The UFC’s current ownership may continue denying that they’ve accepted a bid for the sale of the organization, but what can’t be denied is that bids have been coming in this year. Whether they’re accepting one and working on a full or partial sale or not, several investment groups have been very interested in the organization.
That includes one of the UFC’s originators, former SEG executive Campbell McLaren. A significant part of getting the original UFC event onto pay-per-view, McLaren – currently the CEO of Hispanic MMA promotion Combate Americas – revealed this week that he had a group submit an offer. Based on where they came in at, McLaren doesn’t believe Zuffa will actually be parting with the UFC.
“I don’t think any of the reports are correct, by the way,” McLaren said in an interview with Submission Radio. “And I looked into potentially buying the UFC too with some very famous investment groups based in the US. This was this year – and I think you guys are getting the scoop on this. I haven’t talked about this in the media, and investment bankers and private equity firms are notoriously press-shy, so I’m gonna avoid naming names – but we had what we thought was a tremendous offer, and it was 2.8 billion. And that was sort of based on the investment bank arithmetic.
“The UFC did 200 million dollars in earnings before tax and depreciation, so last year they had a great year,” he continued. “They had Conor [McGregor], they had Ronda [Rousey]. Great year. And they did 200 million dollars roughly in profit, so that’s tremendous. And typically, bankers, private equity firms might look at an earnings like that, and the range would be 12 to 14-times that [which] would give you the value of the company – so 2.8 [billion] was on the higher side. But I think Lorenzo [Fertitta] is very forward-thinking and he says, look, I’m building this tremendous platform around the world and the UFC is a great in Australia, right? Great success in the US. We’re pretty good in Mexico. Great in Canada. Real traction in the UK. But yet, they have built out a platform in Asia and Europe and the Middle East that hasn’t really come online yet. So I think Lorenzo looks at this and goes, ‘we haven’t even seen the real value of the UFC, so I want a lot of freakin’ money. I don’t want some banker’s idea of what it’s worth. I’m a visionary, I know this is worth a lot of money.’
“So I do think he has a super-high value on it, but when you get to that point, there’s only a few people that really can enter into that sort of purchase. Investors are typically very disciplined. Sometimes very well-to-do individuals get caught up in the glamor of something and will overbid, and that’s kind of where I think they are. I don’t think the UFC has been sold. I don’t think it’s gonna be on UFC 200. Now they may have sold off a portion at a very high evaluation, but they can come back to it later on and say, ‘this is our evaluation.'”
Penick’s Analysis: Very reasoned and interesting take from someone with a lot of knowledge in the space. Of course, based on the reports of the bid accepted, several prior groups who were interested at a lower valuation came together to reach something higher. Now, if Zuffa still sees that as less than what it’s worth, perhaps they’re not willing to go with a full sale at this point. The process is still in flux, and until things get finalized there is no sale. It could still be some type of partial sale at that price point, but there could be a number of different possible looks to this deal by the time anything would come to fruition.
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