UPDATED: UFC heading to Philippines for UFC Fight Night 65 May 16th

January 28, 2015

UFC is finally heading to the Philippines per a report by Bloody Elbow.  MMA Junkie reports that the deal has been finalized to hold UFC Fight Night 65 in Manila at the SM Mall of Asia Arena.

Back in 2011, the Philippines was thought to be the country to have the first international TUF according to Dana White. Obviously, that was not the case.  The Philippines is a fight crazy country and have come out by the thousands to see the likes of Carlos Condit, Chuck Liddell and Brandon Vera visit the country on behalf of the UFC.

Payout Perspective:

Certainly, an event in the Philippines could bring a large fan base to an event craving MMA.   Aside from basketball, the Philippines is big on combat sports.  The UFC has toiled with holding an event in the country and it looks like it could come to fruition.  Certainly, Filipino UFC fighters Mark Munoz, Mark Eddiva and Roldan Sangcha-an could be on tap for the event in Manila.

Top 10 of 2012: No. 8 Zuffa continues international expansion

December 27, 2012

The number 8 business story of 2012 is the continued international expansion of the UFC.  This year saw the launch of international TUFs, an Indian television deal and its first event in China.

The first international TUF was in Brazil and involved Vitor Belfort and Wanderlei Silva as coaches.  The show ran on Globo television in Brazil and on Fuel TV in America.  It was also streamed on TUF.tv.  Although the show did not air on Fuel TV until the season was halfway through its Brazilian television run, it was very popular in Brazil.  The show drew an impressive 8 million viewers for the debut episode on Globo TV. The number  was later adjusted to 12 million .  Regardless of 8 or 12 million, the show was a hit.  The UFC stated that over 100,000 viewers watched the show online.

In addition, the UFC introduced an Australian version of  The Ultimate Fighter subtitled “The Smashes” which featured Australian and British fighters.  The series which debuted in September was aired on FX Australia and ESPN UK.

The UFC made inroads into the Chinese market as it held its first event in China.  Off the mainland of China to be exact on the island of Macau.  It used Bruce Lee images in its marketing for the event to entice the locals.

The UFC also signed a television deal in India where it plans a TUF series in the near future.

It announced on Thursday that it will be going to Mexico in 2013 and Puerto Rico in 2014.

Events outside of North America this year included Brazil twice, England, Australia, Sweden, Japan and Macau.

UFC signs media deal in Indonesia

November 11, 2012

MMA Junkie reports that the UFC has entered a partnership with Indonesia’s MNC Media.  The deal gets the UFC a bigger foothold into the Asia market.

Indonesia’s population is over 245 million and growing and is the fourth most populous country in the world.  MNC Media owns television, print and radio companies which could provide the UFC with the necessary multiple platforms to promote events.

Payout Perspective:

The deal which will be formally announced in the near future reflects the company’s strategy to expand globally.  With its markers firm in Europe, Australia and South America, Asia was the next market to enter.  Focusing on populous countries such as India and Indonesia, the UFC is hoping that its brand and promotional efforts will attract its key demographics.  The UFC will likely produce a TUF series in Indonesia to introduce its product to the market.  As for China, we will see if the UFC can negotiate a deal in the biggest country on the Asian continent.

Brazilian Billionaire Interested In Entertainment Company Responsible for Bringing UFC Back to Brazil

September 28, 2011

Brazilian billionaire entrepreneur Eike Batista – who has made a good portion of his wealth from  resource companies – such as mining, energy, petroleum, logistics, real estate and off-shoring – wants to get involved in the Sports & Entertainment industry, seeking to purchase “Brasil1“, the company responsible for bringing the UFC back to Brazil last month.

Batista, who is listed by Forbes as the 8th richest person in the world in 2011, has many companies under his ownership. Batista’s IMX group – which is a partnership of IMG Worldwide inc. and Batista’s EBX Group Co Ltd – is said to be closing the deal to purchase Brasil1, which is a Sports and Entertainment company specializing in consulting, content development, and major event management.

