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SBJ/June 11-17, 2012/In Depth
UFC's global ambitions
Fight circuit pulls no punches in its desire to expand into new markets
Published June 11, 2012, Page 15
Food poisoning was the main culprit, he supposed. But his travel schedule deserved some of the blame, too.
During a four-day swing earlier in the week, the UFC president flew from the company’s Las Vegas home to Stockholm for an event, then to Abu Dhabi for a meeting with investors, and then back to Las Vegas. He was home for two days before heading to Atlanta for UFC 145, then Miami for a morning and afternoon, and then on to Rio de Janeiro, where he helicoptered to and from a press conference before trekking back to Vegas — after mixing in a quick side trip to Los Angeles.
“All the way to Brazil and we’re there for three hours,” White said, raising his brow and shaking his head. “The schedule is nuts.”
Following White’s Twitter feed has become the fight fan’s version of “Where’s Waldo.” Tracking his trips back to their origin is like unraveling a ball of string.
|Vitor Belfort (right) of Brazil trains on Barra de Tijuca Beach in Rio de Janeiro in preparation for UFC 142 in January.
Other than a single show in London in 2002, the UFC did not take its circuit beyond U.S. borders in its first six years under the ownership of billionaire brothers Lorenzo and Frank Fertitta, who bought the company for $2 million in 2001. When they finally did go abroad, they stuck to the language they knew best. Their first eight events outside of North America, held from 2007 to 2009, all were in the United Kingdom or Ireland.
But then the Fertittas and White started to notice that many fans were traveling to those shows from elsewhere in Europe, particularly from Germany. So they took a show to Cologne in 2009. In 2010, the UFC went outside North America four times, visiting three continents, with shows in London, Sydney, Abu Dhabi and Oberhausen, Germany. In 2011, it crashed its fifth continent with a fight in Brazil.
This year’s schedule will include at least seven shows outside North America. White was cageside in Brazil in January, Japan in February, Australia in March and Sweden in April. Later this year, he’ll roll out another card in Brazil and one in England, and break yet more new ground, putting on a show at the Venetian Macao, a gambling mecca off the coast of mainland China.
“Our philosophy is that every market is our market to go into,” White said, shouting to be heard over the pulse of the music before the main event at UFC 145. “Fighting translates everywhere. Everybody gets it. Everybody is into it. So we are going everywhere eventually. It’s just a matter of where we go first.”
Plenty of fight in Brazil
UFC Chairman and CEO Lorenzo Fertitta chuckles when he speaks of the way the Brazilian stars of the circuit who trained in Las Vegas used to look forward to returning home so they could fade into the crowd.
Brazilian jiu-jitsu is core to the origin of the UFC. The circuit’s earliest events, held in 1993 and 1994, were tournaments pitting men of varied sizes and fighting styles in wide-open, often brutal, bouts, with the one who survived the gauntlet coming away as winner. Three of those first four tournaments were taken by Royce Gracie, a California jiu-jitsu artist
The Gracies — and there are many of them — since have ascended as the first family of mixed martial arts, training fighters from all over the world.
Yet, as Fertitta describes it, the popularity of jiu-jitsu as a martial art in Brazil did not immediately translate into popularity for MMA as a spectator sport there.
“They’d have all the fortune and fame and they’d get mobbed wherever they went,” Fertitta said, describing the scene when fighters such as Anderson Silva and Vitor Belfort encountered rabid UFC fans in Las Vegas. “But then they could go home to Brazil and nobody knew who they were. It was a nice balance for them.
“Our fighters kind of liked it. … Now, it’s become difficult for them.”
A degree of that has come with success. The champions in three of the seven UFC weight classes are Brazilian: Silva, the middleweight champ since 2006 and consensus pound-for-pound No. 1; Jose Aldo, the featherweight champ since November 2010; and Junior Dos Santos, heavyweight champ since defeating Cain Velasquez in UFC’s debut on Fox seven months ago.
Then there are old-school favorites Wanderlei “The Axe Murderer” Silva and Belfort, stars and coaches on the Brazilian version of the UFC staple “The Ultimate Fighter,” which debuted in March. And Mauricio “Shogun” Rua and Lyoto Machida, both of whom held the light heavyweight title in recent years.
And there are more.
That deep and successful lineup of competitors made Brazil a natural market for an event. But nobody — not even the chronically optimistic White — could have predicted what played out this past August when the circuit returned there for the first time in 14 years. With Anderson Silva headlining, UFC 134 sold out the 14,000-seat HSBC Arena in Rio De Janeiro in 74 minutes.
That was no surprise. But the television ratings were an eye-opener.
|The UFC knew that Brazil was ripe for growth based on the number of Brazilian fighters and the passion displayed by Brazilian mixed martial arts fans who went to events in the United States, such as these fans who attended UFC 146 in Las Vegas.
On that night, it posted the highest rating of its 12 years on the air, 10 times better than its nightly average. Rede finished third in the time slot — 10 p.m. to midnight. For 14 minutes during the main event, it even drew a larger audience than Globo, the country’s dominant network.
“That opened everybody’s eyes as to what the potential was in Brazil,” Fertitta said. “We immediately were the prettiest girl at the dance. We had every single network bidding to secure our rights.”
Among them was Globo, which regularly doubles the audience of its nearest competitor.
“They’re the 800-pound gorilla over there,” Fertitta said. “There couldn’t be a better place for us to be.”
