Why the UFC Wanted to Keep Fighting During the Coronavirus Pandemic

Mixed martial arts outfit is on the hook for billions in debt after its 2016 acquisition by Endeavor

Despite UFC President Dana White’s best attempts, the Ultimate Fighting Championship was forced to call off its planned pay-per-view event scheduled for next Saturday after pressure from ESPN and Disney, its sole TV rights holder. But the bigger question remains: Just why was the mixed-martial-arts organization so insistent on staging an event during the worst global health crisis since the Spanish Flu pandemic?

That answer can be traced back to Endeavor’s purchase of the UFC in 2016. In that highly-leveraged deal, which was worth $4 billion, the UFC took on $2.3 billion in debt, which means the UFC is under intense pressure to fulfill those financial obligations by 2026, when those loans come to term.

The pandemic has literally brought the entire global sporting world to a halt. Both the National Basketball Association and National Hockey League suspended their seasons, just before their playoffs were set to begin this month. Major League Baseball delayed the start of its season and it’s not clear if any baseball will be played this year (though the league is batting around some wild ideas about having some kind of season in 2020). Even the Tokyo Summer Olympics were delayed until next year.

But unlike the other major U.S. professional leagues, which are made up of individual businesses that can rely on other revenue streams like merchandising and lucrative TV contracts, the UFC’s revenue is primarily based on it staging fights. And it has the double-whammy of being the main driver of its owners’ live events business. Endeavor, is also more than $4 billion in debt, which was seen by industry insiders as one of the key reasons it went ahead with its now-aborted IPO last year.

The UFC signed a $1.5 billion deal with ESPN in 2018 that made ESPN and ESPN+ the sole TV home for its fights. Last year, it added the Disney-owned sports network as the sole provider of its pay-per-view fights. In 2020, the UFC is on the hook for 42 fights for ESPN — 30 to air on ESPN or ESPN+ and 12 for ESPN+ to sell via pay-per-view, including next week’s now-canceled UFC 249. It has held seven of those events so far.

While ESPN is still obligated to pay the UFC for the media rights contract — much like ESPN still has to pay the NBA and MLB despite the lack of games — the UFC would not get the extra revenue from those pay-per-view fights.

The April 18 event was set to be staged at the Tachi Palace Resort and Casino in Lemoore, California. The resort is owned by the Santa Rosa Indian Community of the Santa Rosa Rancheria. Since it operates on tribal grounds, it exists outside the California State Athletic Commission (CSAC), and therefore is not subject to the state’s mandatory “shelter-at-home” order nor has to be certified by the CSAC.

“While the organization was fully prepared to proceed with UFC 249, ESPN has requested the postponement of the event and subsequent bouts until further notice in light of the COVID-19 pandemic,” the UFC said on Thursday. “UFC looks forward to resuming the full live events schedule as soon as possible.”

White’s backup plan? Securing a private island to hold fights. “We will be the first sport back,” White said on Thursday. “Fight Island is real. It’s a real thing. The infrastructure is being built right now.”

Tim Baysinger

Tim Baysinger

TV Reporter • tim.baysinger@thewrap.com • Twitter: @tim_bays



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