Analysis of Reported Zuffa Acquisition of the IFL

July 21, 2008

Last week published a report from HDNet’s Inside MMA that the IFL is expected to eventually be purchased by the UFC. While the IFL is attractive acquisition target because of its potentially undervalued assets, namely its roster of talented young fighters and a 400+ hour video library. However, it does not have much to offer the UFC that it does not already have.

The UFC is already stocked with a majority of the sport’s A-level fighters and has enough B and C level talent to make a plenty of compelling match-ups. Nor does it need the IFL’s stock of fight footage. With over 80 PPVs, 7 seasons of cables most popular MMA reality show and the occasional “free” SPIKE TV fight night, the UFC easily has the deepest archive of quality fights.

It seems that the company’s primary motivation in purchasing the IFL is to keep the company out of the hands of one of its competitors, such as EliteXC who was rumored to have strong interest in the company. This wouldn’t be the first time the company has purchased other promotions for purely competitive reasons, it previously purchased the WEC in order to block a competitor from a deal with the Versus Network and reportedly purchased Pride at least in part to keep it out of potential rivals hands.

The UFC’s gain may be best understood in terms of EliteXC’s loss. The acquisition of the IFL by ProElite would greatly bolster its talented, but thin roster, while the tape library would add more hours to one of the largest MMA libraries in the world thanks to the company’s M&A binge last year.

With a reported asking price of between $750,000 and $1 million, purchasing the IFL is a small price to pay for Zuffa to block its competitors, particularly when it can pick up several talented fighters and the footage to promote them in the process.

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