based sale in history, with UFC’s primary owners, brothers Frank and Lorenzo Fertitta, set for a major windfall. The Las Vegas casino-owning brothers bought UFC for $2 Million in 2001, when the league was suffering from financial hardships brought upon by legislative opposition to the fighting league’s legality. However, the Fertitta brothers and UFC ultimately prevailed. As of March 2016, UFC is now legal in all 50 states. New York’s state assembly recently voted to overturn a ban on fighting sports, allowing UFC access to the “media capital of the world,” and the brothers have realized a 200,000% return on their initial investment.
Bidding for UFC was reported as early as May of this year, when Variety announced that the two primary bidders for the MMA promoter were WME and China’s Wanda Group, which is partnered with both Oriental Dreamworks and Warner Bros. No doubt all parties involved in the bidding process had ideas to integrate the sport’s stars into crossover Hollywood fame, like that realized by Ronda Roussey, who has transcended her UFC fighting beginnings to global superstardom across all media.
UFC offers WME something that no other fighting sport can claim: it’s a cohesive organization that has intelligently and effectively managed its talent and promoters for the overall good of the sport and its fans. Unlike boxing, which has become a black hole of rival promoters and fighters always willing to postpone or cancel fights at the last minute over compensation or other issues, UFC makes sure that if fans want to see a particular fight, the fight happens in a timely fashion. The fighters work for UFC, not themselves, which allows the UFC to promote their overall brand through the success and fan followings of each one of its fighters.
UFC’s successes in talent development have turned the organization into a cash cow. As David Segal wrote for the New York Times: “The next year , pay-per-view events were profitable, and in 2007, the UFC had 5.1 million buyers for 11 pay-per-view fights. Last year , UFC took in $600 million in revenue from ticket sales for live events, TV licensing fees and merchandise. Its athletes have been featured on the cover of Sports Illustrated. One of them, Ronda Rousey, hosted ‘Saturday Night Live.'”
WME’s purchase of UFC is a prescient move by the agency and its fellow investors, allowing them access to a major revenue generator through pay-per-view and live television events as well as an impressive roster of stars to market their brand around.