What the sale of UFC means for the sports business

WME | IMG's US$4 billion takeover of UFC shows the value of storytelling in the sports industry, according to Havas Sports and Entertainment global chief executive Pedro Avery.

What the sale of UFC means for the sports business

The sale of the Ultimate Fighting Championship (UFC) came with the biggest price tag ever paid for a sports property. As with any deal of this size, it’s fun to speculate on the incentives, risks and rewards that are at play around the negotiating table, and there’s a race to judgement as to what happens next. But this is a landmark deal that goes beyond the headline figures which tells us quite a bit about how sport will evolve as a marketing and media platform over the next decade or more.

For Frank and Lorenzo Fertitta, this is a deal 15 years in the making. The brothers paid US$2million for UFC in 2001 which is not a bad decade and a half’s work by any stretch of the imagination. Like all great salesmen, Frank and Lorenzo are brilliant storytellers, who are routinely referred to as the ‘sons of a Vegas casino owner’. This may be true, but the way they do business should not be confused with gambling. What the brothers added to the product during their tenure will become a case study in the sports business for years to come.

Lorenzo was once asked what he had got for that initial US$2million, to which he replied, ’not much more than a brand’. The fight series had existed in various forms since 1993 with a loyal but very small audience.

But the appeal of fighting is universal. Love it or hate it, we understand what we’re seeing on an elemental level. There’s none of the cultural heavy lifting involved in selling the National Football League (NFL) outside the US or soccer back the other way.

At every touchpoint the UFC brand and tone of voice is entirely consistent. There’s none of the star-led spikiness in demand that blights boxing as an investment opportunity.

The bet being taken by WME | IMG is that there’s huge potential growth opportunities for the UFC brand, particularly in markets outside the US. Looking from the outside, there are some great looking synergies between the agency and its new property. These include leveraging talent, packaging and selling media and cross marketing opportunities in to gaming and licensing.

From a business perspective however, the most exciting part of UFC has been its straight to consumer media model, via the much envied Fight Pass, the closest a big sports property has come to achieving the elegant ease of use enjoyed by Netflix customers.

The future will tell us whether UFC can become the generic category brand in countries with a long cultural tradition of MMA, with deeply embedded competitors. The size of the sale price will have also alerted the fighters to the value they bring to the brand, who will doubtless test the mettle of the new management with demands for more of a cut.

But all that is to come. For now, let’s sit back, applaud and then learn from this exciting development in the sports business.

Pedro Avery is global chief executive of Havas Sports and Entertainment