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How The UFC Made MMA A $4 Billion Sport In Just 15 Years

NEW YORK, NY - JANUARY 13: UFC President Dana White and Co-Owner/Chair/CEO, UFC Lorenzo Fertitta attend UFC press conference at Madison Square Garden on January 13, 2011 in New York City. (Photo by Henry S. Dziekan III/WireImage)

The perfect storm. That’s what the UFC were under the stewardship of promoter Dana White and owners the Fertitta brothers, Frank and Lorenzo. The perfect storm.

The UFC were the idealistic blend of cutting edge promos, highlight reel knockouts and fighter monopolisation. They flourished while their biggest rival, boxing, began to perish. The UFC made the big fights, they pumped them up through effective use of social media and mainstream publications and, most importantly, they put on a show. They always put on a show. With the exception of UFC 151, the only cancelled show in the organisation’s history, the UFC have always delivered and they’ve displayed a tremendous ability to adjust and adapt in the face of adversity.

For the better part of 15 years the UFC have been able to give the fans what they want, when they want it. A respectable business model really, when you consider we live in an era of Snapchat and Vine, where people are more impatient than they have been at any other point in human history. Fans want fast-paced, condensed action and that’s what the UFC supplies on nearly a weekly basis.

That’s how they’ve prospered. They took a little bit of the WWE’s razzmatazz and took advantage of boxing’s rapid decline and filled the void between the two, while also building and developing their own core group of fans.

LAS VEGAS, NV - MARCH 5:  Nate Diaz applies a choke hold to win by submission against Conor McGregor during UFC 196 at the MGM Grand Garden Arena on March 5, 2016 in Las Vegas, Nevada. (Photo by Rey Del Rio/Getty Images)
Nate Diaz applies a choke hold to win by submission against Conor McGregor during UFC 196 at the MGM Grand Garden Arena on March 5, 2016 in Las Vegas, Nevada. 

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They made reality tv shows, they released video games, developed mobile apps and were a promotional force across Facebook, Twitter and YouTube.

They understood the business of modern day sport and they put MMA on the global sporting map. On Monday July 11 Zuffa sold the UFC for over $4 billion to sports agency WME-IMG. White and the Fertitta brothers stand to make at least a $3.99 billion profit after purchasing the company from the the Semaphore Entertainment Group in 2001 for just $2 million.

The sale marks the end of an era for the UFC but also highlights one of the most rapidly successful private businesses in US history.

White and the Fertittas made a staggering 199900 per cent profit on their original investment and helped transform the sport from an underground spectacle to a widely accepted mainstream sport, in 15 years no less.

But when did the tide start to turn? At what point did the UFC become truly accepted and what were the signature moments that helped launch the brand?

The consensus is that the Ultimate Fighter Season 1 finale between Forrest Griffin and Stephan Bonnar introduced the UFC to the world, or the world to the UFC, depending on how you look at it.

The fight between Griffin and Bonnar was an instant classic and proved to be the launchpad that the UFC needed in order to propel the sport further and further into the public consciousness.

The UFC were struggling prior to Griffin and Bonnar’s three-round war at the Cox Pavilion in Las Vegas and turned to reality television in a bid to save their fledgling company.

The organisation were floundering after a disastrous series of pay-per-views that culminated with a horror UFC 33 show in September 2001. In a series of unfortunate events, the card’s headliner Vitor Belfort pulled out through injury, the PPV went off the air, all five fights went the distance and there was a low gate due to the nationwide panic surrounding 9/11.

Previous owners SEG had some great PPV events without the backing of television but Zuffa could not seem to replicate their success, with only one PPV event eclipsing 100,000 buys in the first two years of the company’s ownership.

By 2004 the UFC were averaging around 38,500 buys on pay-per-view and were losing millions of dollars in the process. The Fertittas were eager to sell and after failing to find any offers they deemed worthy, they decided instead to pump another $10 million into the company to fund their own reality TV show.

NEW YORK, NY - JANUARY 13:  Lorenzo Fertitta, UFC Chairman and President, speaks during a press conference to announce commitment to bring UFC to Madison Square Garden and New York State at Madison Square Garden on January 13, 2011 in New York City.  (Photo by Michael Cohen/Getty Images)
Lorenzo Fertitta, UFC Chairman and President, speaks during a press conference.

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The Fertitta’s had previously featured on the Discovery Network’s reality show American Casino and they saw how well the series worked as a promotional vehicle for their own Station casinos. They came up with the idea of the Ultimate Fighter and it proved to be the foundation for the future of the company.

