Canadian retirees get inside the UFC octagon - Macleans.ca
 

Canadian retirees get inside the UFC octagon

Blood, sweat and actuarial tables—the Canada Pension Plan Investment Board just bought a stake in one of sport’s biggest enterprises


 
Nick Diaz punches Georges St-Pierre in their welterweight championship bout during the UFC 158 event at Bell Centre on March 16, 2013 in Montreal, Quebec, Canada. (Josh Hedges/Zuffa LLC/Zuffa LLC/Getty Images)

Nick Diaz punches Georges St-Pierre in their welterweight championship bout during the UFC 158 event at Bell Centre on March 16, 2013 in Montreal, Quebec, Canada. (Josh Hedges/Zuffa LLC/Zuffa LLC/Getty Images)

Take note, Canadians: you’re now all investors in the Ultimate Fighting Championship franchise. Well, sort of.

The Canada Pension Plan Investment Board announced Wednesday it’s acquiring an eight per cent equity stake in U.S. entertainment conglomerate WME-IMG for US$400-million. The privately held firm owns an eclectic mix of assets. As a talent agency, it represents celebrities from across the entertainment world. As an event operator, the firm owns New York Fashion Week, Professional Bull Riders (“It’s America’s original extreme sport”) and the Miss Universe Organization—acquired from Donald Trump two years ago.

Perhaps the most valuable brand, though, is the UFC, the world’s biggest mixed martial arts league. WME-IMG led a consortium that shelled out US$4-billion for the franchise last year, one of the largest sports deals on record, according to the Financial Times. Since then, the new owners have worked to expand the organization. Later this year, the UFC will hold its first event in China, and in August, lightweight champion Conor McGregor will take on Floyd Mayweather Jr. in a boxing match. (The bout is anticipated to be highly lucrative for all involved, though it’s also been derided as a publicity stunt.)

Despite the popularity of a franchise that reaches more than a billion households in 157 countries, the UFC is not what prompted the pension fund to invest in WME-IMG. “UFC is certainly part of the many revenue sources they have, but the diversification of this business is what attracted us most,” says Ryan Selwood, managing director, head of direct private equity at CPPIB. “We were not aware the company was so diversified until we got involved in due diligence.”

The investment is a content play of sorts. While the media industry is experiencing an unprecedented degree of disruption, the demand for content is greater than ever. Whether it’s producing, licensing or distributing content—or representing the talent—WME-IMG can play a role. “No matter what type of transaction is occurring around content, they stand to benefit,” Selwood says. It’s also a unique investment for CPPIB, helping the fund to diversify. Direct sports and media stakes are somewhat rare in the $316.7-billion Canada Pension Plan portfolio, although CPPIB has bought stakes in the rights holder of MotoGP, a road racing series, as well as Canadian film and television distribution company Entertainment One.

So while the UFC is only one part of WME-IMG, of which CPPIB’s eight per cent stake is just a fraction of a giant portfolio, you can still rest assured that every jab, knee strike and takedown is adding an infinitesimal amount to your retirement fund.


 

Canadian retirees get inside the UFC octagon

  1. Would love to know the risk adjusted return of the CPP portfolio vs that of a suitably constructed portfolio of passive index ETFs. It would be nice to know that the CPP Investment Board is earning its undoubtedly large keep.