Ontario to Legalize MMA
August 16, 2010
MMA is officially coming to Ontario! An announcement was made by Sophia Aggelonitis on an Ontario Government website Saturday, declaring that MMA events will be legalized and regulated in the Canadian province by early 2011.
Ontario is taking steps to allow professional Mixed Martial Arts (MMA) events in the province.
The province would adopt the same rules for professional MMA that are widely used across North America. This announcement paves the way for the first regulated professional MMA event to be held in Ontario in 2011.
As MMA has grown in popularity throughout the world, many cities have reaped the economic rewards of hosting events. A major MMA event in Ontario could attract up to 30,000 fans and generate up to $6 million in local economic activity — everything from hotel rooms to restaurants and other stores and services.
While MMA events provide an economic benefit, Ontario’s priority is the safety of the competitors. By regulating professional MMA, Ontario could enhance the safety of all participants with explicit safety and medical standards at licensed events.
Payout Perspective:
MMA in Ontario will drive education as over 1/4 of Canada’s population and nearly all of its major media will have access to sport right in their own backyard. The regulation of the sport in Ontario will also help to generate additional interest in the sport nationally – where it’s already more popular than in any other country – because of the fact that Toronto is the media and economic center of the country.
The Ontario website is quite conservative in its $6 million economic impact assessment. I suspect the UFC’s debut in Toronto will push at least $10-12 million towards the local economy (based on 40% of the 60,000 at Rogers Centre coming from out of town and spending $500 that weekend on hotels, food, drink and transportation).
—–
Rogers Sportsnet’s Joe Ferraro was the first to report some months ago that the UFC booked a couple March dates at the Rogers Centre (formerly the Skydome) in Toronto. It seems as though the UFC and Marc Ratner may have known this was a certainty all along.
I’ve said it before, but I’ll say it again: MMA could not have accomplished what it has without the efforts of men like Dana White, Lorenzo Fertitta and Marc Ratner. These are the guys spending the money and devoting the tireless effort in order to pave the way for this sport to break out. The MMA community in Ontario also deserves some credit for its relentless support in the province; its rallies, expos, and educational protests were requisite pieces of the puzzle that helped to convince the government that local support did exist for the sport – that the fat cats from Vegas weren’t just coming in to take advantage of Canada’s biggest market and then leave.
SBJ Profiles UFC’s Tom Wright
July 26, 2010
This week’s Sports Business Journal uses its industry spotlight feature to profile the UFC’s new Director of Canadian Operations, Tom Wright.
In trying to secure regulation and sanctioning in Canada, is there an order of provinces or some provinces that are top priority?
No. 1 would be Ontario, where Toronto is located. We are working on that process right now. After that, there is a federal process that we are going through which is tied to Bill 83 of the Criminal Code and trying to get that changed so that it is legal in all 10 provinces without having to have provincial sanction that would follow.
Payout Perspective:
The fact that SBJ is profiling Tom Wright speaks volumes about his standing in the sports industry. He’s got a wealth of experience and is well-respected throughout Canada and the US. This should bode well for the UFC moving forward.
The only question I have regarding Wright is whether he knows the sport. This is something that really wasn’t broached at the press conference in May, but important nonetheless. If Wright is to be the man educating decision makers, he’ll need to know the sport inside and out (the sport, the fans, and the business).
I’d assume he’s got a pretty good handle on things by now; to my knowledge he’s been to quite a few events dating back to last year. But whatever he doesn’t have, he’ll have to pick up pretty quickly.
European Ultimate Fight Nights
July 22, 2010
ESPN UK recently sat down with the UFC’s Managing Director in the UK, Marshall Zelaznik, and discussed his plans for the start of a European “Fight Night” series.
“We’re working towards bringing together a series of UK and European Fight Nights. My hope is that, come October, we’ll be able to put some real heat on this. Talks are underway,” he told ESPN.co.uk.
“My hope is that it will provide four to six guaranteed UFC events in the UK next year. We’re hoping to hold one more European event [in addition to UFC 120] before the end of the year, and then we’ll get these extra nights planned for next year.
“We’d like to come to Liverpool, Scotland, Newcastle, Birmingham, these places provide 10,000-seaters which will be great for Fight Nights.”
