UFC Attracts $4.1 Billion Bids From Investors Including Hollywood Heavyweight Ari Emanuel
Posted on: June 18, 2016, 08:32h.
Last updated on: June 18, 2016, 10:25h.
The Ultimate Fighting Championship (UFC) was purchased in 2001 by Frank and Lorenzo Fertitta for $2 million. Now 15 years later, the Fertitta brothers stand to make a fortune off their investment should they decide to sell the mixed martial arts company.
Regardless of the fact that UFC President Dana White has remained adamant that the business isn’t for sale, reports are surfacing that a bidding war has emerged.
ESPN’s Darren Rovell says WME-IMG and Dalian Wanda Group are scurrying to secure financing to propose an offer of around $4.1 billion to the Fertittas. Led by WME (William Morris Endeavor) Co-CEO Ari Emanuel, the group is asking backers to invest between $25 and $50 million.
One of those who reportedly bit is Robert Kraft, the billionaire owner of the New England Patriots.
The other party interested in the UFC is China Media Capital, a government-backed firm that specializes in media ventures. The bid by China Media is also rumored to be in the $4.1 billion range.
The private UFC has made no public comment on the reported offers.
House Wins Again
The Fertitta family has been winning for decades in Las Vegas. Their father Frank founded Station Casinos in 1976 and today the casino company holds 20 gaming properties under the Station umbrella.
The Fertittas are also related to billionaire Tilman Fertitta, the sole owner of Landry’s, Inc., which includes the Golden Nugget in its portfolio.
Any gambler knows that the house always wins in the long run, but when it came to the UFC, the investment in 2001 was anything but a sure thing.
“I had my attorneys tell me that I was crazy because I wasn’t buying anything,” Lorenzo told Fighter’s Only magazine of the UFC acquisition. “I was paying $2 million and they were saying, ‘What are you getting?'”
That question is now being answered a decade and a half later: $4.1 billion.
It was a risky bet, but it’s unquestionably paid off.
The UFC was on the verge of bankruptcy in 2001, but the brothers turned around the operation through aggressive advertising campaigns and returning the fights to pay-per-view.
The 2016 UFC
Today, the UFC is thought to be a multibillion-dollar enterprise. Though the company is held privately by the Fertittas who reportedly own 80 percent, Lorenzo admitted to CNN that the brand grossed some $600 million in 2015.
Since 2005, the UFC has recorded 35 fights that have sold at least $2.4 million in tickets. Last December’s McGregor vs. Aldo at the MGM Grand Garden Arena saw a $10.1 million gate.
The UFC has quickly become a popular line at Nevada sportsbooks, and daily fantasy sports leaders DraftKings and FanDuel are increasingly offering new contests on MMA fights.
The bidding investors believe there’s plenty of room for growth, but some financial experts feel otherwise. Writing in Forbes, Mike Ozanian estimates that the UFC’s operating income in 2015 off $600 million in gross revenues was about $160 million.
“Thus, at a $4 billion valuation UFC’s enterprise multiple would be 25,” Ozanian stated. “If UFC is sold for $4 billion my hat goes off to the sellers.”
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