The first big fight to air as part of the Globo deal was Dos Santos’ upset of Velasquez for the heavyweight title in November, which also marked the debut of the UFC on Fox in the U.S. It drew an audience of 52 million.
The UFC was back in Rio in January, with another sellout at HSBC Arena. This time, it pulled 16 million viewers in a broadcast window typically populated by insomniacs — 1 to 3 a.m. — good for a 70 share.
With the sense that Brazil could percolate around all these champions, Fertitta elected last year to try something new there, taking what was the sport’s springboard in the U.S. — the weekly show “The Ultimate Fighter” — and building a Brazilian version.
While ratings for “The Ultimate Fighter” have declined in the U.S., falling to an average of 1 million viewers per episode, the show airing south of the equator has fared markedly better. Broadcast on Globo, “The Ultimate Fighter: Brazil” has averaged 10 million viewers per episode since its debut in March, winning its time slot, Fertitta said.
“One of the things you can’t overlook is that these countries are very nationalistic,” Fertitta said. “The country rallying around [Brazilian fighters’] success is one of the reasons we’re thriving there. You look at our success in Canada. … It doesn’t hurt that GSP (Georges St-Pierre) is one of the best fighters in the world.”
Sizing up other markets
Seeing “The Ultimate Fighter” format succeed in Brazil this year has caused the UFC to alter its international strategy, Fertitta said, striking deals to produce versions of the show around local talent in markets where it sees the greatest potential for growth.
In April, the UFC locked down a deal in India with Sony Pictures Television subsidiary Multi Screen Media that includes a commitment to two seasons of a localized version of “The Ultimate Fighter,” featuring fighters from the region competing there. The Sony deal also put UFC events on the air in an appealing weekly time slot, as the lead-out from Indian Premier League cricket, which reportedly is watched by upward of 100 million viewers.
Piggybacking the sport on the IPL fit with the UFC’s international road map of exposing its shows on the channels that
|UFC fighter Jon Fitch (left) presents Australian rugby player Jared Waerea-Hargreaves with a UFC champions belt during a media event leading up to UFC 127, which was held in Sydney in February 2011.
He doesn’t want to be what cricket is in the U.S. — available to viewers who diligently seek it out, but invisible to the vast majority of viewers, even sports fans.
“That goes right back to our original strategy of being relevant within what the dominant sport is in that market,” Fertitta said. “We don’t have any aspirations to be or think we’ll ever be as big as the IPL. But I’ll take No. 2 in a massive market that’s growing.”
Putting “The Ultimate Fighter” on in India will add something that the sport lacks, but badly needs in order to grow in the region: local talent. Unlike in Brazil, where homegrown talent is plentiful, the UFC must find and cultivate fighters in other areas of the world.
Along with “The Ultimate Fighter: Brazil” and “The Ultimate Fighter: India,” the UFC has struck a deal to produce “The Ultimate Fighter: Australia.” It is close to announcing a Canadian version, and “The Ultimate Fighter: South Korea” will likely host its first event next year. The UFC also is working on a Spanish-speaking version that it could distribute throughout Mexico and Latin America.
“It’s no different than what we did here in the United States starting in 2005,” Fertitta said. “We introduce the sport and the brand to everybody, and we’re not just showing the fights. They get to learn the backgrounds of these guys and understand the culture of the sport and learn about the ins and outs. And coming out of that show, not only do we have a winner, but we typically have six to eight guys who really are qualified to compete in the UFC.”
Developing fighters from those countries will mean investing in more fights there. This year, the UFC likely will hold seven of its events outside North America. Next year, Fertitta expects to “scale that up to 20.” That would pencil out to at least eight fights in Brazil, five in Asia, five in Europe and two in Australia.
“They may not all be of the magnitude of a stadium show of 50,000 or even an arena show of 20,000,” Fertitta said. “But it allows us to have a presence in all these markets on a consistent basis. At that point we can roll out the balance of our business plan, which includes all the ancillary businesses like licensing and merchandise, equipment, gyms, and all the multimedia strategies we employ in the U.S.”
Fertitta began exploring China three years ago, at the same time he started looking into India. The UFC opened an office in Beijing in September 2010, hiring former NBA China managing director Mark Fischer to head its Asian expansion. It has cobbled together a dozen provincial TV deals across China in order to get exposure nationally, putting its distribution at 250 million potential viewers. It also streams its events on the nation’s top three portals.
The UFC still hasn’t landed on a definitive strategy in China, Fertitta said. It has signed one fighter and regularly takes prospects to Las Vegas to train. It hopes to get a better read on the country in November, when it takes its first event to Macau.
|Track Dana White's global voyage.|
Fischer compares the UFC’s current standing in China to that of the NBA there before Yao Ming emerged. The sport had been played there for upward of 100 years, so awareness of basketball was high. But until Yao became a star, few people paid attention to the NBA. Similarly, martial arts trace back for centuries in China. But familiarity with the UFC, or even MMA fighting, still is low.
“The NBA was in China for 20 years before some of the big returns started coming in,” Fischer said. “It’s not going to take us that long. But we’re in the early stages here. We’re preparing a multiyear building strategy. Whether that’s three or four or five years, we believe the return will come.”
This year, revenue from outside North America will represent about 10 percent of the UFC’s business, Fertitta said. But he estimates that these days he spends about 65 percent of his time and energy focused on international expansion.
“I have to,” Fertitta said, “because that’s where the future is.”