On Thursday, Endeavor had its quarterly earnings call which included some information on the UFC and how its positively impacting the company earnings. Fighter pay once again came up as company officials had to tow the line on the controversial issue.
Endeavor’s sports properties, specifically the UFC and Pro Bull Riding saw a 5% increase year over year with $296.7 million in revenue for the quarter which was up $13.2 million from the same time in 2021. The UFC did well this quarter as it announced the robust attendance at the live UFC Fight Night cards in March in London and Columbus, Ohio. The live gate is one of the reasons that the UFC is looking to put on events all over. Also, all PPV event sold out its venues which is in line with the previous quarters.
The earnings call also noted that due to the calendar, there was one fewer PPV event scheduled, but that does not matter due to the sponsorship, licensing and PPV.
At UFC, one fewer pay-per-view event scheduled in the current year quarter, which was solely calendar related was offset by greater sponsorship licensing, commercial pay-per-view and advance-related revenue. Year-over-year adjusted EBITDA growth in this segment was impacted by the UFC calendar shift as well as $8 million of off-season operating costs at Diamond Baseball Holdings.
Endeavor also noted that international media rights deal was “in excess of 100$ over prior deals.”
Bryan Kraft of Deutsche Bank asked the question about fighter compensation. COO for Endeavor, Jason Lublin responded (via Seeking Alpha):
Bryan Kraft
I wanted to ask you a UFC question. One of the questions we’re asked regularly is how UFC fighter compensation measures up to other sports. And the comparisons tend to be made mostly to major team sports like NFL or NBA. So my question is, is that the right comparison? Have you looked at it relative to other professional sports besides the major team sports? And if so, how do you see UFC measuring up?
Jason Lublin
Thank you, Bryan. Yes. Look, we agree there has been a lot of comparisons drawn to team sports such as the NFL and NBA, we actually — we don’t think that is the right comparison for the UFC. We think the right comparison is to other individual sports such as PGA Tour, F1, NASCAR and ATP. And if you look at those athletes and what they’re paid, as a relative percentage of revenue for those leagues, it’s right in line where the UFC is with their athlete compensation. I would also point out that the fighter comp CAGR since 2005 has been 26%, while the revenue CAGR for that period has been 21%. So, the fighter comp CAGR has been outpacing the CAGR of revenue for the entire company. And that’s before we talk about other ancillary ways that our fighters are earning money through sponsorship and other consumer product deals.
So in summation here, we believe we can continue to invest in our fighters without risk to the margins of our business.
Of course, John had the fact check:
Since, thanks to the antitrust lawsuit, we know what the UFC's revenues ($48.3m) & fighter pay ($4.4m) was in 2005 we can apply that 21% and 26% CAGR to get a ballpark of what it is today. That would be approximately $1.02B in revenue & $178m – or 17.5% – for fighter pay today. pic.twitter.com/E9Q94JpB6A
— John S. Nash (@heynottheface) May 13, 2022
Payout Perspective:
The question of fighter pay remains a question by investors and investor media. With these questions, Endeavor must consider how to address the concerns. But, with the information from the UFC lawsuit out there, it is hard to conceal or spin the facts away.
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