UFC Needs to Adapt Management Philosophy

November 24, 2008

Dana White has almost single-handedly navigated a tarnished brand and a banished sport from the brink of death to the brink of mainstream acceptance and international popularity.

Along the way, he has used an unparalleled level of cunning skill and unrelenting passion to micro-manage every detail of the UFC in order to carve it a sporting niche. The UFC President is quite literally involved with every aspect of the UFC from matchmaking to fighter relations to public/media relations to marketing to event production to…well, you get the point.

But, it is becoming increasingly apparent that the UFC needs to move away from this micro-management philosophy.

In this day and age of rapid globalization, how many other CEOs of multinational, half-billion dollar firms can you point to that are involved in as much of everything as Dana White is with the UFC?

I’m having a difficult time pointing to any significant precedence for this sort of management philosophy and probably for good reason: the inefficiencies and impracticalities of executive micro-management at the multinational level can severely hinder firm performance.

I see in Dana White a man under enormous pressure and duress due to an overwhelming slate of travel and responsibility. He has proved his competence time and time again, but even the most competent of individuals cannot perform at their peak without the requisites of a healthy life – rest, diet, and free time.

If burn out hasn’t already arrived at White’s doorstep, it will shortly.

The increasing frequency that disputes with fighters, agents, other organizations, TV networks, and retail organizations have gone public is alarming. So, are the questionable negotiating tactics from the sometimes openly frustrated White.

While certainly, there are two sides to every story, one cannot help but wonder if the end-goal of the UFC couldn’t be accomplished without the fist pounding and ultimatums. An individual well-versed in the art of negotiation, especially within the sports industry could be an extremely valuable asset.

The UFC has brought in some extremely talented people over the last few years – Marc Ratner, Craig Borsari, and most recently, Lorenzo Fertitta – and not only is it important for this talent acquisition to continue, it’s also important for these individuals to be given larger roles and responsibilities within the organization.

The wisdom, trust, and patience necessary to surround oneself with quality people and then actually allow them to do what they do best are what separate the good leaders from the truly great leaders.

There’s no doubt that White is wise enough to surround himself with great MMA talents – he already has – but does he possess enough trust in and patience with these individuals to hand over some of his decision making responsibility?

Thus, it seems quite apparent that the ability of Dana White and UFC management to adapt their management style to the growing needs and demands of their increasingly international business will largely determine their success moving forward.

Promoter's Spotlight: Maximum Fighting Championship

November 7, 2008

I have talked a lot on this website about mismanagement in MMA and have been somewhat vindicated by recent events within the industry. However, while I remain convinced that there is no need to panic, some are still sitting on the fence.

As a result, I have set out to demonstrate that there is a right way of doing things in MMA and that there exist a host of successful organizations within North America.

Thus, I present to you the first MMAPayout.com Promoter’s Spotlight on Maximum Fighting Championship (MFC). I was fortunate enough to sit down with the President of Maximum Fighting Championship, Mark Pavelich, to learn more about his fledging promotion.

The Organization

The now Edmonton-based Maximum Fighting Championship started in 1999 and held its inaugural show in early 2000 in Grand Prairie, Alberta.

The early years of MFC were somewhat of a mixed success – as most early years are for MMA organizations – and it simply took time to build a brand and a reputation. Not long after the MFC was able to produce a consistent MMA show they began to build a fan base consistent with their growing reputation.

In 2007, a Las Vegas, Nevada based entity known as the Paragon Gaming Group became a sponsor of MFC and helped move the organization’s shows to The River Cree Resort and Casino. Despite the new venue holding nearly half the crowd that previous locations had, it allowed MFC to raise their ticket prices while also generating revenue from a site fee paid by the owners of the casino.

“After we did the math we were making more money for 2,500 people than we were 5,000” Pavelich said, then joked “our ticket prices are extortionate…I can’t afford to sit there [front row], because they’re $600.”

Now, the organization is looking to establish season ticket packages for all of its River Cree Resort events – something that’s clearly out of the big four playbook, but that’s exactly the point.

“I’ve never treated the Maximum Fighting Championship like a mixed martial art organization” Pavelich said. “I’ve treated [MFC] like a professional sports organization and that’s the difference.”

Treating MFC like a true sports organization also seems to be the rationale behind Pavelich’s decision to hold fights inside a ring.

“When I first started talking to people [businesses] about sponsorships, they kind of got freaked out about fighting in a cage” he noted, because “they attribute fighting as a sport, in a ring.”

And when you look at their long list of corporate partners – like Miller Genuine Draft or Lexus – it’s obvious that holding fights inside the ring certainly has not hurt MFC.

Running a sports organization also involves a considerable amount of product management, but as it pertains to MMA promotions, few issues with the in-ring product are more important than dealing with fighter and his management team. To that end, Pavelich cautions that management teams and other MMA organizations, alike, need a reality check.

