Lorenzo Fertitta Confirms Zuffa Stake Sold

January 12, 2010

In an interview with the Canadian Press, Lorenzo Fertitta confirms that he, his brother Frank, and Dana White have sold a 10% stake in Zuffa to Flash Entertainment, a subsidiary of the Abu Dhabi government.

LAS VEGAS — An Abu Dhabi-owned entertainment promotion company has bought a 10 per cent stake in the Ultimate Fighting Championship for an undisclosed sum.

 

UFC co-owner Lorenzo Fertitta told The Associated Press that the deal with Flash Entertainment, a subsidiary owned by the emirate’s government, was done to create increased value for UFC and help the mixed martial arts league expand in the Middle East and Asia.

 

Neither Fertitta nor Ossama Khoreibi, chairman of Flash, would estimate UFC’s worth or say what Flash paid for the newly issued shares in Zuffa LLC, its parent company. Fertitta says terms of the deal are confidential.

 

A Forbes story in May 2008 estimated the privately held company was worth perhaps US$1 billion. Fertitta said then that several investors have offered more than that for the league.

 

Fertitta told the AP that those offers have come from many private equity funds, as well as several media companies and hedge funds.

 

“We made the decision early on that if we were to bring on a partner, it wasn’t for financial reasons,” Fertitta said. “We didn’t need to raise any money, that wasn’t the purpose. If we were going to bring somebody it was going to be with someone that could really be a true strategic partner and could help create an increased value for the company long term.”

 

Fertitta said he believes Flash — a promoter known for bringing high-profile concerts and other events to the Middle East — can accelerate UFC’s growth there and in China, India and other countries.

 

Flash’s new shares mean Fertitta’s 45 per cent stake in Zuffa dropped to 40.5 per cent. His brother, Frank Fertitta III, owns the same amount.

 

Dana White, president of UFC, saw his stake go from 10 per cent to 9 per cent after the deal.

Payout Perspective:

FiveOuncesOfPain broke the story, but MMAPayout.com was the first to report the actual details and reasoning behind the 10% sale of Zuffa to the Abu Dhabi government.

The split of the ownership now gives the Fertitta brothers an influx of cash to continue their fight for Station Casinos, while the 1% that goes to White serves as a nice bonus for his tremendous services over the last 9 years.

Flash Entertainment won’t have a role in Zuffa’s day-to-day operations, but the company – and indirectly Sheikh Tahnoon – will help to push the UFC brand abroad. Not only is Abu Dhabi a burgeoning market for MMA (BJJ especially), but the Emirate’s ties with the Eastern world will prove invaluable as the UFC continues to expand its brand towards one of the world’s primary population centers.

Interesting: anyone remember this interview featuring Dana White on Bloomberg that was filmed last October?

8 Responses to “Lorenzo Fertitta Confirms Zuffa Stake Sold”

  1. Whispering Death on January 12th, 2010 9:49 AM

    I’m sure Flash Entertainment is a great promotional company and all but if you need an event promotions company to outsource work to you can’t just sign a contract for a set fee or a percentage of revenues through a term period? Permanently selling 10% of a company just to get use of an event promotions company doesn’t make sense.

    The traditional reason you sell equity stake in a company isn’t to gain the services of an event promotions company. The traditional reason you sell equity stakes in your company is generally because you’re desperate for cash and have exceeded all other financing options.

    Along the same lines, going after “internet pirates” is another seemingly desperate move to raise cash. As the RIAA has shown, there is tremendous risk involved to your brand when it comes to taking people to court. And there certainly isn’t evidence that even after suffereing brand impairment there will be any increased revenues, the RIAA saw the opposite effect. There’s a reason no other company has followed the RIAA’s lead — because it’s a dead end.

    It seems strange for a company that is creating such massive revenues, and supposedly profits, to be aiming for strategies that create short-term cash by risking long-term value. It doesn’t add up for Zuffa, but maybe the Station Casinos are the missing part of the equation.

  2. art carrasco on January 12th, 2010 10:06 AM

    i think your right with the casinos missing in your equation. i know crap about business, but i know fighting. in a street fight you wanna put em down and get the hell out outta dodge FAST! having a government/ promotion company on your side (from one of if not the richest city in the world) is a pretty big gun in a knife fight.

  3. Jose Mendoza on January 12th, 2010 10:42 AM

    Whispering Death,

    “It seems strange for a company that is creating such massive revenues, and supposedly profits, to be aiming for strategies that create short-term cash by risking long-term value. It doesn’t add up for Zuffa, but maybe the Station Casinos are the missing part of the equation.”

    Very good input. I was having the same thoughts, and if you go back and read MMAPayout’s coverage of Station Casino’s and selling a stake in the company, it makes a bit more sense.

  4. jj on January 12th, 2010 1:05 PM

    Dana and Lorenzo on CNBC discussing the deal.

    http://www.cnbc.com/id/15840232?video=1383661807&play=1

  5. Chateau Thierry on January 12th, 2010 1:30 PM

    Dana gave away 1% equity in the deal, 10% of his stake in line with the ~10% Fertitta gave away. How does this deal demonstrate anything about Dana’s commitment to and work for UFC?

  6. EJ on January 12th, 2010 2:37 PM

    “It seems strange for a company that is creating such massive revenues, and supposedly profits, to be aiming for strategies that create short-term cash by risking long-term value. It doesn’t add up for Zuffa, but maybe the Station Casinos are the missing part of the equation.”

    There is nothing short term about this deal it’s all about the longterm view that many people keep trying to put down. When Dana says he thinks this sport will be the biggest in the world he means just that, this will help in that process by bringing in people to help them expand and bringing in more investors to help put down the costs of expansion. It’s also a nice check that the UFC heads can cash for all of the hard work they put in to the sport, really it’s a win win for everyone involved makes perfect sense to me.

  7. RICK on January 12th, 2010 11:58 PM

    All this cooperation with thier new investor is good and all, but like everything else all good things come to an end. Like a new marriage, the newlywed parts ends and then you get the fighting and bitching and shit like that. What is going to happend with the new part owners start to fuss about wanting more say in the company???? opps more drams coming, you will see!! Too bad i like the wasy zuffa was running the company!!

  8. THE NEW ZUFFA MYTH: THE UFC'S INFLATED $1 BILLION VALUE IS BUNK : FIGHT NEWS UNLIMITED on July 25th, 2010 7:28 PM

    […] It took two years for that first Forbes piece to actually produce any kind of sale, and even then it was only for a small percentage in the company. MMA Payout printed the details of the sale, including an article quoting the Forbes piece as estimat… […]

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