Payout Perspective:
I like the idea of local fights for a number of reasons:
1. Talent development
2. Market development and education
3. Television/content fodder
These events don’t have to be broadcast live. In fact, the model the UFC is projecting for itself in the future necessitates that some events will have to be taped for later broadcast. Not only will it be difficult to broadcast everything live (or even broadcast entire events, period), but it’s also likely the talent level for a great many of these European “Fight Night” events will not be able to match the quality that people have come to expect from the UFC. The UFC will likely have to pull a great majority of the fighters from Europe (hence the talent development part of the equation), because it wouldn’t make sense to fly over a bunch of the UFC’s regulars from North American fighters unless it’s just a couple to headline the show.
In this case, the UFC can just aggregate the best fights and highlights to produce weekly segments for television viewers around the world; something incredibly useful for providing additional quick and relevant content for the UFC’s growth markets.
Then again, this is perhaps a couple years down the road. Zelaznik did not elaborate, but the UFC may just be switching the 4-6 UFN shows it does in North America to the UK market in 2011. In that case, it may very well use a host of UFC regulars and broadcast the same day in North America.
It’ll be interesting to see how this develops. The way the UFC handles these events will give us a glimpse of how it may carry out part of its international expansion. Moreover, I suspect that these events will also help the UFC to stress test its current capabilities and experiment a little bit.
UFC’s Zelaznik on International Business
July 20, 2010
Ben Fowlkes of MMA Fighting has posted an interesting interview with the UFC’s Managing Director in the U.K., Marshall Zelaznik, that broaches a variety of subjects including the UFC’s latest absence from the U.K. market.
The U.K. market seemed like a big deal to the UFC when it first began expanding internationally, but so far in 2010 you’ve been to places like Australia and Abu Dhabi, but no U.K. shows. Do you worry that the U.K. fans will feel like they’ve been ignored as the UFC focuses on the rest of the world?
I think that if anyone has that impression, when you look objectively at how we haven’t been here in over a year, you can understand how someone might feel that way. But no one is ignoring the U.K. It’s just an effect of trying to be everywhere at one time. And just the way schedules work out, we probably would have been back in the U.K. earlier, but the TV dates we commit to and how we start working out our calendars, with the lack of availability of venues in the U.K., it just worked out this way.
We would have liked to have been in the U.K. before the summer, but it just didn’t work out with the schedules and the availability. But the offices here in the U.K., there are ten of us who live and breathe the U.K. and we’re always focused on it, so if people hear that they should know that no one is thinking of them as second-class citizens.
Payout Perspective:
It remains to be seen exactly what UFC 120 is going to look like, but it appears as though the UFC will rely on a bevy of British fighters to anchor yet another UK card without a title fight. The UK has not hosted a title bout since January 2008 when BJ Penn defeated Joe Stevenson at UFC 80.
The UFC cannot afford to bring a title fight to the UK every time it visits, but it must be careful not to treat the market as an after-thought. The company has devoted a lot of time and money into developing the UK and it must continue to serve the fan base with appealing fights with beyond the likes of British fighters like Bisping and Hardy or UFC legends like Matt Hughes and Randy Couture.
I tend to sympathize with Zelaznik and the UFC in regards to scheduling and timing, because if a few fights go the other way, they’re probably bringing two title fights to the UK in 2010. Just think about what could have happened had Bisping won at UFC 100, Hardy won at UFC 111, or the UFC had not suffered a host of injuries near the end of 2009 that put pressure on the company to re-establish some momentum in North America in 2010.
Yet, I also tend to think this entire situation exemplifies why rapid expansion is so difficult: the UFC has a limited number of resources and can’t possibly give each market the attention it deserves. The fans in the UK want a title fight, but so do the fans in Canada, Germany, Australia, and every other place the UFC visits.
I understand the allure of big markets like China and India, but the UFC can only move so quickly. It would be foolhardy to expect otherwise.
FEG Announces Partnership with PUJI Capital
July 19, 2010
Daniel Herbertson of MMA Fighting is reporting that FEG has reached an agreement with Chinese investment bank PUJI Capital that plans for PUJI to raise nearly $230 million in funds for the beleaguered organization’s newest international expansion plans.
