By Zach Arnold | April 20, 2016
God knows what is really going on behind-the-scenes between Conor McGregor and UFC. It didn’t take a genius, however, to see that McGregor would soon attempt a leverage play for more money and, ultimately, his goal of co-promoting future events. This goes against the entire credo of UFC’s business model.
With no real ammunition left, Conor McGregor had one card to play — retirement.
Nobody is taking the threat seriously. McGregor needs money and exposure. Despite the beliefs of some in MMA media circles, Conor McGregor is not bigger than the UFC. Using the retirement card plays right into UFC’s hands. It ices McGregor out of the sport of MMA. Unless he wants to take his chances and fight in Europe or Japan, UFC will gladly watch him sit on the sidelines like Randy Couture and waste his time. If McGregor does promote his own fight, UFC will easily obtain a judgment against him in the United States and transfer that judgment over to Ireland for enforcement.
You can already see the legal wheels spinning in the minds of UFC executives.
After McGregor announced his “retirement” from UFC, the promotion yanked him off their UFC 200 card due to allegedly not following up on contractual obligations to promote his UFC 200 fight against Nate Diaz. From there, the hypothetical causes of action start flowing:
- Anticipatory breach, breach of contract – stating the obvious. Whatever it costs UFC to bring back Georges St. Pierre or book Jon Jones for UFC 200 minus the price the promotion was going to pay McGregor to fight would be the economic damages at stake. It would give both UFC & St. Pierre financial incentive to strike a deal and to turn around and sue McGregor for the extra costs of doing business, loss of estimated profits, and special damages.
- Breach of implied covenant of good faith and fair dealing, nonperformance
In a binary labor relations battle between UFC and a fighter, the fighter always loses in the court system and the court of public opinion. Ask Randy Couture. The pressure is intense. The paychecks stop. Television exposure and business opportunities fade away. Even if you have made “screw you” money, there’s never enough.
Changing the equation to win the war
There are several fronts right now under attack for UFC.
- There’s the discovery process in the anti-trust lawsuit. Even if the lawsuit does not survive summary judgment, pandora’s box has been opened for business records & dealings.
- There’s the push in the House of Representatives to get the ball rolling on amending the Ali Act to cover Mixed Martial Arts, giving fighters a civil tool for a private right to sue managers & promoters
- The rise of an alternative promotion willing to pay the same, if not more, than UFC. We’re seeing fighters take their chances with Bellator & Spike TV over the Reebok sponsorship situation.
The biggest threat, however, to UFC’s business model is a powerful TV business partner. UFC has gotten away with having creative control of matchmaking & production with Fox. Fox has largely paid them rights fees to air a Zuffa-flavored product. Fox has never interjected itself into business dealings the way Spike & Kevin Kay have with Bellator, Showtime & HBO with boxing, or the way Fuji TV did with PRIDE and Tokyo Broadcasting System did with K-1.
To change the terrain, fighters must inject an active & strong third-party into the business equation. For MMA, that partner must be Fox. It’s the one opportunity Conor McGregor has make a difference in his business battle with the UFC and he would be wise to take a look at a certain high-profile individual who has used Fox to get what he wanted.
Donald Trump studied the path to the Republican presidential nomination process for years. Trump made sure to maintain a presence on Fox television but by no means did the network build his brand or make him into the media maven. Trump wasn’t like other politicians who had to rely on the Fox machine to build name recognition. The price politicians pay for kissing Fox’s ass is ridiculous.
Trump instinctively created heat with the face of Fox News, Megyn Kelly. When the battle got hot, Fox treated him like a child and sent Roger Ailes after him. Ailes discovered that Trump wasn’t playing around and demanded that he deal with the big boss, Rupert Murdoch, instead of Ailes. Trump called Fox’s bluff and ran a veteran’s event in Iowa opposite of a Fox presidential debate. He used Fox as a weapon and changed the media chess board to his advantage.
If Conor McGregor wants to win a labor battle with UFC, he’s going to have to pull Fox into the business equation. Fox wants to renew their contract with UFC but is struggling to find its footing. Fox Sports 1 has been a disaster. The UFC network events do poorly in the ratings. The 18-to-34 year old demo is still delicious but not as appetizing as it once was. There’s been talk that Fox Sports 1 may emulate Fox News in terms of tenor and style of programming. A more active, aggressive Fox means an opportunity to insert themselves into creative control of sports properties they do business with. UFC falls right into that category. Fox has largely stayed out of the way of UFC in terms of matchmaking and negotiating with fighters.
In order for Conor McGregor to get what he wants and ultimately change the landscape of how UFC does business, he needs to insert Fox into the business equation. He needs to turn Fox Sports executives like Jamie Horowitz into active participants like Roger Ailes & Rupert Murdoch, the same way Fuji TV let producer Kunio Kiyohara work with PRIDE. Break the binary UFC vs. fighter cycle and introduce a strong third-party into business affairs. Once Fox becomes a more active player in managing & producing UFC TV events, UFC has to sacrifice some leverage in order to maintain their relationship with Fox.
Whenever UFC breaks a big story, they go to ESPN. UFC has given Fox plenty of reason to doubt the supposed two-way street for business loyalty. UFC needs Fox as much as Fox needs UFC. UFC’s only other TV alternative is to do a deal with ESPN/ABC and right now there is great volatility in that company, especially after they overpaid for NBA rights fees and got taken to the cleaners by the NFL for Monday Night Football rights.
Fox remains the main game in town for UFC. Everyone knows this. Everyone also knows that in order for Fox to benefit from the relationship, the status quo must change. Combat sports is a star-driven business. You can only get so far pushing a brand-first product. UFC has reached as far as it can go using the brand-first model. As long as they keep making money and don’t get sued into oblivion, there’s no reason for UFC to change the way it does business. Icing Conor McGregor into permanent retirement works just fine for them. It gives them an opportunity to make an example out of yet another fighter who decided to challenge them over money and allows UFC to get rid of a guy who was becoming a massive headache. Better to be on the sidelines and silent than push a fighter who builds his own leverage while making cash in the process. A short-term loss to maintain a long-term gain.
Conor McGregor has no significant leverage right now. He’s not going to get $10 million dollars for a fight. If he wants leverage, he’s going to have to convince Fox to get involved in negotiations. McGregor, or whichever big superstar decides to challenge UFC next, is going to have to convince Fox that the network needs bigger names on cable & free TV cards, a financial piece of Fight Pass, and a financial piece of PPV promotion. Zuffa has never given into any sort of television partner on these business fronts before. The question is whether or not McGregor is smart enough to figure out that being a good self-promoter isn’t enough leverage to get what he wants. He needs third-party muscle and that muscle is Fox.
In the same way that Fox News has been a conduit in building up conservative politicians and pundits, Fox has been UFC’s television partner in building up new stars. Conor McGregor was the first big star built in the Fox Sports 1 era when he fought in Boston. There’s history there. He needs Fox and Fox needs better ratings from UFC. It’s his only chance of forging an business alliance that works for him and works for all fighters. Otherwise, he’s going to be stuck on the sidelines doing empty retirement threats and getting sued into economic submission.