UFC to implement corporate discipline in cutting costs
October 28, 2016
MMA Junkie reports on a document the site obtained regarding the acquisition of the UFC by WME-IMG. The information reveals cost-cutting on the part of the new owners.
According to the document, the purchase price for the UFC was $3,775,000,000 with $200 million going to banker fees and other expenses.
As outlined by a Moody’s report in July, there are “earn-outs” if performance goals are met over the next two year. The new owners could make an additional $250 million if it meets EBITDA goals. According to the Moody’s report, it will receive a $175 payment upon the achievement of $275 million in EBITDA (but not earlier than June 30, 2017) and $75 million payable upon achieving $350 million of EBITDA (but not earlier than December 31, 2018).
With the employee layoffs, the previous payroll of $55.4 million will be cut by $27 million. The new owners did not acquire the corporate airplane used by Dana White, et al. It also indicated that it would “increase standardization and more rigorous corporate discipline, namely in “compensation practices, (travel and expense) policies…” It will also cut the budget for “The Ultimate Fighter.” The show’s production budget will be cut from $27.6 million to $10 million per the document obtained by Junkie.
It was expected that there would be cost-cutting upon the new owners taking over. With the news that the owners would receive a bonus upon meeting EBITDA expectations over the next two years, the cuts are more glaring than one might expect. The news likely means that any chances of significant raises for fighters will likely not happen. Moreover, with more “corporate discipline” it’s unlikely that the company will take on significant extravagances. The news of cuts with “The Ultimate Fighter” likely means the show will not have international TUF’s although I would expect the show to continue since it does provide content for FS1.