As had been rumored for months, on Monday, official news finally came that the UFC had been sold. The final number of that sale came in at $4 billion for the world’s biggest mixed martial arts promotion. Yes, that’s “billion.” With a “B.” The valuation of UFC prior to the sale had been right around $3.5 billion. The consortium of companies that ponied up the money clearly believed it was worth more … and will be worth even more in the future.
All of this is tremendous news for WWE, which is the other major global name in fight sports, regardless of your personal thoughts on its product. In a blog post on Monday, Wells Fargo analyst Eric Katz picked WWE stock to outperform its current trading rate. As a result, WWE stock saw a healthy bump during the day’s trading. But that isn’t the whole story. Katz wrote the following, as relayed by Benzinga and several other sites:
“Although we view this as an interesting exercise in determining the potential value of WWE — in our opinion, Chairman Vince McMahon is NOT selling the company anytime soon. But with positive Network sub trends, a clean balance sheet, new TV rights deals just 2-3 years out, and now a clear sign of demand for somewhat similar content, we are raising our valuation range to $23-25 from $20-22.
“WWE also happens to be one of the more controversial stocks in the media space in our view, as it decided to blow up its successful PPV business model and become the first content company to launch an OTT streaming service [WWE Network]…there were two big milestones that missed investor expectations causing the stock to drop by more than half since the launch.”
Katz was very adamant in stressing that investors continue to undervalue the company’s worth and its stock by huge amounts, which hardcore wrestling fans (and the top execs in WWE, certainly) can probably tell you. Katz believes that if the WWE Network can continue to gain subscribers at its current rate and get up to about three or four million monthly subscriptions, WWE could be worth up to $3.4 billion if it were to sell.
Of course, while Vince McMahon and the rest of the WWE higher-ups love being worth a whole lot of money, they are one of the few company owners in the world that you wouldn’t expect to sell the company, now or ever. They love being worth a lot of money being the best company in the world to put out wrestling — or sports entertainment, if you prefer. I would imagine McMahon, Triple H, et al love being worth that much money on paper … and continuing to own the company and keep making it more and more valuable, rather than selling to the highest bidder.
(Via The Wrap)