` UFC reveal growth blueprint - Fighters Only Magazine

UFC reveal growth blueprint

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Following the WME-IMG’s purchase of the UFC, which came in at a reported $4 billion, the next step is simple, increase revenue.

 

An investor document obtained by MMAjunkie that explains the transaction in more detail sets out the game plan the new owners have already put in motion to attempt to double revenue by the end of 2018.

The article claims that the initial report of the sale hitting the $4b mark wasn’t entirely accurate. WME-IMG along with Silver Lake Partners and KKR paid former owners Zuffa LLC $3.775 billion up front while about $200 million was required for banker fees and other expenses. Depending on performance over the course of the next 18 months the kick back to the previous owners could eventually get it over $4b.

$250m in “earn outs” is at stake if two performance goals are met by the end of 2018. That $250m equates to 6.2% of the UFC’s reported value of $4.025b.

Between June of 2015 and June of 2016 the UFC claimed it’s EBITDA or earnings before interest, tax and depreciation was $170m. WME-IMG need to raise that figure to $275m by next June to earn a $175m payout and increase it to it to £350m to earn an extra $75m.

So how are they going to achieve revenue goals the promotion has never hit before? Here’s the breakdown:

  • An event schedule featuring 13 pay-per-views, including the promotion’s debut in Madison Square Garden, New York, which is expected to generate $15 million in ticket sales alone

  • The broadcast partnership between the UFC and Fox is expected to generate an additional $48 million in “contracted growth”

  • Cutting costs which includes the recent employee lay off which equated to “under 15%” of the overall workforce will save the new owners $71 million

  • The Ultimate Fighter’s production budget has been slashed from $27.6 million to $10 million

  • The corporate jet used by the previous owners – gone as the document states, “The corporate airplane is not part of the acquisition and we do not expect such expenses on an ongoing basis.”

It appears this is only the beginning and with phase 1 already in action the next 18 months will reveal more as the new owners trim the fat and attempt to boost revenue in a very short amount of time.

The key deadline here is the end of 2018 when the majority of the global TV deals, including it’s US partner Fox Sports expires, with negotiations expected to begin towards the end of 2017.