Tanikawa stated that changes should start from 2011 and that Japanese events will continue with K-1 on Fuji TV and DREAM and K-1 MAX on TBS. PUJI will not be involved with the day to day operations regarding the actual promotions but will instead be in charge of fund raising and leading the global expansion and have forecast that they will gather 20 billion yen ($230 million).
Payout Perspective:
This is not an announcement of an immediate capital injection; FEG has not yet secured the $230 million in funding. PUJI Capital is forecasting that it will be able to raise $230 million for FEG, but that is anything but a foregone conclusion.
Normally, you don’t make an announcement like this unless you’re sure you can get the money, but I wouldn’t be surprised if this announcement is more of a PR stunt than anything else. The news has been well-received by the entire MMA community – many of whom long for the “glory” days of Pride and more competition in a landscape dominated by the UFC – and FEG is definitely looking to generate some renewed interest in its fight brands to help it raise new money.
However, FEG has yet to prove that it can manage its assets with any sort of fiscal responsibility. I’m skeptical that PUJI can raise $230 million in the first place, but further question the notion that more money, and an ambitious international expansion plan, is going to solve FEG’s current problems.
If FEG does manage to raise significant funds, it should focus on its home market, first: establishing a strong foundation in Japan with a solid fan base and predictable revenue streams. Yet, rebuilding Japanese MMA is also a tall order. Many believe that much of the success MMA has had in the country is linked to professional wrestling (cross-over and freak show fights were the real draws on many nights); with pro wrestling on the decline, it may be difficult to bring MMA back to where it once was.
If, and only if, FEG can establish a strong fan base, with a solid fight product and firm financial footing, can it look to expand beyond Japan and into other markets. The Asian-Pacific is the most logical destination (Korea, China, Australia); likewise, South America (Brazil) remains relatively untapped. But I’m not sure how much success they, or anyone else, will have in Africa at this point.
This is definitely something to keep an eye on. The MMA fan in me wants to get excited, but FEG and Dream/K-1 still have a long way to go.
Hispanic Interest in MMA Growing
July 14, 2010
Dave Meltzer of the Wrestling Observer talks about the dim prospect of the Lesnar-Velasquez title fight happening in Mexico (now scheduled for October in Anaheim, CA), but mentions the UFC’s exploding popularity in the country.
White spoke of wanting to do a show in Mexico City, but didn’t know if the timing would work out for this fight. With no date on the horizon, it’s unlikely. UFC has exploded in popularity in Mexico over the past year, as the top fighters are now well known in that country when 13 months ago none but Lesnar, through his pro wrestling stardom, had any real name value. It remains well behind boxing and pro wrestling in popularity, that have been staples in that culture for decades. But because boxing and pro wrestling are so popular, it would appear to be a market that would take to UFC.
Payout Perspective:
I’d really be interested to see where Meltzer is getting his numbers from, but I’m inclined to believe him. I’ve run some stats through Simmons Research and the UFC’s popularity amongst American Hispanics is exploding.
- The total number of Hispanic people interested in the UFC is up 50% since 2007, which is the largest increase of any professional sport in North America (including Wrestling).
- Hispanics now make up roughly 15% of the UFC fan base in the US (up from 11% in 2007). Only the WWE has a greater proportion of Hispanic support.
- The number of avid Hispanic UFC fans has increased by over 110% since 2007, which is again the largest increase of any professional sport in North America. The WWE enjoyed the next greatest increase (roughly 85%).
- Not surprisingly, Hispanics now make up roughly 25% of the UFC’s avid fan base in the US (a number up from 14% in 2007).
- Hispanic people are now 10% more likely to be a fan of the UFC than the average person, which is a sizable shift from just a few years ago when members of the group were 13% less likely to be a fan than the average member of the population.
- Furthermore, Hispanic males aged 18-34 are 222% more like to be an avid fan of the UFC than a member of the average population, which is by far higher than any professional sports league (again with the exception of the WWE that sits in second).
It should be noted that Hispanic interest in sports as a whole is increasing. However, these numbers show a significant trend in growth that not only match the UFC’s general growth but exceed it.