The purchase was first reported by Veja Magazine, a respected media source in Brazil.  UFC Rio was not only a huge success for the UFC, but also for Brasil1 and the city of Rio de Janeiro.  The event drew more than 14,000 fans to the HSBC Arena for a gate which is believed to be in excess of $4M.  Not only was the event a huge success as a live attending event, but it is also speculated that “Nearly 30 million Brazilians” likely watched UFC 134 from their homes.

Due to the UFC’s 13-year absence and the sports boom in the last few years, their return last month caught the attention of many high profiled figures in the country such as soccer legend Ronaldo and MMA pioneer Royce Gracie. Politician’s including Rio de Janeiro’s governor Sergio Cabral, and a cast of other rich and famous socialites were ringside as well. One of those high profiled figures in attendance was Eike Batista.

Due to the success of UFC Rio, the UFC stated shortly after the event concluded that it would return to Brazil with multiple events in 2012.  With Batista’s purchase of Brasil1, it’s no doubt that through IMX and Brasil1, those groups will be involved in future UFC events scheduled for Brazil.

Batista’s IMX group is also getting involved with the upcoming FIFA 2014 World Cup, trying to sell luxury box seats for the event as it negotiates a potential deal with Match Hospitality AG, who has an exclusive contract to sell tickets for FIFA-organized events.

UFC 134 Rio – Silva vs Okami : Payout Storylines

August 26, 2011

MMAPayout will be taking a look at the storylines heading into UFC 134 Rio: Silva vs. Okami, which will be held at the HSBC Arena in Rio de Jainero, Brazil on Saturday, August 27, 2011.

UFC’s 2012 return to Brazil could be hosted by 100,000-seat venue

On Tuesday, UFC CEO Lorenzo Fertitta met with local officials to discuss a possible show at the Convention Center of Manaus (one of many “sambadromes” located throughout the country), an outdoor venue that can hold up to 100,000 fans. The city’s metro area includes more than two million residents.

“Our expectation is that Manaus will set a new attendance record with 100,000 people watching the show,” Feritta said. (MMAJunkie)

 

UFC 134 prelims to air in Times Square’s “Little Brazil”

Two fights from this weekend’s UFC 134 event in Brazil will air in Times Square in New York City, officials today announced.

The two fights, which are part of Spike TV’s “UFC Prelims” broadcast, will air on the digital sign above The Doubletree Hotel in the “Little Brazil” area of the iconic intersection.
(MMAJunkie)

 

Nike, Burger King, Brazil soccer club announce sponsorships with Silva

Sherdog reports that Anderson Silva will be sponsored by Nike and Brazilian soccer club, Corinthians Paulista, at UFC 134 in Rio. The two new sponsors add to the Spider’s total for the big event in Brazil on August 27th. (MMAPayout)

 

Sonnen: UFC 134 trip to support Okami canceled due to sponsor intervention, police threat

A source with knowledge of the situation told MMAjunkie.com (www.mmajunkie.com) that Praetorian, a Brazil-based MMA brand, threatened to pull the Japanese fighter’s sponsorship if Sonnen attended.

“There’s a line of people that want to kick his ass,” the source said…. And that could be the least of problems for the expert trash-talker. Sonnen said friends in the country forwarded him a local-media report in which a police chief threatened to arrest him on sight if he showed. The official cited a law that makes disparaging the national identity a crime.

“You don’t have freedom of speech in Brazil; put it like that,” Sonnen told MMAjunkie.com after a workout at Team Quest Tualatin.  (MMAJunkie)

 

Dana White: Anderson Silva wants “big fights,” but FOX headliner not happening

“It’s not true,” he said. “I saw that rumor too. … If he goes out and wins in 13 seconds, he’s not (being) considered for the FOX show.” (MMAJunkie)

 

Fertitta talks UFC Rio, Silva vs Henderson on FOX: “Anderson just needs a win”

– No, we underestimated how popular it was here. If we could do it again, we would do it in a big soccer stadium, you know? But when we put the tickets on sale, we really didn’t know. But it’s been amazing the amount of support, it’s unbelievable.

– We’re working on that, we’re really close to get something done. We think it’s gonna be very successful – a Brazilian Ultimate Fighter, all Brazilian fighters. (Tatame)

 

White claims ESPN hates the UFC

ESPN always hated us and now they hate us more now that we are on FOX. They canceled my int next week for UFC Rio Fuk ESPN… (MMAPayout)

NOTE: F4WOnline states that ESPN made the decision to cancel sending one of their reporters from MMA Live (Franklin McNeil) to Brazil to cover UFC 134 in response to White’s comments. White has since stated that both parties have resolved their issues.

