UFC and WEC Set to Merge

October 28, 2010

Ariel Helwani of MMAFighting.com has just posted an interview with Dana White in which the UFC President has announced the UFC and WEC will be merging effective January 2011.

Payout Perspective:

This is a topic that I’ve covered almost ad nauseam over the last two years with articles like Exploring a Possible Merger and interviews with WEC GM Reed Harris (Part 1 and Part 2), because I felt it was truly important for the continued growth and development of MMA as a sport and the UFC in particular.

Below, I’ve done my best to distill exactly how the UFC will benefit from the merger and why it needed to happen:

1.) Return on Assets: The company is moving assets like Urijah Faber and Jose Aldo from the WEC platform that is maybe generating 2x to the UFC platform that is capable of generating 10x. I understand that the WEC was profitable, but the UFC will be more profitable using the WEC’s fighters and title belts than the WEC ever could have been.

2.) Title Belts: The UFC uses title fights as PPV anchors and a means to map out their event planning strategy 3-6 months ahead of time. It now has two additional belts to use which should help the company to better withstand injury streaks like those that hit its title holders in the Fall of 2009. And if you still question how much title fights mean to the UFC, I’ll simply say this: The UFC does nearly twice the number of PPV buys with an event  featuring a title fight than it does without a title fight.

3.) More Fighters, More Growth. If the UFC plans to continue increasing the number of events it hosts in a calendar year, it will need the added depth of two new divisions to avoid fight cards like UFC 122 that are more or less unremarkable in the mind of the casual consumer. It’s not just the title belts that count here, but also the two sets of highly skilled fighters and serious contenders that will be used to help better fill out every fight card that are also of material interest.

4.) Television Appeal. The new found depth may also prove valuable if/when the UFC signs a new television deal and agrees to further event commitments on any one of the big four networks.

5.) Attention for the Lighter Weights. This deal finally brings some much needed attention to the fast and furious fighters in the lower weight classes that are every bit as good as the men fighting in weight classes above them. The UFC will now give these guys like Faber and Aldo the mainstream attention they deserve. Moreover, the mainstream now has a better platform to discover just how exciting these guys really are and the UFC is surely to benefit from increased product quality as the result of this integration.

6.) No More Confusion. This merger presents an opportunity for Zuffa to present a single and consistent brand message to the consumer. There is no more confusion or double taking on account of an event that looks, feels, and sounds like something from the UFC but really isn’t (but maybe kind of is). It’s all called UFC from here on out. That consistent message will also help Zuffa to focus internally; there are no more divergent or competing goals between two different brands striving to use the limited resources of the same company.

Please excuse me for what you might believe to be hyperbole for this is not: today will prove to be a watershed moment for not only the UFC but MMA in general. That’s how big of a deal this is.

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Edit: I imagine I might have several more thoughts on this today:

  • In thinking about the sponsorship situation I have to wonder what now happens with MusclePharm and AMP Energy. The UFC already has official sponsors in those categories; BSN doesn’t have exclusivity but I believe Xyience does (at least the latest GOOD4U ban would intimate that they do). Interesting. Keep an eye on this.

18 Responses to “UFC and WEC Set to Merge”

  1. Tweets that mention UFC and WEC Set to Merge : MMAPayout.com: The Business of MMA -- Topsy.com on October 28th, 2010 12:13 PM

    […] This post was mentioned on Twitter by MMA Payout, Jordan Breen and Taylor C, mma.ly. mma.ly said: UFC and WEC Set to Merge http://bit.ly/9XTgW0 (MMA Payout) #fb […]

  2. jv on October 28th, 2010 1:08 PM

    This is good for the WEC fighters for sure. No more untouchable status for them. But after that I diverge on how important this is.

    More fighters will help bulk up the weaker PPVs. But it is still to be seen if that will substantially up the buy rate. I think buyer fatigue is growing and I don’t think this will be enough to over come that. There are also a substantial number of fans who for what ever reason hate on the smaller fighters. I don’t get it but it is true.

    I have seen conflicting info on what will still be available for free. If this just looks like a huge cash grab it could back fire.

  3. Machiel Van on October 28th, 2010 1:27 PM

    On the Xyience issue,

    Yes, it’s true that Xyience is the official energy drink sponsor of the UFC, but isn’t Xyience controlled by either Zuffa or the Fertittas themselves (I know it is not wholly owned, but I believe either the Zuffa entity or the Fertittas have the controlling interest)? If so, it is not out of the realm of possibility that they may authorize AMP to operate as a second sponsor. However, one would think that AMP would have to renegotiate their sponsorship deal with Zuffa, since the UFC would give their brand a lot more exposure than the WEC.

  4. Machiel Van on October 28th, 2010 1:31 PM

    I must also agree, Kelsey. People probably won’t understand how much this merger means at first, but it will become very apparent in the coming year. Glad to see the VS deal will remain in place, especially with the Comcast/NBC merger and possible re-branding of the channel.

  5. Stan on October 28th, 2010 2:34 PM

    Awesome news for MMA fans, some of these UFC cards are going to be deep. It will also help SF and Bellator since with 2 weight divisions and the top 155’ers from WEC coming over some of the talented guys across divisons in UFC will be let go, and that should help address the roster depth issues in SF and Bellator.