Note: I’m working on a feature that details the growth of the UFC demographic over the last 3-4 years via Simmons Research. Hopefully I can share that with everyone in the next few weeks. Much of what I’ve always hypothesized is evident in the numbers (such as growth in the older demographics), but they do appear to contradict Dana White’s statements that the UFC demo is nearly 44% female. More to come!
UFC Opening China Office “Immediately”
July 6, 2010
Damon Martin of MMAWeekly reports that the UFC recently hired the individual that will run the UFC’s office in China, which the organization expects to open in the very near future.
Just weeks after the UFC opened an office in Canada – with former CFL commissioner Tom Wright leading the charge – the company hired a leader for a new office in China, which should open in the next few weeks.
“I’ll make that announcement soon. We just hired somebody today, literally today,” White said on Saturday night.
The office will be on mainland China, but no other details were revealed.
The plan came together pretty quickly though according to White, and they plan on being aggressive expanding into the Chinese market.
“We’re working on China right now. We’re opening an office there immediately,” he stated. “We’re moving fast in China.”
Payout Perspective:
The UFC had previously announced an office in China was in the works, but I’m not sure anyone thought it would come this quickly. It’s good news.
I find myself torn between two ideas: 1.) the UFC continuing to build its domestic market, and 2.) the UFC expanding internationally. I tend to think there’s still a lot of room for growth in both the US and Canada. The two biggest regional markets in those countries, New York and Ontario, still haven’t regulated the sport, and MMA as a whole still hasn’t fully caught on the way it could. While there’s an equal, or arguably even greater potential for MMA in some international markets, I also see them as risky propositions. People are often quick to cite several of the cliches involving the tremendous growth and potential of BRIC nations, but rarely do they take the time to understand some of the downside.
Now, certainly, there’s no rule that states a company has to expand one market at a time or that domestic and foreign expansion cannot happen simultaneously. But I do worry that an organization that’s already been stretched too thin on the human capital side, might also become stretched too then from a financial capital perspective. If there’s a question of where the bulk of a very finite set of resources should be focused in order to grow the UFC, I think it should and will be invested in North America.
What does that mean exactly? The new UFC office in China is a great step forward, but I wouldn’t expect to see an event in China any time soon. It’s going to take time and money to build the Chinese market into a viable location for events .
The UFC first needs to educate an ultra-conservative Chinese public about the sport of MMA, which means it’s likely to begin its Chinese market expansion by enhancing its existing distribution channels for UFC content within the country. Next, I’d expect the UFC to begin working on the merchandise side to supplement whatever content it can put on television (or the internet, like Sohu.com).
Meanwhile, I suspect that the UFC will try to leverage its partnership with Flash Entertainment in order to begin building the relationsips within the Chinese political system that will be necessary for further (or accelerated) movement into the market.
Toronto Sports Bar Ripe for UFC Viewing Party
June 23, 2010
Don Muret of the Sports Business Journal reports on the desire of Maple Leaf Sports and Entertainment to turn its Real Sports Bar and Grill into a quasi closed-circuit destination for its Air Canada Center in Toronto.
Maple Leaf Sports & Entertainment’s new sports bar next to Air Canada Centre will sell plenty of beer and chicken wings on game days, but it’s on nights when the arena is full for concerts that the company hopes to cash in on a big food and drink payday
Payout Perspective:
The UFC had a great amount of success with its sponsored viewing party in New York for UFC 111, and it would seem that this new facility next to the ACC might be the perfect location for similar events in Toronto.
If the UFC were able to create a massive monthly, or even quarterly, viewing party, it would assuredly grow the organization’s presence in the market and serve as a complement to the new UFC Canada office. The marketing and buzz that these parties would generate might also apply further pressure on provincial and federal politicians to legalize the sport.
Moreover, if a bill supporting MMA is passed, this new bar could provide the optimal closed-circuit location for the UFC – making a Toronto visit even more lucrative.