 

Fox Sports Radio to simulcast UFC on Fox

The ESPN “car wash” was yanked after the Fox deal was announced, but the issues with ESPN have been resolved. The car wash is the media tour within ESPN where White would have been on multiple ESPN shows in one day to promote UFC 134. White stated that 40 million Brazilian fans will watch UFC 134. (MMAPayout)

 

UFC 134: Extra tickets sold in 18 minutes

It took only 18 minutes to UFC 134 ‘Rio’ tickets be sold out. Promotion provided this Tuesday a new charge of 272 extra tickets due to seat configuration changes and after some returned entrances… (Portal Do Vale Tudo)

 

Lorenzo Fertitta discussing the impending UFC boom in Brazil

ARIEL HELWANI: “Any kind of ideas as to what kind of economic impact in terms of tourism and all that stuff that [UFC 134] will have on the city of Rio?”

LORENZO FERTITTA: “We think it’s going to be similar to Toronto. Toronto was between a $40-50 million dollar economic impact. I mean, who knows? It may even be more. We’ve got a ton of people traveling from the U.S., from Europe, of course from inside Brazil, the majority of the people coming to Rio are from Sao Paulo. So, we’re filling the hotel rooms, we’re filling the restaurants. You can just kind of feel the buzz around town already.” (Fight Opinion)

Strikeforce HW Grand Prix to Air On UK’s Sky Primetime PPV

February 4, 2011

Strikeforce signs PPV TV deal with UK’s Primetime Channel 480 on Sky to bring the entire Heavyweight Grand Prix tournament to MMA fans across the pond.

On February 12th Strikeforce, in association with M-1 Global, launch the most eagerly awaited series in world MMA. Strikeforce have assembled eight of the world’s top ranking Heavyweights to compete in the Strikeforce World Grand Prix – Heavyweight Tournament, to once and for all prove who ‘the toughest man on the planet’ is.

Featuring Fedor ‘The Last Emperor’ Emilianenko (31-2, 1NC), Strikeforce World Champion Alistair Overeem(34-11, 1NC) and the only man to tap out Fedor – Fabricio Werdum (14-4-1) the line up is unrivalled by any other promotion. Add to that Andrei Arlovski (15-8), Sergei Kharitonov(16-4), Brett ‘The Grim’ Rogers(11-2), Antonio ‘Big Foot’ Silva(15-2) and the infamous Josh Barnett(29-5), you have a competition that has MMA fans on edge all over the world.

Following on from Primetime’s success with the Super Six boxing tournament, numerous World title boxing cards and various MMA events, we are delighted to announce that we are now the official UK broadcaster for the Strikeforce World Grand Prix.

This magnificent tournament begins on February 12th, live from IZOD Centre, East Rutherford, New Jersey, and the first event is headlined by Fedor Emilianenko vs Antonio Silva. Fedor will be looking to avenge his shock loss to Fabricio Werdum as he sets about reclaiming his crown as MMA’s undisputed Heavyweight number 1. Co-headlining will be Andrei Arlovski vs Sergei Kharitonov, guaranteeing this to be an unbelievable night of MMA action. Details of the upcoming rounds will be released shortly.

This unmissable tournament can only be seen in the UK on Primetime, channel 480 on Sky or at www.primetimelive.co.uk . Each event will be priced at £9.95 or the whole tournament (4 events) will be available for only £24.95. For more information call 0871 200 4444*


Payout Perspective:

Strikeforce is brining the HW GP tournament over to the UK  via PPV, as it was first reported by Robert Joyner over at MMAFA.tv.  Joyner analyzes the move by the promotion, citing obstacles such as the UK’s unwillingness to pay for PPV events, 3AM live start times, and ability to fill the entire PPV block considering the unwillingness to show preliminary fights in the past.

