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UFC: Two Decades of Eventful Growth

11/11/2013 12:01:00 AM Eastern

The Ultimate Fighting Championship® is
celebrating its 20th year of producing mixed
martial arts fights this month, but in some
ways it would make more sense to wait until
January and then wish the UFC a happy
13th birthday.

No, this isn’t based on some kind of new
math: The UFC may have been staging fights
in the 1990s, but it didn’t begin MMA’s
transformation into the burgeoning sport —
and the dynamic business — it is today until
January of 2001. That’s when brothers Lorenzo
Fertitta and Frank Fertitta III bought
the UFC and, along with former boxer and
manager Dana White, formed Zuffa LLC to
oversee the business.

The Octagon®, the unique eight-sided
structure in which the UFC’s MMA bouts
take place, has been a constant since the
first UFC event, in Denver, on Nov. 12,
1993. But relative to what the fights look like
today, UFC 1 was the equivalent of James
Naismith’s version of basketball or Alexander
Cartwright’s baseball: It’s recognizable as the
same sport but undeniably different.

ENTER THE FERTITTAS

The early years were devoid of gloves, rounds,
time limits, weight classes, and rules against
head butts, hair-pulling or kicking a fighter
on the ground.

But the biggest changes came with the
arrival of White and Lorenzo Fertitta who,
determined to shed the sport’s outlaw image,
began unifying rules, creating fan-friendly
fights, and showing entrepreneurial savvy in
building and marketing the brand.

Once considered a fringe sport, MMA is
now tentpole programming on FOX and an
anchor for FOX Sports 1, as well as a driver
of viewers to TV networks everywhere from
China to Brazil, all thanks to the UFC.
The broadcast deal with FOX Sports Media
Group has drawn more than nine million
viewers to UFC world title fights on American
television. UFC content is also distributed
commercially in the U.S. to bars and
restaurants through Joe Hand Promotions,
in English throughout Canada via Premium
Sports Broadcasting Inc. and Australia via
Main Event, and in French throughout
Quebec via Interbox. “In the beginning
people thought we were crazy just for trying
to get back on pay-per-view, and now we’re on
broadcast TV,” said White, the UFC’s president.
“Our brand is strong enough that we
even have UFC GYMs, something we hadn’t
even thought about back then.”

“The UFC has spent a lot of time carrying
the water for our new network,” said FOX
Sports Media Group president and chief
operating officer Eric Shanks. “They are the
reason people tune in. There’s nobody we’d
rather be in business with. They are aggressive,
smart, creative and get things done.”

Zuffa chairman and CEO Lorenzo Fertitta
added: “We always had the vision to build
the sport and the business for the long run. It
was one of the most tarnished brands when
we started but now it is a brand with a global
span and still a lot of room for growth.”

Fertitta said Zuffa looked at how team
sports had organizations that brought stability,
while combat sports like boxing had
lacked that and devolved into chaos.

“There was a void in the marketplace,” he
said. “We wanted to build the infrastructure
for the sport and build the brand. We
are different from other fight promoters
because we are not only the owner of the
brand but we are also the content producer
and content owner.”

In Latin America, UFC is expanding its
portfolio by getting involved in distribution;
in a partnership with a major media company,
UFC is minority owner of a channel.

“We are becoming a lot more than a fight
promotion company; we are becoming a media
company all over the world,” White said.

“We own the content so we can integrate
sponsors and products, and we don’t have a
season so we can do it 12 months out of the
year,” Fertitta said.

White said the dynamic between him and
the Fertitta brothers hasn’t changed much
since 2001. “Lorenzo and I are the yin and
the yang,” White explained. “I’m impulsive,
but we balance each other out. If I know I’m
being kind of crazy I’ll call him, and he’ll say,
‘You’re being very crazy.’”

(Fertitta’s brother Frank is a co-owner of
the UFC, but is more active as president of
the family’s Station Casinos business, which
he took over from Lorenzo so Lorenzo, still
vice president of the gaming business, could
devote more time to the UFC.)

White had been managing Chuck Liddell,
who would become UFC’s Babe Ruth, when
he learned the UFC owners were in deep
trouble. He’d been friends with Lorenzo
Fertitta since high school and persuaded him
that they had the combined know-how to
make things work, even though it did seem
like a “kind of crazy idea” White said.


30-PLUS EVENTS PER YEAR

“It sounds crazy, but I always thought we’d be
as big as we are now; it was just a matter of
getting it done,” White said of the organization,
which has grown from five events a year
in the United States to an international organization
overseeing more than 30 events per
year, fought across the globe and televised in
145 countries in 882 million TV households worldwide (in 28 different languages).

