When the UFC sold to Endeavor in 2016, there were fears that a culture change might overtake the world’s largest MMA promotion. After all, cage fighting didn’t exactly appear to fit in with the company’s core jet-setting, corporate Hollywood vibe. Several years later, however, and it seems the UFC has largely been left to its own devices—for better and worse.
Other than some calls from on high to stop the promotion from skirting regulations during the early days of the COVID-19 pandemic – and a sweet, high-paying deal to host events in Abu Dhabi – from the outside it feels like Dana White has largely been left to run the UFC how he sees fit. Listening to Endeavor CEO Ari Emanuel talk about the promotion for a recent interview with CNBC, being a hands-off owner is probably a good thing.
“Well, here’s what I would say to you: even during the pandemic – we didn’t have live audiences, we didn’t have commercial PPVs – we beat our EBITA [earnings before interest, taxes, and amortization] number by 10%.” Emanuel responded, when asked about the UFC’s ability to generate revenue during the coronavirus pandemic. “Now with the re-opening, you just saw we had live audiences for the first time. In Houston we’re going to have a live audience. In July we’re having another live audience. Our direct to consumer business on Fight Pass is up 40%. Our commercial numbers and marketing numbers are up. China is going to be bigger than ever.
“Actually, because of the fight – even though our Chinese champion lost, Li Na – there was over a billion video views out of China.”
Wait, backup. Who?
Not retired tennis pro and former multiple Grand Slam singles title winner Li Na? Or maybe Emanuel meant new UFC debutante Na Liang, who fought (and lost) her first bout in the Octagon in the prelim opener of UFC 261? Whatever the case, it’s nowhere close to sounding anything like Weili Zhang, who lost her strawweight title in the night’s co-main event.
Setting aside Emanuel’s flub, the fact that the UFC did have live audiences in 2021 in Abu Dhabi (as well as 7 cards in front of live audiences in pre-pandemic 2020), and the multiple commercial PPV events the UFC put on across the last 12 months, the followup question led to a classic UFC spin line.
“Well I would say the UFC, people don’t realize, has been around for 26 years,” Emanuel responded when asked about the potential a serious injury or death in the promotion might have to hurt stock prices. “Unlike every other sport, we’ve never had a really serious injury. I mean, sports have serious injury, whether it be hockey, the NFL, basketball. We all take our precautions and people understand that going in. I’m not really concerned about that. We do have plans in place. But we have a lot of protections inside the arena, about tapping out, and etc.
UFC-owner Endeavor going public on the NYSE this morning.
CEO @AriEmanuel joined us ahead of the company’s first trade.$EDR @dee_bosa pic.twitter.com/8aC4qHt3fR
— Squawk on the Street (@SquawkStreet) April 29, 2021
“But, we’re like every other sport, whether it be football, hockey, any of these sports that have to be concerned about that. And it’s been around 26 years, nothing’s really happened in that capacity. I think we’re in a good shape there.”
It’s a strange point of comparison that Emanuel draws here, considering that the neither the NFL, NBA, nor the NHL are publicly traded properties, so there’s not really a good basis to compare their relative risks of injury harming value—even if the possibility seems intensely unlikely to be a realistic factor for Endeavor stocks.
Similarly, as much as Dana White has loved to trumpet the safety of mixed martial arts over the years, compared to other sports, there there have been plenty of serious injuries in the promotion. Beyond the growing evidence of long-term CTE risks due to cage fighting, fans quite literally just watched former champion Chris Weidman’s leg shatter in the Octagon during his UFC 261 bout with Uriah Hall—an injury that almost exactly mirrored Anderson Silva’s leg break against Weidman in the UFC in 2013. Thankfully no one has died in a UFC fight, but no one has died in an NBA game either.
One of the major protections that big stick & ball team sports have against long term injury concerns is the presence of a players union that fights to secure long term disability benefits for retired athletes, due to the heavy toll contact sports takes on the body. While it doesn’t seem likely that any single injury would hurt Endeavor’s stock prices, if the UFC ever were forced to move toward creating retirement and disability benefits for their fighters, that feels a lot more like a move that could have a big impact on their bottom line.
In the meantime, however, the IPO appears to have been a huge success, selling 21.3 million shares on Wednesday alone, at a price of $24 a piece. Placing the value of the entertainement company to a whopping $10.3 billion. Good news for Ari Emanuel, and for Dana White. Hopefully good news for the fighters as well, even if Emanuel doesn’t know who any of them are.
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