One year ago today, Lorenzo and Frank Fertitta pulled off the biggest sale in sports history.
After buying the UFC for $2 million in 2001, they, along with high school friend Dana White and a group from Abu Dhabi, sold their empire for $3.77 billion to agency WME/IMG, along with private equity firms KKR, Silver Lake Capital and Michael Dell's investment firm MSD Capital.
It was a fantastic sum that was partly attained by optimistic growth projections by UFC management, which estimated that the UFC would continue to grow at a similar rate as it had in the past, when it rose from a $50 million business in 2005 to a $600 million business by 2015.
That confidence didn't just manifest itself on paper.
White, whose 9 percent share in the sale was worth $340 million, signed a deal to stay on with the UFC as president for the next five years. His salary? Nine percent of the annual profit, according to sources.
The sellers, including White, also put $325 million into the new company, though they could get $250 million back if their projections on future profits hold.
A rough year
Judging by optics alone, the first year under the new ownership has been as challenging as one could imagine.
A women's division anchored by Ronda Rousey, which pushed UFC more into the mainstream than it had ever been, has become largely irrelevant outside the hard-core fan base.
Of the 13 main UFC cards of the new ownership, at least nine of those events have had fights canceled or postponed. Fighters withdrew often at the very last minute, mostly from illnesses and injuries, sometimes as a result of cutting weight too drastically.
That doesn't include a less-than-marketable Stipe Miocic as a heavyweight champ and a paper champ in light heavyweight title holder Daniel Cormier, who had to wait a year for his archrival Jon Jones' drug suspension to end.
"We had exactly the year we thought we would have, based on when people fought," White said. "Cormier-Jones is on a ridiculous card for 214, plus we have Conor [McGregor] and Floyd [Mayweather]."
Conor McGregor has been the UFC's main cash cow, but he has fought only twice in the Octagon over the past year.
The undefeated Rousey, represented by new owners WME/IMG, scored book and movie deals and was thought of as unbeatable after she piled up 12 straight victories, but she was vanquished by Holly Holm in shocking fashion at UFC 193 in November 2015.
Nunes won twice as champ and was scheduled to be the main event to UFC 213 on Saturday night, but she decided not to compete because of health complications. White told fans Nunes was medically cleared but essentially didn't want to fight. The penalty? Keeping the women's champ in its most high-profile division off future main events.
It's also safe to say the UFC has been stalled in its efforts to get new blood into the sport, despite all the development vehicles that the UFC has built to ensure a pipeline of talent.
"I'm used to this," said a fired-up White. "In the early days, they would say, 'What are you going to do when Chuck Liddell is done? What are you going to do when Anderson Silva is done? When GSP [Georges St-Pierre] is done?' I will say that there will never be another Ronda, but there will be new stars."
McGregor as a revenue stream
Then there's McGregor, who has been the main event on four of the seven cards in UFC history that have yielded more than 1 million pay-per-view buys. (Rousey was the main event on two of the other three.) McGregor avenged his loss to Nate Diaz at UFC 196 by beating Diaz at UFC 202, just one month after the sale.
And there was McGregor's appearance in UFC 205 in the organization's first card in New York, which broke all kinds of records for the UFC, including a $17.7 million gate, roughly eight times the average main UFC card ticket revenue.
But there's vulnerability in McGregor, as well.
Just like when Rousey went 13 months in between her past two fights, so too will McGregor -- if the UFC is lucky. The promotion is hoping to get him back in the Octagon by December, but there's no guarantee there.
White reiterated to ESPN this week that McGregor's contract with the UFC does not guarantee he'll fight in the sport again, and with a potential payday of $100 million or more on the horizon for his Aug. 26 boxing match against Floyd Mayweather, the UFC money he makes pales in comparison.
"I worked for years with people here, who loved what they did, and they made a bunch of money [in the sale] and left," White said. "There's never any guarantee that when you make that much money you'll ever return."
While McGregor's long absence from the Octagon is a blow, the UFC is at least financially protected.
Its most profitable event this year will be the bout between McGregor and Mayweather, with sources saying the UFC owners could net more than $40 million from what McGregor has to pay the organization as part of his contractual obligation.
Despite the obvious struggles, there aren't many concerns being voiced publicly.