Going the PPV route is almost a necessity at the moment though, considering that Bravo TV, previous Strikeforce TV partner in the UK, no longer exists and getting MMA programming on other channels has proven to be a difficult task. Just a few weeks ago, BAMMA announced a TV deal that places them on the UK’s SyFy network, and others that have been willing like Bravo and NUTS-TV are not longer around.  Strikeforce ratings are not has as mainstream as UFC’s on ESPN in the UK, so making the PPV TV deal was the quickest and most secure way for Strikeforce to allow fans to watch the events.

Since the PPV event was announced, there have been a few fans that have shown their displeasure, as it is not embedded in the UK culture to pay for PPV events, though it will most likely be the end game for the UFC eventually.  However, there were a few hardcore fans that were quite pleased they were getting the events live, and not the typical delayed event that usually gets spoiled for them through the American MMA media and fans.

In order to ease the switch from a free product to a paid product, Strikeforce has packaged the entire HW GP event, 4 events in all, for a packaged price of  £24.95 ($38 USD), which is roughly around £6 ($9 USD) per show. Individual events are £9.99 ($15 USD).

There will also be a good number of promotions for the UK fans, as MMA Hit Pit is doing, who will be giving away free UK passes for each Strikeforce HW event and also free passes to watch all 4.

Bellator Expected to Announce FX, FSN, Fuel TV Deal; Signs TV Deal in India

December 6, 2010

MMAJunkie reports that Bellator Fighting Championships is expected to announce a multi-year broadcast deal with Fox Entertainment Group in the upcoming weeks.

The deal includes the Bellator product airing live on FX, and on tape delay on FSN and Fuel TV.

“We’re super excited about our next evolution on TV,” Rebney said. “We’re always trying to produce the most exciting and captivating MMA for our fans. Our next step is a significant move in that direction. But at this time, I can’t elaborate on what those alliances would be.”

Sources, though, said Bellator likely will keep its Thursday-night live timeslots with the move to FX. The FSN and Fuel TV broadcasts likely will include “highlights” packages from those events.


MMAPayout was in the process of confirming a potential TV deal with FX and Fuel TV several weeks ago before MMAJunkie broke the story, but the deal was not finalized and the parties were not able to comment at the time.  MMAPayout’s Robert Joyner reported on FX looking for a sports franchise back in July of 2009, making the argument that Bellator would be a good fit for the network.

Bellator has been aiming for a ESPN tie-in, but this would be a good fallback position for the company. Bellator would be attractive in that they offer a strip of programming. They air could offer 12 to 13 week strips of programming back to back, either live or on a one day delay. That constancy would be attractive for FX looking to build a brand. Bellator would be the best option for FX in my estimation.


Some MMA insiders speculated that the UFC was in line to sign a deal with FOX, FX, or Fuel TV, either for a network or cable TV slot, since they already broadcast UFC events on Fuel TV in Australia and Fuel TV recently stated on the SportsBusiness Journal that they were very interested in adding MMA content to their programming in the upcoming months.

Fox Sports’ action sports channel won’t be limited to surf, skate and snow programming anymore.

Fuel TV plans to add lifestyle programming and sports programming from motorsports and mixed martial arts to its lineup over the next month and a half. The moves are designed to expand the channel’s target demo from 12- to 24-year-old males to 12-35 and enlarge its audience.


Fuel TV general manager C.J. Olivares, who’s channel is said to reach around 31 million homes,  stated that Fuel TV was expanding beyond action sports, looking to make the channel a sports and entertainment network inspired by the new generations of sports.  The move is not a surprising one, as Fuel TV was almost sold to MTV last year before the deal fell through in the closing stages and is currently making changes to better position themselves for re-negotiation next fall, when their deal with DirecTV, one of it’s biggest affiliates, is set to expire. FOX Sports and C.J have since agreed not to sell Fuel TV, claiming that big plans are in the works for the niche network, hoping these moves help Fuel TV become a rated network in the future. Simply put, “To survive and thrive in the competitive landscape of cable television, we need to move to a rated environment,” Olivares said.

On the other hand, with the addition of FX, Bellator has now increased its reach to 96 million homes considering that the channel can be found in most basic-cable packages in the U.S.  FX is the home of several hit TV programs such as “Rescue Me”, “Sons of Anarchy”, and “It’s Always Sunny in Philadelphia”, with Bellator becoming the sole sports programming property on the network.


