Ultimate Fighting Championship's fight to the top

BANGKOK // In 2000 the Ultimate Fighting Championship (UFC) was on the brink of bankruptcy. Today the organisation is worth US$4.2 billion, with a number of bidders reported to have tabled offers in this region. It has been a remarkable journey, regardless of whether or not the owners agree to sell. The UFC has been […]

BANGKOK // In 2000 the Ultimate Fighting Championship (UFC) was on the brink of bankruptcy. Today the organisation is worth US$4.2 billion, with a number of bidders reported to have tabled offers in this region.

It has been a remarkable journey, regardless of whether or not the owners agree to sell. The UFC has been rescued from financial ruin and developed into one of the most valuable sporting franchises on the planet, with multimillion-dollar sponsorship and TV deals in place.

In 2001 the casino executive brothers Lorenzo Fertitta and Frank Fertitta purchased the UFC alongside their long-term friend Dana White, who at the time was managing a number of MMA fighters. They set up a holding company called Zuffa and paid $2 million for the company, a sum which at the time was seen as exorbitant.

Lorenzo revealed in a 2009 interview with Fighter’s Only Magazine that even his own legal advisers had questioned the wisdom of spending a seven-figure sum on a struggling company.

“I had my attorneys tell me that I was crazy because I wasn’t buying anything. I was paying $2m and they were saying ‘What are you getting’ and I said ‘What you don’t understand is I’m getting the most valuable thing that I could possibly have, which is those three letters: UFC. That is what’s going to make this thing work. Everybody knows that brand. Whether they like it or they don’t like it, they react to it’,” Lorenzo explained to the MMA magazine.

The Fertittas leveraged their contacts from the gaming world to hold events at Donald Trump’s casino in Atlantic City and the MGM Grand and Mandalay Bay resorts in Las Vegas. The profile of the UFC rose, with ticket sales and pay per view (PPV) numbers steadily improving.

Despite this initial success, Zuffa was showing losses of $34m by 2004. Deciding that they would need to speculate even further before accumulating some return on their investment the Fertitta brothers used $10m of their own money to pay the production costs for an MMA-based reality TV series.

The show was called The Ultimate Fighter (Tuf) and it proved an immediate hit. Televised weekly in 2005 by US network Spike TV, it gave viewers an insight into the lives and motivations of the featured mixed martial artists, as well as showing a fight at the end of every episode.

The first PPV event in the aftermath of Tuf season 1 generated 300,000 buys, doubling the previous record. The PPV viewing numbers continued to creep up, and the following year Zuffa acquired the American promotions World Extreme Cagefighting (WEC) and World Fighting Alliance (WFA) to bolster the roster of UFC fighters.

In 2006 the UFC generated $222.7m in PPV revenue, breaking a record from the world of boxing that had stood for seven years. A few months later Zuffa sent shock waves through the MMA world by acquiring the Japanese promotion Pride for close to $70m.

In early 2011 Zuffa purchased American promotion Strikeforce for about $40m, strengthening the UFC’s roster of fighters at the same time as removing one of its major rivals from the domestic market. The company would quickly recoup that expenditure with a groundbreaking broadcast deal signed later that year.

The UFC in August 2011 announced a seven-year deal with Fox, putting MMA on the same broadcast platform as established American sporting events such as the National Football League and Major League Baseball. The network reportedly agreed to pay the promotion $90m annually, citing the sport’s popularity among the 18-34 male demographic as a decisive factor.

Over the course of the coming years, the UFC would embark on an international expansion in which it put on events in Japan, Australia, Sweden, Brazil, Canada, England, Macau, Singapore, Germany, New Zealand, Ireland, Poland, the Philippines, Mexico, South Korea, Croatia and Abu Dhabi.

In 2015 the UFC held 41 events in 32 different cities across 13 countries, and this weekend the organisation will put on what should have been be its 200th PPV card (it’s actually the 199th because UFC 151 was cancelled). Meanwhile, Tuf is still going strong and there have been seasons set in Asia, South America and Australia

While the UFC has formally denied that a takeover is imminent, it is clear that there are several consortiums ready to meet the reported $4.2bn asking price. A sporting franchise that did not look financially viable 25 years ago is now among the most valuable on the planet.

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Source: Business

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