“A lot of management companies still have to realize that, [they can’t] be delusional on where we’re at in this sport” he said, and “there are organizations out there that are an absolute disgrace to mixed martial arts, because they’re driving up the pricing of fighter payroll so high that they feel that is the way they’re going to compete with the UFC.”

Future Expansion: Bearish on Canadian MMA, Heading South

Unfortunately for Canadian MMA fans, Pavelich holds a rather bearish view of the Canadian MMA landscape. He mainly cites the lack of sanctioning in Ontario and British Columbia, but also pointed to the stagnated growth of the TKO Fighting Championship in Quebec as his primary concerns with the Canadian market.

The recent decision by TKO President, Stephane Patry, to step down also received sharp criticism from Pavelich.

“I think it’s another ridiculous thing” he said. “If I came out tomorrow and said, ‘I’m going to step down from the Maximum Fighting Championship;’ if I’m stepping down from the Maximum Fighting Championship, I just went out of business.”

And so, having conquered Alberta, but holding a bearish view of the rest of Canada, the MFC has set its sights on the U.S. market.

“We’re looking at demographic cities that are…below Edmonton, Alberta” Pavelich noted, and “that means everything reaching from the bottom of the states like Texas, all the way up to Montana, because those are the states thriving in a very depressed economy.”

But, that shouldn’t signal the MFC’s impending arrival on a Las Vegas tarmac any time soon. Pavelich believes Vegas to be one of the more depressed markets in America right now, especially for MMA, and thus the MFC is looking to pursue other markets.

It’s also just as likely that the MFC would find competing against the UFC, on the UFC’s home turf, very difficult – just ask Affliction.

Ultimately, however, that’s Pavelich’s goal, “we want to be number two to the UFC, anything less than that is a total failure to us” he said. “We’re one of only three or four organizations out there making real money…I’m talking King Kong money and we’re in the position where we’ve put in eight years of hard work and it’s starting to pay off.”

The MFC’s new, live-broadcast deal with HDNet Fights will be vital to their assault on the UFC’s stranglehold of the MMA market, but Pavelich believes he’s already seeing the benefits of partnering with Mark Cuban and his popular specialty channel.

“Mark Cuban is a calculating human being – he wants to study [MMA] and figure things out” he said, and “broadcasting wise, I don’t think anybody can argue the level it’s at: their camera crew at HDNet is one of the few crews that actually know how to film mixed martial art events.”

At the end of the day, though, the key to success for firms throughout the business world are is a core, competitive advantage. When asked about MFC’s competitive advantage, the answer was a simple one, knowledge.

“I have to make it definitive: before it’s all said and done, we have to be number two to the UFC” Pavelich notes, and “anything else, I just don’t understand it, because the people we’re competing with just don’t have the knowledge we have.”

Payout Opinion:

As a young businessman in the MMA industry, an interview like the one I had with Mark is an absolute gem of a learning tool.

Say what you want about Pavelich – many people do, he knows it and doesn’t care – but his passion for the sport drives his business. He eats, sleeps, and breathes mixed martial arts and that’s the difference maker.

Additionally, he’s also very confident. He has to be in order to proclaim, “I’m not a promoter. I’m a pioneer!” However, that confidence pays off in the board room when he’s seeking out new corporate sponsorship or looking to broker deals like the one he recently made with HDNet.

Perhaps most interesting, though, were his thoughts on the three biggest challenges that he faces as a promo…err…pioneer:

1.) Knowledge of MMA and conveying it to an audience
2.) Corporate Sponsorships driving his organization
3.) Dealing with fighter management in terms of negotiating payouts.

You can check out the entire interview, here.

Also, be sure to watch for the next edition of MMAPayout.com’s Promoter’s Spotlight.

S&P Places Station Casinos on CreditWatch List

October 20, 2008

NEW YORK  Oct. 20, 2008–Standard & Poor’s Ratings Services today placed its ratings, including its ‘B-‘ corporate credit rating, on Las Vegas-based Station Casinos Inc. on CreditWatch with negative implications.

“The CreditWatch listing reflects our concerns around the company’s progress toward amending its bank covenants,” explained Standard & Poor’s credit analyst Ben Bubeck.

On Sept. 17, 2008, following our review of the terms of a proposed amendment to Station’s bank facility, we lowered our rating one notch and cited concern that, despite the proposed loosening of the covenants included in the amendment, the company could face a covenant violation potentially as soon as March 31, 2009.

The conclusion of our review incorporated the assumption that Station would execute the amendment in the near term. However, the company has yet to announce execution of the amendment. In the absence of an amendment, we project that the company will violate its total leverage covenant on Dec. 31, 2008. In addition, more recent turmoil in the financial markets and continued weakening of economy are likely pressuring performance in the Las Vegas locals market more than previously contemplated.

