If you’re not familiar with mixed martial arts, it’s one, if not the, fastest growing sports in the world. Mixed martial arts (MMA) is a combat sport encompassing a combination of wrestling, boxing, kickboxing, karate, jiu-jitsu, judo, muay thai, as well as other striking and grappling styles.
The Ultimate Fighting Championship (UFC) is akin to the National Football League (NFL) of MMA. The parent company of the UFC is Zuffa, LLC, which is associated with Station Casinos. Zuffa owns the UFC as well as recently acquired Strikeforce (Strikeforce was the 2nd largest promotion for MMA prior to its acquisition.).
As an investor I am very interested in investing in the UFC, other MMA companies and companies that are heavily associated with the sport. The problem lies in the fact that you have an industry that has almost no public exposure. All major companies are privately held.
The MMA companies that are public are nano-cap stocks. They trade for fractions of a cent and are in a class that I would call hyper-speculative. The companies are very small promotions, defunct promotions or dietary pill providers. They’re the types of investments that don’t get me very excited. (Look at AVEW.PK, MSLP.OB, PELE.PK, SUFF.PK…as you will see these are all VERY thinly traded.)
I highly doubt a Zuffa/UFC initial public offering (IPO) is in the works or will be in the next few years. I thought the impetus for an IPO might come through the desire to acquire Strikeforce and thus position the UFC as the unquestionably dominant promotion within the MMA realm. The UFC was able to acquire Strikeforce a few weeks ago without having to turn to an IPO for funding. That hope is out the window.
IPOs are used to gain additional funding/capital. What future event will cause the UFC to need to issue an IPO? I see no clear answer. A push to expand internationally will require more capital for the UFC, but I do not think the environment calls for a rush in their expansion. They are the big fish in their pond, such as the NFL is the big fish in the football pond.
So how do you invest in a fast, but steady, growing industry throughout the world? That is the million dollar question at this point. The main promotion benefiting from the growth is private. My next research venture is going to be directed at the companies affiliated with promotion of MMA products.
I’ll let you know what I discover.