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Ultimate Fighting Championship Franchise Sells for $4 Billion

If you hadn’t heard already, “watching people beat one another mercilessly” has just set a record for the most valuable sports franchise transaction in history at $4 Billion.  The franchise generated just over $600 million in revenue in 2015 and has shown consistent year over year growth in revenue as the franchise has quickly gained in popularity.  UFC is a privately owned franchise and was owned by Lorenzo and Frank Fertitta who both became very wealthy with the successful sale of the franchise brand. 

 

How does the UFC franchise generate revenue?  Pay per view business makes up the largest source of revenue, a $700 million TV deal with Fox television, Over Top Platform offers a monthly membership program for global events held on the channel and then royalties allow the UFC franchise to also monetize the franchise brand through product sales.  Bellatore is the second competitor in this space who is owned by Viacom. 

 

As consumers, we see this every day, the athletes are become more significant in sports notoriety and becoming main stream athletes with basketball, football and baseball.  Mixed martial arts has taken the main stage for viewers and audiences around the United States.  One can see the amazing transition UFC made from a once cult following to main stream America by looking to the sponsors which include Bud Light, EA Sports, Harley Davidson, Reebok and other large name brands. 

 

So why did the sports franchise work so well?  It comes down to the power of a brand and the consistency of a solid business model.  Good marketing, branded products, strategic relationships and a solid business model lead UFC into being a global franchise brand.  The market grew and the established network allowed the franchise to grow exponentially.  Today, UFC broadcasts in 156 different countries.

 

The UFC Franchise will be purchased by WME-IMG which is a talent agency/sports marketing conglomerate owned by a group of private equity firms.  Clearly again, another sign that the UFC brand had made the transition to main stream.  Although the comparison isn’t pure in that other franchises are single teams and the Ultimate Fighting Championship is a league, the transaction has been billed as the single largest valuation for a franchise sale ever recorded.  This would put the UFC Franchise ahead of other valuable sports franchises such as the Dallas Cowboys, New York Yankees and Manchester United. 

 

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