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.

Payout Perspective:

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.

23 Responses to “UFC to implement corporate discipline in cutting costs”

  1. Fight Fan on October 28th, 2016 7:13 PM

    Wow talk about being cheap

  2. tops E on October 28th, 2016 8:40 PM

    Hahahaha….so they really did not think about the operating expense….hahaha cost cut and ask alms from actors hahaha….fertita heist

  3. tops E on October 29th, 2016 1:33 AM

    Now is the time for fighters to form a union and start asking for pay hike….img is on a lose lose situation…they have silent investors they need to appease with the huge money they spent buying the ufc…so now fighters have leverage if you dont pay us you wont recoup the overpriced thing you bought hahaha

  4. d on October 29th, 2016 6:47 AM

    We have seen fighter pay increase dramatically at the top and it will likely continue, WME knows they have to take care of these fighters.

    There will never be a union in the UFC. Those top stars won’t join in and they would need them.

  5. Wil on October 29th, 2016 8:18 AM

    Wow….what we have learned already…..one wonders what will will learn in the future based on what keeps coming out. Look at the cut for TUF….if that isnt an indicator of where that show is I do not know what is. And the fighters can certainly say goodbye to any increase in pay across the board. This isnt a case of of the new boss coming in and firing the old boss’ people and replacing them….it sounds like the positions themselves have been eliminated…which is a definite sign of reshuffling the budget. The banks clearly made out like bandits no matter what happens with those sellers fees.
    This tells me something else, the money isnt going to be spent on the rank and file even top level fighters or champions, the money is going to be spent on the fighters who rake in the ratings….Rousey, McGregor, and whatever hype jobs White can create and or what gimmick fights(ers) can be brought into the mix. Gone will be the days of (as they seem to be now) of contenders getting their just do shots at titles….whomever sells tickets, PPVs, and ratings will get the spotlight and the title shots. In fact, with the star driven model the UFC now is, we will see that titles mean less and less and its about the name now.
    Consequently, we will see more prize fighters moving to Bellator….and possibly to other promotions overseas depending on where they can get the most out of sponsorships.
    In short…..the heyday of UFC is gone, the novelty of the monopoly has worn off, and what you read above is the new normal.

  6. Cutch on October 29th, 2016 10:38 AM

    Read some of MMAJunkies articles about this, the Fox deal goes up every year, currently at $140 million a year and will be $168 million in 2018 before the deal runs out.

    205 expected to do around $15 million gate, then down to between $6 to $8 million average for MSG events.

    Blue chip sponsors like Xbox & Toyota are coming in to advertise as they have two spots open right now, the fact that New York usually more than doubles the rest of the country for average season ticket seats for New York teams like the Knicks & Yankees, they will be able to put their prices up for both New York & Las Vegas.

    Over $400 million per annum on TV rights per year from around the globe.

  7. Cutch on October 29th, 2016 12:11 PM

    Hype jobs Ronda was undefeated champion when the UFC brought her in, she then went and crushed everybody until she fought Holly Holm, she has countless top 10 wins.

    McGregor was a 2 weight champion in Europe, he owns victories over current top 10 fighters like Holloway, Poirer, Mendes, Aldo & Diaz, again not a hype job, he’s twice tried to fight the LW champion but RDA pulled out and did the same with Aldo but Aldo called the first fight off and pulled out, Conor fought 2 legit guys in short notice, one a full weight class above what he was planning on fighting at.

  8. Cutch on October 29th, 2016 12:19 PM

    There never was a monopoly and fighters can fight were ever they want, Bellator is a million miles behind the UFC

    Rory MacDonald (who has said he can’t fight until summer 2017, to heal his nose) & Benson Henderson (who is joining the Army in 2018) are expendable, hell the UFC just took two champions straight off Bellator, Will Brooks & Eddie Alvarez, they can easily do it again.

  9. fight fan on October 29th, 2016 9:06 PM

    McTapper has 3 losses, that is a hype job. UFC using the exact same promotion style as WWE, they just field a different product in the ring.

  10. tops E on October 30th, 2016 12:26 AM

    The first board meeting with investors they would say we increased profit in the last 3 months 2016 compared to last year…..and its all because of firing employees hahahahaha…

  11. Cutch on October 30th, 2016 2:23 AM

    Or they could get a hedge fund, steal $500 million dollars and don’t pay it back, oh but accept the 10% manager fee and make out with $50 million.

