Why Is MMA Growing So Fast?
When Was Cage Fighting Popular?
It’s undeniable that the rise of the UFC has been historic. In 20 years, the company has taken a sport, which was illegal in many states, and turned it into an anchor product, for the biggest sports network in the world.
Dana: “I don’t care what color you are, what country you come from, or what language you speak. We’re all human beings. And for some reason, fighting is in our DNA man.”
At the center of it all is Dana White. And he’s as big of a character as you can find. Dana White is the “ID”, of the UFC in many ways. But behind the bluster and hyperbole, there’s a monumental business story happening.
The UFC doesn’t just wanna be mainstream. It wants to be the most popular sport in the world. And even that ambition may be too limited. Now the crown jewel, is super agent Ari Emanuel’s endeavor empire. The UFC is influencing, not just sports, but culture, media, and entertainment.
And for them nothing, not a pandemic or bruising legal fight, will stand in their way.
Dana White: “It’s hard for people, to really wrap their brains around, how big this business can really be. But I get it. I know what this thing is capable of. And I always have.”
Is UFC The Biggest Sport In The World?
To understand, one of the most interesting stories in the world of sports, and business you have to come here to Las Vegas. It’s not about betting. It’s not about the new football team, or even the hockey team that everyone’s so excited about. It’s about one sport, the UFC. And it’s about one guy, Dana White.
More than 20 years ago, White convinced his high school friends, Frank and Lorenzo Fertitta to go in with him, on buying the UFC for $2 million. Today estimates value the UFC, at closer to nine or $10 billion. It’s the centerpiece of one of the largest talent, and entertainment companies in the world. And three years into a contract with ESPN, the UFC is growing faster than ever.
But to understand how we got to this moment, you have to understand the last two decades, and the best person to ask about that, is Dana himself in his natural habitat.
Crazy how’s that? Nice to see you. You too.
This is an incredible office. Oh thanks. By the way. Look at, come over here. This is my bar.
Oh my gosh. And this is my gym. I’ll come in here in the morning. I work out, shower, and then start my day. Right.
As I’ve dug into this business. I mean it’s mind blowing, I think for anyone who’s looking at it say, it’s two million bucks. Right. Like I mean, and look what it’s become. The landscape in the backyard is worth $2 million.
You know what I mean? It’s true. Right. It’s crazy. We bought the company, and this wasn’t allowed on pay-per-view.
Adult content was on pay-per-view and you could pay for it, but you could not pay for the UFC.
We bought the company and our goal was to get it on free TV, which everybody thought was impossible at the time. ‘Cause it was illegal. Yeah in some states. In some states.
Yeah, it was illegal in some states.
In fact as of 2001, only two states sanctioned UFC fights. But after a lot of investment, and a lot of visits to state capitals, not only does all of North America sanction fights, but the UFC broadcast to more than 900 million households, all around the world.
The growth of the company, and the sport is in large part because of Dana. But also that the UFC is set up much differently, than other pro sports like the NFL or the NBA.
So what makes Dana White different from Adam Silva, or Roger Goodell? Dana said what makes him different is that the UFC is easier to manage. There’s one guy that makes all the decisions and that’s Dana.
Dana: When I want to do something, we’re doing it.
Unlike many other sports leagues, that have team owners, players, unions, or governing bodies who weigh in on decisions, the UFC well, it has Dana. That’s allowed him to be aggressive, over the last 20 years of business. And especially through the pandemic. In the United States, the UFC was the first major sporting event, to resume operations.
When it hosted UFC 249 in May of 2020, News4Jax covered the news; “Tonight the first major US sporting event, since the COVID-19 shutdowns, will take place right here in Jacksonville.”
Getting international fighters, into the octagon proved to be more challenging. But Dana had an idea for that as well. HBO reported that the UFC was apparently building a facility, on a private island that they’re calling “Fight Island”.
Now is that’s a clever name? No. Is it the perfect name? Yes.
Lawrence Epstein said that it started with Dana saying, “I’ve got an idea. I want to buy my own private island. I want to own it myself. I want to set all the rules. I can do anything I want to do on my island, and we’re going to put fights on on that island. We’re not going to have to listen to anybody, ’cause it’s going to be my island.”
