The Ultimate Fighting Championship, better known as UFC, has cemented itself as the premier promotion in the world of mixed martial arts (MMA). With flashy superstars like Conor McGregor and Ronda Rousey headlining massive pay-per-view events, the UFC has exploded from a controversial niche sport into a multi-billion dollar behemoth. But who exactly owns the UFC, and how did it become so incredibly valuable?
The Wild and Crazy Origins of the UFC
To understand the current state of the UFC, you have to go back to the beginning. The UFC was founded in 1993 by Art Davie and Rorion Gracie of the legendary Gracie jiujitsu dynasty. Their vision? To set up a tournament that would determine the most effective martial art for real, unarmed combat through no-holds-barred fights between different disciplines.
MMA was not considered a sport at the time. These early UFC events, held in small venues like Denver‘s McNichols Sports Arena, were underground, bare-knuckle brawls with very few rules meant to resemble a real street fight. Fighters came from backgrounds like boxing, kickboxing, wrestling, karate, jiu-jitsu, judo and muay thai. There were no weight classes, rounds or time limits, and techniques like headbutting, groin strikes and hair pulling were totally legal.
As you can imagine, these events were incredibly controversial, banned in most states and unavailable on pay-per-view. Arizona Senator John McCain famously called it "human cockfighting" and letters poured in begging UFC to halt the vicious spectacle. But a small subgroup of fight fans was attracted to the raw, unregulated combat.
Despite the controversy, UFC still struggled to make profits in the late 90s after the novelty wore off. They desperately needed an owner who could see the potential in this wild, untamed sport.
How the Fertitta Brothers Shaped the Modern UFC
That visionary owner turned out to be the Fertitta brothers, Frank and Lorenzo. In 2001, they acquired the UFC for just $2 million through their company Zuffa LLC.
At the time, MMA was banned in 36 states and was far from mainstream. But the Fertittas saw an opportunity where others didn‘t, and they set to work transforming the UFC‘s image through strategic regulations.
Under Zuffa‘s new leadership, UFC started implementing critical rules to make fights safer and more palatable. This included introducing 5-minute rounds, judging criteria, weight classes and banning techniques like headbutting and groin strikes. While controversial among hardcore purists, these changes got MMA legalized across North America, paving the way for massive growth.
| Key Regulations Introduced by UFC under Zuffa | Year Implemented |
|---|---|
| Five weight classes | 2001 |
| Five-minute rounds | 2001 |
| Banning headbutts and groin strikes | 2001 |
| Judging criteria | 2002 |
| Gloves required | 2002 |
The Fertittas invested millions into growing the UFC brand, and stars like Chuck Liddell and Randy Couture emerged as major PPV draws. By 2016, the controversial niche sport had transformed into a global phenomenon, airing in 156 countries with an estimated value of $4 billion.
UFC Sells to Endeavor for $4 Billion in 2016
After 15 hugely successful years under Zuffa LLC, the Fertitta brothers shocked the sports world by selling the UFC to Hollywood talent agency Endeavor (then WME-IMG) for a reported $4 billion.
This was one of the largest transactions for a sports property in history, marking a new era for the world‘s premier MMA promotion. The Fertittas earned approximately $1.5 billion each from the sale, while minority owner Dana White sold his 9% stake for over $360 million.
While the Fertittas cashed out enormously on their initial $2 million investment, White stayed on as UFC President and public face under Endeavor‘s new ownership. Endeavor CEO Ari Emanuel took over running operations at the top.
UFC‘s Meteoric Growth Under Endeavor
Fast forward to today, and the UFC is more profitable than ever under Endeavor‘s watch. As of April 2022, Endeavor owns 50.1% of UFC, with the promotion valued at a whopping $7 billion. Just one year later, UFC‘s value has grown to an estimated $12.1 billion as part of a merger between Endeavor and the Alliance MMA network.
This makes the UFC far more valuable than competitors like Bellator MMA, owned by media giant Viacom and estimated to be worth around $500 million.
Let‘s look at how the UFC is generating such massive revenues under Endeavor:
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Pay-Per-View sales: PPV events headline by stars like Conor McGregor, Israel Adesanya and Jon Jones generate hundreds of millions in sales revenue. UFC 270 featuring Francis Ngannou did an estimated 500,000+ buys alone.
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Broadcast deals: UFC‘s partnerships with major networks like ESPN bring in billions over multi-year deals. Their current ESPN deal pays UFC a whopping $300 million annually until 2023.
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Ticket sales: UFC events at venues like Madison Square Garden and Las Vegas‘ T-Mobile Arena consistently sell out, averaging over $6-7 million per event in gate revenue.
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Merchandise: Lucrative apparel deals with brands like Venum and Panini autographs help capitalize on the UFC‘s star power to move merchandise.
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Sponsorships: Blue chip sponsors like Crypto.com, DraftKings and Monster Energy shell out millions for prime logo placement at UFC events and fighter kits.
Under Endeavor‘s leadership, the UFC is accelerating towards total market dominance in MMA. But challenges remain around fair fighter compensation that could affect the promotion‘s future.
Legal Battles Around UFC Fighter Pay
While the UFC is generating billions in revenue, many fighters believe they aren‘t getting fairly compensated. Over the years, several former UFC combatants have filed antitrust lawsuits alleging the promotion suppresses athlete pay.
The issue stems from the UFC‘s contract model. Unlike major team sports, MMA does not have a players association or union to collectively bargain for fighter contracts and pay. Critics argue this gives the UFC unchecked leverage to suppress costs and maximize profits.
Estimates suggest UFC fighters receive only 15-20% of the promotion‘s total revenues, while athletes in the NFL and NBA receive close to 50% through collective bargaining. Top UFC stars can earn millions per fight, but entry-level fighters make as little as $10,000-12,000 for risking their health inside the Octagon.
There is currently an ongoing class action lawsuit against the UFC, started by former athletes like Cung Le, Jon Fitch and Nate Quarry seeking to reform contract and pay practices. The result of this legal challenge could have major implications on the future of the UFC‘s business model.
The Bottom Line
There‘s no denying the Ultimate Fighting Championship has come an incredibly long way from its humble "human cockfighting" origins. The Fertitta brothers invested in the unproven property when MMA was banned across the U.S., and their gamble massively paid off.
Under current owner Endeavor, the future looks extremely bright for the UFC to solidify its status as the #1 MMA promotion on the planet. But lingering issues around fighter pay threaten to shake up the business. One thing is sure – the UFC‘s wild ride is far from over!