UFC’s celebrity investors have a chokehold on $300M dividend

Best Combating Championship is draining its money reserves to fund large payouts to celebrity investors — even as its fighters gripe that they are vastly underpaid, The Write-up has figured out.

The combined martial arts large has accredited a large $300 million dividend to UFC’s buyers — a star-studded listing that consists of Mark Wahlberg, Charlize Theron, Gisele Bündchen, Ben Affleck and tennis stars Serena and Venus Williams, sources reported.

About 50 percent of the $300 million will go to Endeavor, the leisure keeping enterprise run by Hollywood superagent Ari Emanuel, which acquired a 50 % stake in UFC in 2016 for $4 billion. Endeavor also owns Hollywood talent company WME, style and sports activities media company IMG and the Miss out on Universe Pageant.

Wahlberg, the Hollywood producer behind “Entourage” and “Boardwalk Empire,” is slated to nab a roughly half-million dividend, sources mentioned, whilst Brazilian model Bündchen — wife of Patriots quarterback Tom Brady — is on observe to get $145,000.

Other beneficiaries incorporate UFC President Dana White, Endeavor CEO Emanuel — the inspiration for the Ari Gold character in HBO’s “Entourage” — and Endeavor Government Chairman Patrick Whitesell, ex-husband of Jeff Bezos gal pal Lauren Sanchez.

They’re slated to pocket much more than $3 million each and every, resources said.

UFC private equity backers KKR and Silverlake, which have a 42 p.c stake in Endeavor, will also money in, sources claimed.

The $300 million in payments marks the 1st time UFC has issued a dividend payment because Endeavor purchased a 50 p.c stake in 2016, resources stated. And its sheer measurement has jaws agape.

“Most of the time when you do a dividend, you really do not distribute your complete harmony sheet,” said a money resource. “If you had been likely to dividend out 10 % of your hard cash, that would be an regular study course. If you had been heading to dividend 90 percent of your money, which is not.”

Battle for increased shell out

The payments will depart UFC with just $50 million as it faces new MMA rivals and allegations by fighters that they are underpaid when compared to athletes of other major sports activities groups.

Resources inform The Submit UFC’s fighters charge the Las Vegas promotions corporation less than $150 million last yr — or below 16 p.c of its $900 million in income. By distinction, Big League Baseball, the Countrywide Basketball Affiliation and the National Football League all share concerning 48 per cent and 50 per cent of revenues with their players, info reveals.

“It’s diverse league by league,” Endeavor President Mark Shapiro reported. “We spend our fighters substantially far more than any other MMA firm. They have earned it. Fighter compensation has gone up commensurately with the achievement of UFC.”

Though UFC fighters could possibly be more appropriately compared to boxers, who get paid out per bout, they have argued in legal papers that they are normally prohibited from negotiating for additional funds since UFC dominates its sport— and takes advantage of that leverage to retain wages down.

In 2014, a group of UFC fighters, like Cung Le, Jon Fitch and Kyle Kingsbury, sued UFC’s then-mother or father organization, Zuffa LLC, claiming it engaged in anti-competitive practices supposed to push down their payment charges, together with forcing fighters into extended-term contracts that prevent them from preventing in other places, and “using its sector dominance to coerce fighters to re-indicator contracts.”

The circumstance has been slowly winding its way through a Las Vegas federal court, where a choose is weighing whether to grant it course-action standing. If that transpires, UFC could be on the hook for around $1 billion in damages to around 1,200 fighters who risked obtaining their faces bashed in on a normal basis, such as Conor McGregor and Ronda Rousey. The two McGregor and Rousey have been UFC fighters in between the course interval of 2010 by 2017, legal professionals for the plaintiffs have mentioned.

Endeavor IPO flop

The $300 million dividend follows Endeavor’s unsuccessful effort and hard work to raise $600 million by an original general public presenting past tumble. Endeavor’s Shapiro denies that the payment has just about anything to do with the flopped IPO, contacting it the “normal court docket of business” after an “incredible year” at UFC.

But resources convey to The Article the dividend is immediately tied to Endeavor owning yanked its IPO very last September amid weak desire that was first reported by The Write-up.

“Because an thought did not operate, the UFC is now going to be the subsequent supply of hard cash till Endeavor goes back out all over again to try to go public,” explained a source shut to Endeavor. “It’s now draining the UFC in purchase to prop up the relaxation of the enterprise.”

The business has a $4.6 billion personal debt load and, as The Put up noted in December, it faces a horde of dispirited WME expertise brokers who were counting on the IPO to hard cash in on inventory selections they’ve been accepting in trade for scaled-down bonuses. Brokers have been demanding they be created whole, and Endeavor has been seeking for approaches to compensate them at minimum in part ahead of April, as The Put up has reported.

Shapiro on Thursday confirmed that Endeavor will use some of its UFC dollars for a stock buyback application, but claimed the dividend issuance is “not straight linked to liquidating personnel.”

Endeavor also plans to use the funds for acquisitions, Shapiro explained devoid of giving specifics.

Rivals on horizon

UFC has verified a dazzling spot in Endeavor’s portfolio with hard cash stream of far more than $200 million a yr, resources reported. Even now, it will take the worthwhile battling club a good year to rebuild its coffers — hindering its potential to broaden even as the competitiveness ramps up, sources mentioned.

Rival Bellator, which is owned by ViacomCBS, is in search of to extend in the US, as is The One particular, a Singapore-dependent league backed by Sequoia Funds that is valued at additional than $1 billion due in component to its aggressive footprint in Asia.

Industry experts say UFC could give up ground if it just can’t continue on to make investments intensely in Asia, make meaningful acquisitions or extend into other areas, like boxing.

But Shapiro tells The Post that there are no designs to go into boxing — and he nixed recent studies that Endeavor may possibly spin off UFC or promote shares of the MMA group to the public by means of an initial stock featuring.

“We under no circumstances had any strategies to go community. The UFC is a major and useful fascination in Endeavor. It is not in our curiosity to spin it off or IPO,” he claimed.

That jibes with what resources have advised The Put up — namely, that Emanuel does not want to shed his dollars-cow UFC small business to an IPO or spinoff.

“Ari is adamantly towards UFC likely general public. Endeavor wouldn’t be worthy of as much,” the resource said in advance of introducing that they also “don’t want the fighters to know just how financially rewarding the UFC is.”