Ultimate Fighting Championship is draining its cash reserves to fund big payouts to celebrity investors — even as its fighters gripe that they are vastly underpaid, The Post has learned.
The mixed martial arts giant has approved a massive $300 million dividend to UFC’s investors — a star-studded list that includes Mark Wahlberg, Charlize Theron, Gisele Bündchen, Ben Affleck and tennis stars Serena and Venus Williams, sources said.
Roughly half of the $300 million will go to Endeavor, the entertainment holding company run by Hollywood superagent Ari Emanuel, which bought a 50 percent stake in UFC in 2016 for $4 billion. Endeavor also owns Hollywood talent agency WME, fashion and sports media agency IMG and the Miss Universe Pageant.
Wahlberg, the Hollywood producer behind “Entourage” and “Boardwalk Empire,” is slated to nab a roughly half-million dividend, sources said, while Brazilian model Bündchen — wife of Patriots quarterback Tom Brady — is on track to get $145,000.
Other beneficiaries include UFC President Dana White, Endeavor CEO Emanuel — the inspiration for the Ari Gold character in HBO’s “Entourage” — and Endeavor Executive Chairman Patrick Whitesell, ex-husband of Jeff Bezos gal pal Lauren Sanchez.
They’re slated to pocket more than $3 million each, sources said.
UFC private equity backers KKR and Silverlake, which own a 42 percent stake in Endeavor, will also cash in, sources said.
The $300 million in payments marks the first time UFC has issued a dividend payment since Endeavor bought a 50 percent stake in 2016, sources said. And its sheer size has jaws agape.
“Most of the time when you do a dividend, you don’t distribute your entire balance sheet,” said a financial source. “If you were going to dividend out 10 percent of your cash, that would be an ordinary course. If you were going to dividend 90 percent of your cash, that’s not.”
Fight for higher pay
The payments will leave UFC with just $50 million as it faces new MMA rivals and allegations by fighters that they’re underpaid compared to athletes of other major sports teams.
Sources tell The Post UFC’s fighters cost the Las Vegas promotions company less than $150 million last year — or under 16 percent of its $900 million in revenue. By contrast, Major League Baseball, the National Basketball Association and the National Football League all share between 48 percent and 50 percent of revenues with their players, data shows.
“It’s different league by league,” Endeavor President Mark Shapiro said. “We pay our fighters significantly more than any other MMA organization. They deserve it. Fighter compensation has gone up commensurately with the success of UFC.”
While UFC fighters might be more appropriately compared to boxers, who get paid per bout, they have argued in legal papers that they’re often prohibited from negotiating for more money because UFC dominates its sport— and uses that leverage to keep wages down.
In 2014, a group of UFC fighters, including Cung Le, Jon Fitch and Kyle Kingsbury, sued UFC’s then-parent company, Zuffa LLC, claiming it engaged in anti-competitive practices intended to drive down their compensation costs, including forcing fighters into long-term contracts that prevent them from fighting elsewhere, and “using its market dominance to coerce fighters to re-sign contracts.”
The case has been slowly winding its way through a Las Vegas federal court, where a judge is weighing whether to grant it class-action status. If that happens, UFC could be on the hook for over $1 billion in damages to over 1,200 fighters who risked getting their faces bashed in on a regular basis, including Conor McGregor and Ronda Rousey. Both McGregor and Rousey were UFC fighters between the class period of 2010 through 2017, lawyers for the plaintiffs have said.
Endeavor IPO flop
The $300 million dividend follows Endeavor’s failed effort to raise $600 million through an initial public offering last fall. Endeavor’s Shapiro denies that the payment has anything to do with the flopped IPO, calling it the “normal court of business” after an “incredible year” at UFC.
But sources tell The Post the dividend is directly tied to Endeavor having yanked its IPO last September amid weak demand that was first reported by The Post.
“Because an idea did not work, the UFC is now going to be the next source of cash until Endeavor goes back out again to try to go public,” said a source close to Endeavor. “It’s now draining the UFC in order to prop up the rest of the company.”
The company has a $4.6 billion debt load and, as The Post reported in December, it faces a horde of dispirited WME talent agents who were counting on the IPO to cash in on stock options they’ve been accepting in exchange for smaller bonuses. Agents have been demanding they be made whole, and Endeavor has been searching for ways to compensate them at least in part before April, as The Post has reported.
Shapiro on Thursday confirmed that Endeavor will use some of its UFC money for a stock buyback program, but said the dividend issuance is “not directly linked to liquidating employees.”
Endeavor also plans to use the money for acquisitions, Shapiro said without providing specifics.
Rivals on horizon
UFC has proven a bright spot in Endeavor’s portfolio with cash flow of more than $200 million a year, sources said. Still, it will take the lucrative fighting club a good year to rebuild its coffers — hindering its ability to expand even as the competition ramps up, sources said.
Rival Bellator, which is owned by ViacomCBS, is seeking to expand in the US, as is The One, a Singapore-based league backed by Sequoia Capital that is valued at more than $1 billion due in part to its aggressive footprint in Asia.
Experts say UFC could give up ground if it can’t continue to invest heavily in Asia, make meaningful acquisitions or expand into other areas, like boxing.
But Shapiro tells The Post that there are no plans to move into boxing — and he nixed recent reports that Endeavor might spin off UFC or sell shares of the MMA organization to the public through an initial stock offering.
“We never had any plans to go public. The UFC is a major and valuable interest in Endeavor. It is not in our interest to spin it off or IPO,” he said.
That jibes with what sources have told The Post — namely, that Emanuel doesn’t want to lose his cash-cow UFC business to an IPO or spinoff.
“Ari is adamantly against UFC going public. Endeavor wouldn’t be worth as much,” the source said before adding that they also “don’t want the fighters to know exactly how profitable the UFC is.”