MMA In India
August 18, 2008
Inside MMA took a moment this past week to put a spotlight on the international dimensions of MMA, with some coverage of the burgeoning popularity of MMA in India.
While it is good to see MMA growing in new areas of the world, as MMAPayout mentioned in previous posts, if Zuffa/UFC is looking at expansion targets, they must prioritize the order of their targets. Lorenzo Fertitta has mentioned India in the past as an area that would be attractive, mainly on the basis of demographic trending there. Mention of India in recent discussion of International expansion has been lacking, though. One of the key things that Zuffa will probably be looking at when formulating expansion plans is the payback time period, which could dissuade India from being high on the priority list.
When discussing payback in foreign expansion, take the UK venture as an example. The UK expansion saw a huge outlay of cash to get into the market, but they had a strong modern economy and overall high standard of living. They also had a vibrant MMA cage scene (via Cage Rage) that was beneficial for expansion of the Zuffa brand to British shores. Cage Rage receives it’s knocks from fans (even a lot of Brit MMA fans) but it primed the market and set the stage for the UFC coming into the UK. These two things allowed for the UFC to see a quicker payback on the dollars they invested in expanding into the UK market. These are two things that are lacking in the Indian market. Judging from the footage above, the India MMA scene is clearly in it’s infancy.
The payback on a move in to India is going to be much more long term in structure, mainly for the economic reasons elaborated on in our original post on prioritizing as well as the state of their domestic MMA scene. The UFC’s early stage in their life cycle is often used as a means to argue for their inability to give a larger share of profits to their fighters. It is this same early stage in their cycle that prevents them form expending disproportionate dollars in a market that has an extremely long payback. If they were looking to put large $$$ in to speculative markets that may yield fruit in 10, 20 or 30 years, their bond rating would drop faster than an Anderson Silva opponent. Luckily, I don’t believe that to be the case.
At this point Zuffa needs to pick the low hanging fruit in regards to where they go next. The low hanging fruit would seem to be mainland Europe or possibly further moves into Latin America. The European Community is a very robust market economically, which should be attractive. Germany has been mentioned recently as one such area for expansion efforts in 2009. The Latin market will also be attractive, in large part because there is a huge demographic of Latinos in the US that will be a PPV market once there is a pipeline of Latino athletes fighting in the Octagon stateside. The UFC are going to spend money proportionally to the ability to get that money back, sooner preferable to later. It is these lower hanging fruits that will fund the long term projects like and India or a China as markets further down the line.
The UFC may look to cultivate India as a market, but they won’t do it with a huge dollar-intensive investment. They are better served by facilitating the improvement and growth of the domestic market that is already there, not by going in and looking to make a big footprint in a market that would be generous to be called in it’s embryonic stages. They may look to do so in low cost ways as hosting seminars and the such, much like the seminar held this past week-end in Tijuana. The company will see passive marketing gains in the market through things like their UFC 2009 video game. They may also look increase their television presence. These would be some ways of bolstering the sport and their future viability in India, without expending millions in the process.
