The UFC Has Its Best Financial Year In Its 28-Year History
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The UFC Has Its Best Financial Year In Its 28-Year History
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Hey Friends,
After going public last year and raising more than $2 billion through private placements and its IPO, Endeavor has released its first annual earnings report.
The sports & entertainment conglomerate beat Wall Street expectations, delivering revenue of $5.1 billion last year. But they still had a net loss of $467.5 million.
Revenue: $5.1 billion
Net loss: $467.5 million
Adjusted EBITDA: $880.3 million
“In our first year as a public company, we saw significant outperformance across our portfolio as the world began to emerge from the pandemic, with increased attendance at live events and continued heightened demand for premium content,” said Ariel Emanuel, CEO, Endeavor. “Given the unique position we occupy in the content landscape, we remain confident about our ability to continue leveraging trends, unlocking growth, and delivering long-term value.”
As a reminder, Endeavor’s business consists of three main categories:
Live Events, Experiences & Rights (43% of 2019 revenue)
On-Location (NFL)
Streaming Rights (Olympics, NFL, NHL)
IMG Events
Talent Representation (36% of 2019 revenue)
IMG
William Morris
Owned Sports Properties (20% of 2019 revenue)
Ultimate Fighting Championship
Professional Bull Riders
Euroleague (pro basketball)
Endeavor’s stock ($EDR) is up about 20% since its IPO last April, compared to a roughly 6% gain for the S&P 500 over the same period.
That’s all interesting, of course, but the real highlight of last week’s earnings call was undoubtedly the Ultimate Fighting Championship (UFC).
Remember, Endeavor acquired a 50% stake in the business back in 2016. They then raised an additional $1.75 billion and finalized a transaction to acquire the remaining portion of the equity that they didn’t already own before their IPO last year. The remaining 49.9% in equity was held by two private equity firms, Silver Lake and KKR, and Endeavor acquired it in exchange for cash and shares in their parent company.
But here’s the exciting part — the UFC just delivered its best financial year in its 28-year history, despite facing a global pandemic last year that significantly impacted their live events schedule.
UFC Annual Revenue
2016: $690 million
2017: $750 million
2018: $695 million
2019: $860 million
2020: $890 million
2021: ~$1 billion
The UFC has grown tremendously since Endeavor took over majority ownership in 2016. They accelerated their growth throughout the pandemic, and their streaming deal with ESPN now looks rock solid — but how big can this business really get?
I asked Dana White that question on the podcast last week, and he told me that if you “do the right fight, at the right place, at the right time — we could do 5-6 million pay-per-views in one night.”
That’s more than 2x the current PPV record of 2.4 million that Khabib Nurmagomedov and Conor McGregor set at UFC 229 in 2018.
UFC 229: Khabib vs. McGregor (2.4M)
UFC 202: Diaz vs. McGregor 2 (1.6M)
UFC 257: Poirier vs. McGregor 2 (1.6M)
UFC 264: Poirier vs. McGregor 3 (1.5M)
UFC 246: McGregor vs. Cerrone (1.35M)
But with the UFC closing in on a $10 billion valuation—Dana White and Lorenzo & Frank Fertitta bought it for $2 million in 2001—the (lack of) increase in fighter pay has become a hot topic throughout the sports world.
And when Endeavor CEO Ari Emanuel was asked about it during the earnings call, he provided a rather vague answer — here’s the exchange between Emanuel, Jason Lublin (Endeavor CFO), and LightShed partner Brandon Ross:
Brandon Ross: UFC fighter comp and benefits have become a real hot topic of conversation lately. I know that’s been elevated by Jake Paul. I was just wondering if you could give your perspective on why the overall split have ended up where they are and what your outlook is there, whether we should expect relative share that fighters are getting of that revenue pool to go up in time or stay kind of where it is.
Ari Emanuel: On our last earnings call, I think this was a question also, well, not exactly this question but similar. We’ve increased fighter play. I want to make sure I’m right, about 400%?
Jason Lublin: Six hundred percent.
Emanuel: Six hundred percent since 2005. So — and we’re investing in the business with Performance Institute, food, recovery. So we have done — and now participation in Dapper Labs and NFTs in the kits. So we think we’ve done very, very well. And as the revenue for the business increases has only benefited that business, and we’ve grown and the sport has grown and fighter pay has grown too, as I said, how much it’s gone up since 2005.
Ross: I think the pushback that’s out there, though, is that your overall revenue base at UFC has grown much more than that 600%, I believe, and what the overall relative share should be.
Emanuel: Well, I’m not commenting on that. I think we’ve done very well as it relates to the pay for the fighters.
Ross: Great. Thank you.
The reality is that Brandon Ross is correct. The UFC has increased fighter pay by about 600% since 2005. But their revenue and profits have also grown by over 1,700% and 6,200%, respectively, during the same period.
This isn’t an issue that is going to get solved overnight. We could probably spend an entire week breaking down this topic alone. But the UFC is a publically-owned company now, and given it represents one of the highest-growth assets for Endeavor, I can’t imagine they will give up hundreds of millions of dollars in revenue without a fight. We’ll see what happens.
I hope everyone has a great day. I’ll talk to you tomorrow.
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The Joe Pomp Show: A new episode with Dana White & Rich Kleiman is live!
I recently moderated a panel with Dana White and Rich Kleiman for the Mint Collective conference in Las Vegas. We discuss how Dana built the UFC, why Rich is so bullish on collectibles, the shift from pay-tv to streaming, and they even tell some epic stories about the biggest challenges they’ve overcome in business.
This was a fantastic conversation with two industry leaders — enjoy!
