Alex Weprin of The Hollywood Reporter reports that Endeavor has bought 100% of the UFC. The news comes as the company prepares for its Initial Public Offering later this year.
Sportico reports that Endeavor will be raising $1.75 billion to buy the rest of the UFC. Endeavor and the UFC entered a deal on February 16th to buy the 49.9% of the UFC that Endeavor doesn’t own in exchange for units in Endeavor.
In July 2016, the Endeavor, KKR and Silver Lake purchased the UFC for $4 billion. There was an agreement in place where Zuffa could have been optioned as its own IPO by KKR or Silver Lake but with this transaction, those rights go away.
The UFC became a valuable asset for Endeavor as it seemed that it was the only property in the Endeavor portfolio that provided value during the pandemic. As most in the MMA world know, the UFC’s ability to generate revenue has grown exponentially since the company was sold and then subsequently partnered with ESPN. Also of importance is the fact that there is no bargaining unit for its independent contractor/athletes which keep labor costs down.
Payout Perspective:
We will have more on this transaction in the coming days. But it’s clear that this was going to happen for a number of reasons. The UFC is a valuable asset and bolsters Endeavor’s ability to sell investors on the cashflow and potential revenues. With the UFC, Endeavor’s stock should be attractive. Without a full ownership interest, it muddies the waters for those concerned that the company’s biggest revenue generator may be wrested away by someone else. In fact, the option for KKR and Silver Lake to exercise its right for the UFC to go public would have vested this summer. So, the move avoids any issue. MPO will continue to follow.
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