UFC Owners Turn $2 Million into $4 Billion

After months of rumors, the Ultimate Fighting Championship (UFC) announced on Monday that it would be sold for $4 billion to a group of private investors. The deal represent the largest of its kind in the history of professional sports, topping the $2.1 billion the LA Dodgers were bought out of bankruptcy back in 2012. It also marks a staggering profit for the investors who bought the organization back in 2002.
What is remarkable about the sale is that casino operators Lorenzo and Frank Fertitta bought the nearly bankrupt organization in 2000 for $2 million. The $4 billion sales price represents a 72% annual return, every year, on that modest original investment.
“We saw an opportunity,” Lorenzo Fertitta told CNN’s Rachel Crane late last year. “We felt like there was a void in contact sports. We felt…if we put in the right rules and regulations…we could create an opportunity for business.”
UFC is now the world’s biggest and most successful mixed martial arts league. The sport combines all different types of fighting including boxing, wrestling and martial arts.
While UFC was once considered a violent, fringe sport banned in many states, the Fertitta brothers made great strides making the league more mainstream and accepted as a legitimate sport during the 15 years they have owned it. UFC fights now draw stadium crowds of up to 70,000 fans as well as large broadcast and pay-per-view audiences. Bud Light, Reebok, Harley-Davidson, MetroPCS, EA Sports, Toyo Tires and FRAM auto filters are among their many sponsors.
The price paid for UFC is roughly seven times its gross revenue, as chairman Lorenzo Fertitta told CNN that the organization took in about $600 million in 2015.
UFC is being bought by a group led by talent agency WME-IMG. The group includes major private equity firms Silver Lake, Kohlberg Kravis Roberts, as well as the private investment firms of Michael Dell. The Fertitta brothers will retain an undisclosed minority stake in the company after the sale. President Dana White, who owned 9% of UFC, has signed on for five years with the new ownership group, and will receive 9% of the company’s net profits during that time instead of an ownership stake.
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