Lawrence Epstein is the UFC COO and often when Dana has an idea, he’s one of the people tasked to turn it into a reality, and ultimately they put on a series of events in Yas island.
And so it all started with a crazy idea of Dana.
I’m literally going to buy an island, I’m going to own it. I’m going to be the king of that island. And I’m gonna do whatever I want.
The Success Of UFC During The Pandemic
Keeping fights going during the pandemic, was important to Dana White. Critics and health officials warned against matches. At one point even ESPN’s parent company Disney, had to step in when the UFC sought, to avoid California state guidelines, by holding the event on tribal lands. But at a time when most other sports, had been almost entirely shut down, UFC was able to produce matches for their fighters, and deliver on their contract with ESPN.
Dana White said that it was one of the things he’s most proud of in his 20 year career with the UFC, and that is they didn’t lay off any of their employees. They honored all of their fighter contracts. Everybody made a living and got paid through COVID.
Since the UFC, resumed live events in May of 2020, they’ve conducted about 55,000 tests of athletes and staff, with a positivity rate of about 1%. But as vaccines rolled out through the country, and restrictions began to ease, the UFC was ready to bring fans back.
And in “Sin City” they wanted it back in a big way. UFC president Dana White said, that Connor McGregor versus Dustin Poirier is happening July 10th at the “T-Mobile” arena, at full capacity for UFC 264. And for the first time, since the start of the pandemic, Las Vegas has sold out, the news up and down the strip. Vegas was alive again with activity.
Thanks in large part to the main event match, between Connor McGregor and Dustin Poirier. And despite rising cases in Nevada, and the rise of the Delta variant around the country, fans couldn’t wait to be back. In fact, T-Mobile arena sold out it’s more than 20,000 seats, in just seconds.
And you may remember the actual match ended up, not going past the first round, after Connor McGregor suffered a gruesome leg injury. But for the sport of combat fighting, it’s never been more successful. I mean this isn’t even the event. It’s a press conference.
McGregor was asked “Do you respect Dustin Poirier, no matter what happens on Saturday night?”
I don’t give a * about him, to be honest. I don’t give a rat’s * about him.
Dana considers himself a pretty big sports fan, but candidly has never been a huge UFC fan. So, how did he get to the more casual sports fans and what happened through the pandemic? Obviously they gained a lot of fans, because they were the only thing on TV.
People tuned in people watched. They gained a lot of fans, because there was nothing to gamble on.
So Sports Better started betting on UFC. And if you’re going to watch UFC, you’re going to end up loving it. There’s no way that isn’t exciting to you, and not fun to watch.
The UFC On ESPN
And now in year three, of their seven year deal with ESPN, more and more people than ever are being exposed to UFC, and MMA fighting. The UFC on ESPN.
Dana wanted to be on ESPN. He knew that’s where the UFC needed to be. It’s a sport.
You don’t really realize the impact until you get on ESPN. The impact was been massive!
Dana said when you turn your TV on at three o’clock in the afternoon, three o’clock in the morning, 6:00 AM. There’s a bulletin up there that says, “Connor McGregor versus Poirier”. Every single week that’s up there. And these fighters names start to drill into people’s heads. You do that over a seven year period. It’s massive. Not just for the brand, but for the individual fighters too.
The UFC is also important to ESPN, in an age of cord cutting, ESPN is looking to grow, their “ESPN Plus” streaming audience.
And they have great content, and a massive fan base they’ve built over the last 20 years to finally get to ESPN. Where they can actually add value to them, and their demographic are called the cord cutters.
But the road to ESPN 20 years ago, for the UFC sounded laughable.
UFC Commentator: “Dana, congratulations on your first show. That’s gotta feel good.”
Dana White: “Thank you very much James. I appreciate it. We’re very excited.”
The Ultimate Fighter Reality Show
After years of investment, in just making the sport legal, they still needed a way to grow their audience. So they did what anyone in the early 2000’s would do. They started a reality show.
Dana said they picked who they believe were the best guys in this country at the time.
