SBJ: “UFC Feeling Scrappy”

Jon Show of the Sports Business Journal has written a great article documenting some of the UFC’s success over the past few months. He also manages to get Lorenzo to divulge some interesting information regarding the future plans of the organization.

The SBJ has certainly increased its coverage of MMA over the last few months, and we’re all the more happy to pass some of it along.

Here are a few of the more interesting points in the piece, but I encourage everyone to check out the entire article:

• The UFC has media deals in 150 countries, and access to 418 million homes worldwide.

• India is being targeted for the next distribution deal

• The UFC is planning to open a regional office in Canada; possibly one in the Middle East.

• Product licensing is a key focus for the organization moving forward, ostenisbly because the UFC is looking to diversify its revenue streams away from its events. New CMO Bryan Johnston is looking to spearhead this effort.

• UFC Gym: San Francisco will be the first of nine to open in the US, starting in 2010.

• According to Lorenzo Fertitta, the total number of UFC events per year is not expected to grow in the near future. They’ll maintain a rate of 20 per annum, but are looking to increase the number of WEC cards.

Payout Perspective:

The UFC’s expansion strategy is a tried and tested  one. The WWE has used this model for years: the organizaiton uses television distribution to introduce the product, and then follows the distribution up with a host of other products. Then, once they’ve developed enough product awareness and brand recognition, they’ll move in with an event.

India has a ton of potential, but it’s a market with many problems – certainly one that will need to be approached slowly and with caution. In the mean time, the UFC is rumoured to be hosting its first event in Australia next February. They’re also said to be in frequent talks with the UAE and Macau.

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According to Fertitta, Zuffa isn’t planning to grow the number of total UFC events next year, and 20 is likely to be all we see.

It’s a sound move for a number of reasons:

1.) Companies often get caught up in their own growth and begin to pursue expansion too aggressively. This usually leads to an over-saturated market whereby supply outstrips demand, and the consumer simply gets sick of seeing the product everywhere and associated with everything.

A sport like MMA needs time to develop at its own pace. It’s especially unwise to rush a sport as controversial as MMA, because people need a little bit of extra time to become accustom to the nature of the beast.

2.)  Filling all of those extra cards would have presented a large problem. It’s not just an issue of headliners, either, but also using somewhat unknowns on the rest of the main card. Sure, Kurt Pelligrino has had his fair share of post-fight bonuses, but he doesn’t move PPVs or even register as a bonus fight to most fans.

Then we get into issues of: “where are these fighters going to come from?” or “is there enough top-end talent in the world to fill all these cards?” or “should we merge the UFC and WEC to take advantage of lightweight classes and their stars? and “how might this impact the overall quality fo the cards?” etc.