The Heat and the Shine

UFC is expected to set a company record for single-night revenue on November 12, 2016.  That is the night that Conor McGregor chases the UFC Lightweight (155 lb.) Championship at UFC 205 in New York City. In digesting the previous paragraph, three things stand out.  One: UFC's business model is largely based around massive revenue intakes for single-night events.  Two: With rare exceptions, there is little to distinguish one UFC pay-per-view from the other.  A new number pops up every month or so, some fights happen, and the company moves on to the next one.  Three: A man who has never competed as a UFC Lightweight is about to challenge for the UFC Lightweight Championship. Maybe there should be a fourth: UFC fans love it.  UFC is having no trouble making money right now.  Their business model works. Does it work well enough, though? UFC's new owners, WME-IMG, used a very large loan to purchase UFC: $1.8 billion, to be exact.  The new owners are going to have to increa

UFC made headlines in the financial news world yesterday, and not in a good way.  Bloomberg reported that the United States Federal Reserve admonished Goldman Sachs over WME-IMG's purchase of UFC. The story was circulated by the usual cadre of anti-UFC folks in the MMA world, but that doesn't mean that it's benign. Let's go through exactly how the UFC sale went down and what the Fed was complaining about. Some time ago, UFC's former owners, Zuffa, LLC (led by the Fertitta brothers) approached Goldman Sachs about brokering a sale. Approaching a bank about brokering a sale is standard operating procedure when the seller wants to go on the open market in order to attract debt-driven buyers.  The idea is that Zuffa didn't want to limit themselves to selling to only people/companies who have billions of dollars of cash on hand.  Zuffa wanted to be able to sell to people/companies to are willing to take on billions of dollars in debt, and then pay Zuffa with

That UFC 205: McGREGOR vs. ALVAREZ would be a hot ticket is no surprise.  It is the first mixed martial arts event in New York since UFC exploded in popularity a decade ago, and it features Conor McGregor, UFC's top box office attraction.  An attempt at a box office record -- beating the $12 million in tickets sold at Toronto's SkyDome in 2011 -- was expected by Dave Meltzer of the Wrestling Observer, a close watcher of UFC's business since the promotion's inception. Still, the box office level that UFC management has Madison Square Garden scaled for is eye-popping: $18 million.  In an arena with under 18,000 available seats*, the math is simple: UFC is hoping for an average ticket above $1,000. Standard UFC 205 tickets sold through Ticketmaster were at seven standard price levels: $106, $256, $456, $606, $806, $1,006 and $1,506.  As of the time of publication of this article, standard price levels below $1,506 are all unavailable on Ticketmaster. Once UFC 205 ti