Report: Emmanuel mulling over UFC purchase prior to Endeavor IPO

The New York Post reports that Ari Emmanuel is seeking to purchase the UFC.  The story speculates that the UFC is now valued at $6-$10 billion. 

With news that Endeavor will make another go at an IPO, Emmanuel is rumored to want to purchase the remaining 49.9% it does not own.  Silver Lake and KKR own 40% of the UFC as the firms financed the deal for $4 billion.

The article notes that an individual with knowledge pegs the valuation of the UFC between $6 and $10 billion.  As many know, despite the pandemic, the UFC has been one of the first properties to return to shows.  This has made the UFC a solid financial driver for Endeavor as many of its properties had been shut down this past year due to the pandemic.

The New York Post notes, “The MMA promotion company accounted for 80 percent of Endeavor’s overall profit in 2020.”  Even pre-pandemic, the company accounted for 50 percent of Endeavor’s annual earnings.  The UFC’s pandemic profits were between $400 million and $450 million per year. 

The crux of the reason to buy out the UFC is Endeavor’s strategy of owning the property outright. They would sell equity in Endeavor to private investors ahead of the IPO.  With the money, they would buy the UFC.  Thus, the amount it may be willing to buy out the rest of the 49.9% is up in the air.

Payout Perspective:

Two big takeaways from this article.  First the valuation of the UFC is astronomical.  If we are to believe the $6-10 BILLION figure, it would mean that the company has grown dramatically over the course of just 4-5 years.  We can attribute this to a lot of things but you first have to look squarely at the ESPN deal.  Secondly, it has been the bell cow for Endeavor which in turn drives up its value.  While we all may belie Dana White for bringing events back to the possible detriment of its contracted workers.  The business has been printing money. At a time when its other properties have failed, the UFC has stood out for bringing in revenue.  This is important to investors.  Moreover, buying the UFC out prior to a previous contractual opportunity for Silver Lake or KKR to force it to go public would behoove Endeavor as it seeks to raise money after a couple down years.