  12. Cutch on October 30th, 2016 2:32 AM

    “McTapper” had two loses years ago in his record, he then fought the only guy who has beat him in the UFC in the rematch and beat him, hell he knocked him down 3 times and that was two weight classes above what he normally fights at both fight, he’s moving up 10 lbs this time not 25lbs.

    Anderson Silva tapped a few times early in his career against Japanese guys in Pride, he still went on to have an amazing career, including any tapping out Pride champion Dan Henderson.

  13. d on October 30th, 2016 7:56 AM

    “And the fighters can certainly say goodbye to any increase in pay across the board. ”

    It is more or less a fact that pay will gradually increase to the top stars. We’ve already seen drastic increases in pay for stars. The salaries are going to have to increase considering the current climate. Fighters like McGregor and Rousey are going to have to be paid 8 figures for big fights as Conor did for his last fight and certainly will for this fight.

    Stop t.rolling.

  14. d on October 30th, 2016 7:58 AM

    Cutch, yeah, the FOX deal is going to skyrocket soon also when they go up for renegotiation. There deal is expected to be within the 250-350m dollar range. Then if you factor in the popularity of the sport and the constant growth, we will soon see a crazy amount of money coming into the sport through ppv, licensing, sponsorship, etc.

  15. d on October 30th, 2016 8:03 AM

    “McTapper has 3 losses, that is a hype job.”

    This is completely senseless.

    Marvin Hagler had 2 losses and a draw before he won a major title.

    Manny Pacquaio had 3 losses and 2 draws before he became a ppv star.

    Sugar Ray Robinson had 19 career losses and 6 career draws- I guess he really must have been a hype job. Haha. I mean, he’s only considered the greatest boxer of all time.

    The list for this could go on and on.

  16. Fight Fan on October 30th, 2016 10:47 AM

    Apples and oranges delusional d, McTapper thought he was the next Floyd lmao

  17. Wil on October 30th, 2016 11:12 AM

    And the interesting thing about that Fight Fan, there is no “next” Floyd….it will probably be a generation at least before we see a talent like that again who was able to accomplish what he did. On top of what he accomplished in the ring, the fact that he is worth in upwards of 600m, with a promotional business promoting fights on PBC and Showtime, and making the phenomenal investments he is, the kid may very well become a billionaire before he is done. By the way, I predict he has at least one more fight…..I will not be surprised if he faces the winner of Garcia-Thurman….or Pac again…now that Richard Schaefer is back on the scene alongside Haymon and May with his own Ringstar Promotion

  18. Fight Fan on October 30th, 2016 11:27 AM

    Wil that’s true, reports are he is sparring again. Expect a May fight with Canelo if he doesn’t fight GGG.

  19. tops E on October 30th, 2016 11:32 AM
  20. tops E on October 30th, 2016 11:36 AM
  21. d on October 30th, 2016 12:52 PM

    Apples to oranges possibly in the sense that it is much more difficult to sustain winning streaks in mma due to its complexity. IE, its easier to lose in mma and losses for McGregor aren’t as bad as their boxing counterparts.

    McGregor would never be the next Mayweather, he actually fights when competing. Mayweather runs and dances like a ballerina.

    Also, Mayweather is not worth 600m, that is one of his many works of fiction. His promotional company is likely losing money and he will never be a serious player. He will likely go bankrupt like Tyson and Holyfield in about 10-15 years when he no longer has an active income and spends money recklessly.

  22. d on October 30th, 2016 12:57 PM

    http://www.bloodyelbow.com/2016/9/20/12983690/waddell-reed-investments-434-million-decline-al-haymon-pbc-boxing-news

    PBC’s actual situation.

    Also:

    “I think 2016 should go down as one of the worst years in boxing history, maybe the worst,” De La Hoya said, firmly.

    Bleak.

  23. Cutch on October 31st, 2016 6:01 AM

    De La Hoya is a little bit responsible for that, also he had his eye off the ball and let Richard Schaefer in charge and most All Haymon fighters left Golden Boy for other promoters while he was dealing with his drug issues.

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