Bellator Signs TV Deal In India With Big CBS Prime

Bellator Fighting Championships has signed a TV deal in India with recently launched BIG CBS Prime, a joint venture between Reliance Broadcast Network and CBS Studios International, which launched the network across 20 million homes in India on November 29th this year.  Bellator is scheduled to make its debut on Friday, December 3rd, at 10:00 PM, with two hour episodes, which will be a first-of-it’s-kind mixed martial arts initiative in India.

Aparnaa Pande, the business head at BIG CBS Prime, commented of the deal: “Cricket and sports programs are known to draw huge audiences in India. Our audience entertainment preferences and consumption mapping pointed at an excellent opportunity to bring to India, this world acclaimed and unique form of martial arts that has never been seen in Indian this far. The Bellator Fighting Championship promise to revolutionize the way fighting championships have been consumed this far.”

CBS Prime will also make other popular U.S. programming available, including hits such as NCIS, movies from NBC Universal and Sony, and is in talks with other international studies to acquire other Hollywood films.  Par of the networks strategy will be to localize international shows, such as Indian versions of Entertainment Tonight. BroadcastingCable reports the details on the U.S. breaking into the TV market in India.

“The launch of Big CBS Prime is the first step towards addressing the current need gaps of Indian viewers for internationally acclaimed quality programming,” noted Tarun Katial, CEO of Reliance Broadcast Network, in a statement regarding the channel’s strategy and programming.

Adding that Indian viewers have traditionally waited nine months or more for new U.S. fare to reach India, Katial noted that these delays and the lack of content exclusivity had mean that “English programming as a category is highly under-developed. With our exclusive range of programming mix, Big CBS is uniquely posed to grow the size of this market.”

Big CBS is planning to air some U.S. shows within 24 hours after their appearance in the U.S.

As part of its ad sales strategy the network is planning to target luxury brands, which have increased their ad spend by about 43% in the last four years in India.


Payout Perspective:

This is a great deal for Bellator, finally giving MMA fans what they have been coveting since season one, live Bellator events showing on an easily accessible network, which the combination of FX, Fuel TV, and FSN provides for the promotion.  We will have to wait on the details of the deal, but it appears to be a good one for Bellator at the moment.

It increases their distribution a great deal, rivaling the UFC in terms of homes reached for a promotion in North American and creates big opportunities for next season.  The question for Bellator now is if they can capitalize on the reach they have with sponsors and other means to generate revenue.  You also have to wonder if they will enter the PPV market this year, since they promised their investors a turn-around this year, originally claiming that they would hold multiple PPV events by the third year of operation, which is where they will stand next year.  It is possible that they could switch over to a non-PPV model similar to Strikeforce, but without knowing what type of licensing fees Bellator is receiving from FOX, it’s still to early to speculate on that.  Either way, this move is a huge step up for Bellator, which has improved their TV reach and distribution deals each of it’s first three seasons.

The UFC’s Roadmap in China: Long-Term

November 8, 2010

The Chinese market is full of potential. China’s population is extremely large. Its economy is growing and a sizable middle class has begun to emerge in many urban areas. China is also a nation steeped in martial arts tradition. Yet, China is also a very challenging market to enter and the UFC will need a well-defined plan and impeccable execution in order to be successful in the market.

Last week we focused on the UFC’s short-term roadmap in China. Today, we’ll focus on the long-term.

Objectives

The UFC needs to determine what it wants to accomplish with this expansion into China – both in the short-term and long-term – before it actually lays out a road map and sets down the path. Therefore, the following is a list of brief objectives the UFC is likely striving to achieve in the market:

1.) Generate awareness and educate the Chinese about MMA/UFC
2.) Cultivate interest in the UFC brand
3.) Accelerate the growth of grassroots Chinese MMA
4.) Establish a viable business model for UFC Asia

I’m sure there are others that the UFC has identified and its are likely more detailed, but this is the gist of what needs to happen.

The Long-Term Roadmap

1.) Driving Grassroots Participation

Participation does not correlate to fan avidity across all sports (soccer in the US is a great example), but this is certainly the case with MMA. The sport motivates people to participate and, in turn, that participation draws them closer to the sport and its biggest stage. The UFC must do all that it can to facilitate this participation. UFC gyms are not an extremely viable option in the market, even in the near long-term of 5-10 years, but community development projects that involve local martial arts gyms in major cities could provide a launch point for re-charging and re-directing grassroots participation towards MMA in the country.

