Exploring a Possible UFC-WEC Merger

August 17, 2009

The talk of a potential merger between the UFC and the WEC has increased dramatically over the last few weeks, thus MMAPayout has decided to explore the idea and potential consequences of such a deal.

Since Zuffa bought the WEC in 2007, the idea has been to run the company as a completely separate entity to the UFC and develop the brand as a stand-alone product that featured some of the world’s best smaller fighters – that’s why the company dropped its 170, 185, and 205 division in 2008.

While Zuffa has more or less succeeded making WEC the home to most of the world’s top bantamweight and featherweight fighters, it hasn’t been able to grow the brand into a wildly successful, highly profitable brand like the UFC. It’s by virtue of that poor brand recognition that we’ve yet to see a WEC PPV; and therein lies the problem.

It’s sort of become a vicious, self-fulfilling cycle for the WEC: they lack the brand recogntion to host PPV and major television events, events that would in turn help to boost their brand. To a certain degree its hard to fault the WEC because they’re really getting the short end of the stick in terms of human and financial capital; the UFC is simply too big and growing too quickly to leave much for the WEC to work with.

And so, without the strong PPV buys or the backing of a major network – in addition to lacking the support structure that the UFC enjoys – the money, nor the exposure, is available to the world-class athletes that the WEC does employ. The feeling is very much that fighters like Mike Brown, Miguel Torres, Brian Bowles, Urjiah Faber, Jose Aldo, and Donald Cerrone in co. deserve more.

Enter the UFC-WEC merger discussion.

Pros and Cons

+ Fighters like Torres, Faber, Brown, Bowles, Aldo, and the rest of the emerging WEC talent would be given a much larger stage to showcase themselves and their fighting talent. An increase in exposure would give these fighters an opportunity to earn a greater following, and thus increase their earning potential (both from a compensation standpoint and a sponsorship standpoint).

+ Two new divisions within the UFC would supply the organization with enough top-end talent to better fill the main card portions of PPVs and Spike TV cards. The PPV and rating numbers seem to support the idea that non-title fight events are seen as second tier; by absorbing the WEC, the UFC is giving itself two additional belts and a host of new talent to help fill those main cards. If the UFC is looking for consistency in its PPV numbers, it must work to eliminate the UFC 95 and 96 cards that don’t feature a title defense or an incredibly interesting match-up. Even the UFC 101 main cards that really only feature two draws of any interest need to be eliminated. The two new divisions would also help matchmaker Joe Silva make last minute replacements to cards that would otherwise be victimized by last-minute changes (UFC 85 comes to mind).

+ Likewise, the UFC could use two new divisions to spur the expansion of other content offerings such as its UFC magazine or UFC unleashed and knockout series. If the magazine, for example, is looking to move from a bi-monthly to a monthly edition in the next couple years, more fights and fighters will greatly help that transition.

– However, the UFC already has enough trouble giving its current roster the standard 3-4 fights per year; adding more fighters would complicate things even further.  Sure the champions and top-end talent will find fights, but what about the lower-level guys or developing prospects?

– Higher fighter turnover is likely to result from an influx of even more fighters into the UFC. If you thought the fighter turnover was bad now (McCrory and Leites just the latest of known UFC fighters to get the axe), then just wait until the UFC adds 40-50 more guys.

– There are also a lot of talented industry people working for the WEC currently – what of their jobs?
– What happens to obligations with Versus?

A Potential Solution

At the time Zuffa bought the WEC, the UFC didn’t have the capacity to absorb the entire organization; so in hindsight, it was probably the correct play on Zuffa’s part to operate the WEC as a separate entity. At the very least, it gave Zuffa the opportunity to try and duplicate the success they had with the UFC.

Now, the UFC is a far larger company than anyone probably envisioned even two years ago, and the WEC’s growth has been less than flattering for a parent company used to expanding at a breakneck pace. Not only is there not enough human or financial resources necessary to make the WEC a major player, but it would appear as though the WEC seems destined to forever linger in the shadow of its sister company.

The question then becomes, if the WEC really isn’t taking off, then why not bring the best of the organization over to the UFC? The idea being that parts of the WEC could potentially add more value as a part of the UFC than as a separate entity; transfer the best WEC fighters, its video library, and some of the management personnel to the UFC in order to help round out the organization. Then move to address some of the potential pitfalls of the merger.

It’s not as if the UFC is really adding a ton of fighters, either. If you take the top 20 guys in both the bantamweight and featherweight divisions, plus 5 of the top lightweights from the WEC, that’s just 45 contracts.

The UFC is growing at such a quick pace – both domestically and internationally – that it likely wouldn’t surprise anyone if they were to host 24+events in 2010, and more in following years. Those events are going to need quality main events – many of them title defenses – and having seven divisions full of champions and contenders makes that a lot easier. It also bodes well for the future of the 135 and 145 divisions if prospective fighters know that they can earn a healthy living as an MMA fighter in those categories.

In order to address the 3-4 fights per year issue, the UFC would probably have to use some combination of roster cuts in other divisions, while also tacking on 1-2 more fights to every undercard in order to push everyone through to their 3-4 fights a year. Not much of a stretch considering we’ve already seen the UFC fill big cards (UFC 99 in Germany had 12 fights at one time).

Also consider that the UFC seems to have revisited its policy on exclusivity to some extent. They’ve allowed Houston Alexander to fight on the next Adrenaline card, which is something they really haven’t done in close to three years. It’s another tool they can use to alleviate some of the roster stress they organization might experience with added WEC fighters.

In the end, a simple comparison is all that’s necessary to realize that the long run benefit of adding potential PPV draws like Torres, Brown, Faber, Bowles, etc. far outweighs the short-term cost of paying for a few extra fight purses on every card.

Unfortunately, there’s no way to address the rampant turnover that exists in the UFC – it’s a necessary evil from the organizations perspective (as unpopular as it may be with the fans). While it’s regrettable that fighters are sometimes signed and released quickly, their marketability is forever improved having fought in the UFC. It also helps the sport, believe it or not, to have a host of former UFC fighters because they’re seen as legitimate options to anchor the fight cards of smaller promotions.

Another Option?

If, for whatever reason, a merger isn’t possible it would be well worth Zuffa’s while to canvas network television at any cost.

I say this for two reasons: 1.) even if they had to take a bad deal in the short term, the resulting gains in popularity would almost certainly garner them a better deal in the future, and 2.) it’s really a trojan horse of sorts, because Zuffa can still use the WEC programming on network TV to push viewers to their UFC PPVs which generate the bulk of the company’s revenues.

Even if Zuffa receives nothing in terms of rights fees, they’re still going to be ahead in terms of the exposure that might lead to potential WEC PPVs, better television deals in the future, or in-programming UFC content advertisements that push viewers to UFC content. Zuffa and the WEC would simply need to ensure they retained some semblance of production control in order to run the sponsorship and advertisement set they need to.

Food for thought at any rate.

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