The Ultimate Fighter 1 finale in April 2005 recorded a 1.9 rating and was one of the most watched shows on American television that week. Its successor The Ultimate Fighter 2 drew similar numbers and produced a new wave of stars. In the first two seasons of the Ultimate Fighter the show would produce two future champions in Rashad Evans and Griffin, as well as a host of other fighters that would go on to become perennial main card fighters.

The show also had a direct impact on the UFC’s PPV buys as the average buys for a UFC PPV skyrocketed from 38,500 from 2001 to 2004, to an average of 527,00 buys per show in 2006.

In 2015 the UFC averaged 580,000 PPV buys for the year but ten years later they’re much more diversified. In 2006, the majority of the UFC’s revenue came from PPVs, according to a John S. Nash article on Bloody Elbow in October 2015. 

The UFC made $87 million dollars from PPV revenue in 2006, approximately 48% of their total revenue of $180 million for the year.

In 2014 they made $82 million dollars from PPV revenue, which accounted for 15% of their total revenue of $522 million.

In 2015 Lorenzo Fertitta indicated that the company had generated around $600 million in revenue through a variety of financial streams.

Speaking to CNN (via MMAMania), Fertitta said:

“We’ll generate about $600 million in revenue for the year 2015, which is a record for the company and it’s a fairly significant growth coming off 2014. The exciting part of the platform that we’ve built is that we’ve been able to embrace different tiers of revenue. We have our basic pay-per-view business, that is our biggest source of revenue.

“Then we have our media rights, which is really similar to rights that we sell to FOX for all of the programming we give them. And then we have embraced the over-the-top platforms, where we launched UFC Fight Pass, which is a subscription service of $9.99 per month where you can access the entire UFC library and we also put live exclusive UFC events from around the world on that format, as well as original programming.

“So we really have those three sources of revenue to generate, three ways to monetise our contacts.”

LAS VEGAS, NV - DECEMBER 12:  A general view of the crowd as Jose Aldo of Brazil walks to the Octagon during the UFC 194 event inside MGM Grand Garden Arena on December 12, 2015 in Las Vegas, Nevada.  (Photo by Todd Lussier/Zuffa LLC/Zuffa LLC via Getty Images)

As you can see, Fertitta didn’t even mention the Ultimate Fighter, which will be entering its 24th season in August on Fox.

There’s no doubt that the Ultimate Fighter played a gigantic role in growing, and keeping, the organisation afloat, but there’s also several moves that the UFC made after the airing of the series that really put the company and the sport in the spotlight.

The Tito Ortiz-Chuck Liddell rivalry drew huge interest from fans and the media as there was a genuine distaste between the two fighters. Their feud ran deep, and was made even more complicated by the fact that the UFC’s president, White, had previously managed the two men in the past. Liddell won the first fight at UFC 47 by stoppage but their rematch at UFC 66 was the first UFC fight in history to surpass 1 million PPV buys.

The acquisition of former NCAA wrestler and WWE superstar Brock Lesnar was also a massive signing for the company as not only was Lesnar a supreme athlete, he was also a hugely popular wrestler in the WWE and as a result he brought a lot of those fans over to the UFC. Around the same time Anderson Silva and GSP both began to clear out their respective divisions.

RIO DE JANEIRO, BRAZIL - JUNE 12:  Anderson Silva speaks during a press conference for UFC 162 at X-Gym on June 12, 2013 in Rio de Janeiro, Brazil.  (Photo by Buda Mendes/Getty Images)
Anderson Silva speaks during a press conference for UFC 162.

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The UFC had acquired a whole legion of fighters from the wildly popular PRIDE Championships and there was genuine talent within the organisation. The best began to fight the best and just as one star began to fade, another would quickly rise.

It’s where the company has distanced themselves from the WWE and professional boxing as, instead of relying on Floyd Mayweather and Manny Pacquiao or The Rock and The Undertaker for a draw, the UFC creates its own stars and banks on the field as opposed to one individual athlete.

The Fox TV deal, the introduction of a women’s divisions, the acquisition of Strikeforce and the WEC, the first huge European star in Conor McGregor and increased sponsorship and mainstream sports coverage were all momentous moments for the UFC and only add to the company’s staggering net worth.

The UFC have had some dark days and some rotten luck over the years but ultimately their good decisions have outweighed their misjudgments.

Issues like fighter pay and rights have been a big topics up for discussion in UFC circles for years now, and while it still has a way to go before it reaches acceptable standards, the Fertitta brothers and White have helped put MMA on the map, and for that we should all be thankful.

Jack O’Toole, Pundit Arena

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Author: The PA Team

This article was written by a member of The PA Team.