Best nine months ever – Is UFC on track to make $1 billion in 2021?

UFC is insanely lucrative. Can they breach $1 billion dollars in revenue for 2021?

UFC keeps breaking their financial records. Even after huge 2019 and 2020 numbers, 2021 could be an even bigger success for the mixed martial arts leader.

After having the “biggest first half ever” this year, the third quarter numbers continued that trend and the UFC is now said to have the “best nine-month year-to-date period” in company history.

“We once again surpassed our quarterly revenue and adjusted EBITDA targets,” Endeavor CEO Ari Emanuel boasted about their financials during their Q3 Earnings Call.

“UFC posted its best nine-month year-to-date period in the 28-year history in terms of revenue and adjusted EBITDA, and this despite lower event output in the third quarter versus third quarter 2020.”

The noted difference in third quarter revenue for 2020 and 2021 was due to a one-time 25 million contract termination fee with Aurora Cannabis recognized last year. More events were also held in the third quarter of 2020 as a result of the cancelled events due to COVID-19 being moved to that period.

Where are those lucrative 2021 figures coming from? UFC 264, which had Dustin Poirier vs Conor McGregor 3, was a huge success, while ticket sales and PPV revenue from bars and restaurants are also back, but Endeavor officials attributed their growth to a big increase in sponsorship revenue and international media rights.

“UFC 264 became the third highest grossing event in UFC history,” Emanuel said. “Commercial Pay-Per-View saw the highest worldwide grossing revenue quarter since the pandemic began, driven in large part by the many U.S. restaurants and bars starting to open in full capacity.

“UFC’s sponsorship revenue is up 59% compared to third quarter 2019, the last [ph] non-COVID impacted here,” Emanuel noted.

“We’ve closed nine new deals throughout Asia Pacific during the period. If you combine these nine with the prior five international rights deals we discussed last quarter, the aggregate average annual value is of more than 80% over the prior deals.”

According to Endeavor CFO Jason Lublin, they have signed “several” new licensing and multi-year sponsorship contracts, including deals with companies such as Icon Meals, Battle Motors and ZipRecruiter.

In addition to the UFC’s impressive the revenues, they also increased their debt. According to their 10-Q filing with the SEC, as of September 30, 2021 they had an aggregate debt of $2.2 billion on first term loans. A further $600 million was added to this on October 27, with the money borrowed being disturbed to Endeavor.

The interest on this now $2.8 billion in first term loans should cost the UFC approximately $98 million a year, based on their terms using the current LIBOR (London Inter-Bank Offered Rate). In addition, the term loan includes a 1% principal amortization, which add $28 million over the next 12 months to their debt service.

As they mentioned, the last nine months have been a pretty huge success for the UFC. Endeavor’s Owned Sports Properties, which is driven mainly by the UFC, impressively had $288 million in revenue in the third quarter, putting their total for the year at around $830.9 million already. Meanwhile their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) will be $412.5 million, a margin of 49.6%.

Endeavor’s Owned Sports Properties had $147 million more in revenue in the first 9 months of 2021 than they had in the first 9 months of 2020. Their EBITDA also increased by $78 million over last year. This continues the trend of seeing this segment having a higher EBITDA margin on new revenues.

In 2019, their revenues increased $163 million from the previous year, with 90% of this new revenue going to EBITDA. In 2020, revenues increased by $17 million but Owned Sports Properties EBITDA grew by $40 million, a 235% margin. For the first 9 months of this year, their EBITDA margins on increased revenues has been 53%.

If UFC still makes up around 90% of those Owned Sports Properties like it’s been for recent years, they could be looking at around $750 million in revenue and $370 million in EBITDA for the first three quarters of 2021 alone.

To put things in context, even with one quarter to go, that would be equal or bigger than the revenue totals of every year except 2019 and 2020, which reportedly had $860 million and $890 million, respectively.

As Q4 for 2021 is likely to be bigger than in 2020, they’re expected to exceed those two totals and set a new record for the company. If things go as planned, it seems like a very strong possibility that the UFC actually reaches that 1 billion dollar mark.