Epstein stated that when you look at every metric, every single metric relating to the UFC. Whether it’s number of fans, profitability, ratings, pay-per-view buys. There’s this inflection point. And that inflection point, is the “Ultimate Fighter” reality show.”
Fight TV starts “Television Network for Men”. We pitched “The Ultimate Fighter” to them, and they want nothing to do with it. So we say to them, “Well what if we pay for it?”” They liked that idea a lot.
The UFC would put $10 million, into creating the first season of the show. Dana oversaw the production himself, and starred in the show.
Dana White during a show: “I don’t want you here. And I’ll throw you the out of this gym, so fast your head will spin.”
That paid off.
And the ultimate fighter would go on, to be one of the biggest draws for the network, and run for 14 seasons. And from the popularity of the show, the UFC would only grow. They then moved to Fox sports, and help launch their FS1 channel. But it also helped connect Dana, with one of the world’s best known agents. Ari Emanuel.
If you’re not familiar with Ari Emanuel, you might know the entourage character of Ari Gold, that was based off of him.
He now runs Endeavor, a newly public entertainment juggernaut.
Ari Emanuel said they had come up with a research department, to look at ratings to help them sign people and to keep shows on the air. Different from any other agency at the time.
A year later, Dana calls Ari and says, “If you can get me a meeting with HBO boxing, I’ll sign with you.”
He was a character on an HBO show and he’s done most of the programming. He thought “this is like simple” but Ari explained that meeting didn’t go well. But White did end up signing with Ari as a client.
How The UFC Goes From 2 Million To 4 Billion
And then in 2016, when the Fertitta brothers decided to sell the UFC, it would be Ari and Endeavor who would ultimately, buy a controlling stake in the UFC, valuing the company at about $4 billion. Remember the UFC was bought by the Fertittas, and Dana for about $2 million, roughly 15 years earlier.
And since the sale Ari, and Endeavor have used the whole of the company’s portfolio to help grow the UFC even more.
Ari Emanuel said, “When you think about, and we can do this on many things, we call it inside the company architecture, how we take elements of the portfolio, and use other elements to build value across the platform. And if you think about where we started at the UFC, when we got it to where it is now, that’s only because of the architectural platform, of the company. International sales, gambling, licensing, video games.”
Dana White even did a show on the food Network for a cheeseburger crunch wrap.
Ari Emanuel said that the non-scripted group in WME sold the show to Food Network. Four episodes with Dana.
That expanded their audience and that’s the architecture of the UFC business. Constantly adding value, adding audience, growing market share, growing awareness.
And while many aspects of Endeavor, suffered from the pandemic, Hollywood was essentially closed for business. The UFC thrived, so much so that in April of 2021, they would buy out the remainder of the UFC, from investment firms KKR and Silver Lake, as part of a plan to take Endeavor public.
In fact, according to Ari, owning all of the UFC was critical, to convincing Wall Street that his ambitions were sound. The next phase, continuing to take the UFC business global.
10% Of the UFC audience is in the United States, 90% is international. The economics are switched. 90% of the economics is domestic.
10% is international. There’s a couple sports that are global. Soccer’s global, basketball is of some extent, but the UFC is for sure global.
UFC Fighters Matchmaking
Dana White spends a majority of his day with one of his lawyers, and two of his matchmakers. They sit in a room most of the day, every day looking over the fights that they’re building from all parts of the world that the fighters are coming from, and where they wanna go, and what they want to do.
And finding rising talent, from around the world makes a big difference, to the UFC business.
Dana White: “When we go into these new markets. For instance, when Connor McGregor became a star, he ignited Europe. Weili Zhang, our Chinese world champion. When she became a champion, she ignited China. When you have somebody who looks like you, talks like you, and comes from where you come from, and they’re looked at as the baddest human being, on planet earth, you rally behind these people. Yeah. And it becomes big. And then eventually once you do this, you know, in different parts of the world, you’ve got a real global sport.”
UFC Fighters’ Multi-Billion Dollar Lawsuit
Fighters have, and will always be the engine of the UFC. But if there is one speed bump in the road, to UFC global domination, it may be the multi-billion dollar antitrust lawsuit, it’s currently facing from former UFC fighters.