The strength of grassroots programs will also affect the development of local fight talent in the market. If Yao Ming has taught us anything, it’s not necessarily that a Chinese star is necessary for adoption, but that it certainly helps your cause to be able to leverage Chinese nationalism to generate interest.

2.) Live Events

I do not think that a consistent schedule of events are a serious consideration in the short-term – largely for reasons cited in the challenges piece – but I do believe the UFC will host events on the periphery of the Chinese mainland in the next 12-18 months. There is far less regulation or conservatism in Hong Kong or Macau that make these solid options for UFC events that will help further drive awareness and interest in the region.

In the medium to long term I also see potential in leveraging the considerable expatriate populations in Tier 1 cities to help make local events a viable option for the UFC. I’m not sure the UFC makes money on these events, but the expats will close the gap enough to the point where the UFC can justify the first few events as investments in the mainland market; its not taking a loss as much as it is paying for press and other promotional opportunities that might not be available without an event.

3.) Developing a Revenue Model

The last piece of the puzzle in China is money. The UFC needs to earn enough money to recoup its investment and then generate a return. If all goes to plan, it’s likely a return that few other investment alternatives (i.e., markets) could have provided. But how? That’s quite potentially the half-billion dollar question.

China is not a PPV market, but nearly 75% of the UFC’s revenues are event-related (i.e., from PPV or live gate sources). Thus, the UFC faces the possibility of either a.) cultivating a PPV market in the market, or b.) finding other ways to make money.

I see merchandise playing a bigger role in China than it has in other markets. This might especially be the case if the lifestyle component takes off as it has the potential to. However, I’m inclined to believe that merchandise will play a greater role in the UFC’s domestic revenue picture than it has in the past; even despite the fact that PPV revenues are also currently growing.

Beyond merchandise I like the idea of two different monetizing strategies with regard to the television product:

  • The sports and entertainment industry as a whole is witnessing a shift in consumption towards on-demand platforms, which offer a variety of more engaging options for advertisers or sponsoring brands to interact with the consumer. These new advertising models (also known as branded content models) are growing in popularity and could provide the UFC with an opportunity to leverage the sizable viewing audience to rake in significant revenue.
  • PPV may be an option at lower price scales. I do believe there’s potential in slowly introducing exclusive pay content such as fight compilations or documentaries for a nominal fee (e.g., 10-20 RMB) that might warm up the public to purchasing content. This may then allow the UFC to begin charging a similar nominal fee for certain events with the goal of using the small prices to drive enough volume to cover costs and earn a profit. It’s not a bad idea when you consider the size of the m18-34 demographic in China alone is roughly 200 million. If just 1% of those people buy an event 4 or 5 times per year, that’s $US 25-30 million annually. There’s a start.

The UFC’s Roadmap in China: Short-Term

November 4, 2010

Several weeks ago MMAPayout.com engaged in a discussion regarding the UFC’s three biggest challenges to entering the Chinese market: battling Chinese conservatism; generating material revenue; and, remaining patient in the short-term with an eye on the promising long-term. We’ll advance that discussion today, by focusing on a potential short-term roadmap to success for the UFC in China.

Objectives

The UFC needs to determine what it wants to accomplish with this expansion into China – both in the short-term and long-term – before it actually lays out a road map and sets down the path. Therefore, the following is a list of brief objectives the UFC is likely striving to achieve in the market:

1.) Generate awareness and educate the Chinese about MMA/UFC
2.) Cultivate interest in the UFC brand
3.) Accelerate the growth of grassroots Chinese MMA
4.) Establish a viable business model for UFC Asia

I’m sure there are others that the UFC has identified and its are likely more detailed, but this is the gist of what needs to happen.

The Short-Term Roadmap

1.) Television Exposure

The UFC is a controversial product entering a conservative marketplace. Its needs to generate awareness and educate the base Chinese population before it can truly begin cultivating a market in the country. The best way to accomplish this is through television.

