Bloomberg on Saudi stake in UFC parent company

Monday, March 19, 2018

The UFC began as a vehicle to prove that Jiu-Jitsu works, and that asses in seats would enjoy watching the process. Now it’s playing a role in helping to rebuild one of the world’s richest economies.

In 2010 Abu Dhabi’s Sheikh Tahnoon bin Zayed bought a 10% stake in the UFC for $200 million, giving it, of course, a $2 billion valuation. Many people thought that was nuts, but in 2016 the company sold to the Hollywood talent and event management agency WME-IMG (now Endeavor) for $4 billion, the largest sale of a sports property in history. Many people thought that was nuts but now Saudi Arabia’s Crown Prince Mohamed bin Salman (known as MBS) has directed the nation’s sovereign wealth fund to take a $400 million stake in Endeavor for a reported 7% of the company, or perhaps a little less. That would indicate a valuation of about $6 billion.

The move is part of the crown prince’s breathtakingly audacious plan to diversify and modernize Saudi Arabia’s economy. Erik Schatzker, Lucas Shaw, Matthew Martin have the story for Bloomberg.

The purchase is the latest in a series of deals by the Public Investment Fund and is scheduled to close as soon as March 19, a day before bin Salman and U.S. President Donald Trump meet at the White House. Then in early April, the crown prince will be the guest of honor at a Los Angeles dinner hosted by Endeavor Chief Executive Officer Ari Emanuel.

Endeavor could play a key role as Saudi Arabia rebuilds industries that have withered since movie theaters and other forms of cultural expression were banned more than 35 years ago. One proposal under discussion would have the company work with Saudi Arabia’s General Sports Authority and General Entertainment Authority on projects that range from staging events to training athletes.

Entertainment is one of the sectors MBS has made a priority as part of Vision 2030, his plan to wean the kingdom off its dependency on oil while, at the same time, relaxing some of the social restrictions that made it one of the world’s most conservative countries. In January, for the first time in decades, movies were screened in public theaters, with “The Emoji Movie” and “Captain Underpants: The First Epic Movie” playing in Jeddah.

The crown prince has been using investments by the PIF to build relationships with other companies he hopes will play a role in that economic and social transformation, including SoftBank Group Corp. and Blackstone Group LP.

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