UFC: Two Decades of Eventful Growth

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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.”

UFC Pursues Final Frontier: New York You can go to a UFC event in Germany or Australia or Japan or Brazil, or, of course, in Las Vegas, or even in New Jersey. But at Madison Square Garden in New York City, once the mecca for organized fighting? Not allowed. Professional mixed martial arts remains verboten in New York State, despite the endless efforts of the UFC.

The ban is all about politics, nothing else, said Lorenzo Fertitta, co-owner (with brother Frank) of UFC. “Frank and I own Station Casinos, one of the largest non-union casinos in the world, so the local culinary union here in Las Vegas has followed us around and harassed us,” Fertitta said.

Union lobbyists found success, he added, by winning support from Sheldon Silver, the speaker of New York State’s Assembly since 1994. He votes pro-labor and has enough clout, Fertitta said, that he can singlehandedly put any policy he doesn’t like in a stranglehold. While the New York State Senate has passed (by a wide margin, Fertitta noted) a bill approving MMA for four straight years, and by all accounts the Assembly has enough votes as well, Silver hasn’t let the vote happen. “Our frustration comes from the fact that the union hijacked the process,” Fertitta said.

“It’s crazy how blatant Silver is about keeping us out without reason,” UFC president Dana White said. “He couldn’t care less — that’s how powerful he is.”

Fertitta said the UFC already has penetrated the market, both in terms of television and live events in New Jersey that draw New Yorkers. “But we will continue to try every year and hope for the change,” he added. “At this point it would be about the moral victory.”

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