Dana White in SBJ
June 15, 2010
Dana White was interviewed for this week’s Sports Business Journal and answered various questions about the direction of the UFC and MMA in general. It’s clear the interview was designed for an audience that isn’t tremendously familiar with the sport and MMA fans are likely to have already heard these questions answered in previous interviews. Nonetheless, here’s a summary of the interview:
- White still considers the UFC a PPV company, but noted an increasing television presence and expansion into video games and UFC Gyms as potential sources of revenue growth.
- Nearly 44% of UFC fans are female.
- The UFC is not a renegade company: it wants to be unique and edgy, but it’s also “running towards regulation.”
- Canada could end up rivaling the UFC in terms of MMA market size; Mexico and the Middle East were cited as near term markets with huge potential.
- The UFC is looking to start in China with a TUF on one of the country’s popular websites (note: Sohu.com would probably be the obvious choice, if this were to happen tomorrow).
- White claims the bottleneck on growth is not infrastructure or hiring more people, but notes he can’t fly around to global target markets because of the company’s 36 shows per year.
Payout Perspective:
I’m not sure any of this is a surprise – especially for MMAPayout.com readers. 
However, I did find it interesting just how much White emphasized the female portion of the demographic. It’s likely a focus for the organization and something the marketing and sponsorship teams are actively pitching to agencies representing companies looking to buy media or other advertising.
…..
The other interesting bit came from White’s claim that the UFC’s struggle to manage its growth is not bound by people. I disagree. As the UFC continues to expand, I think it’s going to find that there are major differences in the consumers within many markets and that individualized marketing and sponsorship tactics are going to be necessary. Those individualized plans require local market knowledge and talent.
In fact, we’ve already seen this in Germany. The UFC’s approach hasn’t worked very well and in many ways its just making people more angry – it’s not just 3-4 politicians that don’t want to see MMA in Germany, it’s a lot of people. Germany is a country in which many of its people still view combat sports through the boxing paradigm: it’s not gentlemanly to tackle an opponent, hit him while he’s down, or try to choke him. That’s a real obstacle to overcome; one that takes time and a dedicated market approach.
Furthermore, the UFC just went out and hired Tom Wright to head up UFC Canada, because it needed dedicated people in the market. Wright is now able to do what Dana and Lorenzo can’t: apply consistent pressure on the Canadian government and manage the ebb and flow of UFC news in the country.
100 Annual UFC Shows Possible?
May 28, 2010
John Morgan of MMAJunkie reports that the UFC has already begun the preliminary research necessary to determine whether an office in China is feasible and worthwhile. The goal of the UFC is to begin expanding its reach with localized versions of TUF in several different markets and eventually to begin promoting 100 shows per year.
The growth prospects for the UFC are astounding. As recently as 2007, the UFC held just 19 events. White said he envisions a day in the not-too-distant future when the company could hold as many as 100 events annually including single nights with multiple events on multiple continents.
“This is is a work in progress,” White told MMAjunkie.com (www.mmajunkie.com). “We bought this company, and we were doing five fights a year. If you would have told me six or seven years ago that we’d be doing 34 fights a year, I would have said, ‘That’s impossible. It’ll never happen. That’s crazy.’ We’re probably going to end up doing 100 fights a year.
“We could have a show [in the U.S.] on Saturday night and five more going on in five other countries. That’s what’s going to eventually happen. It’s figuring this thing out, putting the pieces together, and like I said, it’s a work in progress. But I’m telling you guys, I said it years ago, and I’ve been saying it – how big this thing is going to be. I think people are now really starting to realize how big this thing is really going to be.”
Payout Perspective:
To promote 100 events, the UFC assumes the following will be in place:
- Fighter availability (quantity and quality)
- Worldwide legalization and acceptance
- Access to substantial distribution in each market
I tend to think that 100 shows per year is a possibility, but the time frame for such an accomplishment is absolutely up in the air and certainly isn’t something that will happen within the next 5 years.
Fighter availability (quantity and quality)
The UFC currently does 30+ shows per year with a roster of ~220 fighters and that number is closer to 260 when you consider the number of guys that are signed and then cut after one or two fights in any given year. The UFC would probably need 900-1000 fighters to do 100 shows and that’s conservative considering the global nature of its 100 show ambitions would strain the ability of fighters to compete more than 2-3 times per year.