Television in China gives the UFC a window into the mainstream with exposure that extends beyond the 18-34 demographic that the Sohu.com platform currently affords the company. Depending on the type of television deal(s) the UFC signs, it could have access to as many as 1.2 billion consumers. This access is crucial because it gives the population an opportunity to see what MMA really is and allow them sufficient time to grow comfortable with its existence. This television deal shouldn’t be a blitz, nor should it go unsupported. Exposure is something you build to a crescendo and complement with other content/information through PR, advertising, and social media – although the latter is difficult in China.

CCTV is the dominant television network in China and owned by the state. CCTV 5 is the defacto national sports channel and potentially a very powerful ally or obstacle to the UFC’s exposure ambitions in the country. If this were ten, or even five, years ago I’d say the UFC should be looking to do whatever it takes to do a TV deal with CCTV – even if it meant submitting to poor terms that might amount to zero rights fees coming back in the “exchange”. However, there are now those that believe CCTV’s monopoly on the Chinese television market is coming to an end with the emergence of bona fide regional networks that are supported by a strong demand for localized news. Thus, a potential alternative to a deal with CCTV might be to sign a string of regional networks in China (e.g., Mongolian TV) or at least those that concentrate around the major Tier 1 cities like Shanghai, Beijing, Guanzhou, and Shenzhen.

2.) Selling the Lifestyle

There are two main ways the UFC can sell the sport in China. The most obvious strategy comes via the natural appeal of the product; everyone “gets” fighting and some even like it. If given the proper exposure, many of those that like it will become UFC fans. The other strategy is to promote not just the product, but also heavily emphasize the MMA/UFC lifestyle. The emerging Gen Y’s in China – think 18-24 or even 18-34 – are heavily influenced by American and Japanese popular culture. If the UFC can manage to convince the Chinese consumer that the UFC is the next big thing in the US, it will instantly increase its credibility within the market.

There are case studies that support enhancing awareness and interest through lifestyle promotion. The NBA was the first (in many regards) to do this in the market, and the results have been fantastic. In addition to promoting the sports at the grassroots level and NBA games through television exposure, the league has also pushed very hard to integrate the basketball lifestyle into Chinese culture. There are a ton of factors that figure into the NBA’s success and it really stands as a compliment to their integrated strategy, but you wouldn’t believe the number of kids wearing basketball shoes, jerseys, and long shorts in Beijing or Shanghai. It’s consumer behavior perpetuated in large part by lifestyle promotion.

3.) Merchandising

It goes without saying that clothing, equipment and other related merchandise are necessary for the adoption of the UFC lifestyle. Just the same as Chinese NBA fans can buy a pair of Nike Zoom Kobe V’s, the Chinese UFC fan will need to be able to purchase UFC or Tapout clothing and different types of training equipment to fully embrace the UFC lifestyle.

However, the Chinese retail situation is comprised of a rather convoluted distribution system and greatly troubled by the black market counterfeit industry that exists nearly everywhere in the country. It would certainly behoove the UFC to move on establishing these connections now – which I’m sure will be one of Mark Fischer’s preliminary actions – because it may take a while to sort out.

Yet, establishing merchandise in the market will prove vital to the UFC’s agenda. Not only is merchandise necessary from a lifestyle perspective, but also from a promotion perspective. Merchandise acts as a non-funded form of promotion that helps to reinforce and perpetuate a brand message through a sort of third-party endorsement. The Chinese may be influenced by American or Japanese culture, but nothing influences more than a Chinese individual sporting the latest perceived trend.

Furthermore, the sale of merchandise also adds a much needed financial component to the UFC’s operations in the market.

Check back next Monday for the final article regarding the UFC in China. We’ll be taking a look at the UFC’s long-term roadmap in the country.

The UFC’s Challenges in China

October 12, 2010

I recently traveled to China with my fellow MBA students at the Warsaw Sports Marketing Center in order to consult with several sports leagues and firms doing business in the country. Not only was the trip very successful for the Warsaw Center, but I’ve personally returned home with a better understanding of the Chinese consumer and the key challenges facing the UFC as it looks towards expansion.