UFC’s video-on-demand offerings include
distributors such as Comcast, Charter
Communications, Cox Communications,
Time Warner Cable, Verizon FiOS
TV and Mediacom Communications, as
well as Rogers and Shaw
Communications in Canada. Broadcast partners
include FOX (U.S.), Sportsnet and TVA
(Canada), Globo TV and Globosat (Brazil),
Sony (India), BT (United Kingdom/Ireland),
RTL9 (France), OSN (Middle East/North
Africa), Guangdong TV (China), WOWOW
(Japan), FOX Sports (Australia) and more.

Fertitta’s experience also included time as
vice chairman of the Nevada State Athletic
Commission, and he was able to persuade the
NSAC to legalize the sport there; the UFC’s
Las Vegas debut in 2001 went a long way toward
legitimizing MMA.

Credibility does not, however, equal profitability,
and the UFC was still a long way from
making money.

UFC 33 was not only in Nevada but on
PPV, and the new bosses expected to draw
150,000 buys. They pulled one-sixth of that
number. Fertitta said he came out of the
experience realizing that marketing the UFC
as a sport — not the Wild West violence it had
been known for — would take a while.

By 2004, White and the Fertittas were losing
enough money to contemplate selling the
UFC. After their initial $2 million purchase,
they’d lost more than $30 million. But instead,
they invested $10 million more, counting
on the immediacy and intimacy of television
to reel in a new audience.

In 2005, reality series The Ultimate Fighter®
debuted. A desperation move, it paid off
brilliantly. The Ultimate Fighter captivated a
new generation of fans, who were riveted by
the fighters’ personalities as well as by the
hard work and discipline they demonstrated
in pursuing glory. There were teams coached
by UFC stars, including Chuck Liddell, who
would later appear on HBO’s Entourage, FOX’s
Bones and even The Simpsons as himself, showing
how the UFC’s appeal was broadening.

“You could feel the momentum during the
season, but it was the finale when we really
knew we had made it,” White said of the
series. The finale peaked with 12 million
viewers.

Even in the show itself, the UFC took risks,
showing fight scenes without announcers. “It
was controversial but it was a key decision,”
Fertitta said. “It made you feel like you were
there watching the fighters, not at home being
told what you were seeing.”

Even as the UFC was growing, Fertitta and
White knew that to avoid the pitfalls that have
ensnared boxing of late, they needed to go
further to unify MMA.

So the UFC began buying up rival MMA
organizations like World Extreme Cagefighting
(WEC), Japan’s PRIDE Fighting Championship
and Strikeforce, which included
female fighters.

“One of the negatives of boxing is that it
hasn’t been able to put together the fights the
public wants to see,” Fertitta said. “We wanted
to be able to consolidate the best fighters under
our umbrella.”

White said this would have happened
organically over time, but with each of the
rivals struggling economically it made sense
to hasten their departure, getting the fighters
in their prime as well as the organizations’s
extensive fight video libraries.

Both White and Fertitta said small, regional
MMA organizations remain an important stepping
stone for fighters — the minor leagues in
essence — but Fertitta said he expects UFC to
be the sole national player from here on out.
“Fans now equate our sport with our brand,” he
said, likening the UFC to Xerox or Kleenex in
that regard. “That’s what our advantage is.”

Meanwhile, the UFC, generating $250 million
in revenue by 2007, began its quest for world
domination, striving to develop the brand and
the sport outside the U.S.

“We started with five events a year but now
we have over 30 and we’re still not big enough,”
White said, pointing out that while Major
League Baseball, National Basketball Association
or National Football League stars only rarely
become international icons, fighters — from Muhammad
Ali to Bruce Lee to Mike Tyson — resonate
globally. “People are fascinated by seeing
who the toughest guy in the world is.”

Introducing UFC fights and local versions
of The Ultimate Fighter proved “trickier” than
expected, White noted. “It took longer than we
thought it would to really get going,” he said.

To get it right, “we had to take our time,”
Fertitta said, establishing a strong infrastructure
with UFC offices in Canada, England,
Brazil and Singapore. One key to the UFC’s
long-term success, he added, was “making a
major investment in human resources,” starting
at the top.

“We brought in significant sports executives
who had local knowledge to run each region,”
Fertitta said, pointing to Tom Wright in Canada,
who previously ran the Canadian Football
League and Adidas in Canada; Gary Cook in
Europe, who had overseen the Michael Jordan
brand there and the U.K.’s Manchester City
Football Club; and Mark Fischer in Asia, who
had led the NBA’s expansion in China.

