If you pay $4 billion for a company today that was bought for $2 million in 2001, how long would it take to recoup your investment and begin turning a profit?
The new owners of the UFC obviously have an idea. They shelled out the hefty sum Monday for the mixed martial arts organization, the most expensive transaction thus far in sports history.
UFC President Dana White, 46, who will stay on with the new ownership, had adamantly denied that the company was for sale during the past few months.
The price paid for the UFC is roughly estimated to be seven times its gross revenue. It is estimated that the UFC grossed approximately $600 million dollars last year, 2015. The majority of the money is made from pay-per-view broadcasts.
UFC currently has a cable deal with the FOX network, a deal that expires at the end of 2018. When that time comes, count on an attempt to start a bidding war—ESPN verses FOX.
“We’ve been fortunate over the years to represent UFC and a number of its remarkable athletes,” said WME-IMG co-CEOs Ari Emanuel and Patrick Whitesell, Beverly Hills talent agents, now partners in the new ownership group, in a prepared statement.
The agents continued, “It’s been exciting to watch the organization’s incredible growth over the last decade under the leadership of the Fertitta brothers, Dana White and their dedicated team. We’re now committed to pursuing new opportunities for UFC and its talented athletes to ensure the sport’s continued growth and success on a global scale.”
The Fertitta Brothers, Lorenzo and Frank, high school friends of White, bought the nearly bankrupt organization in early 2001 for $2 million dollars on a tip from White, who initially managed MMA fighters at that time.
Since the purchase, UFC has built a global MMA empire with broadcasts that reach 156 countries and territories. Equally as important is that UFC is popular with the 18-49 age group sought by advertisers.
Saturday’s UFC 200 generated a Las Vegas box office record of $10.7 million dollars for the company and is expected to surpass their record of 1.6 million pay-per-view buys achieved for UFC 196 in March.
Noted MMA fighters currently under contract are Conor McGregor and Ronda Rousey, who both recently lost their championship matches, and Jon Jones, who was scheduled for the main event of UFC 200 this past weekend but was pulled for testing positive for a banned substance. Apologetic and contrite, Jones plans to fight again to regain his title, once his suspension is lifted.