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UFC sale in "advanced talks"; why it makes sense now & what to expect

Dana White & Fertittas

When the Fertitta brothers and Dana White first bought the Ultimate Fighting Championship for $2 million back in 2001, they took on a company that wasn't regulated in many states and countries, one that was a small blip on the average sports fan's radar, and one that was bleeding money and almost extinct.

15 years later, things have changed. The sport of MMA is a known and covered entity by major sports publications, is regulated in all states and most major countries, and can be a content and financial force at both the major and minor league levels when done right. And with all that, the UFC, the true brand name in MMA, has risen to not just the forefront of the sport but as three letters that embody the sports and that transcend pop culture. Even they don't watch fighting, people know the letters U-F-C.

And that is what makes Tuesday night's news that many behind the scenes had heard about for months such an amazing thing if you think about all that it took to get here: the UFC could be sold between $3.5 and $4 billion in the not-too-distant future.

ESPN's Darren Rovell reported Tuesday night that sources have told him several groups are in on the bidding which include China Media Capital, entertainment power WME/IMG, The Blackstone Group, and Dalian Wanda Group.

Our Dave Meltzer and Bryan Alvarez have a breaking news audio available on this for subscribers.

From Rovell's report:

"Investment bank Goldman Sachs has been representing Zuffa LLC, which bought the UFC in 2001 for only $2 million. Sources with knowledge of the numbers presented to potential investors said that Goldman Sachs had represented UFC's last full year earnings in the $200 million to $250 million range, before interest, taxes, depreciation and amortization. A new television rights deal, which would begin in 2019, could add an additional $250 million in annual revenue to the bottom line, investors were advised."

Note that many have cited that the current UFC and Fox deal is worth about $100 million annually. $250 million in just U.S. based money would be a significant increase, but perhaps is an option if the UFC decides to take more shows off PPV in favor of a TV partner, Fight Pass, or a combo of both.

Rovell says the leader is believed to be Dalian Wanda Group, led by Wang Jianlin, China's richest man. The group has getting more and more involved in pro sports, and recently bought U.S. film studio and entertainment company Legendary Entertainment. Here are more details on DWG and the rest of the bidders.

Lorenzo Fertitta

So Why Now? And What Now?

That's the $4 billion question, right? Considering the ROI on that initial $2 million, both the Fertittas (each 40.5% owners), Flash Entertainment (10%) and White (9%) are going to get paid handsomely. The kids of their kids of their kids are going to be set and then some rich. (Well, they are already, but you get it.) 

Think about it though: Zuffa has built the preeminent fight brand of all time, bought out all of their major competitors, trailblazed with their TV deals, helped power the sport being legalized throughout the globe, and have built a model where three distinct revenue drivers (PPV, Internet, traditional TV) show no signs of slowing down. The only areas left for pioneering aren't of interest to them: primarily the unionization of the fighters.

Additionally, new owners aren't going to mean a complete disruption of the entire front office and mass firings. Successful companies don't buy other successful companies for that much money to create chaos and to fracture everything they wanted to buy in the first place. While the Fertittas will likely not be involved in a post-sale UFC, I don't see any reason that White wouldn't continue to remain as the well-compensated driving force behind the scenes unless there's a complete conflict of personalities that would neccessitate him leaving. It's possible he could leave on his own and hand the reigns over to someone else. Perhaps boxing will return to his life. Who knows?

What will be interesting is how the fighters react when/if this goes down. There's no question fighter pay is still a huge issue and with the Reebok deal still causing so much strife, you can imagine plenty of behind the scenes grumbling by fighters about getting their piece of the pie. And they're right, but those are things that union leadership and collective bargaining can help even out. Could this be the final straw toward a typically individualistic group of athletes finally coming together? Doubtful, but again, who knows?

What we do know is a major sale is going down soon for the world's largest fight organization. If you thought 2016 was an amazing year for UFC news and fights, I have a feeling we ain't seen nothing yet.