By Zach Arnold | March 16, 2011
Put yourself in the situation of a money mark being recruited by people in the MMA business to put up some cash, either for a new start-up or for a ‘turn-key’ operation. Other than murmurs about something happening with Pro Elite, the entire industry is owned by Zuffa on a large scale. Bellator is on the outside-looking-in on MTV2, somehow hoping beyond hope that they catch a few breaks and that UFC breaks away from Spike TV. Showtime is stuck, for better or for worse (depending on your point of view), in a shotgun marriage with a new business partner that has been trashing them for the past several years. Outside of Zuffa & PRIDE & K-1 (in the past), nobody has a proven long-term track record of making money in MMA. Are you willing to pony up big cash to get into the sport?
BTW, as Josh Gross pointed out on Wednesday: Rough day for ProElite, Inc. stockholders out there. Shares fell $0.10 & lost over half their value. Volume still high, just under 700k.
Dana White says that Zuffa doesn’t have a monopoly in the business — all it takes is someone with guts and big money. Of course, it’s easy to say that when you have over 300+ fighters under contracts and none of them are classified as employees with benefits. 10 years ago, Turner ditched World Championship Wrestling and sold the assets to WWE. The wrestling business has never been the same since then. TNA has tried and utterly spent millions upon millions of dollars going nowhere. WWE has declined as well and has been saved by international expansion, but things aren’t looking terribly great domestically for them on PPV.
UFC is in the PPV business and a heavy portion of their viewer demographics crosses over from the pro-wrestling field. They know what the formula is to make money. For an outsider wanting to get in, the barriers are now extremely high. A lot of money, a lot of resources, and a need for office talent that understands the business. It’s not something you learn in a textbook. And yet, in many situations when new money marks come into the fold, it’s always the sleazy retreads who should never have gainful employment who somehow attract the marks in order to draw a few paychecks before the next failure happens.
- Jonathan Snowden: Combating the UFC monopoly — tennis as a model for organizing fighters
- Jose Mendoza: Searching for a viable competitor, is it worth the risk?
And that’s just the climate in the States. Try Japan. Sumo’s falling apart. The wrestling scene has limited power now. K-1 has had financial difficulties. The yakuza problems still exist. Now, the big Tohoku earthquake, tsunami, and nuclear problems. Want to be a promoter in Japan and spend a lot of money only to have to cancel a show? Several promoters have had to deal with that fate this week, including Dragon Gate which announced a cancellation of their big March 20th event in Tokyo at Ryogoku Kokugikan. All Japan has a show scheduled for the 21st at the same building. Their show may get postponed as well. Between the politics, resources, and crime, how will the Japanese scene look in the future?
As a reader, give me a scenario in which you can see an outsider coming into the MMA landscape and being successful. Forget about competing with UFC, I want a scenario in which you can see someone making money for a sustained period of time and having somewhat of an impact. How do you do it? Who do you need to align with? Is the entry into MMA as poisonous at this point as the entry is into professional wrestling? How do you convince television executives who believe that only Zuffa knows how to promote the business and no one else?
To add further context to this discussion, check out our audio conference call on this subject with myself and Jeff Thaler. Issues addressed include: Has MMA jumped the shark? Will there be any anti-trust issues down the road? Who will want to invest money in the sport? Will Zuffa cash out in the near future?
Get a head start and listen to our discussion (it’s 20 minutes long), as I’ll try to transcribe parts of it this weekend. It’s worthy of your time to download the conference call and check out the discussion. I’d like to get your responses to what was discussed on the audio.