Forbes magazine, in their recent cover story Ultimate Cash Machine, described UFC as:
the Ultimate Money Machine. The night before the Super Bowl 10,700 fans packed the arena, paying an average of $340 for a ticket to witness nine mixed martial arts fights. Another 500,000 fans paid $45 ($55 for high definition) to watch five of the nine fights at home. The total haul from the event: $25 million.
In an interview with CNBC, UFC President Dana White said the sport has come a long way since itÃ¢â‚¬â„¢s branding a bloodsport by such critics as John McCain who referred to the UFC as Ã¢â‚¬Ëœhuman cockfightingÃ¢â‚¬â„¢. Dana said that in the early days UFC was banned from pay-per-view, and showed his irritation over that, by saying Ã¢â‚¬ËœEven porn is on pay-per-view, but they wouldnÃ¢â‚¬â„¢t put us on.Ã¢â‚¬â„¢
Now the UFC is expected to generate $250 million in 2008, and owns 90% of the mixed martial arts genre’s revenue. The tables have turned and the UFC now generates most of that revenue from monthly pay-per-view events. Other revenue comes from ticket sales to live events, licensing for its Spike channel cable shows The Ultimate Fighter and UFC Fight Night. Tack on DVDs, T-shirt, and downloaded fight archive sales, and youÃ¢â‚¬â„¢ll get the full picture of where that $250 million comes from.
The UFC is also branching out with international appeal after selling out live fights in Manchester, U.K. and Montreal, Canada. Obviously, UFCÃ¢â‚¬â„¢s main target is the World Wrestling Entertainment, which as a publicly traded company is valued at $1.4 billion.
Also, according to CagePotato.com, the UFC is faring a lot better than itÃ¢â‚¬â„¢s struggling competition, which are on the verge of extinction.
Although a lot newer (and with real fighting), the UFC could be coming close to WWE’s target price. The brothers Fertitta (Lorenzo and Frank III) have said they have been approached by private equity and media firms to sell with offers exceeding $1 billion. The Super Fertitta Bros. are not interested in selling.
They were very interested in selling back in the dark days of the UFC, though. After purchasing the UFC for $2 million from its previous owner in 2001, the FerttitaÃ¢â‚¬â„¢s had given prez Dana White over $44 million to make the league a success, until they saw the drain on their finances and wanted out.
Back then White said he could only get them a buyer interested in paying $7 million. The Fertittas decided to give it another shot, given their lack of feasible options. The produced and shopped The Ultimate Fighter reality show and Spike TV picked it up. The show became a huge success and the rest of the fairy tale is history.
With each owning 45% of the UFC empire, both Fertitta brothers are currently sitting pretty as the 380th richest people on the Forbes 400 list. They each have a net worth of $1.3 billion from their UFC endeavors in addition to stakes in the Station Casinos brand.
So, turning a $2 million purchase into a $1 billion+ brand in a little over 6 years, how can you beat that?
Forbes: Ultimate Cash Machine, May 5, 2008
Cage Potato: IFL and Bodog on Verge of Extinction; UFC Keeps Stacking That Paper, April 18, 2008