Issue 048
March 2009
Growing up in Las Vegas, Lorenzo Fertitta learned early on about the buzz of a big event. He was nine years old in 1978 when his father took him to his first fight – Muhammad Ali versus Leon Spinks at the Las Vegas Hilton.
"I just couldn’t believe the magnitude of the event and the crowd,” he recalled in a rare interview. “And I was hooked, from that day on.” More fights followed, big and small. “I had nothing to do with the sport, but I loved it. My mom would pick me up from junior high, before I could drive, and drive me down to Caesars Palace because they used to have open workouts and you could watch these guys train, like Thomas Hearns and Milton McCrory, the whole Kronk team. Larry Holmes was there at times. It was really, really cool.”
Some 30 years after Ali-Spinks, the billionaire co-owner of the UFC is now in the business of delivering that buzz via mixed martial arts. His goal is to take it worldwide.
Fertitta resigned as president of Station Casinos in June 2008 to devote himself fully to developing the UFC. President Dana White remains the face of the UFC, with a hand in just about everything the organization does. Fertitta’s job is to give White a truly global sandbox to play in.
Prior to their UFC 93 event in Dublin, Fertitta was in England, France, and Germany looking to spread the word. Germany and Sweden are targeted destinations for shows this year. The United Arab Emirates is also on the UFC radar. “He’s been to Dubai more times than I can remember,” White said. “He’s everywhere right now. I couldn’t do that.”
Fertitta doesn’t see the UFC getting to the Emirates in 2009, citing a lack of a suitable venue, although he notes several are under construction. The Philippines are also in play, possibly this year. “We have a strategic plan, we know where we want to go and what we’re focused on,” Fertitta said. “This year, Europe is really a priority for us. We’ve spent some time looking at some of these different markets and we feel like Europe is really where the focus should be at this point.”
The UFC has worked hard at the UK market, so has it been cracked yet? “We’re in the process of it. We’re certainly not where we want to be, but it’s kind of one of those things where – if you go back to the United States around 2005 – you could just start to kind of feel that the UFC was growing, was going to get over the tipping point and really become mainstream. And that’s sort of what it feels like now in the UK. We’re just starting to feel like we’re starting to break through.”
The UFC’s tentacles are already far-reaching. Some eight years after Lorenzo, his older brother Frank, and White bought the UFC, the organization reaches more than 300 million homes around the world, including the Balls TV network (seriously) in the Philippines. Adding more TV networks to the family is part of Fertitta’s mission, as is exploring new media and avenues to further expose the sport.
The UFC allows Fertitta to combine business and pleasure. On fight night, he always arrives in time to see the first bout. “I watch everything. From a business standpoint, it doesn’t really matter [if I attend] but I’m here because I like to watch the fights.” After the main event, it’s back to business. Fertitta, older brother Frank, White, and matchmaker Joe Silva meet to discuss bonuses.
There are standard bonuses (knockout, submission, and fight of the night) that are disclosed, but the UFC brain trust also decides on discretionary bonuses that are not made public. Perform and you get paid more.
“No different than if I have an employee at the end of the year, he’s making a salary but I also give him Christmas bonuses or discretionary bonuses if I feel like they had a good year and did a good job. It’s really the same thing,” Fertitta said. “We sit down and say `You know what, I think this guy deserves a bonus for doing this or a bonus for doing that. He really tried hard tonight, even though he may not have won.’”
Fertitta says usually the group is pretty much on the same wavelength when it comes to rewarding fighters. As to how much money is lavished on bonuses, Fertitta says it’s “totally discretionary”.
“It seems to be working good so far,” he said. “I guarantee you that we are the only promoter in the history of the world that’s paid people more than they’re contracted for. And it’s just part of the company culture.”
Bonuses done, the Fertitta brothers, White, and a handful of colleagues traditionally go to dinner, usually for Italian. Since buying the company in early 2001, he has only missed one show, UFC 83 last April in Montreal, which conflicted with the wedding of a close friend in London.
Fertitta was born and raised in Las Vegas, where his father, originally from Galveston, Texas, founded Station Casinos to provide gaming to the locals. Lorenzo, who has two sons and a daughter, has an older sister in addition to his brother. Their ancestors came from Italy in the early 1900s. His father’s side of the family hail from Sicily, a little fishing town outside of Palermo called Cefalu. His mother’s side came from the Florence area.