The surge in the sport’s popularity is driving a lot of new interest in participation among elite athletes, but it’s going to take a great deal of time to develop the talent necessary to host 100 UFC events a year. This, unless the UFC is willing to sacrifice product quality — especially with its undercards. Yet, I wouldn’t suggest that, seeing as top-to-bottom fight quality is a key point of differentiation between MMA and boxing. The overall strength and entertainment value of a UFC card in its entirety is very much a part of the value proposition which it has used to build the sport.
Moreover, promoting 100 shows in a year would almost necessitate the inclusion of further weight classes at 125, 135, 145, and possibly 225 to give the UFC a chance to fill all of these cards. What does that mean for the WEC? What does that mean for other promotions? I suppose part of the assumption here is that, if the UFC gets to this point, its size and scale afford it so many advantages that it really does become the NFL of MMA (meaning you’re not going to have Fedor with Strikeforce or Aoki/Kawajiri in Dream).
Worldwide legalization
Despite the success of MMA in North America over the last five years, the sport is still not legalized in major markets like New York and Ontario — the UFC’s road to worldwide legalization will be no less tumultuous. I fully expect that history will repeat itself; and, when you take into account the cultural differences that exist between North America and other regions of the world, the road to legalization could be an even longer haul for the UFC in certain international markets.
In Germany, Austria, and France the thought of hitting a downed opponent is near sacrilegious to the mainstream sports fan. More than that, their consumer population is far more sensitive to violence, in general, which will very much make the sport a long-term proposition.
China is a very attractive market, but also one that can be unpredictable and very difficult to do business. The WWE have had a very difficult time penetrating the market (as have bigger companies like Google), because its conservative culture governed by a semi-communist state that operates under an “our way or the highway” policy. Although, the addition of Flash Entertainment (the Abu Dhabi state-owned company that bought 10% of Zuffa in 2009) will certainly help, because they have the connections and clout to get meetings with the key decision makers.
Moreover, I tend to think that people often over-estimate the future size and purchasing power of markets like China and India based solely upon what they’ve heard (much of which is exaggeration on the part of the American political and media bodies fearfully looking over their shoulders at the next challengers to American superiority). Many have suggested that China’s GDP will soon exceed that of the US (and possibly triple the US by 2050), but the country has its own economic and political challenges ahead. For example, the combination of nearly ubiquitous cigarette smoking, airborne pollutants, water contamination (nearly 33% of their fresh water is undrinkable), and the one-child policy will soon put a strain on China’s already questionable health care infrastructure and force a relatively small and proportionately shrinking middle class to support a very large and very sick group of elderly. None of which bodes well for China’s economy in the long-term.
The UFC and Dana White may very well come to realize that “getting the US done” was easier than expanding globally.
Access to distribution
The future of television might be the internet (sometimes I think Dana reads the site), but it’s not going to happen overnight and its not going to happen easily. There are many powerful people earning a lot of money through the status quo (i.e., television networks and cable/satellite providers) that really don’t have much incentive or desire to change the existing model. It’s going to be a tooth-and-nail fight to switch the medium.
Thus, I’m betting on a rather slow change and proliferation of internet-based television, which suggests that the distribution necessary for 100 shows a year will necessitate a hybrid system. Not everyone is going to switch at once, which means the UFC still wants to be on traditional television for now (but it will take internet-based distribution in markets like China or Germany where it can’t get to television, in the mean time).
What does the UFC need to do next?
Be patient.
I understand the temptation — the potential of MMA is huge — but it would be unwise to rush global expansion beyond the current capabilities of the firm. The UFC risks stretching everyone and everything too thin, which would utterly kill product quality in the long-term.
Therefore:
- Let the localized versions of TUF do their magic: develop regional talents, build regional fan bases, and encourage grassroots development.
- Give the UFC programming time to develop a following in the over 150+ markets it now resides.
- Further push merchandise and collectibles into these foreign markets to give the UFC additional presence.
In the mean time, concentrate on dominance within existing markets and work to develop further competencies in marketing, public relations, and digital media. The UFC is good in these areas, but it could also definitely improve. There’s no such thing as perfect; and if there were, it wouldn’t be good enough.
