The UFC was recently purchased in a deal that valued the promotion at $4 billion dollars. That’s good news for the publicly traded WWE, one analyst says, but the sports entertainment brand can’t touch Dana White’s real fight game financially.
Wells Fargo believes WWE could now have an equity valuation of $36-$44 per share — essentially 80-120 percent above Monday’s actual stock price. Analysts there previously saw a bull scenario that would have valued the Vince McMahon-owned promotion at $37-$52 per share, if everything worked out in its favor.
In reality, WWE stock closed Monday at $20.46 per share, up about 5 percent for the day.
“Although we view this as an interesting exercise in determining the potential value of WWE — in our opinion, Chairman Vince McMahon is NOT selling the company anytime soon,” Wells Fargo wrote in a Monday post. “But with positive Network sub trends, a clean balance sheet, new TV rights deals just 2-3 years out, and now a clear sign of demand for somewhat similar content, we are raising our valuation range to $23-25 from $20-22.”
The analysts continued: “It’s important to point out that there were several bidders for the UFC, with reports that this included the Dalian Wanda Group and China Media Capital. The point here is that content in the realm of sports has substantial value due to its live viewership — and WWE’s weekly shows are predominantly viewed live.”
WWE’s “Smackdown” is switching from pre-taped to live on July 19.
Prior to the WME-led deal, the Ultimate Fighting Championship was part of private company Zuffa, LLC — so coming across accurate financials has proven to be a bit of a task. Wells Fargo used credit agency filing and public statements by Chairman Lorenzo Fertitta to help its cause. Analysts then applied their findings and Earnings Before Interest, Taxes, Depreciation and Amortization — commonly called EBITDA — margins to WWE estimates for 2017.
The 90 percent stake in the UFC was purchased by a consortium of private equity buyers led by WME-IMG, and includes Silver Lake Partners, KKR and MSD Capital.