The Driver of UFC's International Efforts

March 31, 2009

Friend of MMAPayout Ryan Harkness recently posted about the UFC’s plans for international expansion and raised some questions that were vexing him:

I’m still trying to figure out why the UFC pegged England and Europe for expansion first … I’d love to get the inside scoop on what Zuffa’s plan is. It might sound stupid hitting up Spain (Spain!!) before Brazil, but I have to hope that Dana and Lorenzo know what they’re doing and there is method to their madness.

I was going to just e-mail this to Ryan but since he threw it out there for consumption, I’ll share with our readers what I think the master plan is with regards to expansion.

The main prism through which to view the UFC’s international efforts is through a few words that Dana White once said. Dana is fond of saying “I’m in the PPV business, and every decision is centererd around making that bigger.” Lorenzo Fertitta echoed this sentiment in his interview with The Atlantic stating “We call it the wheel. The UFC wheel. You’ve got your core— the pay per view. That’s essentially your product, right? And then, you know, you have spinoff things.” While the UFC has added other facets to their revenue streams, the central profit center for the UFC are their PPV’s. That is the paradigm they know and are comfortable with, and one that they will look to replicate.

The driver of their international strategy is what augments their PPV revenues, to my eye. The UK and mainland Europe are the first targets in expansion because they represent the easiest path to implementing their template that has been so successful in the United States. The ability to get a market for their PPV’s up and running in a country and doing very good numbers will be the ultimate decider of where the UFC expands internationally. The UK was attractive for this very reason. The WWE with their Wrestlemania events and boxer Ricky Hatton have done impressive numbers on PPV in the UK, with the Hatton vs Floyd Mayweather Jr. PPV doing a rumored 1.4 million buys in the UK. The UK enjoy a high standard of livng and an advanced technological infrastructure that make it possible to reap windfall profits via PPV if the UFC are able to successfully market their product in the British Isles. It is this same reason that the UFC will expand further, from the UK into mainland Europe. In addition, with a UFC office and staff in the UK, the company can reach economies when doing shows in say Italy or Spain. Moving on the Asian or Brazilian market would require a full scale committal of assets, like with the initial launch in the UK. These cards in Italy or Spain can also be sold back to the UK PPV buyer to offset the cost of expanding. Much has been the case with US PPV buys of UK cards helping underwrite UK expansion. These economies are another major reason why the UFC is delving further into Europe rather than making a play in South America or Asia.

It is key to remember who they have placed as their chief man in the UK/Europe. Marshall Zelaznik is the UFC UK President, but his roots are in the PPV industry. Zelaznik was plucked from PPV heavyweight In Demand to head up the UK effort. He told Fighting Spirit Magazine that:

I don’t subscribe to the fact that it isn’t a PPV product here. We’re still getting people used to the idea of paying for the UFC, because for years they’ve had it free on Bravo. But by doing the UK events, which have a special appeal, I think over time that the UFC will become a PPV product in this market, and the revenue will be substantial.

Zelaznik was put in charge to boost the profile of the sport Ultimate Fighting in the UK and build an infrastructure. Both were needed but running parallel to these efforts has been the goal of making UFC a staple on UK PPV. Ryan asks why Spain or Italy over Brazil? I would venture to guess they see a bigger upside in selling their PPV’s in those countries in addition to the economies mentioned earlier. UFC pay-per-view events are shown on Globosat Programadora in Brazil, but sales in the country likely don’t generate the needed payback for a full scale expansion into the country to make sense. You also have to ask if there is the needed standard of living and technological infrastructure to to succeed in a big way via PPV. Iin the end that is what will motivate these initial stages of expansion: payback. How quickly can the country be made into a profit center via PPV?

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