Tuesday 22 March 2011

Business As Usual: Zuffa/UFC Dominates MMA

Business as Usual
“When Alexander saw the breadth of his domain he wept, for there were no more worlds to conquer” Hans Gruber – Die Hard
The purchase of Strikeforce by Forza, LLC (a subsidiary of Zuffa, LLC the parent company of the Ultimate Fighting Championship) a couple of weeks ago sent shockwaves through the MMA world and confirmed (if that was needed) that the Zuffa owned UFC is the only horse in this race.
The news came on the heels that big-time MMA in Japan is basically a thing of the past. With World Victory Road confirming that barring a new primary sponsor (after Don Quijote pulled their money), Sengoku would cease to operate. On top of that Fight Entertainment Group is in the midst of a financial restructuring to try and save the company and that means it’s highly likely they will sacrifice DREAM. Meaning that the UFC is the only major MMA company in the world, something that the Fertittas and Dana White have worked the past ten years to accomplish.
It didn’t come easy and it wasn’t all their doing, along the way they got a helping hand from incompetent promoters and sheer dumb luck. When Zuffa bought a down on their luck UFC from Bob Meyrowitz’s Semaphore Entertainment Group in 2001, I doubt anybody could see the unbelievable growth the company would go through but I’m getting ahead of myself.
We all know the history of the UFC pre-Zuffa, almost an immediate success on PPV as a relatively small 26 year old Brazilian with phenomenal Jiu-Jitsu skill captivated the imagination of the viewing audience by beating a string of much larger and far less skilled opponents.  We, the viewing public, not being the ripped 6’2” 240lbs ideal of a professional athlete, saw this lean almost passive man “kicking ass and taking names”. The success would keep rolling for years as “Ultimate Fighting” became a sensation, the detractors were their of course, dubbing it as “human cockfighting” but that didn’t seem to effect its advancement until a war hero from Arizona spoke.
That hero was the Republican Senator for Arizona and future presidential candidate, John McCain, and boy did he hate it. It’s widely reported that McCain saw a tape of UFC 1 and found it so completely repugnant he wrote to all fifty governors in the United States and asked them to ban” No Holds Barred Fighting”.
Thirty six of those states would ban the sport and such was the vitriol surrounding the events, they lost their biggest source of revenue, cable pay-per-view.  Between 1997 and early 2001 the Ultimate Fighting Championship would live hand to mouth promoting shows in smaller states and living off DirecTV PPV, with its smaller satellite audience.  Four months before the sale of the UFC the New Jersey State Athletic Control Board (SACB) passed a law to codify MMA using what are known as the Unified Rules of Mixed Martial Arts. Originally drawn up by the California State Athletic Commission (CSAC) prior to what was meant to be a vote to pass a law bringing MMA under their jurisdiction but due to budgetary concerns MMA was not sanctioned until five years later in the Golden State.
After the Zuffa takeover things changed quite rapidly as within 8 months MMA would be sanctioned in the fight mecca that is Las Vegas, Nevada. As coincidence would have it, Lorenzo Fertitta was on the board of the Nevada State Athletic Commission (NSAC) until July of 2000 and was heavily pushing for the legalization of MMA in Nevada before buying the company. Coincidences aside, the card was deemed a failure (with decision after decision) but nonetheless it was a major step forward in the legitimacy of the UFC and MMA as a whole. Cable PPV came back on board and then the pinnacle at the time was achieved when a UFC fight (Steve Berger vs. Robbie Lawler from the hastily put together UFC  37.5) became the first MMA fight in history to air on US cable TV.
April 9th 2005 the world changed. Something cult became something mainstream. Stephen Bonnar fought Forrest Griffin. “There's no way to really measure or quantify its impact, but we know TV ratings spiked in the middle of the fight, indicating people were flicking by, saw it and stopped, or, someone called them and told them to put it on” said Jordan Breen, Administrative Editor of Sherdog.com. “It was like a mass indoctrination into MMA for the TV watching public”.
The Ultimate Fighter TV show debuted on 17th January 2005 with 1.7 million people watching the new reality show on Spike TV. The strong personalities on the show and the draw of live fights on TV every week maintained a strong audience through its first season. The irony is that a reality TV show wasn’t something the UFC really wanted to do, they wanted to run a weekly show with fights similar to ESPN’s Friday Night Fights. But Spike wanted to take advantage of the booming reality TV market and went to UFC with the idea and an ultimatum do this or no TV, which lead to the inevitable yes.
The Bonnar – Griffin fight not only spiked interest in UFC/MMA but it made believers out of not only Spike’s executives but also the advertisers. “There was a little reluctance at the beginning because a lot of them didn’t know what it was, there was some concern about violence, and, quite honestly, the UFC had some baggage from its previous ownership” said Kevin Kay, Spike’s executive vice president of programming in the Las Vegas Review Journal. “But once they saw the show, they wanted to be part of it”.
