Document details new UFC owners’ plan to increase earnings

MMAjunkie‘s Steven Marrocco and Ben Fowlkes obtained an investor document that details the new owners’ plans to grow earnings.

According to the document, the sale of the UFC was just under the reported $4,000,000,000+ price widely cited in the media. The sale price was apparently $3,775,000,000, plus $200,000,000 in other expenses, including banker fees, for a total of $3,975,000,000. However, the price to the original owners increases by an additional $250,000,000, if the league can reach increased earnings targets over the next two years.

EBITDA (earnings before interest, tax and depreciation) for June 2015 to June 2016 was $170,000,000. Increasing that to $275,000,000 by June 2017 earns an additional $175,000,000, and increasing it to $350,000,000,000 by June of 2018 earns $75,000,000 more.

The increase is expected to come from the full 13 pay-per-view shows per year, a contracted increase of $48,000,000 from the partnership with FOX, and cutting $71,000,000 in costs.

Employee compensation was identified as the biggest area of cost savings. The UFC recently laid off under 15% of its workforce. The new ownership intends to reduce payroll costs by $55,400,000, an estimated 44%-53% of the total.

The Ultimate Fighter budget will drop from $27,600,000 to $10,000,000.

There was also a reference to cost cutting through increased standardization and more rigorous corporate discipline, namely in compensation practices, [travel and expense] policies, long-lived consultants, political contributions, overhead, etc.

The private jet is gone.

The UFC takes care of several fighters including Chuck Liddell, Matt Hughes, and Big Nog, via largely ceremonial positions with the company. It is not known if these will continue.

On the cost side, WME-IMG will get a $25,000,000 management fee, the same sum that former CEO Lorenzo Fertitta reportedly earned before his departure.