As a private company, how the UFC is doing financially is unknown, though WME-IMG co-president Mark Shapiro did tell ESPN that the UFC "will hit the projections forecasted in our acquisition plan and will likely exceed them, given the opportunities in our reach across lines of businesses." Shapiro's remarks were confirmed by UFC chief operating officer Lawrence Epstein.
Those projections have never been publicly revealed.
As part of the sale agreement, the UFC, which yielded $170 million in net profits from June 2015 to June 2016, would have to yield $275 million in the following year (June 2016 to June 2017) to trigger a $175 million bonus payment to the former owners, including the Fertittas and White. Neither Shapiro nor White would comment on whether the bonus was triggered.
While the UFC over the past year has done relatively well in selling tickets to events -- including hosting huge crowds in Cleveland, New York, Toronto and Las Vegas for UFC 203, 205, 206 and 207, respectively -- data obtained by ESPN reveals that the live event business makes up less than 14 percent of its revenue.
More important is the pay-per-view revenue, which has typically been around 35 percent of annual revenue in recent years, according to documents obtained by ESPN.
While not publicly released by the UFC, estimates made by those who cover the sport suggest that the past 12 fights under the old ownership (UFC 189 to 200) averaged about 100,000 more buys per card than the first 12 fights under the new ownership (UFC 201 to 212).
A UFC official disputes that estimate but would not provide any further insight on pay-per-view numbers or UFC Fight Pass subscriptions or provide any specific data supporting the growth of the business.
The largest chunk of the UFC's total revenue, certainly by the time 2019 rolls around, will be the new U.S. media rights.
While it's too early to understand how those negotiations will go, Shapiro did reveal to ESPN that new international television deals struck in the Middle East, Asia and Latin America came at increases of more than 200 percent, which is not a surprise, given WME/IMG's strength in negotiating and producing television deals.
"We worked with the UFC for years and are confident in our investment," Shapiro said. "This property, on its own, is unlike any other, and now it is being supercharged through our global network."
ESPN has obtained, however, projections listed in a document distributed by MSD Capital, which soon after the sale sought to sell some of its risk in the investment, as it had always planned as part of a standard financing move.
Those projections suggested that total revenue would grow by a robust $354 million from 2016 to 2019, the first year of a new U.S. media rights deal. The UFC's value by that year, based on multiples (a comparison of a company's value to its revenue) reached in the sports industry, could be worth $7.8 billion, documents indicated.
The U.S. central banking system, the Federal Reserve, was concerned enough with the projections for the UFC's future that in the fall, it sent a note to Goldman Sachs, which is financing $1.8 billion in debt on the deal, according to Bloomberg News. It is not known how, if at all, those concerns were dealt with. Both the Federal Reserve and Goldman Sachs declined comment on the matter. But given Standard & Poor's grade of B-plus on the debt itself, it doesn't appear to be of dire concern.
"There are only two destinations for this investment: It will either be considered a good one or a great one," said Richard Sarnoff, managing director of private equity for KKR, which put $410 million into the deal.
Numbers in the MSD Capital deal document suggest that, at worst, the UFC will get $280 million from the first year of a TV deal in 2019, up from $168 in 2018. At best, the deal will be worth $450 million in 2019.
Hitting the top number might require a new player, such as Facebook or Amazon, to step up and buy part of the deal, especially as media rights deals are being more heavily scrutinized, because of the cable television bundling decline.
"We have the best entity in the world handing those rights," Sarnoff said. "It's a product that has such a unique audience; not only is it growing, it's growing among the younger audiences that are hard to reach. There's nothing in the marketplace to buy, as far as live rights go, over the next two years."
White has an answer for everything.
He knows the last-minute bowing out of fighters is hurting the sport. It's why he's not ashamed to say that the company's new $12 million, 30,000-square-foot training center in Las Vegas isn't only to serve the fighters -- it also will help him save fights. Complete with nutritionists and conditioning gurus, fighters, if they choose, can work with the UFC's experts to help them cut weight in the safest way possible.
To White's credit, no serious party bidding for the UFC wished to take on the promotion without White involved, since he's clearly the glue that holds the pieces together. But not many outsiders expected him to be an even greater presence than he was before the deal.
"When I made money in this deal, a lot of people thought I was going to bounce and be gone," White said. "I've never been busier, never been more engaged."
White admits that in the new deal, there's more number crunchers around than ever before, but he likes to bet on himself and couldn't be more proud of what he has built. He says that in his own unique way:
"Everyone who doubts us, we'll shove it up their a--."