Issue 115
June 2014
Gareth A Davies, MMA and Boxing Correspondent for The Daily Telegraph, London, on the business skills of Lorenzo Fertitta and the UFC.
It was intriguing being present as Lorenzo Fertitta was interviewed as much about his business acumen and the advancing digital media model the UFC espouses, as opposed to the sport itself, in front of a seemingly slightly sceptical, yet hugely influential audience at Café Royal in London’s West End recently. It was self evident the fighting organization is so far ahead of the curve.
Having dispensed the well-worn story about buying three letters “U-F-C” with his brother Frank and business partner Dana White, Fertitta unleashed his business mind on the developing digital era.
He explained how he had been able to see boxers like Sugar Ray Leonard, Marvin Hagler and then Mike Tyson live, at their pomp, and in their decline. “I was a big fight fan at the time, but when I started thinking about boxing as a business the thing that really escaped me was I couldn’t think of an industry or a business that had generated that much revenue – billions of (dollars) – yet didn’t have a brand associated with it.
“There was no brand. Everything was thought of as a ‘one-off event.’ So when we were presented with the concept of stepping into the UFC, you could actually create a combat sports brand and create value.
“The ability to go to a media company, whether it be NewsCorp or BT Sport (in the UK) or Globo in Brazil, and sell them enough content on a consistent basis, it allowed us to create value.”
In business terms, it has seen exponential, and indeed, projected growth of hundreds of millions of dollars over the next decade. With 250–300 live hours per year, the UFC can present some of the world’s largest media companies with unrivaled fight packages.
So, for example, if television investors need to present a concrete plan to their board of directors, Zuffa is able to lay out X number of events, X number of title fights as well as Y number of hours. Boxing simply cannot offer that.
That is the plan which may eventually scupper big deals in boxing with major television companies. Look at Showtime, part of CBS Corporation, in the US. They have effectively built their boxing program around Floyd Mayweather, a six-fight deal over three years, which nets the unbeaten champ $250 million.
But once Mayweather saddles up and rides out of town with his bags loaded with cash, there is little left to replace him. Trying selling a business model outside Mayweather, or say, Manny Pacquiao, to a major corporation. It’s a hard sell.
“It’s very difficult to sell advertising, integration, sponsors, all those other things, so we’ve taken a leaf from what the other leagues have done – whether it’s the Premier League (soccer) or the NFL,” explained Fertitta.
Five years of graft, and $10m spent on The Ultimate Fighter season one changed all that. It was a bet, a risk-management strategy, that they ultimately won. It opened the floodgates, of course.
“This is a great product. You put these athletes that are world class in the Octagon, let them compete and that translates anywhere in the world. I don’t want this to come off bad, because I’m the biggest fan of the NFL that you could possibly imagine, but I don’t know how you sell that in Brazil; I do not know how you sell that in Asia; I do not know how you sell that in Korea. I don’t know, it’s difficult. But let me tell you this, you take the UFC to any country, any culture anywhere in the world, and everybody understands combat.”
Digital media, he explained, has been at the heart of expansion, and will continue to be. The UFC has 14m ‘Likes’ on Facebook, 4.5m followers on Twitter, and the UFC has 70m hits per week on its websites.
Again, it was a risky tactic, but Fertitta explains: “Early on, we really encouraged our athletes to embrace social media. Leagues like the NFL and the NBA were restricting athletes, saying, ‘An hour before you go on the field or the court you can’t be on Twitter, and until an hour afterwards.’
“I actually encouraged BJ Penn to tweet in between rounds. There’s been times when it’s backfired on us, but at the end of the day we managed that process and we’ve really embraced it. From the digital perspective, our philosophy is trying to make sure our content is available to everyone on any platform they want it.”
The likelihood is that we will all be folding out our phones eight times, and our iPads four times to create a large HD screen, in the not too distant future. Who’ll be there, at the forefront? Fertitta and the UFC. Why? Because they are already set up to follow systemic change.
