How Bud Light won UFC back: Global ambition meets a worldwide footprint

Bud Light’s new partnership with Ultimate Fighting Championship comes after an annus horribilis dominated by a damaging consumer boycott. Can the move help restore the brewer’s growth trajectory?

The third round of a UFC bout got under way in 2012, when Bud Light was a sponsor of the mixed martial arts promoter. Bud Light is returning as UFC’s beer sponsor next year. PHOTO: JEFF CHIU/ASSOCIATED PRESS

Bud Light’s partnership deal with Ultimate Fighting Championship last month was a rare win for the beer brand this year, an annus horribilis dominated by a damaging consumer boycott over its collaboration with a transgender influencer.

The brewer, which had first sponsored UFC from 2008 until 2017, took back the official US beer rights from Modelo, the same brand that surpassed Bud Light this spring as the top-selling beer in the US. Bud Light’s parent, Anheuser-Busch InBev, was praised by UFC chief executive Dana White for having core values in line with the mixed martial arts promoter.

But despite Bud Light’s 2023 sales slump, executives at TKO, the new parent company of UFC, characterised the deal as just as much of a win for them.

UFC plans to use the global marketing reach of AB InBev to help promote its sport around the world and compete for sponsorship dollars alongside the biggest, most lucrative of leagues inside and outside of the US.

“We’ve made a concerted effort to grow from tens of millions of dollars of ad sales for UFC to a number that would put us on par with other major sports leagues today,” said Andrew Schleimer, chief financial officer at TKO.

The deal established AB InBev as UFC’s global beer partner, in addition to making Bud Light UFC’s official beer in the US. AB InBev’s international scale is what clinched the deal, according to Mr Schleimer.

UFC previously had signed some local deals with other beer brands, but none will be in place by the time AB InBev takes on the global partnership in January. Local AB InBev brands around the globe will sponsor UFC media properties via signage, commercials and social media, as Bud Light will do in the US. A deal with one global beer partner provides consistency across markets,
Mr Schleimer said.

“While the cash value of these deals are of extreme importance, when we look at these types of relationships, it’s almost as important to determine or to see the marketing value,” Mr Schleimer said.

The sponsorship deal, the financial details of which weren’t disclosed, is the biggest to be signed with UFC, TKO chief executive Ari Emanuel said on on the company’s first earnings call. TKO hopes the marketing firepower of the brewer will drive UFC subscriptions, ticket sales and viewership levels, particularly in Mexico, Brazil and across South America, according to Mr Emanuel, who
is also the chief executive of TKO’s majority stakeholder,
the media and talent agency Endeavor Group.

The expiration of Modelo’s deal with UFC at the end of this year will conclude a six-year sponsorship during which the beer brand placed a theme of a “Fighting Spirit” at the heart of its marketing strategy.

Modelo bid again for the US beer sponsorship, but UFC ultimately chose to go the global route, people with knowledge of the deal said.

Modelo last month said it would “invest in the right partnership opportunities that further accelerate our momentum.”

Modelo in the US is owned by Constellation Brands, which sells wine and spirits in around 20 countries but doesn’t distribute beer outside the US and Guam.

AB InBev accounts for around one of four beers sold worldwide, including Modelo in other markets.

That means Modelo could theoretically pop up as a UFC sponsor under the new deal – just in markets outside the US, and under the AB InBev umbrella.

A spokeswoman for AB InBev declined to comment on that possibility, saying the company is focused on Bud Light and Budweiser with regard to UFC.

“We have nothing but great things to say about Constellation, but it was the
right time to seek a partner … that would help us continue to evolve as a global brand,” Mr Schleimer said, adding that UFC and AB InBev came together via Endeavor’s cultural marketing agency 160over90, which counts the drinks giant as a client.

“We want our partnerships going forward to reflect the global nature of our business – and the Modelo deal was a US-only deal,” Mr Schleimer said.

There are some rules

Publicly-traded TKO Group Holdings was formed this year after Endeavor combined the fighting franchise with a newly acquired majority stake in World Wrestling Entertainment.

UFC executives before and after the formation of TKO worked to position UFC as a high-octane and occasionally bloody combat sport that is also attractive to household-brand sponsors, sports marketing executives said.

The promoter gets its name from the Ultimate Fighting Championship, which in its infancy in the early 1990s gained a reputation for brutal bouts governed by the promise that “There are no rules!” There were, in fact, some rules, such as “no eye-gouging”, and UFC added more as the sport grew in popularity while some critics called it barbaric. It also added judges, time limits on fights and a scoring system. It got a boost in 2018 when UFC struck a distribution deal with Disney’s ESPN following years of broadcasting fights on Fox Sports and, before that, the young-adult, male-focused channel Spike TV.

“There was a point in time where Walt Disney and ESPN would not do a deal with UFC,” Mr Schleimer said.

Buying into an audience

Some brands still steer clear of sponsoring UFC, according to Pat Heffernan, senior vice president of strategy and co-head of sports sponsorship consulting firm Jack 39. Such deals involve plastering brand logos around an octagonal cage that’s no stranger to blood and injury, he said.

“We’ve looked at it for some brands and there’s been some caution, because the sport is inherently violent,” Mr Heffernan said.

But UFC’s young audience strongly appeals to other brands, particularly in the beer industry, which has struggled to recruit new legal drinkers, according to Mr Heffernan. That’s even more true for Bud Light, which also has to regain drinkers who may have sworn off the beer earlier this year, he said.

UFC markets itself as a sport with a young, diverse group of supporters, according to an advertiser pitch deck seen by The Wall Street Journal.

UFC says some 45 per cent of its fans are 18 to 34 years old, and the median age is 36, according to the deck.

Some 21 per cent of UFC fans are Hispanic, 15 per cent are African-American and 35 per cent are women, the deck said.

Just under a quarter of people considering Bud Light are already fans of UFC, according to November figures from YouGov, a market-research company that runs daily surveys about thousands of brands.

A recent survey found that over 40 per cent of lapsed Bud Light drinkers said that they are now more open to coming back to drinking the beer following months of marketing investment, AB InBev chief executive Michel Doukeris said on an earnings call last month.

Mr Doukeris emphasised the global reach of the UFC deal and the synergies between brands.

“UFC and AB share these American roots, a track record of employing American people, driving economic prosperity, supporting veterans and first responders,” Mr Doukeris added.

The Wall Street Journal