Back in early September, the Ultimate Fighting Championship (UFC) announced it had been named the official high performance advisor of the Chinese Olympic Committee (COC). The mixed martial arts organization said in a statement that it will “provide [Chinese athletes with] a variety of high performance physical and rehabilitation services” at the UFC Performance Institute in Shanghai, in preparation for the next two Olympic Games (’21 Tokyo, ’22 Beijing). Financial terms of the deal were not disclosed (a fee agreement is known to exist). While UFC chief operating officer Lawrence Epstein said that high performance training and rehabilitation services are “not a huge part of [company] revenues, percentage wise, right now,” the company sees “a big opportunity, from a financial standpoint,” in the business moving forward.
Our Take: The UFC initially invested in the construction of the Las Vegas-based Performance Institute—its first foray into elite performance training—in the interest of putting on the best fight cards possible. Epstein said the promotion “wanted to provide [its athletes] with a resource where they could train better, increase their performance and ultimately prevent injuries from taking place. And if [a fighter] did become injured, [where they could receive] world class physical therapy and training—not just so they could come back quicker, but more complete from a health standpoint.” The UFC also wanted to ensure fighters had a facility where they could cut weight in a scientific and safe manner.
An inquiry from the COC about “having some athletes train [at the UFC Performance Institute in Las Vegas]—specifically their rowing team”—sparked the business relationship between the UFC and the Chinese Olympic sports organization, Epstein said. Initially, the COC sent 25 athletes to Nevada to train with the MMA outfit’s sports performance and nutrition teams in preparation for ’20 Games (which have since been pushed to ’21). Epstein called the collaboration “really successful from both their standpoint and ours.” The newly signed multi-year deal indicates that was the case.
For the UFC, the relationship with the COC represents proof of concept for its sports performance business (it also fueled the decision to open a Performance Institute in Shanghai). “It validates we can build these types of facilities and train athletes in a way that produces great improvements,” Kevin Chang (SVP, Asia-Pacific) said. By “these types,” Chang means the best sports training facilities in the world from a health, science and technology standpoint. If the facilities can earn that reputation, “there is a big opportunity to grow the [elite performance training] business in partnership with a variety of other sports federations or leagues” (and presumably generate meaningful revenue). Until COVID hit, the Las Vegas Performance Institute was the official athletic training, physical therapy and nutrition facility of the WNBA’s Las Vegas Aces. A host of NBA, NFL and NHL players have also made the facility their offseason home.
Epstein was hesitant to suggest just how much upside is in the UFC’s Performance Institute business, but cited EXOS (an elite training facility in Phoenix) as a successful competitor one could use as a benchmark for potential. According to Men’s Journal, the “world’s most elite training operation” was on track to generate $140 million in revenue in 2015. For perspective, the UFC did +/- $900 million in 2019. In other words, while high performance training and recovery may never replace content development and distribution as the UFC’s primary driver of revenue, it could provide meaningful revenue growth—particularly if the company continues to add locations. Chang called the UFC Performance Institute in Shanghai (which cost $13 million to build) “a great litmus test for how we can approach other [markets].”
The UFC’s partnership with the COC (and by proxy the Chinese government) should also open up some revenue opportunities for the UFC beyond the high performance training business. Chang explained the “awareness and brand value” gained via association will give the company “the opportunity to partner with a broader range of everything from broadcasters to sponsors.” Of course, as Chinese athletes training at the facility enjoy success within the promotion, local interest—and thus revenues—should climb.