The Ultimate Fighting Championship (UFC) mixed martial arts organization has been sold to Hollywood talent agency powerhouse WME/IMG for a reported $4b, earning a handsome profit for former owners Lorenzo and Frank Fertitta.
Rumors of a UFC sale had been circulating for months, but the deal was finally confirmed on Sunday by UFC president Dana White, who will be staying on as president and the public face of the organization.
White, who held a 9% stake in the UFC, has traded his holdings for shares in the UFC’s new ownership. The government of Abu Dhabi, which held a 10% UFC stake, is also sticking around.
The Fertitta brothers, who held a combined 80% stake in the UFC via their Zuffa LLC business, have retained a small passive minority position in the new entity. Lorenzo Fertitta will be relinquishing his role as UFC chairman. White declined to speculate on what either Fertitta brother might choose to do with their new supply of free cash.
The Fertitta brothers, who own Las Vegas locals casino business Red Rock Resorts Inc (formerly known as Station Casinos), teamed with White to purchase the UFC in 2001 for a mere $2m. At the time, the UFC was at its lowest ebb since its 1993 debut, having been branded as “human cockfighting” by Sen. John McCain and banned from staging contests in many US states.
The Fertittas and White were credited with fostering the increased acceptance of MMA by working with state athletic agencies to develop uniform regulatory standards, which led to the subsequent turnaround in the UFC’s fortunes. As a privately held company, the UFC isn’t required to reveal its financial figures, but MMA analyst Dave Meltzer has estimated that the UFC earned a profit of around $158m last year on revenue of $609m.
This weekend’s UFC 200 event earned a record $10.8m in ticket sales despite the hiccups that forced multiple alterations to its marquee matchups. In addition to lucrative pay-per-view deals, the UFC has a broadcast deal with Fox that expires in 2018.
William Morris Endeavor (WME), which has represented the UFC for the past decade, acquired rival IMG in 2014 for $2.4b. WME/IMG is led by Ari Emanuel, the brother of current Chicago mayor Rahm Emanuel, a former advisor to President Bill Clinton.
WME/IMG enlisted the help of private equity groups Silver Lake Partners, Kohlberg Kravis Roberts & Co (KKR), MSD Capital and MSD Partners to help finance the deal. Speculation has it that WME/IMG is prepping an initial public offering, the value of which has just taken a significant upturn.