Affliction and Golden Boy shook the foundations of the MMA industry when they announced their plans for an unprecedented partnership focused on creating hybrid MMA & boxing events for the future. The announcement, coupled with the financial failures of several MMA promotions in the last two years, has led some to question the viability of MMA as a standalone product.
After all, there must be something wrong with MMA as a product if the greatest heavyweight in the world cannot sell more than 100,000 PPVs sitting atop a star-studded, albeit grossly-overpaid, undercard; or, if a 34 year-old street fighter cannot single-handedly bring a company back from the clutches of financial insolvency.
Am I the only one that has a problem with the notion that MMA cannot standalone?
This is a sport that has spawned an industry of promotions, athletes, clothing brands, and training facilities that are the inspiration for a unique lifestyle that’s quickly being embraced the world over. This is a sport that has the undivided attention of an entire generation of young males about to come into copious amounts of disposable cash. And as a result, this is a sport that has witnessed dramatic revenue growth from nearly $20 million annually in 2001 to almost $400 million in 2008.
Let’s call a spade, a spade: these MMA promotions are failing due to management issues, not because of the presence of any critical flaw with the sport of MMA or its market.
Then, from the perspective of one of these distressed management teams, it’s only logical to try any and everything in order to prevent the ship from sinking. They’ve sold their souls to get on network television, sworn by cross-promotion (although we all know that they’d wholeheartedly refuse, were they in a position of power), and now they’re willing to experiment with hybrid events.
I have no problem with any of the above ideas, in fact I think they’re plausible solutions under the right circumstances. Rather, I’d merely like to point out that desparate times require desparate measures; and, from the perspective of negotiating leverage, acts of desparation often require great sacrifices.
But, why not try a hybrid event? The benefits of a boxing/mma event are obvious: the pooling of resources and competitive advantages, mixed with the merging of two distinct demographics is theoretically less capital intensive, less risky, and a probable success. But is it really that complicated?
Without any knowledge of the Affliction-Golden Boy deal – noting that event Tom Atencio seemed lost on many of the details – it seems fair to point out that splitting expenses also means splitting revenues. Which begs the question, what is the revenue split?
Affliction has already proven it can sell-out a venue; what the organization really needs is PPV sales. Ultimately, then, Affliction’s success will depend upon two things: 1.) reducing fighter payouts and bonuses, 2.) receiving a large enough portion of the revenue split (i.e., the PPV sales) to put them back in black.
However, seeing as Affliction is scrambling to break-even on their next show, it’s quite likely that they were forced to make considerable concessions. After all, what is the incentive for Golden Boy to share their considerably larger PPV position?
Apparently, Golden Boy sees Affliction as a vehicle for entering a sport that cannot standalone…