HDnet FiGHTS: Professional MMA

September 20, 2007

Mark Cuban made his rumored MMA project official last week with the announcement of HDnet FiGHTS. The promotion will hold it’s first card on October 13 in Dallas. Guy Mezger is the most prominent face in the new project, although it’s not clear whether he’s simply the group’s Joe Silva (UFC Match Maker) or something closer to Dana White (public face and prime mover of the company). Others mentioned in connection with the project include: Ed Fishman, Las Vegas promoter extraordinaire of Pride fame, Reed Wallace, President of White Chocolate Management who’s clients include Fedor and Rampage Jackson among others, and Ted Ehrhardt, who has made waves in recent months by signing college wrestling stars to train for MMA. Cuban also mentioned Vince McMahon of World Wrestling Entertainment as potential business partner, which makes some sense but would no doubt be very controversial in the MMA world.

Cuban said all the right things from a business perspective, indicating that he’s willing to invest whatever it takes to be successful and plans to start small. Initially the group will be working mostly with outside promoters, eventually promoting their own full scale events. Mezger has said that the group hopes to be promote 24 shows in 2008. Cuban enters the game with several inherit advantages including his own TV outlet (although HDnet is available in only 5% of homes nationwide), production company, and DVD distributor, as well as, and perhaps most importantly, his own vast personal fortune. As owner of the Dallas Mavericks he also brings instant credibility with the sports establishment that could open doors with mainstream advertisers and media that the UFC has had difficulty gain traction with.

Cuban lauded the UFC’s financial success but positioned it as an entertainment spectacle, whereas HDF would focus on presenting MMA as a professional sport. This was supported with a lot of the same talking points that Gary Shaw has followed about the UFC being about the UFC brand, whereas HDF would be about the fighters. Cuban wants to make it easier for fighters to train full-time, specifically mentioning a guaranteed salary that would represent a draw against their purses and health insurance. He also pushed the need for a fighters union.

The IFL has taken a similar approach to compensation on much smaller scale. While these criticisms hold a lot of water for UFC undercarders, the top fighters in the UFC are well compensated and seem very happy with their arrangements. Tito Ortiz’s recent resigning, despite personal animosity with White seems to confirm this assessment. There’s something to be said for using a salary draw system to balance out the feast or famine nature or getting paid per fight, but time will tell whether fighters prefer the security of the proposed HDF approach or the high ceiling, bonus laden UFC system.

The UFC’s insistence on exclusive contracts also came under fire. Cuban indicated that he wouldn’t ask for exclusivity and that HDF would focus on “defining [fighters] as pro athletes and letting them develop their personal visibility and careers.” “The way the contracts are structured, they don’t know when they’re going to fight or if they’re going to fight again, and unfortunately some folks hold their next fight over their head using it as pressure to extend a contract or using at pressure for any number of things and that really puts these guys in a bad position.”

The UFC’s use of exclusive contracts to me is a key factor in the growth of the sport. Unlike boxing, UFC is able to guarantee the fights the fans want to see. They also provide stability which allows the UFC to build big fights step by step, leading to bigger draws and better pay day for fighters. For fighters, exclusive contracts give promoters an incentive to protect fighters’ futures rather than merely focusing on the next fight with no regard to whats best for the fighter’s career in the long term.

One of the most interesting, and perhaps valid, critiques of the UFC was on the sponsorship front. The UFC’s greatest business failure has been the inability to attract blue chip sponsors which Cuban attributed to the Ultimate Fighter reality show which presents fighters as drunk and out of control. “That’s not going to get you a deal with Nike and a sponsor. That’s going to make you one of any number of guys who have 33 different names tattooed on their shorts. There is a market for the spectacle that the UFC and WWE created, but there’s also a market for serious athletes who wants to be treated seriously and who wants to be perceived as being a serious athlete, who wants to be full time at their craft.”

Cuban seemed to suggest a sponsorship model more akin to major professional sports leagues with league wide deals rather than the current model of individual sponsors. He specifically talked about working on an apparel deal with Nike or Addias. Cuban said that while fighters might not get paid under such a deal in the beginning, just the association with a respected brand would help establish fighters as professional athletes.

One of the most interesting names to surface in relation to the project is Vince McMahon. McMahon, and in particular his son Shane, has been rumored to be interested in getting involved in MMA since the UFC’s rise. There is some evidence to suggest that the UFC’s growth has been negatively correlated WWE’s decline, specifically in the pay-per-view arena. A case can be made that without the strong lead-in of McMahon’s WWE Raw for the first season of the Ultimate Fighter, the UFC as we now know it would not exist.

Cuban portrayed McMahon as a master promoter who can put together world class events, within the parameters of presenting a professional sport, while Cuban brings creditability to McMahon as a legitimate sport promoter. McMahon is undoubtedly one of the most accomplished promoters in the world, but he has failed miserably outside of pro wrestling, including his only attempt at legitimate sports, the incredibly short lived XFL. However, his experience promoting live events and television productions is second to none.

It will be interesting to see what HDF ultimately evolves into. Cuban specifically made the point that the effort would be a process and in the beginning they’re interested in learning what fighters want and what they can do provide a better platform for fighters to demonstrate their talents. To me the idea of promoting a more legitimate sports model is interesting, but I’m not sure it has the potential that the UFC’s brand center approached does.

There is no doubt that there is a core MMA fan base that is most interested in the fights, but they are a small, albeit devoted, group. They understand the technical aspects of fighting and are interested in who the best in the world is. They want to see the best fighters regardless of boring or unmarketable they are. They complained when Tito Ortiz got a shot at Chuck Liddell after beating Ken Shamrock twice. This group will find a more professional, no frills sports presentation very appealing.

The hardcore fan base is important, but the growth driver for the UFC, and MMA in general, is the causal fan. They were introduced to the sport during the The Ultimate Fighter boom. They watch for the stars, guys with dominant personalities. They’d rather watch a bad fight between two stars than a good fight between two unknowns. Getting this segment interested is the difference between doing 250,000 buys for GSP-Serra and Silva-Lutter and doing 1,000,000 for Liddell-Ortiz. This group is into the spectacle atmosphere of the UFC.

This of course raises the million dollar question facing the business today, namely are we in the middle of an MMA boom or a UFC boom? Is it the sport that’s growing in popularity or is it simply the UFC brand? Until someone other than the UFC manages to gain some traction (let alone make some money), I think you have to go with the latter rather than the former. But it took Z
uffa four years to turn around the UFC so we’re probably not going to know the real answer to the question for several more years.

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