Eric Cramer a lawyer for former UFC fighters said they filed their case in December of 2014 on behalf of a group of mixed martial arts fighters who fought for the UFC. In broad terms, the case is an antitrust case where they’re claiming that the UFC, is both a monopoly and monopsony, meaning it is a dominant seller, of mixed martial arts services, and a dominant buyer of mixed martial arts services.”
The lawsuit claims the UFC quote, “Engaged in an illegal scheme to eliminate competition”, and that allows it to pay fighters”, quote, “A fraction of what they would earn in competitive marketplace.
Cramer said the UFC has used those tactics to bad ends, including suppressing the compensation of the UFC fighters, and making it difficult for fighters to get free agency, and have mobility and control their own careers.”
Maybe unsurprisingly, Dana white doesn’t see it like that. We bought the company in 2001. We didn’t start making money till like six or seven, right? Ever since the day we bought the company, fighter pay has gone like this, and it’s gone up even more in the last five years.
And it’s going to go up even more in the next five years. William Isaacson, a lawyer for the UFC, said in a statement to Bloomberg that, “Average fighter compensation has risen by over 600% since 2005.” But according to the plaintiffs in the case, while UFC fighter pay has increased, the percentage of revenue fighters received, has remained fairly stable and around 20%. And what this analysis shows, is that if the UFC was competitive, and did not allegedly violate the antitrust laws, it would pay its fighters 50%, or more of the revenues it’s generated.
Just like baseball, just like hockey, just like basketball.
And if that were to happen, if instead of paying 20% of the revenues generated, it paid 50% or more of the revenues generated, the fighters would have made $1.6 billion more, during the period, 2010 to 2017. Usually when you’re facing, this kind of legal battle you tend to stay quiet.
But for Dana, he’s not afraid of letting you know just how he feels.
The UFC Changed Their Pay Structure
They built an industry from nothing, where if you followed the lines of how many people have benefited, and made money from their company.
The UFC changed their pay structure, so that everybody makes money. Not just the top guys. In boxing, the top guys make millions, and everybody else starves. Everybody makes money here. Everybody makes a good living, and there’s enough money to reinvest back into the sport.
They work to grow the sport and grow the brand.
We’re growing a real business. We’re heading into this, this country where everybody gets a trophy, and everybody should get this. And everybody should get that. When I leave, when I leave, maybe it’ll turn, this place will be left at the hyenas, and then come in and rip this thing apart.
But as long as I’m here, it ain’t gonna happen. I have a lawyer who does a lot- The lawsuit is likely to take years, to resolve. And for Dana, the best way to grow fighter pay, is to continue the mission of growing the business. And making more money for everyone.
Fight nights are huge on weekends for entertainment in Las Vegas.
A highly anticipated UFC fight can fill in the T-Mobile arena as fans and celebrities stream in to see these fight, while Dana is behind the scenes, making sure everything around the entire production, is happening up to his standards. He is there like literally, like right there against the octagon. 100%. There’s a telephone there next to him that’s connected to a truck.
Anything he doesn’t like that’s going on, he just picks up the phone and calls the truck, whether it’s an in-house production issue, or a non TV production issue. He’s actually producing the show in real time. His team is so good that this thing is dialed in and he knows exactly what he wants.
We’re one of the few major sports organizations, that produce all of our own content. So everything that you see, whether it’s on ESPN, whether it’s on global in Brazil, whether it’s on BT in the UK and list goes on, that stuff is all produced by us.
And it’s produced in a way that has a global mindset. So when you’re in China and you’re watching UFC, that market is specific to the way the content is created. When people ask me about the upside for this thing, I’m always like well, how many people are there on earth, 7 billion?
So my long-term goal was to put on fights that are doing 5 million, 10 million, 15 million pay-per-view buys. And this thing is truly the first real big global sport. And we have no seasons. We go 365, 52 weeks a year where we’re going. We got through this COVID thing, this company from all of my employees, my executive team, and to the core unit over at Endeavor, we’re like this right now.
We’re as tight as tight can be. We’re all on the same mission. We’re all on the same page. And we’re very scary group of people right now. We’re gonna, we’re gonna crush this thing.
Shy of a meteor hitting the earth, I think we can get through anything..