The Best Entrepreneurs in Sports
How the UFC is using technology and partnerships to take over the world
Sports are not like mobile apps — it takes years for people to acquire interest and habitually consume them. It’s a major barrier to entry that gives sports like football, basketball, and baseball, enormous stability. On the contrary, it makes the creation of the UFC one of the most fascinating case studies in the history of sports. How does a sport that didn’t exist two decades ago, now have a chance to be the world’s second most popular sport (behind soccer)?
In 1991, the UFC was formed by a group of investors and mixed martial arts fighters who wanted to pit different fighting styles together in the same ring. One of its first fights featured a 450-pound sumo wrestler against a Dutch kick boxer (the kick boxer won!). The vision had become a reality, yet the general public quickly disapproved.
The focus on selling violence came at a major cost. By 2002, the sport was ten years old and on the verge of bankruptcy. Senator John McCain called the sport a “human cockfight” and worked with legislators to ban it in 49 out of the 50 states.
However, future UFC President Dana White saw something completely different; he saw a superior product to boxing that just hadn’t been operated and marketed correctly. As a result, he partnered with childhood friends Frank and Lorenzo Fertitta to buy the UFC for a measly $2 million.
Ten years later, the UFC is valued close to $2 billion and holds events in sold out arenas around the world.
An average UFC event can produce around $25+ million through pay per-view (PPV) buys. In the US, its popularity has skyrocketed, especially with young people. In this demographic (ages 18-35), the UFC is now more popular than the NHL and NASCAR. It sells more merchandise than the Rolling Stones or U2.
While the sport exploded in less than decade, UFC executives ultimately knew its hyper-growth would eventually curtail. It’s not like Americans were just going to forget about football and basketball to watch UFC fights all day. During the past two years, the numbers are confirming these fears. TV ratings for UFC programming are starting to disappoint and its PPV business, which was once shattering records, is now experiencing negative growth.
However, that isn’t the entire story. Since 2010, the UFC shifted its strategic focus to an ambitious international expansion plan. While other organizations like the NBA and MLB have tried to “globalize,” no one is truly embracing the concept like the UFC is.
Unlimited Access for Fans
White’s vision is to allow every corner of the planet to have the same access to content that folks in the US do. In order to do this, the UFC has invested heavily in social media and digital content as part of a larger strategy to provide unlimited access to its product. Fans can engage with UFC fighters even when they aren’t fighting. As a result, UFC fans feel attached to not only the star fighters but the younger, lesser-known fighters as well.
When it comes to social media, the UFC is the industry leader. To illustrate, NFL Commissioner Roger Goodell has 400,000 Twitter followers while UFC President Dana White has over two million. It isn’t a coincidence. White actively uses the platform to broadcast news as well as his candid opinions. Furthermore, White encourages fighters to engage with their fans on Twitter. How exactly does he do this? In 2011, White paid out $240,000 in bonuses to fighters for attracting followers on Twitter or writing creative tweets.
I recently wrote a post about the rising cost of cable bills which can lead to a major collapse in the TV industry. The UFC is far ahead of the game with regard to digital content delivery. Recently, it partnered with YouTube to launch a premium, subscription-based channel, called UFC Select. The channel, which can be purchased for $5.99/month, features a wide range of programming including live fights. It serves as an example of how sports can be distributed without the involvement of a cable company.
If you weren’t fully convinced about UFC’s commitment to unlimited access, its new mobile app is icing on the cake. If you run into a UFC fighter in real life, the UFC mobile app has a feature where you can take a picture together, have the fighter digitally sign it within the app, and post it directly to Facebook or Twitter. Yes, digital autographs.
Penetrating every market around the world
Instead of waiting for the sport to grow organically in new markets, the UFC has been aggressive in forming partnerships which allows for instant distribution.
In 2010, its parent company Zuffa sold a 10% minority stake to an Abu Dhabi-based entertainment company named Flash Entertainment. The deal was a strategic partnership aimed at helping the UFC penetrate Asian markets where they had little experience. Recently, the UFC announced that they are bringing its popular reality TV show, “The Ultimate Fighter” to India. The show will be broadcasted in Hindi for the local TV audience. White believes that countries like India will provide fans, but also fighters one day.
In Latin America, it has partnered with broadcast powerhouse Televisa Networks to give them access to 20 Spanish-speaking countries including Mexico and Argentina. In Africa, the UFC plans to stream fights directly to mobile devices in 18 different languages. The move would allow them to sidestep TV networks in a region where most people consume entertainment through their mobile devices.
By leveraging technology, the UFC is entering markets other sports have not dared to touch. It is already broadcasting in 28 languages and 145 countries around the world. The company predicts that by 2015, international revenues will outpace its domestic revenue.
“I believe fighting was the first sport on earth, and it’ll be the last sport on earth. It works everywhere, and we’re going to take it everywhere, “ says White.
Just a few decades ago, boxing was one of the most popular sports in the world. Now, it is struggling to keep pace with the UFC. Boxing’s biggest (and arguably only) star is 36 years old and its fan base is generally an older demographic. Like many once-successful businesses, its complacency is being exposed by an innovative start-up with far greater ambition. It’s a story we see time and time again here in the Silicon Valley. You can guess where I will be placing my bet.
Ironically, Ravi is not a UFC fan and actually prefers boxing. He writes about a variety of sports/business topics which can be seen here. For comments/suggestions, e-mail him at: ravidev86@gmail.com. Follow him on Twitter.
