'More than just cage fighters': Why the UFC is a US$4B big deal

CTV News Channel: UFC sold for $4B MMA reporter Mike Bohn discusses what then sale means for the future of the Ultimate Fighting Championship.

The Ultimate Fighting Championship was hemorrhaging money and struggling to move past its brutal beginnings when Dana White and two high school friends purchased the mixed martial arts promoter for US$2-million in 2001. That bet on an underdog sport once labelled “human cockfighting" has yielded a massive return on investment following the sale of the global sports enterprise.

White confirmed the sale of the company Sunday. A consortium of investors led by Hollywood talent agency WME-IMG will reportedly pay $4-billion for the UFC. The price has not been officially announced. Private equity firms Silver Lake, Kohlberg Kravis Roberts, and Michael Dell's investment firm MSD Capital are also said to be backing the deal.

White, who had a 9 per cent share of the company, will stay on as president under the new owners. Majority shareholders Frank and Lorenzo Fertitta, who hold an 80 per cent stake, will tap out of their management roles, but retain a minority stake. The Abu Dhabi government will continue to own 10 per cent of the company.

The UFC has experienced tremendous growth since its launch in 1993, when it was known for violent, unregulated bouts and unlikely matchups between backyard brawlers and martial artists. The first championship had just two rules; no biting or eye-gouging.

Mike Bohn, a reporter with USA Today and Rolling Stone who covers the UFC, told CTV News Channel that the company was “really in a dark, dark spot,” when White and the Fertitta brothers bought in.

“It was barely allowed on pay-per-view. Not many people were watching it, and it was kind of outlawed in a lot of different states.”

Today, UFC fights are broadcast in more than 150 countries, reaching an estimated 1.1 billion television screens. The company puts on approximately 40 events per year and has more than 500 athletes under contract, including fighters who have established star power beyond the ring including Conor McGregor, Brock Lesnar and Ronda Rousey.

“People see them as more than just cage fighters, more than these barbaric people who just go in there and fight each other. They are actually interesting characters and athletes,” said Bohn.

White told ESPN on Sunday that fans should not be worried about the ownership change, noting that he expects the sport is “going to the next level.”

Dave Meltzer, a leading authority on the business of mixed martial arts and pro wrestling, estimates UFC posted a $157,806,000 profit on $608,629,000 in gross revenue in 2015, for a 25.9 per cent profit margin. The company has more than doubled its reported profit year-over-year.

“You have to give massive credit to the Ferttitas and Dana White,” said Bohn. “They managed to make it into a mainstream sport by getting big sponsors, by getting it legalized in a lot of different states, by forming rules and just doing a lot of thing to make it acceptable to a mainstream audience.”