Last week, MMAPayout.com had the chance to chat with WEC General Manager Reed Harris in regards to a variety of topics. It wasn’t really your typical question and answer interview, but more a meandering conversation between two MMA enthusiasts.
Below, part two of the interview further discusses the talk of a merger between the UFC and WEC, the WEC’s relationship with its fighters, and the influence that Lorenzo Fertitta has had on the business.
Enjoy.
KP: You guys see your place then as a solid number two, but from a strategic planning standpoint, how do you plan to grow the company in terms of your ratings – maybe getting into the PPV and stuff like that?
RH: Because of the fact that I believe the sport has a long way to go as far as growth, I think that being a solid number two could put us in a really good spot – as far as viewerships, PPV, etc.
Our strategy is to build those lighter weight divisions; and, as you know, in boxing and in other combat sports, a lot of times the lightweights are very, very popular. That’s where we’re going. We’ve got Faber, Brown, Torres, and Bowles. We’ve got a lot of guys – Benavedez, Cruz – that are coming up. We’ve got guys like Fabiano and Jose Aldo that are in the mix now, and we’re building those divisions. I’m hoping in the next couple of years with our strategy of doing more shows and also going to possibly Mexico and Canada, I think we can build our company into a very profitable one. And that’s the goal, to become profitable; which, we’re on our way to doing and are doing.
KP: A lot of the conspiracy theorists – and that wasn’t the point of the merger article article…
RH: I’ve read your site since the beginning, and I was told about it, but I haven’t had the chance to read it yet. I just skimmed over the first few paragraphs, but I’ll go read it when we’re done.
It’s just, from a business standpoint, why would we – do you think it would add a lot of value to the UFC to bring in the WEC fighters? I don’t think it would.
KP: I do; even just looking at it from the perspective of the importance of title events. The UFC has five titles right now, and if you were to add 135 and 145 – that’s two additional titles. The numbers have shown that title fights are significantly more popular than non-title fights, and the UFC has been doing a greater proportion of non-title fights recently just because they’re ramping up the number of events they’re doing. Two more titles and 4-5 more extremely marketable fighters like Torres, and Faber, and Bowles, and Brown, and Aldo and all these other guys in the mix, it may add value.
However, as you say, the counter to that is how do you pull it off logistically?
RH: Right. You’ve got another 30-40 guys to add to your roster; and you can’t just have title fights, you’ve got to have all the fights, all the preliminary fights.
Plus, I think I mentioned to you that we have a really good deal with Versus. I don’t think they’d want to give that up.
KP: Now, the only thing that I wonder is whether, from a growth perspective, you may outgrow Versus at some point down the line.
RH: I think – hopefully! – Versus will grow with us. As we get bigger, there is certainly the PPV option for us and I think that’s where we’re headed. Certainly, we’re not going to look at the kinds of numbers that the UFC is looking at right now, but there is a comfortable place for us in the PPV world where we can do two or three PPVs a year and do superfights, etc. That would certainly help the company’s bottom line.
KP: What would be an acceptable buyrate for you guys, to make you profitable? Given all the failures that Affliction and EliteXC have had with their PPVs?
RH: The PPV numbers are something we don’t discuss, but we believe we’d do very well.
I can tell you that most of the things I read that, when it comes to events and stuff, aren’t accurate. I don’t mind talking to you about it. There’s certainly a business side to this and we look at things very carefully, and that’s one of the reasons we’ve been successful.
KP: That’s the problem from my position, managing a business website and there’s a great deal of information asymmetry between you and myself. Where you know everything and me, I know very little. It makes the job tough. [Laughs]
RH: That’s the way we want to keep it by the way! [Laughs]
I read your stuff and normally it’s pretty well thought out, but if you ever have time I’d like you to do a story on why the WEC should continue. There are two sides to look at with an argument like this. One side is could it possibly help an organization like the UFC and the other is, what would be good for the sport? I think there’s no question that having – even though there are other organizations like Strikeforce – the WEC building these other weight divisions ultimately, in the long run, is really good for the sport.
