UFC Inks Record Deal with Bud Light, Absorbs Backlash to Grow Int’l Business

UFC Inks Record Deal with Bud Light, Absorbs Backlash to Grow Int’l Business

TKO Group Holdings (NYSE: TKO) will hold its first earnings call as a publicly traded company later today (Nov. 7). The UFC’s newly signed global beer partnership with Anheuser-Busch Inbev (NYSE: BUD) is certain to be among the highlights mentioned.

The MMA promotion recently announced a six-year pact reportedly worth more than $100 million. The deal, which begins in January ’24, is said to be the largest sponsorship tie-up in UFC history on a per-year basis.

The money, however, comes with a catch (or at least some backlash).

Anheuser-Busch plans to use the UFC platform to promote its Bud Light brand in the United States (it has discretion to promote other brands under its umbrella abroad). BUD has faced criticism and calls for boycott from conservatives since aligning with transgender activist Dylan Mulvaney back in April.

Of course, conservatives comprise a vocal portion of the UFC fan base.

But TKO was/is not concerned with the noise that has surrounded Bud Light in recent months. Record fee aside, it views Anheuser Busch as capable of helping grow the UFC business internationally faster than any other potential beer partner.

“It was truly [a decision] predicated on our desire to go global in the category and enter into a deal with a company that had the ability, from a marketing perspective, to turbocharge our efforts,” Andrew Schleimer (CFO, TKO) said. “We believe we are under monetized from a media rights and sponsorship perspective outside the U.S.”

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One cannot downplay TKO’s involvement in this deal. CEO Ari Emanuel is looking to maximize shareholder value and BUD offered to pay more, in cash, than anyone else on an annual basis.

The Endeavor founder has also been challenging UFC and WWE to think bigger as it relates to their largest sponsorship categories.

“It was important, at this stage of our growth and development, to partner with a global brand or global company that could help us tell a more congruent story,” Schleimer said.

That is particularly valuable with TKO increasingly leaning into international site fees as a revenue stream (see: recently announced deals with Saudi Arabia and UAE).

“One of the key tenets to our investment thesis is to bring more events internationally,” Schleimer said. “There is a significant amount of fandom outside the United States still ripe for monetization.”

And TKO leadership believes BUD can help build that following.

“The marketing assets and prowess that a global powerhouse [like] Anheuser Busch brings to UFC creates a significant amount of, from our view, over time, intangible value by virtue of assisting us in growing our fan base both domestically and internationally,” Schleimer said.

Existing relationships played a role in this deal coming together too. 160over90, Endeavor’s cultural marketing agency, has a deeply rooted long-standing relationship with BUD as the brand’s sports and experiential agency.

“With Endeavor as a 51% owner, TKO benefits from its access to the entire Endeavor flywheel and its network of clients and partners,” Schleimer said.

But this deal doesn’t get done without UFC president Dana White signing off. One must imagine he did so knowing that negative sentiment would follow.

However, the fight promoter has a soft spot for Anheuser Busch. He considers the UFC’s first deal with the global beer brand (circa 2008-2017) to be amongst the most impactful in company history. At the time, regulators in many states were still opposed to legalizing the sport. BUD lent an air of legitimacy to the challenger sport.

White also sees an American company that at its core –putting the noise of the last seven months aside– has its values aligned with the UFC brand. BUD employes 65,000 Americans, supports both veteran and first-responder causes, and spends close to a billion dollars annually with American farmers.

Anheuser Busch is, presumably, hoping the UFC can help rehabilitate its image like a recently fired SEC head coach would look to Nick Saban for help. The company has learned the hard way that sports and broader cultural agendas do not mix.

Teams, leagues, media companies and “advertisers should focus on the energy of the fan/consumer and try to be popular to all,” former Anheuser Busch executive Tony Ponturo said. The goal should be "talking to everyone without pointing any one group out” (think: Budweiser's 'This Buds for you' campaign).

BUD’s Q2 ’23 revenues fell 10.5%, the bulk of that decline has been attributed to Bud Light.

If UFC can help to stop the bleeding the promotion would seemingly have a new business line on its hands: brand rehabilitation.

But one should not expect the promotion to begin fixing brands that have gotten away from their core values (though one presumes it could be a lucrative strategy).

“The consumer sees through ‘bought loyalty’ and it will only backfire for them,” Ponturo said.

His advice for brands that find themselves in trouble: “be authentic. Talk to all. And have a product that delivers.”

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