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This month’s UFC & Bud Light mega sponsorship deal initially seemed like a badly needed win for the troubled beer brand whose market share plummeted in the wake of a controversy involving their sponsorship of transgender social media influencer Dylan Mulvaney.
Dana White went right to work doing Bud Light damage control
It was hard to miss the fact that UFC CEO Dana White immediately got out there doing image rehab for Anheuser Busch.
“I am a big Military/Law Enforcement guy. They have this, ‘Folds of Honor’ where they’ve spent $44 million over the last however-many years. Fallen first responders and military people, their families get taken care of with this money; scholarships for their kids, etc. That is right up my alley. Almost a billion dollars a year go to US farmers, for their crops, for their products. That is right up my alley, that is exactly who I am. 65,000 Americans are employed by Anheuser-Busch, and thousands of them are vets. Right up my alley.
“And I could keep going on and on forever and tell you why I am more aligned with Anheuser-Busch than any of the other beer companies that were offering to pay us money.”
UFC might need Bud Light pretty badly too
But the more we learn from recent TKO financial news the more this deal looks like it solved a pretty major need for the UFC as well.
In a recent report from the Wall Street Journal, newly formed UFC & WWE partnership TKO chief financial officer Andrew Schleimer outlined some of the major benefits for the UFC, beyond just the rumored $100M price tag.
“We’ve made a concerted effort to grow from tens of millions of dollars of ad sales for UFC to a number that would put us on par with other major sports leagues today,” Schleimer explained.
“While the cash value of these deals are of extreme importance, when we look at these types of relationships, it’s almost as important to determine or to see the marketing value.”
“We want our partnerships going forward to reflect the global nature of our business—and the Modelo deal was a U.S.-only deal,” he concluded.
Outlined in the WSJ article are details that outline how, while the UFC will be represented by Budweiser and Bud Light in the US, they will be represented by more local AB InBev brands on an international scale. Not only will the UFC be getting Bud Light advertising in the states, but access to a market where AB InBev brands account for 25% of all beer sales. That includes Modelo, although a spokesperson for the beer company apparently declined to answer as to whether or not the UFC would be seeing a renewal of their Modelo partnership outside American markets.
Why does the UFC need this kind of push?
Beyond the obvious (money), the UFC’s new parent company, TKO, is struggling with two issues serious enough that they recently warned their investors about them (quotes are directly from TKO’s latest SEC filing):
- Vince McMahon being on their board is a liability
“Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.” - The antitrust lawsuit against the UFC
“Unfavorable rulings in our legal proceedings could result in material liability to us or have a negative impact on our reputation or relations with our employees or third parties. The outcome of litigation, including class action lawsuits, is difficult to assess or quantify,” the document read.
“Plaintiffs in class action lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. We are currently named in five related class-action lawsuits filed against us alleging that we violated Section 2 of the Sherman Act by monopolizing an alleged market for the promotion of elite professional MMA bouts and monopsonizing an alleged market for the services of elite professional MMA athletes. On August 9, 2023, the plaintiffs in the class-action lawsuits were certified as a class. If we are unable to resolve these or other matters favorably, our business, operating results, and our financial condition may be adversely affected.”
All things considered, it just might be that TKO, and by extension the UFC, needs all the financial bolstering it can get in the face of these major threats to their business.
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