UFC investment won’t be used to help bail out Station Casinos, owners say

A new investment will help the Ultimate Fighting Championship expand around the globe, but it won’t somehow be used to help bail out bankrupt Station Casinos, the league’s Las Vegas-based owners said.

Flash Entertainment, a wholly owned subsidiary of Abu Dhabi, United Arab Emirates, last month paid an undisclosed sum to buy a 10 percent stake in Zuffa, which owns the UFC. The deal immediately set off speculation that the investment could somehow benefit Station Casinos, which is partially owned and operated by the same family that owns Zuffa.

"Donald Trump has a condo project here that has nothing to do with the casinos he has in Atlantic City," Zuffa Chairman and Chief Executive Officer Lorenzo Fertitta said Monday. "Separate set of shareholders, completely separate companies. We’re not the only people to have different businesses. Phil Ruffin is a perfect example. He owns the Treasure Island and he has other businesses in Kansas that have nothing to do with that."

It "should be very simple for people to get" that Zuffa and Station Casinos are "totally separate companies," he said.

"There’s no connection other than the fact that me and (brother) Frank (Fertitta) own an interest in both companies," Fertitta added.

Fertitta and his brother, Station Casinos Chairman and CEO Frank Fertitta III, along with high school friend and current UFC President Dana White, bought the UFC in 2001 for $2 million.

The two brothers own 81 percent of Zuffa. Although Lorenzo Fertitta oversees the company’s operations, Frank Fertitta III has no operational role in Zuffa.

Lorenzo Fertitta sits on Station Casinos’ board as vice chairman, but he resigned as Station’s president to focus on Zuffa in June 2008.

Although Lorenzo Fertitta repeatedly emphasizes that the sale to Flash was a strategic move to help the UFC enter the Middle Eastern and Asian regions, fight blogs immediately began trying to make a connection between the investment and a possible investment into Station Casinos.

Abu Dhabi controls the world’s largest sovereign wealth fund, with an estimated value of between $400 billion and more than $875 billion.

The issue reached The Wall Street Journal’s "Bankruptcy Beat" blog Jan. 13.

Paul Thistle, a professor and chairman of the finance department at the University of Nevada, Las Vegas, said the division of the two companies is not unusual among entrepreneurs who often set up separate corporations to protect themselves in case one investment goes bad.

"If it was all one company, Station and UFC, then they would have to use the money from UFC to pay off the debt from Station Casinos," Thistle said. "They’d have to legally because it’s all been borrowed by one company. This way, they’ve got two separate companies, so that actually protects the assets of UFC from the financial problems they’re having with the casinos. That is really what it comes down to."

Flash Entertainment’s investment will not benefit Station Casinos, but it is already paying dividends for the UFC.

Two weeks after the Flash announcement, the UFC announced an April 10 outdoor event for Abu Dhabi, the capital of the United Arab Emirates.

Zuffa then announced a partnership with Sohu.com, one of China’s largest Web portals, to show pay-per-view matches in the country. Lorenzo Fertitta said the long-term goal is to stage events in China, India, Singapore and other parts of the region.

The expansion into the Middle East and Asia, matched with earlier events held in the United Kingdom, Germany and Canada, has analysts and bloggers wondering whether fewer events will be held in Las Vegas.

"The more the UFC grows, Las Vegas is going to benefit because at the end of the day, Las Vegas is still our hometown," Lorenzo Fertitta said. "We’re still going to do five or six big events here a year. That’s not going to change."

Las Vegas held a pay-per-view event in January, with a second event, UFC 109, scheduled for Saturday at Mandalay Bay. Fertitta said the UFC is planning additional local events for May and July.

Las Vegas, where Fertitta grew up and graduated from Bishop Gorman High School, will benefit from the international growth when events are held here, Fertitta said.

"In fact, I think it will enhance it because one of the things that I think gets overlooked a bit is this," Fertitta said. "Everybody talks about the value we bring to Vegas when we bring an event here. The fact that when we have these events that are broadcast from Vegas and where showcasing places like MGM or Mandalay Bay, it is now being broadcast literally all over the entire world. Vegas is being broadcast all over the entire world. It’s a big commercial for the entire city."

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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