News ReleaseGrowth of Combat Sports Presents a Compelling Opportunity for Investors
MMA TKO
An estimated 640 million people are dedicated fans of Mixed Martial Arts, signaling that the popularity of the sport is at an all-time high across the globe. According to a report from TechSci Research, the global combat sports market has experienced significant expansion on the backdrop of rising global interest in fitness, coupled with the widespread adoption of combat sports as a means of physical exercise as consumers are increasingly recognizing the health benefits and mental discipline associated with these activities. Going forward, the market is set to experience robust growth, growing from $8.7 billion in 2023 to about $12.6 billion by 2029, representing a CAGR of 6.5%. For investors looking for a way to capitalize on the growing popularity of combat sports, little known Alta Global Group (NYSE:MMA) and TKO Group Holdings (NYSE:TKO) should be added to their watchlist. Alta Global Group (NYSE:MMA) is a technology company that is enabling the global martial arts and combat sports industry to maximize the monetization opportunities available to the sector by increasing consumer participation in the sport. Think of it this way: As the fanbase for combat sports has risen over recent years, so too has the level of consumer interest in how to get fit, train, and get into shape like a professional fighter. Whether it's women thinking about self-defense or kids dealing with bullying, more and more people have been looking into learning more about the various sports comprised in mixed martial arts. For example, the growth in participation in jiu jitsu has been soaring globally. With this huge growth in the combat sports fan base and increasing investor interest, Alta believes that the next phase of growth for the sector will involve transitioning fans from just strictly viewership to real interest in participation. That is why the company has developed digital solutions that bring together the whole MMA community—fans, participants, gym operators, and coaches in order to drive more participation. This unique idea has received significant consumer validation, as illustrated by the fact that Alta Global Group (NYSE:MMA) has already amassed a substantial user base and strong user engagement of about 15 million monthly views and over 5 million social media users. It also currently ranks in the top 3 for ‘MMA’ in global search results. Taking that into consideration, Alta’s value proposition is simple. It aids in the digital transformation of a sector where small businesses and owner-operators predominate. They can benefit enormously from a partner like Alta, who will give them a really high level of visibility in a digital sense and the ability to connect them with their underlying fans. In recent days, Alta announced its acquisition of a subscription based mobile marketing platform Hype, which they believe will provide an invaluable digital tool for their gym partners to connect and engage with members, and grow revenue more cost effectively. So far, Alta has signed partnership agreements across a large global inventory of gyms, which it will work with to help get fans of mixed martial arts on the mat, training in their gyms and academies. Those agreements include a relationship with UFC Gym Group, which has close to 200 locations globally, to roll out Alta’s training within those gyms. The company has been aggressively growing its published gym footprint. The company has built a huge database of 9870+ professional and amateur athlete profiles, 5645+ potential content creator profiles and 3500+ tutorial libraries. Alta Global Group (NYSE:MMA) will provide marketing content, training syllabus for gyms and coaches, and connect the underlying fans to an opportunity to train either online or inside a gym at one of the company’s gym partners globally. This is a win-win deal for everyone in the ecosystem, as fans interested in participating in the sport can be easily matched up with a coach and gym. And Alta controls the whole payment experience, so when the company charges a customer a monthly subscription to train with the coaches in one of its programs in a gym, the company collects 100% of the payments. It then keeps its split and pays the gym the residuals, meaning that the gyms don't have to go through the hassle of onboarding the customer, chasing the money, collecting it, reconciling the payments, etc. Alta monetizing in a way that the UFC and other large professional promotions don't presently do, which is through fan base participation, could make it a very attractive company in the eyes of these much larger companies down the line. In fact, the way Alta Global Group (NYSE:MMA) makes money is completely complementary to how other players in the sector make their money and it doesn't have any crossover or cannibalization. That means that in the coming years, as Alta scales up, the partnership with UFC gym will have the opportunity to continue growing. Thanks to its first mover advantage in aggregate participation in the MMA sector at a grass-root level, the opportunity for Alta is massive. To put it in better context, there are over 45,000 martial arts academies in North America alone, with some estimates suggesting that Americans are spending about $30 billion a year on training and martial arts. With the sector growing at double digits and participation growth surging, some analysts predict that the US will have 67,000 martial arts academies by the end of 2025, which bodes extremely well for Alta. Alta Global Group (NYSE:MMA) has built iconic partnerships with the most exciting and respected identities in MMA who amplify its brand and drive platform adoption. In fact, the company recently announced that five-time MMA world champion Conor McGregor had invested in Alta, whilst Conor voiced his support for the Alta Warrior Training Program through social media. Other Alta Ambassadors connected to the UFC include former 2-division Champion Daniel Cormier and Laura Sanko. At the moment, the company’s high profile brand ambassadors and investors have a reach of 60 million+ social media followers, allowing it to generate even more hype and reach more cost effectively. TKO Group Holdings, Inc. (NYSE:TKO) had a solid start in 2024 with strong performance across both UFC and WWE. Coming off a record 2023 for both businesses in terms of revenue and profitability, the company continued to deliver through the first quarter. From our perspective, the health of the combat sports sector is overwhelmingly driven by the most dominant player, which is the UFC, and it is doing extremely well. The Endeavor-controlled company, which owns the UFC and WWE, reported revenue of $629.7 million, with a net loss of $249.5 million and adjusted EBITDA of $282.2 million. The company also raised its guidance for the year to up to $2.685 billion in revenue, and adjusted EBITDA to up to $1.205 billion. The loss was attributable to the $335 million UFC settlement from March. Unsurprisingly, the UFC saw its live events, sponsorships, and consumer products segments rise, with media rights down slightly due to one less numbered event. Most notably, the company secured a landmark global deal for WWE with Netflix and renewed UFC rights in multiple international markets, and UFC 300 became one of the highest grossing events in UFC history. During the quarter, the company also announced that Tourism Western Australia entered a multi-year partnership for UFC to return to Perth with at least two events, including the UFC 305 pay-per-view in August and one additional Fight Night in subsequent years. Disclaimers: RazorPitch Inc. "RazorPitch" is not operated by a licensed broker, a dealer, or a registered investment adviser. This content is for informational purposes only and is not intended to be investment advice. The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. 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May 16, 2024 06:00 AM Eastern Daylight Time