  6. Stan on October 28th, 2010 2:40 PM

    JV,

    Please explain your “cash grab” comment, because as it stands now, Meltzer breaks it down, the UFC will be losing about 5 shows between WEC and UFC. Now we’ll see how this pans out because I personally feel this is step-one in a bigger television expansion. As Kelsey points out WEC was profitable, but it wasn’t anywhere near the level of the UFC, so it’s not like this merger is going to bring major superstars over and give a sudden influx of cash to the UFC banner, if anything there will be a few growing pains in adding the 2 new divisions and new fighters. I don’t see the “cash grab” that will immediately happen from this move, it’s a long term plan that, to me, makes an incredible amount of sense.

    Also, since they’re already advertising the next TUF for WW and MW, I wouldn’t be surprised if the following one has either 145, 135 or both.

  7. jv on October 28th, 2010 3:50 PM

    >”Please explain your “cash grab” comment”

    I haven’t seen what Meltzer wrote so maybe there is some thing there.

    What I am referring to is doing away with free shows and charging $60 to see the same fighters you were seeing for free. What I have read is that they will be going from 10 shows on Versus to 4. The other 6 you will have to spend $60 to watch.

    Those 4 shows may have UFC on the logo but the free UFC shows have sucked in comparison to the WEC shows lately. If I remember the trending on the free UFC shows isn’t doing particularly well.

    One of the talking points in the forums used to be that the high PPV fees were worth while because of all the free content. People counting the commercials as free content. If it looks like the UFC is trying to dry up the number of free shows in order to get people to buy more PPV shows, people may start to feel like they are being milked. A year ago you couldn’t find any one that would admit to skipping buying PPV shows. These days it is quite common. Times are tough for a lot of people and you can’t expect them to keep giving more and more and more. The free shows bought some good will. Fewer free shows will mean less good will.

  8. jv on October 28th, 2010 4:00 PM

    >”Awesome news for MMA fans, some of these UFC cards are going to be deep. It will also help SF and Bellator since with 2 weight divisions and the top 155′ers from WEC coming over some of the talented guys across divisons in UFC will be let go, and that should help address the roster depth issues in SF and Bellator.”

    Bellator and SF don’t have roster issues due to a lack of available talent. In Strikefores case they have more fighters than they can use due to Showtime not taking as many shows as originally planed. They were supposed to do 20 shows including CBS last year and then did 16. The SF roster has actually been growing by leaps and bounds. And contrary to popular internet myth and legend fighters very rarely go straight from the UFC to SF. Besides I don’t think more than a handful will be cut by the UFC. They need the fighters.

    Bellators problems are pretty well all of their own making and there is a good chance that they won’t be around next season.

  9. Stan on October 28th, 2010 9:06 PM

    JV,

    Disagree about SF, they may have some talent on their roster numbers wise, but I was referring more to the quality of fighters, I think there is a severe dropoff in talent in SF once you get past a handful of top guys, I think cuts will come and those guys will be better than many guys on SF’s roster. For example, Cote got cut today, without having SF’s 185 roster in front of me, I am assuming there’s someone under contract with them who he could replace and it would be an improvement. I do agree though that SF has been careful about not signing every guy UFC cuts, because I imagine they don’t want to portray a minor league image.

    I will have to google for the quote a little more, but I am 99% sure Dana said they are capped on PPVs, so there will not be any more PPVs as far as things stand now. As things stand at this second Zuffa will run 5 less shows next year. Since it’s a privately held company I am making a logical guess that Zuffa did not run 5 shows at a loss last year, between locked in sponsors and such I just don’t see it…

    Yes, I agree, they are likely trying to push their PPV numbers up because that’s where the money is right now for them, I would imagine they show a bigger trend when title fights are on a card, so they now have 2 more titles to build up and put championship fights on PPV.

  10. rick on October 28th, 2010 10:42 PM

    You know what irks me about the above comments, its the spin people put on UFC trying to make money! Doh, hello, it a freaking business! Lets try to be more positive, maybe all this, is a plan to offer and entice the networks about the capabilities of the UFC drawing power! They know they have to build up the little guys and show the Networks that they can fill the needs of big shows several times a year and to include some PPVs! It is not always a devious plan of the UFC when they do things like this, maybe, just maybe, they do want the best for MMA’s future, which in turn would make them more money anyways. Just my thought!

  11. mmaguru on October 29th, 2010 9:19 AM

    This is great news. I find it difficult to be able to watch WEC events live. Now we will get a chance to see these fighters in the UFC which should add so much more interest in their events.

  12. Brain Smasher on October 29th, 2010 11:57 AM

    Does anyone think Cain winning the belt expedited this merger? The WEC had the weight class’ that most Hispanics would compete in. Also WEC has more Hispanic fighters. Now that they finally have the Hispanic eyes on the UFC, what better time than to merge?

    With talk of a UFC in Mexico city this was much needed.

  13. Kelsey Philpott on October 29th, 2010 2:12 PM

    I’ve been told this merger has been in the works for two months now, but kept on the hush hush. Cain didn’t have anything to do with it.

