The BIGGEST Sports Deal EVER?

The Biggest Sports Deal EVER-

The biggest sports deal EVER?

I’m not sure how many of you would have heard by now as it was just announced on Monday last week but the biggest sports deal ever was officially confirmed after a few weeks of rumors in the industry. No it wasn’t the Taylor Hall trade or PK Subban trade, they’re pennies compared to this monster.  The UFC, better known as the Ultimate Fighting Championship, was sold for a record sum of $4 BILLION dollars. Not bad for a 15 year run after a purchase price of $2 million back in 2001.

To put that into perspective, here are the top 5 most valuable sports franchises according to Forbes(caution, it’s a page per each franchise kind of list if you wanted to see the whole thing it’ll be a lot of clicking): 

  1. Manchester United – $2.23 billion
  2. Real Madrid – $1.88 billion
  3. New York Yankees – $1.85 billion
  4. Dallas Cowboys – $1.85 billion
  5. Washington Redskins – $1.56 billion

Technically I guess the UFC is more of a league than a franchise, but who would have thought with all the resistance over the years that it would become so valuable? They literally fought their way to the top!(HA! My mom always said I was funny)  I think one of the tipping points for it was the associated brands becoming so popular. Affliction t-shirts replaced Ed Hardy shirts as the douchebag uniform of choice. It was mainstream possibly before the UFC was. When associated brands become mainstream it’s only a matter of time before the main property sky rockets in value.

If you didn’t know the UFC has been around since 1993. For me, I first heard about it in the mid 90s at a movie rental store. I remember my father would occasionally pick one up and I’d watch a little bit of it with him. Then it disappeared for years (for me) until the big Randy Couture vs Chuck Liddell matches that were the bigger cards in the early 2000s. Which is shortly after it was first sold, in 2001 it was basically going bankrupt and the Fertitta brothers purchased it with their business partner and former boxing manager, Dana White.

So who bought the UFC?

Jump ahead 15 years later and the UFC is sold again, this time to a big management firm, WME-IMG.  The WME part of WME-IMG is a talent management company, William Morris Endeavor. They manage celebrities and athletes to make them more money. The CEO is actually the guy Ari Gold is based off of on the HBO show Entourage. The IMG part, creates 32,000 hours of sports content for television each year. So it seems like they’re going to be able to handle the UFC.

What was the return on investment for the biggest sports deal ever?

The most recent selling price of the UFC is the reason you’re here, right? Well lets get into it! 4 BILLION DOLLLARS!  After 15 years on a 2 million dollar investment, pretty solid return right? A return on investment(ROI) of $3,998,000,000 that breaks down into a 2000x return. To simplify that a little more, every dollar they invested, they were paid back $2000.  Which is basically incredible if that worked for our CPP in Canada we would be getting paid out about $152,658,000 in retirement assuming we paid in for 30 years at 2016’s contribution limits.  As it stands right now, that would PROBABLY be enough to retire comfortably…but who knows what the future might hold!

Another way to look at this ROI is to compare it to the stock markets. Most major indexes that the markets are measured by have averaged 7% yearly returns over 15+ years.  The UFC return averaged 13,333% each year over the 15 years it was owned by the Fertitta brothers and Dana White.  That’s 1904.762 times more…again, wow.  If only someday I could get a return like that.

What do you guys think of this deal seems like even a 1% investment would have be quite the windfall! Let me know your thoughts in the comments below.

 

2 comments

  • The rapid rise in the value of sport franchises, leagues, etc. is based on the paradigm shift of how we consume media. Due to products like Netflix, the value of generic TV programming via cable has plummeted. In fact, the only reason to have cable is for live programming ala sports. This is why Rogers/Bell paid $1.6B for Leafs/Raptors, why Rogers own the Jays, Bell own the Argos and part of the Habs, and why Quebecor was willing to put down a $500M franchise fee for the Nordiques. The value of sports isn’t necessarily the product itself, but the ability to own/manage the TV rights.

    • Excellent point, I don’t doubt it for a minute that you’re correct. Sports have always been highly entertaining to the masses and have incredible stories of hardship, triumph and many other qualities that people enjoy in stories. Owning the team and broadcast rights basically gives you access to decades of these stories.
      Stephen recently posted…What is the financial effect of Pokemon Go?My Profile

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