The UFC went public, what does that mean?

The UFC went public, what does that mean?

"It's official. The UFC is now a public company. #EndeavorIPO"— Dana White on Instagram

Hey everybody, Charlene here. Just a really quick introduction and then we'll get to the meat of this. By now if you're a loyal #phalanxfamily member you're familiar with the deep and transparent writings of our founder Chris. Those are still going to happen but he hired me to send out periodic intel on the industry. I'll be digging up interesting news events in the business of Jiu Jitsu and MMA, conducting interviews inside Phalanx HQ, highlighting our pro team victories, etc. My goal here is to send out intriguing and informative articles. I hope you like it and I'm very happy to be part of this team!

Okay so onto what I've discovered:

You can now officially become part-owner of the world’s biggest MMA organization. 

Yup, you read that right. You can own an (admittedly tiny) portion of the UFC if you so wish. The UFC is now open to retail investors. I know you're probably interested. I did my best to collect any relevant information regarding the matter, so you don't have to.

It's not just the UFC as a single company that went public, but the entirety of it's parent company, the Endeavor Group Holdings, Inc. Under the New York Stock Exchange, Endeavor received the ticker symbol EDR. If it were only up to UFC President Dana White himself, the MMA production probably would never. In fact, in an interview with 8 News Now's Chris Maathius, he mentioned that the idea of going public just doesn't appeal to him.

It seems like his opinion has changed since then, though. He seemed quite pleased when he took to Instagram to announce the UFC's public listing. White was present alongside Endeavor CEO Ari Emanuel and Executive Chairman Patrick Whitesell when trading began at the NYSE.

danawhite Verified It’s official the UFC is now a public company #EndeavorIPO

Endeavor may have debuted on the NYSE only last month, but this actually isn't the first time it tried to get into it. In 2019, it dipped its toes briefly in the stock market, which was performing notably weakly by then. Endeavor tried to spark interest by lowering stock prices from $31 to $27.50, but conditions just weren't favorable.

Uber and Lyft went public earlier in the year, and the outcome had been underwhelming, to say the least. Peloton Interactive, Inc debuted in the same week as Endeavor's attempt and saw a 10% slump in value right after. Thus, citing poor investor demand, Endeavor pulled out its IPO at the eleventh hour.

That may have been for the best, going by the positive trend in its stock value today. On its first day on the stock market alone, Endeavor has seen a 5% growth. The IPO was $24 per share with 21.3M shares of Class A common stock. It went from the initial value to a high of $28.47 and dipped down to $23.25 before finally closing the day at $25.20. By the end of the second day, it had nearly doubled its initial pre-IPO valuation of $10B, hitting a market cap of $18B by closing.

Endeavor is a risky investment.

"Who needs diversity when you have Daddy White and Papa Musk on your side?" Said one Reddit post, going exactly as Endeavor planned.

This is a controversial piece of opinion, but I'll say it anyway. The Holdings Group is recruiting business magnate Elon Musk into its ranks, not for his acumen. Instead, it's because Endeavor needs help getting investor attention. (Or at least, many seem to believe.) And if that really is the case, what better way is there to get attention than bringing a media magnet on board?

Just look at Dogecoin—Musk tweets about it once, and its value shoots to 22.59%.

Elon Musk tweets about dogecoin, and price immediately jumps

Photo by  thedial.co

Its subsidiaries may be well-known by people around the world, but Endeavor itself actually isn't a household name, and it knows that.

In other words, the IPO may have been massively successful, but don't get too excited. The consensus among financial analysts is that NYSE: EDR is a risky investment due to the volatility of its many businesses. This volatility is further compounded by the fact that the stability of any post-IPO stock is affected by increased trading from retail investors, so invest with caution.

(If you're looking for more specific information that will help you make an informed investment decision, you may find value in this article.)

Despite the warnings against its (allegedly not reassuring) portfolio, it's important to note that Endeavor has been able to keep business going despite the COVID-19 pandemic. The UFC, in particular, had done more than just scraping by to survive. The restrictions on entertainment and spectator events may have been harsh, but it definitely wasn't enough to put the stopper on the UFC. It shone all the way from 2020 into 2021 with consistent efforts to put on high-quality shows in the United States and Abu Dhabi.

What does this mean for combat sports?

To date, UFC officials have issued no statement about what the buyout and the IPO mean for the UFC. If the track record is anything to go by, though, then there may not be anything to worry about.

Endeavor bought the UFC from the Fertitta brothers for a remarkable $4B in 2016—a historical amount for sports league sales. Fans wondered about what this meant for the promotion, fearing that the change would drastically affect its productions. Dana White quelled those concerns by reassuring the public that things would continue as they had in the past.

Endeavor

 

White has been president of the UFC for 20 years and through several changes in ownership.  It's not unreasonable to assume that the promotion will continue to operate in the same manner as prior to the IPO. Sure, the company is now subject to external investors, but executives have no plans of giving up control anytime soon.

There are some speculations about how this recent development will affect the world of martial arts. As the biggest MMA promotion company across the globe, UFC holds a lot of sway over the industry. When they opened to the public, they streamlined the availability of funding they needed to promote more events.

However, the stock market is very liquid, and investors can enter and exit the investment whenever they wish. As a result, this change puts Endeavor (and UFC, consequently) under pressure to produce bigger, flashier events that will retain the appeal of investment to both current investors and attract new ones. It could mean more events or bigger productions. Perhaps it could even mean diversifying to style-specific events, BJJ included.

Honestly, the possibilities are endless. All we know for sure is that generally, as is the nature of public companies, they've got the funding, and they're under pressure to perform. It's not impossible for them to expand beyond MMA and dominate style-specific industries. Have they expressed any indication of interest in such? Well, not really. But you never really know what the future holds in store, so let's keep our fingers crossed for good things to come.

Thanks for reading. I look forward to providing you with more insights!

~Charlene
Phalanx Team