The gaming business has affected the youngest Fertitta in many ways. He’s a huge college football fan, for example, but has no favorite team. “We always had the sportsbook, so I was never really allowed to have a favorite team. I could only root for the team that we needed to win, for the money in the sportsbook,” he explained. “So growing up, I really don’t have an affinity for any specific team.” He also likes the NFL, but says he would pick the Bowl Championship Series (BCS) Championship game over the Super Bowl.
He remains close to the high school he attended in Vegas and tries to catch football games each Friday. Football was Fertitta’s game. He played strong safety in high school (“I like contact”). Too small for Division 1 schools, he was nevertheless recruited by (the then) Division-III University of San Diego. He spent four years there before earning his MBA at New York University’s Stern School of Business.
There was only one casino when the Fertitta brothers took over the family business, their father retiring due to health issues. Today they have 19, between the ones they own and one they manage for an Indian tribe in Sacramento. The chain is taking a beating at present, as are other Vegas casinos during the economic downturn. “It’s a tough time,” he said. “But let me tell you what, Las Vegas is a resilient place.”
Fertitta’s interest in boxing led to an appointment to the Nevada State Athletic Commission after graduate school. He had always wanted to be in sports, and White saw the ailing UFC as an opportunity. “We weren’t thinking of building a media company and going across the globe and doing all these things. We didn’t have that foresight.
“It was just more of a hobby,” he added. “It was something fun to be involved with and if it worked, it worked. Anybody in their right mind probably wouldn’t have bought the company. In fact, I had my attorneys tell me that I was crazy because I wasn’t buying anything. I was paying $2 million and they were saying ‘What are you getting?’ And I said ‘What you don’t understand is I’m getting the most valuable thing that I could possibly have, which is those three letters: UFC. That is what’s going to make this thing work. Everybody knows that brand, whether they like it or they don’t like it, they react to it.’
“And that’s what has tagged the sport. That’s branded the sport. People don’t say ‘I’m going to see an MMA fight’, they say ‘I want to see Ultimate Fighting’. And I knew I had that asset and the library, the first 30 shows, and that’s what we bought.”
In the beginning, the company was a money pit, and there came a time when Fertitta had had enough of pushing a boulder up the hill while digging into his pocket. “It was like a never-ending black hole. I didn’t know when it was going to turn. It wasn’t like somebody could say `OK, you’re going to put up a finite amount of money and this is what your investment is going to be. And if it works, it works; and if it doesn’t, it doesn’t.’ It was scary because we just kept writing checks, writing checks. And every time, we’d come back and say `Oh my God, we’ve got to fund payroll this week, I need another half-a-million dollars, a million dollars. I need this, I need that.’ It was like, `When is this going to end? I can’t do this forever.’ I got to the point where I started to panic a little bit.”
It was the end of 2003, the start of 2004. Fertitta called White and said they needed a buyer, investor, somebody. The next day, White had an offer (“substantially less than what we invested”). Fertitta was thinking about accepting it, knowing the offer would end the hemorrhaging. The next morning, he called White with his decision. “It must have been six or seven o’clock in the morning. I said ‘I’m not ready to quit. I think we can make this thing work.’ That’s when we really started talking abut the idea of producing our own [TV] show and just giving it to a network just to get exposure, like one last effort.”
The Ultimate Fighter was a final gamble. “I liken it to if you’re sitting on a 21 table and you have $100. And you gamble, you gamble, you lose, lose, lose, and all of a sudden you’ve got $5 left. Then you say `I might as well put up all five and see if I can start doubling my money and get out of this hole.’ That’s really was what that was about. It was like, you know, we’re already in this far.” Before the show got on TV in early 2005 – at a cost of some $10 million to the UFC – the company started seeing traction. Tickets were selling well and pay-per-view numbers showed some improvement. “Not to where we were making money, but we were starting to see a little bit of light at the end of the tunnel. Then we got on TV and it just blew it out of the water.” It took some $45 million before it started turning around, with the business finally beginning to sustain itself in 2005.
While other businesses struggle to keep afloat in today’s depressed economy, the UFC sails straight ahead. “Everything’s still firing. We did the best business the end of the fourth quarter last year – and going into the first quarter is looking great,” said White. UFC 93 sold out in four days, followed soon after by UFC 94. Fertitta reports that ticket sales for UFC 96 in Columbus are “off the charts and fans don’t even know who’s fighting yet.