Back home, the UFC was getting ever closer
to the “mainstream” status its owners aspired
to. It became the leading PPV provider and,
in 2008, signed sponsorship deals with Bud
Light and Harley-Davidson; other sponsors,
like Kraft, Proctor & Gamble, Metro PCS and Dodge Ram Trucks, have since signed on.

To exploit the brand’s newfound strength,
the UFC also added Fan Expos; merchandise
and apparel; a video game franchise with EA
Sports; DVDs and Blu-rays; UFC 360, an internationally
distributed magazine; UFC FIT, an
in-home fitness and nutrition program; and
the line of UFC GYMs, with 95 locations in
25 states in the U.S. and one in Sydney, Australia
(all branded or soon to be rebranded
UFC GYM) with more than 85,000 members.

The big step forward was the seven-year deal
that took the organization from Spike TV to
FOX, making UFC a crucial component of
recently launched channel FOX Sports 1 and
also putting fights on broadcast TV for the
first time.

Fertitta said Spike TV served UFC well, but
“we felt like we grew up as a sports property.”
The FOX deal features four fights per year on
the FOX network, with more programming
on FOX Sports 1 and FOX Sports 2.

Looking ahead to 2014, there will be 22
UFC fights across FOX-owned properties,
including four events on the FOX broadcast
network, 14 on FOX Sports 1 and four on
FOX Sports 2. The prelims for the 13 UFC
pay-per-view fights will also air live on FOX
Sports 1.

Additionally, there will be three new seasons
of The Ultimate Fighter on FOX Sports 1.
FOX and UFC are integrated across multiple
delivery platforms.

“The UFC has met and exceeded our expectations,”
Shanks said, adding that White
and the Fertittas were the first to buy into the
FOX vision for a new sports network to challenge
ESPN. “We have an amazing working
relationship, helping the other reach goals
from scheduling to production to marketing.”

The Ultimate Fighter felt lost on Friday
nights, so the network shifted it to Wednesdays
to strengthen the show. FOX is also promoting
UFC across its platforms, giving the
sport exposure to NFL viewers (and watchers
of MLB’s World Series in October), who are
as mainstream as it gets.

“We’ve certainly made a lot of progress and
we’re knocking on the door to the mainstream
in a big way,” Fertitta said.

LOOKING FOR MAYWEATHER MONEY

Of course, the UFC is also continually looking
for ways to get even bigger, with Fertitta
aiming for Floyd Mayweather-type numbers
(the boxer’s most recent pay-per-view fight
grabbed nearly 2.5 million buys, reaping $136
million) for its biggest fights while broadening
the fan base.

“We’re allocating significant resources for
marketing and promotion to Hispanic audiences,”
Fertitta said, adding that the approach
is “both grass tops and grassroots” and pointing
to a recent multimillion dollar ad campaign
aimed at Latinos for Cain Velasquez’s
heavyweight title defense.

On the grassroots side, the UFC has a strong
social media presence — it was the first sports
organization to stream live events on Facebook
for free — and encourages its athletes to
embrace social media to whatever extent they
feel comfortable. “We educate them on what
is appropriate but we have never held our athletes
back,” Fertitta said. “While it backfires
sometimes, we are able to handle it.”

With technology advancing so rapidly, Fertitta
is determined to find every avenue possible
for the UFC, from ad-supported fights on
FOX to PPV to newer platforms. That desire
to stay ahead of the game led to UFC.TV.

“They reached out to us,” said Chris Wagner,
co-founder of NeuLion, the company
that creates the streaming interactive video for
UFC (as well as for the NFL, the NBA and
ESPN). “They are willing to take risks and
want to be a leader, and UFC.TV comes out
of that.”

The interactive platform lets fans chose
camera views and audio from either fighter’s
corner, as well as timeline markers and sophisticated
statistics that Wagner said “will make
them more engrossed in the sport.”

White said the intensity of the interactive
experience is perfect for UFC and its fans; he
added that he and Fertitta continue to scour
new technology for other opportunities. “With
every platform we say, ‘How does this work for
us and for our fans?’”

The UFC offers PPV on Xbox Live, You-
Tube, Roku, Sony PS3, Samsung,Facebook,
Apple iOS, Blackberry, Amazon, Yahoo!
Sports, Ustream, Android and other platforms.
It has digital partnerships in Brazil,
Latin America, France, South Korea, China,
the U.K., Australia, Germany, Greece and
Israel.

White said he and Fertitta briefly sat back
and reflected on how far they’d come while
watching the FOX Sports 1 documentary
celebrating 20 years of the UFC. “It was pretty
cool,” White said. “But then we were ready to
move on. Lorenzo and I think there are huge
things coming up for UFC.”

September
October