By Simon Calton, CEO of the Carlton James Group
If I’d known when I’d started my career in finance and investing over 15 years ago that I’d be sitting here opining on the opportunity to invest in the sport of two grownups beating the living daylights out of each other, I’d have called you crazy.
Martial Arts has been a part of my life since I was little boy and for the last 13 years Brazilian Jiu Jitsu and Mixed Martial Arts has been at the forefront. But this has always been a distraction from a busy working life and I definitely didn’t see these two worlds coming together.
But here we are. In a world of rising inflation, lowering interest rates, global equities hinging on a government leader’s tweets, and constant uncertainty stemming from trade wars – investing in alternative asset classes is a must for any investor, retail or institutional.
Up is down, down is up, and the strategies your parents and grandparents deployed for the past century need to be reconsidered and sometimes cast aside.
For some of us, this means the consideration of Mixed Martial Arts as an attractive and very investable asset class.
Popularity of MMA
The sport of Mixed Martial Arts (MMA) has skyrocketed over the past decade – whilst originally perceived as organised brawls, MMA is now one of the fastest growing sport world-wide, gaining notoriety through event organisation such as One Championship, Bellator and of course, the renowned Ultimate Fighting Championship (UFC).
The sport’s popularity has soared beyond expectations and with the MMA world making headlines daily, this is an industry which as a product, has a centre of interest beyond the realms of merely the sport itself.
The equality within the sport is another quite unique aspect, with the women’s divisions growing at a fierce rate and headlining Pay Per View (PPV) cards.
Why You Should Invest
Its continued growth lies in part with the popularity of the UFC and its first mainstream programme – ‘The Ultimate Fighter’. In just a decade the sport has grown to ascertaining more PPV purchases than any competing organisation or sport. Despite transformative consumer habits of televised media, UFC has made the threats of streaming irrelevant due to the revered demand to watch the MMA spectacle.
The UFC is the current pinnacle of the MMA world. At the forefront, the UFC was purchased in 2002 for $2m and later sold in 2016 for over $4bn, amounting to one of the highest value deals ever in sports. In 2018, UFC alone generated $700m in revenue and accumulated a worth of $7bn after acquiring a gregarious $1.5bn TV contract with ESPN.
Currently, the UFC’s parent company is filing to go public, making investing into MMA much more accessible than it’s ever been before. Alliance MMA, a league aiding the development of fighters, easing them into the UFC, was the first company to go public within the sport.
Although UFC is dwarfing its competitors such as the PFL, Bellator, and One, the multi-billion dollar fighting organisation is the highlighting factor within the industry. The world of MMA is beginning to shape society differently and open the doors to many other organisations and schools to flourish, no matter the country.
Surviving Economic Correction
According to Nielsen Sports DNA, MMA maintains 451 million permeable fans. Quite surprisingly, its global presence is key to surviving the next global recession. 85% of MMA audiences lie outside of the U.S. regardless of the UFC’s presence in the U.S., dominating arguably the most profitable demographic world-wide.
With year-on-year growth, we’ve yet to see the sport mature, making investing into MMA, UFC and even other industries that surround them (such industries like media, clothing, sports nutrition, etc.) highly profitable. The sport has a long way to go to hit the prize tags that the likes of boxing and motorsports achieve, and for this reason the growth should outperform any market correction.
MMA is culturally transformative, especially within the UK. When I was growing up in the UK, the only martial arts you could do was Judo, Karate and Boxing. Now, there are hundreds of different schools of martial arts with MMA at the top of the tree, ultimately adding both purpose and discipline into people’s lives. That change in culture ostentatiously alludes to long term profitability through cultural conformity.
Where Does MMA Go From Here?
I’ve shared why many are bullish on MMA, but how does one capitalize on this unique and high-growth investment opportunity? The first objective, really for any investment, is to separate the real players from the opportunists. The truth is, MMA has been around for a while, it’s just now really hitting its stride. Industry “professionals” are jumping in and positioning themselves as MMA experts, but they’re likely more just good marketers or someone with deep media and operational experience.
By comparison, there are professionals and true “experts” who have been operating in the space for years, and understand the unique blend of entertainment, sports, media, and financials needed to scale an operation. If MMA is the “horse” you need to find the right jockey. Vet the individuals leading these teams to ensure not only a deep understanding of this unique asset class, but that they understand the ancillary products and services that will rise as MMA continues to do so.
It’s likely that we are still in the early days of MMA! Direct investment or by participating in a fund that invests in MMA presents the opportunity but pay attention and as always – investor beware!