In resolving the CreditWatch listing, we will continue to monitor the company’s progress toward executing an amendment to its bank facility, and will reassess our conclusion in the event that the terms of the proposed amendment have changed since our previous review on Sept. 17, 2008. We will also revisit our assumptions around expectations for Station’s performance as part of the review.

Spike Orders 2-Hour Pilot from MGM, Executive Produced by Dana White

October 8, 2008

New York, NY, October 8, 2008 – Spike TV has ordered an untitled two-hour pilot based on the Irish Mob in Boston from MGM Television Entertainment (MGM), and will go into production late this fall with an option to go to series.  Emmy® and DGA award-winning director Walter Hill will serve as director of the pilot. Chris Bertolini (“The General’s Daughter,” Battle: Los Angeles) wrote the script.  The original drama is executive produced by Ultimate Fighting Championship® President Dana White and Tom Lynch and the Tom Lynch Company.

Scheduled to shoot on location in Boston, the story revolves around the explosive fallout that occurs when a Boston mob boss abruptly vacates his position and various rival factions face off in an epic battle to control the streets.

The production team also includes Gary Stephenson and Richard Bullock who will serve as producers.  Sheila Jaffe (“The Sopranos,” “Entourage”) will serve as casting director.

During the course of his remarkable career, Hill has been a writer, director and producer on projects ranging from classic westerns to action-packed thrillers and buddy comedies, all marked with his visceral style.  Hill most recently directed AMC’s critically-acclaimed and Emmy®-award winning miniseries “Broken Trail,” for which he won the Emmy Award® for producing and was nominated for Outstanding Directing For a Miniseries, Movie or Dramatic Special. Hill won the DGA award for “Broken Trail,” and was honored with Emmy and DGA awards for his work on the pilot of the groundbreaking neo-western “Deadwood” for HBO.  Hill is represented by ICM.

This movie marks the first ever scripted project for White, who helms the world’s fastest growing sports organization, the UFC, and hosts Spike TV’s wildly popular series, “The Ultimate Fighter.”

Bill McGoldrick, senior vice president, development, is Spike TV’s executive in charge of production.  For MGM, production is being managed by Chris Ottinger, Executive Vice President, Worldwide Television Group.

CBS Exec Kahl: "Coming back with fight No. 4."

October 6, 2008

CBS Senior Executive VP for Primetime Kelly Kahl spoke with several MMA media outlets on Sunday night, and re-affirmed the network’s commitment to finishing out their contract with EliteXC. Speaking with Michael David Smith of MMA Fanhouse:

“The numbers last night were terrific,” Kahl said. “The total viewer number was on par with May 31 and the demos were down just a little bit, but we were up against a couple good college football games and the baseball playoffs. … Last night was a step ahead, not a step back. To do roughly the numbers we did in May against much steeper competition bodes pretty well.”

“We have a four-fight contract,” Kahl said. “We certainly plan on coming back with fight No. 4.”

Speaking with MMAWeekly, Kahl stood behind the decision to go forward with a Kimbo fight, even after Ken Shamrock was forced to withdraw from the match:

In terms of Shamrock, that was a situation really out of our control,” Kahl continued. “We did what a professional organization would do. We got another quality fighter in the ring with Kimbo. We didn’t want to disappoint the audiences on television or in the arena. And we obviously put a good fighter in there. In terms of the surprising outcome, that’s just the fight game. Kimbo was a man for stepping up and taking the fight, and Petruzelli was a stud for taking it too. At the end of the day, we promised Kimbo Slice and we delivered Kimbo Slice.”

Kahl also spoke on the ratings and saw the ratings for last night as being the settling point, and what CBS would look to do going forward:

“It’s looking like the night is going to tuck into slightly behind the May card, but I think it’s hopefully more representative of the cards that we would do moving forward. Recognizing that there was a lot of hype around the first one, that the second was kind of an anomaly, because we did it in July when we weren’t able to support it as well with our CBS promotion. So I like to think this is the number we can look at going forward, which is a very solid, very sustainable number.”

BusinessWeek's 100 Most Influential People in Sports

October 6, 2008

The current issue of Business Week features The Power 100: The Most Influential People in Sports. UFC President Dana White was named # 61. White is featured prominently in a cartoon accompanying the piece emblazoned on a UFC title belt alongside Casey Wasserman and Danica Patrick. The caption to his listing reads, “led by UFC, mixed martial arts is shoving boxing aside as the biggest draw for fight fans.”

As a demonstration of the publication’s belief that MMA is supplanting boxing, Ross Greenberg, President of HBO Sports and the current power broker in boxing, comes in five slots behind White at # 66.

