UFC Inks New Media Deal With Discovery as Overseas Rights Grow
UFC has signed a new international partnership with Discovery Inc. in Spain and the Netherlands, the latest in a growing international media portfolio.
UFC fights will air on Discovery+ in the Netherlands and on Discovery-owned Eurosport in Spain, a multi-territory deal that will pay the Endeavor-owned promotion company a “significant increase” over what it was previously making in those territories, according to CFO Andrew Schleimer.
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The partnership is the latest in a critical growth strategy for UFC, a high cash-flow business on pace for its most profitable year ever. UFC is increasingly looking internationally for growth, including high-profile efforts in China and the Middle East, and media is a principle way to capitalize on its burgeoning popularity.
Nine of the 12 current UFC champions are from outside the U.S., and UFC estimates that about 90% of its 625 million global fans live outside America.
From a revenue standpoint, however, the U.S. remains dominant. About 90% of UFC’s media revenue comes from North America, thanks largely to its $1.5-billion deal with ESPN. UFC also hosts the vast majority of its top-tier events in the U.S., though the overall revenue skew is likely slightly more balanced.
“In simple terms, there’s a mismatch between where the current economics are and where the fanbase lies,” Schleimer said in a phone interview. “And that just screams ‘opportunity’ for us.”
Schleimer said the international push is a product of multiple trends. First, mixed-martial arts and UFC are both more popular than ever. Secondly, over the past couple years UFC has become fully integrated into the broader Endeavor ecosystem, which includes a global sales team with sports and media expertise in many foreign markets.
At the end of last year, UFC closed nine new international rights deals across Asia and the Pacific. The promotion company says that its 15 newest overseas media deals (prior to the Discovery agreement) represent an 80% increase from its prior payments. There are also a handful of key international renewals on the horizon, including deals in the U.K. and Ireland, Brazil, Germany, Russia and Japan. (UFC’s domestic ESPN deal ends in 2025).
UFC was the first major U.S. sports league to resume operations after the onset of the COVID-19 pandemic, and it finished 2020 having delivered 41 of its 42 major scheduled events. The promotion company opened 2021 with the best nine-month period in its history, and Endeavor CEO Ari Emanuel told analysts in November than UFC’s sponsorship revenue for the third quarter was up 59% compared with Q3 2019.
“By all measures, through nine months in September, we saw the best revenue, the best profit, the best social media growth, and the best Fight Pass subscription numbers,” Schleimer said. “Top to bottom, there were few categories where we didn’t see meaningful value accretion and increases that would, in the aggregate, cause us to put up record results.”
That’s critical for Endeavor (NYSE: EDR), which went public last April, around the time it committed to purchasing the remaining 49.9% of UFC that it didn’t already own. UFC’s record quarters came as the wider entertainment industry was still seeing pandemic disruption, which has helped cover revenue shortfalls in other parts of the company and bolstered the Endeavor stock price, according to analysts. (UFC also holds $2.2 billion in debt, per Endeavor’s 10Q filing).
In May 2021, AT&T (NYSE: T) announced a proposed merger between its WarnerMedia and Discovery (Nasdaq: DISCA). The combined company, called Warner Bros. Discovery, is expected to start trading after the deal closes later this year.
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