From that point on the speed of expansion set a blistering pace, more shows, higher PPV buy rates, more merchandise and importantly more money for fighters. The expansion wasn’t limited to the UFC either as Zuffa purchased the small California based World Extreme Cagefighting in December 2006. Started in 2001 by Scott Adams and Reed Harris, Zuffa saw the potential in bringing through stars in the smaller weight classes and augmenting the already established divisions. It also had another purpose, Versus were looking for MMA programming and Zuffa didn’t want any product they didn’t control gaining a foot hold on cable TV.
WEC was to start kept separate from its big brother (UFC) with very little changing but gradually the change was increasingly more evident peaking at the only WEC PPV, when the letters WEC were never mentioned or shown. From that point on its days as a separate organization were numbered until early 2011 when it merged with the UFC. 
For many years the UFC’s main competition was Japan based Pride Fighting Championship. Dream Stage Entertainment (DSE) started Pride in 1997 and really started to take hold with the emergence of the “Gracie killer” Kazushi Sakuraba. The lavish ring entrances and pyro made Pride stand out from any other sports franchise in the world and this was paid for by Fuji Network TV. The ratings on that station were quite positively obscene and they seemed destined to be the top of the food chain for the foreseeable future, when all of a sudden the rug was pulled out from under DSE.
Rumours of the involvement of Japanese gangsters, the Yakuza, in the running of DSE had been around since the beginning of the company but nothing had ever been proven. With the feeling that arrests were about to be made, Fuji Network TV announced on the 5th June 2006 that Pride would never air on the station again and they would no longer bankroll any of their shows, Fuji were the major financers of Pride. Within a year Pride was owned by a Las Vegas native called Lorenzo Fertitta. The plan at first was to keep the promotion as a going concern but the concerns surrounding the criminality of running shows in Japan made Fertitta nervous about losing his gaming license in Las Vegas. Pride would never promote another show but would leave behind a legendary list of fights that Zuffa now owns.
And now we come to the reality of what is happening in Strikeforce right now. It’s impossible to say what will happen in the future but you can see the writing on the wall for Strikeforce as a separate brand. But at least for the foreseeable future it will exist at least until the end of the Showtime Networks contract, with the extensions placed in the contract this could be at the latest 2014 and at the earliest 2012.
Strikeforce was founded in 2006 by parent company Explosion Entertainment with minority owner Scott Coker and sports promotion company Silicon Valley Sports and Entertainment (SVSE), the former being a long time sports promoter dating back to 1985 and the days of International Sport Karate Association (ISKA). SVSE are the current owners of the National Hockey Leagues San Jose Sharks and owners of “The Shark Tank” the HP Pavilion in central San Jose. Strikeforce became the first company to promote a CSAC regulated MMA even when former UFC Middleweight Champion (now the Light Heavyweight division) Frank Shamrock fought Cesar Gracie on March 10th 2006.
Strikeforce became competition to the UFC when they purchased some of the fighter contracts and the video library of the monumentally poorly run, Elite XC and days later signed a 3 year TV deal with Showtime Network. 25 months later Strikeforce would be under the same management group as UFC for a price in the region (no specific figure has been confirmed at press time) $40 million, incredible if you consider it cost $70 million for Pride without a network TV deal in place.
The sale was basically forced on Scott Coker as SVSE wanted no part of a promotional war with UFC and opted out, rumours started back in December that SVSE were looking at getting out and Zuffa supposedly had minor negotiations at that point. “Silicon Valley Sports and us were great partners” said Coker. “They wanted to get back to their core business, the hockey business and expansion of their other sports businesses. We had a long conversation and started taking different offers and then we started talking to Lorenzo. They had a really good time in this business, but they wanted to get back to their core business. I wanted to stay in this business and this is how we hooked up”.
One of those offers was the newly financed Pro Elite, the former owners of EliteXC, which had an offer on the table of $20 million to the owners and another $20 million for expansion. But the $40 million offer was enough to sway SVSE and Coker and so Strikeforce was sold. Coker is set to stay on and run Strikeforce with a budget and that the production of the Strikeforce shows will still be run by Strikeforce, as per the contract.
Almost immediately after the announcement fans and media types started throwing the words “monopoly” and “anti-trust” around. “Anyone calling what Zuffa has a "monopoly" isn't really aware of what a monopoly is or how they work,” said Breen. “However, there's no getting around the fact that they control 90 precent of the elite fighters from 135 to heavyweight. I think it's wrong to look at it in terms of "good" and "bad"; things aren't that simple. On the one hand, it is an inhospitable climate for fighters on the outs with the UFC or mid-tier fighters who can benefit from negotiating with different promotions. However, it opens the possibility to see the absolute best fighters fight one another, repeatedly, in various combinations. There's no getting around how important that is”
One has to wait and see what the future holds for Strikeforce but Zuffa’s track record for keeping things separate isn’t great. But in the meantime we can all sit back and salivate working out what now are the possible fights we will get over the next few years.

Paul Dyer

No comments:

Post a Comment