Other players connected to the MMA industry cracking the list include Mark Cuban, owner of the Dallas Mavricks and HDNet, at # 44. Tony Ponturo, VP of Global Media and Sports Marketing for Anhueser-Busch, is # 14 with a description that is of some significance to the MMA industry: “all eyes will be on the man who controls the biggest ad budget in sports–to see what the brewer’s new owner will spend.”

Casey Wasserman, CEO of Wasserman Media Group, checks in at # 46. WMG is a recent entrant into the MMA industry counting Randy Couture, Gina Carano, and MMARated.com among its portfolio in the sport.

EliteXC CEO Speaks With MMAWeekly

October 2, 2008

EliteXC CEO Chuck Champion recently sat down wit MMAWeekly for an in-depth talk about his financial moves at the helm of ProElite.

Champion was able to give a little more detail on the nature of the most recent funding efforts that were detailed in their recent SEC filings:

In a candid conversation with MMAWeekly.com, the CEO said that the $2.5 million dollar shortfall came when two major investors in the company, The Hunter Fund and Absolute Fund, elected not to make a scheduled loan.

“Them not having been able to consummate those, for reasons that are better illuminated by them than me, put us in a situation where we had to rely on our commercial partners, CBS and Showtime, to help us get through that bridge. They were terrific enough to be able to advance us license fees in order to be able to put on the rest of the shows for the remainder of the year, the last one being Nov. 8.”

The tightening of credit markets are a likely culprit. EliteXC has attempted additional major capital raises, approaching various entities already, but it will be a tough road in the current environment. A rumored increased stake by TV partner Showtime may be a bit more plausible.

Champion also detailed the high burn rate EliteXC had with cash and the cost cutting efforts that have taken place since he has taken over. That passage really underscores the lack of financial foresight that is being used with the start-ups in the MMA field. Folks like Champion and Jay Larkin with the IFL are brought to instill fiscal sanity once original management has felt the hangover from their cash-drunk adventures.

Larkin is castigated by some in the MMA field because he wasn’t a died in the wool MMA fan, but in the role of CEO having good financial sense trumps knowing a keylock from a kimura. Sure it would be nice if you have both, but booking and the nuts and bolts of the sporting side can be better served by having a strong number two man to handle those areas.

Fertittas Among 25 Highest Paid Men

October 2, 2008

Executive compensation has become a hot button issue during the recent economic crisis. A list compiled by Fortune magazine of the 25 Highest Paid Men features, perhaps surprisingly, two names familiar to the MMA industry.

Frank and Lorenzo Fertitta, owners of Zuffa, parent company of the UFC, ranked third and fourth respectively on the list. Frank Fertitta III earned $146.6 million in compensation in 2007 as Chairman and CEO of Station Casinos. Lorenzo Fertitta earned $145.4 million as Vice Chairman and President. Fertitta left his position as President earlier this year to join Zuffa full time.

KJ Noons' Future: Curtain Jerker?

August 26, 2008

Curtain Jerker – the first fighter to walk out to the ring in the first match of the day.

Jared Shaw speaks with Percy Crawford of FightHype and gives another option for KJ Noons if he doesn’t want to play ball with a Diaz Noons match-up:

Look Percy, there is nothing that says I can’t put KJ Noons on an undercard; off TV. He can be first fight of the night; champion or not. There is no rule to that so who is really threatening who here? Again, being a champion is a great thing, but if you are not around, having a belt doesn’t mean anything because nobody knows who you are. Win or lose in a fight with Nick Diaz, I believe both of them come out stars.

Shaw certainly doesn’t seem to be shying away from the tough talk publicly as it relates to putting on Noons vs Diaz. To be honest, If the fight does go on at some point, it probably won’t be half as entertaining as the war of words over the past week has been.

EliteXC's Jeremy Lappen Responds To Silva Situation

August 22, 2008


LOS ANGELES (Aug. 21, 2008) – The California State Athletic Commission announced Thursday morning it had suspended Antonio Silva for 12 months and fined him $2,500 for testing positive for the banned anabolic substance Boldenone after a fight on July 26 in Stockton.

Shortly thereafter, Silva’s co-manager Alex Davis issued a statement claiming not only that his fighter was clean but that he had no idea how Silva could have tested positive.

Here is what Jeremy Lappen, Head of EliteXC Fight Operations, had to say in response to Thursday’s events:

“We respect the California commission and the job they do. We always enjoy working with them and work very well together. The illegal use of steroids is a problem in all major sports, including mixed martial arts. We certainly do not condone the use of steroids.

“But we also support, trust and have confidence in our fighter, Antonio Silva, who has denied ever taken any illegal substance, including steroids, and is prepared to challenge the results of the California Commission.

“So until all the facts are known and a final decision is rendered, EliteXC will reserve making any further comments at this time.’’

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