I have been reading multiple articles on the UFC sale and wanted to share my thoughts on it with the UG. I am a corporate / real estate attorney and handle business and asset sales on a regular basis (but in the millions of dollars, not billions).
These are my own thoughts and opinions on the purported sale (don't take anything here as fact):
1. The UFC hasn't "sold" yet. From all appearances, Zuffa, LLC (the entity behind UFC) has confidentially put out an RFP, or a "Request for Proposal". This invites interested parties to submit offers to Zuffa for a buyout. Often, the interested seller will draft a form contract, send it to interested parties, and see what revisions the parties make in order to compare the offers. It's being reported the "bidding period" ends today, which likely means Zuffa will evaluate offers received to date, and "award" the sale to one of the parties.
2. The UFC isn't even under contract to be sold yet. It takes some time after a bidding period ends to get a fully-executed purchase agreement. Could be a few business days, could be weeks. No one knows. What I can tell you is that it's rare to see a deal closed immediately after a bidding period ends. Add to this the fact that you've got Fox and Reebok involved (and believe me, they all are very aware of this pending sale), which entities may have limited approval rights, and the time period could be longer.
3. Even after the UFC is under contract to be sold, it will take time. Just because you have a signed purchase agreement doesn't mean the deal is closed and done. There are often (in my experience, almost always) due diligence periods in favor of the purchaser during which the purchaser does its homework on Zuffa's corporate assets, contracts, leases, etc. During a due diligence period, the purchaser usually has the ability to terminate the contract and recoup some or all of its previously-made deposits.
4. It may be UFC assets being sold, or it may be Zuffa, LLC. Businesses are sold one of two ways. First, there's an asset sale. Zuffa would essentially sell the buyer all of its physical and intangible assets which are in any way related to the UFC, including an assignment of pertinent contracts and leases. The other way would be for the Fertitas, White, and the Abu Dhabi group to sell their membership interest in Zuffa, LLC. In this latter method, Zuffa, LLC would remain "owner" of the UFC assets, but the ownership interests in Zuffa, LLC would change hands. This really doesn't matter from the fans' standpoint, and has more to do with tax / legal implications.
5. After the sale is done, most executives will probably stay on for some time. It's rare for a sale to close and for there to be an immediate change in management. In fact, most purchase contracts contemplate a transition period whereby the seller agrees to assign certain executives' contracts to the buyer in order to help "transition" the buyer into running the business. There is often a sunset period on the executives' tenure, after which the buyer and executives could part ways or negotiate continued service.
6. Big, upcoming PPV events do not determine whether the UFC will be sold, just the price. I've seen many posters saying "there's no way the UFC sells before UFC [insert # here]. Those posters are wrong. Upcoming PPVs merely affect revenue / profit projections and overall valuation. A sophisticated buyer (and all potential buyers of the UFC will be sophisticated) will project net revenue, apply a time value of money discount, and offer a buyout price accordingly.
7. The Culinary Union will try to stop / derail the deal. We all know it. The CU doesn't want to see the Fertitas succeed anywhere, anytime. Expect some type of attempt (through publicity or otherwise) by the CU to: (i) lobby federal regulators to scrutinize the sale; (ii) indirectly put out bad publicity; and/or (iii) do anything else in its power to potentially devalue the UFC brand. If this happens and it actually affects a potential sale, I wouldn't be surprised to see Zuffa institute legal action against the CU for tortious interference. We all know that Zuffa is in ongoing litigation related to the prior class actions (which many suspect were motivated/cooredinated by the CU), and that absolutely has had an impact on any pricepoint. I also suspect the CU has been lobbying in favor of the Ali Act expansion into MMA, which would likely have a material and adverse impact on Zuffa from a purely economic standpoint.
8. The fighters may or may not be adversely affected. Obviously the fighters will be under new ownership, but if the management doesn't change immediately, there may not be any palpable change from a fighter's perspective. UFC will likely conduct "business as usual" for some time. Where we will really start to see new ownership play a role is in contract negotiations, whether it's with the fighters, television networks, or apparel / product sponsors. I suspect, but do not know, that if the UFC sells one of the first areas we will have visible change is in endorsements, etc. Time will tell.
Those are my thoughts for now. I'm happy to field any questions you guys throw my way.
-gatorlaw
