The Bottom Line: Concerns Pile Up for New UFC Owners

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When Zuffa purchased the Ultimate Fighting Championship in 2001, it faced a host of serious obstacles in taking the company to a higher level. The UFC lacked pay-per-view clearances to show its big events, and a cable television platform seemed almost like a pipe dream. The company needed to create stars but simultaneously needed to avoid spending too much money on talent. Pride Fighting Championships in Japan was on the ascent and controlled more of the sport’s best fighters and most marketable stars.

Over the next six years, Zuffa addressed these concerns one by one, building the most powerful organization MMA had ever seen. The UFC then largely rode that train for as long as it could. All the groundwork had been laid. If running the UFC from 2001 to 2007 was full of hazards and pitfalls, running the UFC from 2008 to 2016 was relative smooth sailing. Zuffa cashed out, selling to WME-IMG; and given Zuffa’s history, it feels kind of appropriate that the new UFC ownership group faces the most significant series of challenges the company has faced in many years. Like Zuffa a decade and a half ago, WME-IMG will have to demonstrate its mettle and savvy in the early going as it takes over as stewards of MMA’s top promotion.

The problems that WME-IMG faces are largely monetary or stem from monetary concerns. The astronomical price tag combined with the heavy reliance on debt means the pressure is on to make as much money as possible every step of the way. While Zuffa often took the long view and invested in ways that were likely to benefit the growth of the sport over the long haul, WME-IMG will need to make more in the short term. That will create the temptation to go the K-1 route, forsaking the sport’s long-term strength and stability in a bid to gross more money now.

The cutbacks in the UFC office, particularly in the regional offices, speak to this basic problem. The UFC may be more profitable in the short term, but in political terms, it may be losing the ground game that will help it in the long term. It takes time for the sport to grow in popularity in other regions, and that growth won’t happen on its own. It’s unlikely that the recent cutbacks will create an immediate crisis, but they could create problems that pop up unexpectedly in the years to come.

An even bigger problem for WME-IMG comes from fighter unhappiness. Many UFC fighters in recent months have expressed discontent over a variety of issues. The amount of money spent purchasing the UFC has enhanced the perception from fighters that they are underpaid. Fighters want to be paid more, and the new ownership group isn’t going to be keen on spending more given all the debt. This has spilled out into public disputes. Those disputes further advance the narrative and make additional disputes even more likely. The UFC also doesn’t benefit when fans see their favorite stars say negative things about the company.

Making things worse for WME-IMG is that fighter leverage is higher than it has ever been. Back during the UFC pay-per-view explosion in 2006 and the next few years following, the UFC brand name was a huge part of the sport’s success. Pay-per-views had a solid floor of around 400,000 buys for most cards. The range for pay-per-views wasn’t that wide because the brand was crucial. Over time, the volume of shows has meant that the biggest superstars draw better than ever but also that the floor for rank-and-file shows has never been lower. The brand means less, and the superstars mean more. Don’t think that Conor McGregor, Ronda Rousey and Georges St. Pierre aren’t aware of this. It makes negotiations tougher as the fighters ask for a bigger piece of the pie.

The leverage that fighters possess wouldn’t be as big of a deal under other circumstances, but an additional lingering problem for the new UFC ownership group is the rising clout of Bellator MMA. With a powerful conglomerate behind it, Bellator has stepped up its efforts in the MMA space. The signings of Rory MacDonald, Benson Henderson and Chael Sonnen demonstrate that Bellator is willing to compete for high-level UFC talent.

The risk for the UFC isn’t that Bellator will overtake it. The gap between the companies remains huge. The risk is that the UFC loses enough fighters that fans no longer assume UFC’s fighters to be the de facto top fighters in each division. Given that the UFC is built so heavily around proving who the best is in every division, any lingering doubts about that undermines the basic product the company is selling. MMA’s best fighters are less concentrated in the UFC now than at any point since Zuffa purchased Strikeforce, and it’s likely the movement will be towards more decentralization in 2017.

The UFC remains MMA’s juggernaut, and in just a few weeks, UFC 205 could be both the highest-grossing card in MMA history and the most impressive lineup of all-time. Still, there are plenty of issues that WME-IMG will need to address in 2017. Nothing is promised in life or in business, and an individual sport is harder to control than a team sport. WME-IMG inherited a powerful and dominant company because of the savvy moves made by the previous owners. It now needs to show that it, too, can maneuver through difficult circumstances.