Traits of the Chinese Consumer

  • Exceptionally nationalistic
  • Historically very conservative, especially where violence in concerned
  • The average salary in urban areas is 4,000 RMB/month (~$600)
  • A great majority of their entertainment is consumed through free, state-owned television programming
  • Increasingly influenced by consumer trends in Japan and the US
  • Possess global aspirations in all walks of life; money, cars, clothes, etc.

While in China, I very much got the sense that the country is in the midst of a culture shift; much in the same way that the country has experienced somewhat of a paradigm shift regarding its political and economic ideologies. The rapid development of China’s economy and underlying infrastructure (in most areas) has generated tremendous wealth, but it’s also provided the Chinese with a sort of global aspiration: they want – and can now afford – what everyone else has (i.e., fast cars, fancy clothes, and good entertainment).

The traditional Chinese values pertaining to face, family, and country are still very much in place. However, the added element now is a young Gen Y group with the confidence, ambition, and wherewithal to adapt those core values to the Western world.

Key Challenges

1. Chinese conservatism

Despite China’s storied martial arts history and emerging cultural thaw, MMA will not be an easy sell in the country. The Chinese are still by and large a conservative and risk-averse group of consumers led by an extremely protective and controlling government. MMA is a very aggressive and violent sport that’s easily misunderstood.

The biggest challenge for the UFC in China will be obtaining buy-in at the governmental level. If it cannot cultivate key relationships within the government it can forget about television coverage, live event permits, and any sort of merchandising initiative. The Chinese still follow the cultural lead of the government in many ways, and if the government decides to throw its weight behind something, not only does that something get done, but people tend to take notice pretty quickly.

2. Revenue generation

The next biggest challenge relates to the UFC’s business model. Nearly 75% of the UFC’s revenue is event-related, but China is neither a PPV market or a significant spectator market.

The Chinese consume a great deal of their sports through free, state-owned television programming and are reluctant to pay for what they’ve always had for free – even despite the increase in the number of set-top boxes in the country. Various different sports properties have tried PPV or subscription models in the last couple years, but each have failed (including a group that bought the rights to the EPL for three years at some $70m and fell into bankruptcy two years into the deal).

The fact that it’s far more easy and cost-effective for the Chinese to stay at home and watch an event for free makes them less inclined to watch live, especially in the densely crowded and difficult to navigate urban areas. The high rate of television consumption contributes to the lackluster live-game experience at most sporting events, which in turn provides even less incentive for fans to attend. It’s a self-perpetuating cycle.

Nearly every sporting event taken to China has struggled at the gate – the Olympics, F-1, ATP, European TOUR, etc. In many cases the government often resorts to hiring groups of people or assigning army units to attend events as paid spectators just to beef up the look of the event for global television audiences. It’s a very difficult ticket sales market.

Perhaps the best way to be successful is to play on Chinese aspirations for the consumption of world class goods and services. If the UFC brings its best and brightest to China and sells it as such, it may gain an audience on the merit of simply providing its best offering to the country. It would be seen as a sign of respect to which reciprocation is almost guaranteed as a matter of courtesy and obligation.

3. Patience

In the late 1980s, the Commissioner of the NBA, David Stern, crossed the Pacific and sat in the lobby of the CCTV HQ with a box of tapes on his lap looking to accomplish one thing: get his product on television. More than 20 years later, basketball and the NBA have finally started to take hold.

There are many reasons for the NBA’s success in China – it wasn’t just Yao Ming – but perhaps the most important is the combination of effort and money over the period of the last 20+ years. If you look at the current foreign sports landscape in China, the most successful organizations are all those that have spent a good chunk of time in the country. I do not think this is coincidence.

This third challenge is one borne of patience. Is the UFC willing to make the necessary investments — concessions on rights fees to get on TV, localized manpower to cultivate government relationships, and enduring rather high opportunity costs to put on live events — in a market that isn’t likely to provide a solid return for at least another five years?

4. Others

The above three considerations are probably the biggest challenges facing the UFC in China, but it will also have to contend with a variety of other issues to establish itself in the country:

  • Navigating the sometimes very different distribution infrastructure within the country
  • Protecting its intellectual property
  • Implementing or supporting a national development program

Check back next week where I’ll expand a little further on China by taking a look at what I see to be the UFC’s roadmap for success in the country.

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