On Tuesday night, Darren Rovell of ESPN.com reported the Zuffa ownership group is in advanced talks to sell the UFC, hiring investment bank Goldman Sachs to represent it in discussions with at least four groups that have bid on an acquisition of the MMA global market leader.
Rumors of a potential sale have occasionally surfaced over the last several years, but this is clearly the strongest report yet that Zuffa is considering cashing out, with ESPN citing a potential price tag of up to $4 billion.
But why now? The UFC is riding high, with UFC 200 around the corner, a couple of transcendent stars in Conor McGregor and Ronda Rousey and its first New York state event in decades coming up.
To mine the potential causes and reasons behind the possible deal, as well as what it might mean for the future, I’m joined by Bleacher Report MMA lead writer Chad Dundas.
Mike Chiappetta: Chad, I wasn’t surprised to hear this report, and I’m sure you weren’t surprised either. Like most good businesses, its leadership team is always looking for opportunities. Until now, it's always been the one snapping up properties, but there have been signs it wouldn’t last forever.
For one thing, the Fertitta brothers have the family business to run, recently taking their renamed gaming company, Red Rock Resorts, Inc., public. For another, those of us who have been around the UFC a long time have heard that Lorenzo Fertitta has long been interested in bringing an NFL team to Las Vegas.
As Bleacher Report NFL writer Mike Freeman wrote, “large swaths of ownership no longer see putting a team in Vegas as a problem.” Fertitta may think it’s time to pounce on this opportunity or simply sell when the market is high.
Chad Dundas: We're dealing with a fluid situation here, Mike. Even as I type this, our former Bleacher Report colleague Jeremy Botter is reporting for FloCombat that Zuffa is merely looking to sell an 11-15 percent stake in the UFC.
A move like that obviously wouldn't be unprecedented. In January 2010, the parent company sold a 10 percent stake in the UFC to Flash Entertainment, a live-events promoter owned by the government of the United Arab Emirates. The Octagon has made a couple trips to the UAE since then, but mostly Flash has been a pretty silent partner.
And look, even if this is just the Fertittas portioning off another small-ish side of flesh, the fact is that our friends in Las Vegas are going to sell the company store at some point. Despite the fact they've seemed like lifers when the cameras are on, I've always gotten the impression that behind the scenes, they were treating the UFC like a spec house.
And you're right. If you're looking to unload this thing, now would be a great time. Not only because of the positive developments you mentioned above, but because there's at least some evidence to suggest the ride is about to get a lot rockier for ownership. There is that looming class action lawsuit, rumbles of an Ali Act for MMA coming in the near future and a labor force that isn't going to get any less interested in getting a fair slice of the pie as time goes on.
If I were Dana White or one of the Fertittas, I might look up at the clock and wonder if midnight wasn't just about to strike.
MC: The sale of a percentage rather than the whole thing does seem much more likely. After all, the UFC is still a profitable business, one that allows the management team an almost-absurd level of control over its product and finances. Compare that to say, owning an NFL team, and there are so many rules and regulations to follow. Would the Fertitta brothers really rather do that than continue carving their own path?
That seems unlikely. I can understand the interest in owning an NFL team and being the savior that brings the league to your hometown. Who wouldn't want to do that? But doesn't owning a league sound better than owning a team? It does to me.
Another roadblock? By my understanding, the NFL prohibits ownership in any gambling interest, so the brothers would have to rid themselves of their stake in Red Rock Resorts, Inc., to go the NFL route. That seems awfully unlikely, too.
So a percentage or a portion seems the most logical outcome. White indirectly showed that was the case when asked by NBC Sports' Dan Patrick, saying, "Um, obviously if I'm in the middle of a deal right now, there's a lot of confidentiality involved in it, but we're working on expanding."
But, if they did sell, what would the UFC look like? For all the grief White receives, it's hard to imagine the UFC without him. He's been the chief hype man for over a decade, and he's been good at it, even if he's taken a diminished role in the last year or two. I doubt a new controlling interest group would come in and immediately install its own people in every top role. There is too much of a learning curve involved to do that, but one thing we know in life is that everyone is replaceable.
I wouldn't expect the finished product to look vastly different. New ownership might come with new ideas for presentation, but fighting is still two people and a cage. If anything, maybe we could finally say goodbye to "Face the Pain."
CD: It's fitting that you bring up "Face the Pain," given that everything we know about the MMA industry in America today was created exactly in the image White and the Fertittas wanted. Bloodsport-style marketing? That's them. Unfortunate relationship with bro culture? Them. Weird insistence that the whims of management and fans should come before the well-being of the actual fighters? Guess who.
I often wonder what would have happened if a crew of billionaires with slightly different sensibilities had bought the UFC all those years ago. Alas, now we'll never know.
One day we will find out what life in the UFC is like without White and the Fertittas, though. That's a certainty. Many of us kvetch long and loud about them—and they deserve it—but sometimes I wonder if we should be careful what we wish for.
If the company that bought the UFC were a faceless hedge fund or stuffy venture capital firm, would we end up pining for the fast-and-loose days where White shot from the hip and Fertitta showed up looking like he could out-bench-press most of the roster? Maybe.
I doubt anyone who bought the UFC would suddenly come in with a more labor-friendly attitude, unfortunately. They would be buying the thing based on Zuffa's revenue history and projections, after all. But someone who might bring a new vision for the sport? I'd be all in on that.
A guy can dream, can't he?
MC: Yeah, I guess those are the things we wonder most about. What would a sale mean for the fans? What would it mean for the athletes?
For the latter, the questions are numerous. Would it mean an increased schedule? A further watering-down of the product? More opportunities? Anything and everything is possible with a new perspective. It could be the best thing to happen to the UFC, or the very worst.
But one thing I do know is that the treatment of athletes isn't likely to change without any concerted effort by them. A sale generally assumes any pre-existing deals. Reebok will stay, so will the Fox deal and those ironclad contracts. Billion-dollar businesses aren't known for magnanimity.
So in the end, whether the UFC honchos sell the whole organization, just a part of it or keep the ownership structure as is, it will be mostly "business as usual," a term familiar to longtime fans of UFC acquisitions. Except this time, it will actually be that. Everyone is always open to tinkering with the formula, even an ultra-successful one, but no one will toss it away and start from scratch.
Generally, fans don't care about ownership teams. There are a few outliers. George Steinbrenner. Mark Cuban. Jerry Jones. Al Davis. Dana White and Co. fall into this category. They are characters who are weaved into the fabric of the sport. Even a sale wouldn't change that.