  14. Diego on October 29th, 2010 6:35 PM

    HOORAY!!!! I’m just happy for the fighters. Jose Aldo should definitely be headlining major PPVs (500k+ buys, not the emasculated WEC kind) and now he will get the chance. This will be great for all those guys toiling away in the WEC, fighting in front of anemic crowds – and at the same time it reinforces the UFC brand as the best place to go for exciting sports action. Well done, long overdue.

  15. BrainSmasher on October 29th, 2010 9:53 PM

    Kelsey, i was referring more to the timing. I have heard about the merger for a long time too. But why now? Wether Cain did or didnt influence the decision it was still good timing to and curtainly wont turn away Hispanic viewers to have more fighers they relate to and fighters their own size to relate too. Just seems to me there are many reason for the merger but this is what put it over. They clearly have been resisting pulling the trigger on it.

  16. Joeygarciayesthatone on October 30th, 2010 9:53 PM

    what this merger means if you can read between the lines is mma wont ever sell, and make a profit the way UFC does. (the front office is no diffrent than AT&T or any other for profit buisness)
    as someone pointed out up there (post) you have got the same guys fighting in the minor leagues currently but your just putting an MLB logo on them and calling it the “majors”. you can bull shit some of the people some of the time but you can bullshit all of the people all of the time.
    just watched pacquio 24/7 hes getting out of a $100,000 mercedes benz you know the same one Dana White and the Frettettas drive while BJ Penn and others are living in cramped apartments probally driving a honda civic.
    there needs to be some kind of parity which pays these fighters what they are worth a the box office because the UFC is starting to only sell in big (respectable) numbers ppv wise only when name fighters fight. I wanna see Lesner, GSP, and those guys steppin out of the long stretch limousines 100K cars and the like just like the top boxers do, because UFC fighters are now the reason why UFC can pull in big PPV numbers. its no longer the UFC brand that sells. its the name match-ups. and the UFC will continue to “pimp” these guys like Lesner, GSP, Randy, ect. until somebody steps up and says “STRIKE” like they do in all major sports.
    But remember the “microphone” Joe Rogan and Goldberg control is being orchestrated by Dana himself. so right now they can thow away Hendo and the others in the garbage can and you the people will watch the “scabs” fight and call that the “Majors”.

  17. Kevin L. Wiley on October 31st, 2010 12:08 PM

    I think this a potentially huge move especially with the UFC’s fringe or non hardcore audience.

    Recently the UFC had (in my opinion) began losing some of its broad appeal. Many non hard core or what I like to call “fringe” fans have been negatively reacting to decisions, and fights controlled by wrestlers (basically lack of action). With the merging in of the lighter weight fighters, the action aspect of UFC shows will automatically increase, I believe this is huge as MMA appeals to a broader and broader audience,

    The one posters comment on the “Mexican market” and Velasquez’s winning of the UFC HW title is on point in my opinion. The Hispanic market marks the biggest potential market for immediate impact for the UFC, and the market’s love for combat sports, and the large WEC influence of latin based fighters (Cruz, Benavidez, garcia, and Torres) marks a great chance at breaking through right now.

    As a hardcore fan, I am as excited by this as anything since Pride’s stable coming to the UFC.

    I am also wondering if there is a chance that Zuffa might add a 6th scheduled bout on PPV’s? (maybe just pie in the sky lol).

  18. Brain Smasher on November 1st, 2010 2:08 PM

    Joey Garcia

    It dont appear you follow MMA very closely. BJ Penn was born into a wealthy family and lives in a paradise in Hawaii.

    The GSP and Lesnars you mentioned can “step out of limos and 100K cars” if they choose. You think Brock has no money? I would guess he is making at least 3 million per fight after PPV %. GSP is easilt making millions per years. Chuck Liddell drives a Ferrari and a Hummer. Also arriving in a Limo is meaningless. Just about anyone can do it. Most dont own them anyway. Just rented.

    Uf anyone if getting under paid its the no name guys on the card not the big names you mention. Also using a boxer as an example of how MMA fighters should be paid is not the best example to follow. Low level boxers are paid less than Low level MMA fighters. Also top boxers take every penny while not investing in their sport. A Brock Lesnar may deserve a little more than he gets. BUt The UFC acts as a league to secure the future of the sport. How could Cain or Dos Santos every afford to promote themselves? Thats what the UFC does. Takes a little from the top guys and promotes and builds the next generation of fighters. This dont happen in Boxing. Maywether and Pacman dont take pay cuts to make sure boxing fans know about the up and comers. They dont use their money for the best interest of boxing. Which is why it is struggling, The UFC fights legal battles for the sport, gets sanction is cities, states, and countries that no single fighter would be willing or able to do. I believe boxing pay structure is one of the biggest reasons Boxing has the problems it does. Its why fights dont happen. The guys make to much to risk losing so they avoid bad style match ups and dont fight very often. Its a bad sign when Floyd and Pac can turn down the money they did. In every sport everyone wants to prove they are the best except for boxing. Teams dont refuse to play in the super bowl for more money.

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