Once considered to be a renegade sport and banned in many states, UFC reformed itself and fine-tuned its sport over the years, and now has sold for billion.
The sale represents the most paid for a sports league, although the NFL and other major professional sports leagues remain much more valuable.
Zuffa LLC, owned by brothers Lorenzo and Frank Fertitta III, who also own the majority of Red Rock Resorts (formerly Station Casino), paid $2 million to by UFC 15 years ago. A group of wrestlers, fighters, and martial artists started in 1993 as the touring Ultimate Fighting Championship (UFC), which held its first event in Colorado.
Now a firmly established, wildly popular professional sport that is headquartered in Las Vegas, the UFC earned a $4 billion selling price to partnership of William Morris Endeavor and International Management Group (WME-IMG) and a private equity entity identified as MSD.
Ari Emanuel and Patrick Whitesell are co-CEOs of WME-IMG and in a joint-statement said: “It’s been exciting to watch the organization’s incredible growth over the last decade under the leadership of the Fertitta brothers, Dana White and their dedicated team.”
Emanuel and Whitesell said they are “committed to pursuing new opportunities for UFC and its talented athletes to ensure the sport’s continued growth and success on a global scale.”
Although the Fertitta brothers sold their controlling interest in UFC, they will continue holding a small interest, and Lorenzo agreed to continue serving as chairman during a brief transitional period.
Dana White will remain as UFC president, and the UFC will remain headquartered in Las Vegas, where its massive new headquarters is under construction in the southwest corner of the Las Vegas Valley along the 215 beltway.
White also will maintain an ownership stake, which was 9 percent prior to the sale. The Abu Dhabi government also has a 10 percent stake in UFC, via its Flash Entertainment enterprise.
During its early years, the UFC was dominated by colorful fighters and champions, like Dan “The Beast” Severn, and Brazilian jiu jitsu expert Royce Gracie, and others. Its events were single-elimination tournament formats with no breaks for rounds.
Under the guidance of eventual UFC President White, the sport transformed into a boxing-style format, with multiple weight classes and title holders. States dropped their restrictions on UFC events, and it helped to make mixed martial arts (MMA) nearly as popular as professional boxing.
Better still, the fans get to see the best fighting the best, rather than avoiding them, as happened for many years in boxing with Floyd Mayweather Jr. and Manny Pacquiao.
The growth of the sport’s popularity, along with pay-per-view TV dollars, merchandising, and other revenues, has made UFC the top MMA league and in 2011 spurred the Fertitta brothers to sell their then-struggling family casino business and buy the UFC for $2 million.
The UFC last year reported it made some $600 million.
The sale will be a windfall for the IRS, which could tax the sale profits anywhere from 20 percent for capital gains to nearly 40 percent for personal income, depending on the tax mechanism used.
Another 3.8 percent likely will go toward investment income tax, which will help fund Obamacare, plus state income taxes.
