Back in 2001, Frank and Lorenzo Fertitta bought Ultimate Fighting Championship (UFC) for a measly $2 million. 15 years and a few $100 million worth of investing and promotion later, and the world's biggest mixed martial arts (MMA) promotion is now worth close to $4 billion, according to company president Dana White.
It's an earth-shattering price tag that may be too astronomical for some, including Campbell McLaren, one of the original co-founders of UFC. As he recently told Submission Radio, he -- along with plenty of wealthy investors -- looked into buying the company themselves.
After crunching numbers with plenty of mathematicians and bankers, Campbell and Co. offered up a bid of $2.8 billion that was ultimately rejected by the Fertitta brothers.
"I don't think any of the reports are correct, by the way. And I looked into potentially buying the UFC too with some very famous investment groups based in the US. This was this year - and I think you guys are getting the scoop on this. I haven't talked about this in the media, and investment bankers and private equity firms are notoriously press-shy, so I'm gonna avoid naming names - but we had what we thought was a tremendous offer, and it was 2.8 billion. And that was sort of based on the investment bank arithmetic. The UFC did 200 million dollars in earnings before tax and depreciation, so last year they had a great year. They had Conor, they had Ronda. Great year. And they did 200 million dollars roughly in profit, so that's tremendous. And typically, bankers, private equity firms might look at an earnings like that, and the range would be 12 to 14-times that [which] would give you the value of the company - so 2.8 (billion) was on the higher side. But I think Lorenzo [Fertitta] is very forward-thinking and he says, look, I'm building this tremendous platform around the world and the UFC is a great in Australia, right? Great success in the US. We're pretty good in Mexico. Great in Canada. Real traction in the UK. But yet, they have built out a platform in Asia and Europe and the Middle East that hasn't really come online yet. So I think Lorenzo looks at this and goes, we haven't even seen the real value of the UFC, so I want a lot of freakin' money. I don't want some banker's idea of what it's worth. I'm a visionary, I know this is worth a lot of money. So I do think he has a super-high value on it, but when you get to that point, there's only a few people that really can enter into that sort of purchase. Investors are typically very disciplined. Sometimes very well-to-do individuals get caught up in the glamor of something and will overbid, and that's kind of where I think they are. I don't think the UFC has been sold. I don't think it's gonna be on UFC 200. Now they may have sold off a portion at a very high evaluation, but they can come back to it later on and say, this is our evaluation.'"
For comparisons sake, Major League Baseball (MLB) team Los Angeles Dodgers sold for $2 billion in 2012, a record-setting price tag for a sports franchise.
That's a lot of cheddar.
For now, McLaren still serves as CEO for Combate Americas -- a Hispanic sports and media franchise -- which was founded in 2011. But if he and his investors ever come up with more cash to buy UFC back, they better be prepared to have a sit-down with a certain featherweight champion about sharing the wealth.