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Today’s gem is this chart which shows the UFC’s uses of capital from 2005 to 2016 (note the $1.239bn in total shareholder distributions):
The Fertitta brothers acquired the UFC for $2m in 2001, and installed Dana White as CEO, granting him a 10% equity stake. From 2001 to 2005 the brothers invested an additional $36.4m into the business.
Between 2005 and 2010, the Fertitta brothers took home over $775m in distributions, generating a 21x multiple on their invested capital (MOIC). By 2016, their total distributions amounted to $1.07bn (28x MOIC). The source of capital is as follows:
Then, in 2016, the brothers sold the UFC to WWE which netted them an additional ~$3bn. This would mean that, within ~15 years the UFC generated a ~107x MOIC for the Fertitta brothers. What an investment!
Though I am not a huge fan of the UFC, I like this case study because of the substantial amount of investment return generated from the cash flows of the business. The UFC generated $1.25bn EBITDA between 2005 and 2016, which supported the massive dividends. A rare example of a business that returned a substantial amount of cash flow back to shareholders, while still growing astronmically.
The source of the chart and numbers can be found here.