KP: I would agree with that. If you guys get to the point where you’re a very, very successful number two; the point where you can start increasing some of the payouts and some of the undisclosed salary to really make these guys at the level of the UFC counterparts, that’s going to help the lighter weights in thinking, “I can make this my career and become a full-time fighter.” Certainly that’s where there is some real potential for growth in the sport.
RH: The thing that a lot of guys don’t understand about my fighters is that I’ve never lost a fighter over pay. Guys like Miguel and Urijah, you have to remember that, first of all there wasn’t really even a division for these guys to fight in a couple years ago – we created that. I can tell you that how we take care of these guys, and the way we take care of these guys, they’re doing very well. Urijah will tell you that.
I think that what people misunderstand is that I have a lot of interviewers that ask fighters things like, “would you like to make more money?”
And, really, the only thing that bothers me, and I had this argument with Steve Cofield over at ESPN about this, is I said look, “I’m under contract with these guys.” We’re under contracts that span 18 or 24 months or whatever with these guys. When I sign those contracts, those guys were completely happy with those deals.
The problem is things have changed: the sport has gotten bigger, the WEC is bigger, and guys have gotten bigger. But, I think you’ll agree that there’s a combination of events that made that happen; one of them being that we promoted that person. We also understand that it’s also based on the performance they’ve contributed. I’ll use Faber as an example, Urijah has certainly performed very well and that’s one of the reasons he’s very popular, but also we promoted him. So it’s kind of a mutually beneficial thing: to build a fighter and make him a household name.
It is a business though and we have contracts that we have to abide by. I could just hold them exactly to the contract and pay him exactly to the contract, but instead we as a company make a decision to do bonuses et cetera. I think that’s very fair on our part. We’re trying to do the right thing.
I can tell you that I have fighters that are completely elated when I give them bonuses because it’s completely unexpected. They are undisclosed, though, and it’s not something that I will discuss as far as who gets what – I don’t want to discuss anybody’s payroll or any type of compensation in the company.
KP: Can you tell me how you come up with those undisclosed bonuses? Is there a formula or is it just at your discretion: you talk it over with the matchmaker and other executives and you come to a figure.
RH: There is a formula – plus we look at the event that’s taken place, etc. – but I’ll tell you that Dana and Lorenzo Fertitta are very generous. They told me the day I started, when they bought the WEC, the fighters are the most important aspect of this business. I’m telling you they’re very generous in a lot of ways – they surprise me all the time.
KP: They take a lot of heat over it, too. People only see the disclosed figures, assume that’s all there is, and they go crazy over it.
RH: Well, yeah, and how do you think it makes them feel? Where Lorenzo and Dana have just completed a WEC event where they gave a number of bonuses to people, which they didn’t have to, and then they go back on Monday and they read all the criticism.
People need to understand that there is a reason why people want to fight for the WEC and the UFC. If we were not doing the right thing, this business would not be successful.
KP: You’ve exuded the patience too, and a lot of people don’t have that patience. They see the success of the UFC and WEC, but they don’t see exactly what you brought up, that there were no lightweight divisions before you guys came along; there were no substantial places to fight; and after five years the UFC was down $40 million, until they broke out with the reality series.
RH: And you know the guy, I’ll tell you, one of the things that people don’t talk about much is Lorenzo. The guy was $40 million in debt and he calls Dana and says, “let’s keep it going” when they had that discussion about selling. Imagine the balls that it takes to do that! That guy is singlehandedly responsible for where the sport is today – he and Dana both, and Frank too, obviously.
I’ve been in business for many years, involved in pretty high-level real estate developments, and I know what it takes to make decisions like that. There’s a certain kind of guy that can do that – most guys can’t, they run for cover when things aren’t going well – but not Lorenzo and those guys.
They really put it all on the line, all out there. They said, “look, this thing has a future! So let’s keep it moving and keep it going.”
KP: Well, I don’t want to take anymore of your time. Thanks so much for speaking with MMAPayout.com, and I look forward to speaking with you again!
RH: No problem, my pleasure!
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