UFC Estimated Worth – $2.3 Billion; Lack of Growth Cited
UFC Estimated Worth – $2.3 Billion; Lack of Growth Cited
LAS VEGAS–(BUSINESS WIRE)–A two-part valuation report on Zuffa LLC, the parent company of the Ultimate Fighting Championship (UFC) has been released by UNITE HERE. It is estimated that the mixed-martial-arts company is worth $2.23 billion, which implies an equity value of $1.76 billion given the firm’s long-term debt. Lack of growth in key markets and flat revenue since 2012 prevent a higher valuation of the firm, argues UNITE HERE.
“We do not believe the UFC is more valuable than some of the most iconic sports franchises such as the New York Yankees and Dallas Cowboys, whose stadiums are collectively worth almost $2 billion,” said Jim Sullivan, an analyst with UNITE HERE. “If the UFC were still growing fast, one could imagine a much higher valuation. However, the UFC has not expanded into its own target markets like China, India, Africa, and Russia, and its overall revenue barely grew between 2012 and 2015.”
The two-part report is available on the Zuffa Investor Alerts website.
Part one of the UNITE HERE report dismisses comparisons of the UFC to some highly-valuable sports franchises and argues that it is more appropriate to compare it to World Wrestling Entertainment (WWE), another event promotion company. Such an approach would value the MMA promotion at approximately $2.23 billion.
Part two of the UNITE HERE report takes a closer look at the UFC’s international growth track record, its Reebok partnership, and labor and legal issues. It is argued that the UFC does not deserve any higher valuation because it has not shown significant growth over the past several years. Noting that the company had annual revenue at nearly $600 million in both 2012 and 2015, UNITE HERE concludes that the UFC does not deserve a very high valuation multiple like the 18 times EV/EBITDA multiple used when Dalian Wanda, one of the potential bidders on the UFC according to ESPN, purchased Ironman Triathlon last year.
UNITE HERE represents 270,000 working people in industries such as gaming, hotel, and food service in Canada and the United States. UNITE HERE’s Culinary Workers Union Local 226 and Bartenders Union Local 165 have a labor dispute with Station Casinos (NASDAQ: RRR), an affiliate of Zuffa LLC.