“We’re up double-digits year over year. We’ve just had our two biggest pay-per-views we’ve ever had, at the end of year in November and December, in America. I think we do have a product that works in recession times because while people may not have as much discretionary income, they still want to be entertained. Even if you look at the movie industry, the box office is still very healthy, because people still want to go out and get entertained. Our product is still a cheap form of entertainment, they get together, they cluster, everybody pitches in $5 or $10 and they buy the pay-per-view and have a party.” Fertitta notes big fights also drew crowds back in the Great Depression.
The UFC put on more than 30 shows in 2008. They remain in the fast lane in 2009, continuing to accelerate. “We’re hiring and hiring and hiring and hiring,” White said. “We just hired a new marketing guy. Literally, we’re hiring two people a week.” The company has 105 employees on two continents.
Fertitta’s interest in the UFC was sparked by his own appreciation of jiu-jitsu, and the sport remains “one of my absolute priorities”.
“Whether I’m on the road, whether I’m at home, I’ll make it a point. I figure out what I have to do for that day and I make sure I get up early enough where I can get at least an hour, or an hour and a half, of training in.”
Being the boss has its perks. Sometimes, the week of a show, he’ll “steal” a session with a top trainer like Mark DellaGrotte. “I think it’s part of staying close to the sport. I enjoy it. Probably the one time I’m not thinking about business is when I’m in there getting my butt kicked.”
He started learning boxing with White back in the late ‘90s, then added jiu-jitsu with trainer John Lewis (rolling with a teenage Mark Bocek, who has gone on to fight in the UFC) and has since worked Muay Thai into his routine. “I find that it’s a great workout and it’s interesting to me. So those are kind of the three things I work on.”
He tries to train six days a week. And he attempts to stay disciplined in what he eats, although he admits that growing up with an Italian background “it’s tough to say no to pasta. For the most part, I eat pretty healthily.” It seems to be working. The compact Fertitta is solidly built, showing the results of those workouts. He moves gracefully, but showed a human side at a recent weigh-in when he tripped coming up the steps and almost flew over the scales. His weigh-in wear is UFC casual, more restrained than White. Both clean up nicely for fight night.
Fertitta does not hide from the spotlight; he gets on stage for the weigh-ins, after all, but does not seek it and rarely speaks out. Of course, White talks plenty enough for everyone. Fertitta says the cornerstone of the UFC’s success is the friendship and trust between himself, his brother, and White. “If you had a group of guys that didn’t have that tight bond when things were going so bad, the thing would have blown up. You would have seen people suing each other and all this other crazy stuff. But I think it’s that friendship and trust that I think allowed things to keep going.”
Fertitta has no problems with White’s shoot-from-the-lip style. “Let me tell you, the reason that the fans love Dana – the media, everybody – is because he pulls no punches. You know when you’re talking to him that it’s not going to be some statement that was vetted out by a group of executives. Dana says it the way it is, good, bad, or indifferent. He doesn’t have that filter and I think fans appreciate that. They’re sick of people not telling the truth or [not] being honest about things. He may be controversial because of it but I think that’s part of his success as well.”
While some hardcore fans say Fedor Emelianenko is the last missing piece in the UFC puzzle, Fertitta is unfazed by the Russian heavyweight star’s refusal to come aboard. “From my perspective, it really doesn’t matter to me. Fedor, in the MMA world, in this very kind of close-knit, tight, hardcore world, whether it’s the media or people close to the sport, people talk about him. But outside of that, the general public has no idea who Fedor is, nor do they care. He would not make an impact from a business standpoint, in my opinion, with the UFC.
“Would I like to see him in the UFC? Absolutely! I’m all about bringing in the best fighters in the world and seeing if they can compete and seeing who’s best. I want to do that. I would say I’m more puzzled as far as why his management team opted not to go the route of doing business with the UFC. What they’re missing is we could turn him into a household name overnight. We’ve done it before, with a number of fighters. All of a sudden, they fight in the UFC and it’s like their career just explodes.”
Back to the buzz, Fertitta experienced it firsthand in boxing when he was just a boy. He got a major-league dose of it at the Randy Couture–Chuck Liddell fight on UFC 52 in April 2005, just a week after the finale of Season 1 of The Ultimate Fighter. It was a signpost that the UFC had truly arrived. “Just sitting in the arena, it just felt different,” he recalled. “There was a different buzz, there was a different feel, it really felt like a big mega-fight.” It was, finally, game on in the Octagon.
