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Inside the UFC

From left, USC Marshall School of Business Dean James G. Ellis, Lorenzo Fertitta and David Carter (Photo/Dan Avila)

At the Sports Business Institute’s (SBI) Commissioners’ Series on Jan. 15, Lorenzo Fertitta, chairman and CEO of the Ultimate Fighting Championship (UFC), shared the story behind his organization’s transformation from a struggling, nearly bankrupt entity in 2001 to the highly successful global sports enterprise it is today.

In conversation with SBI Executive Director David Carter, Fertitta discussed the UFC’s ascent as the fastest-growing sports organization in history, giving the audience insights into leadership, strategy, branding, marketing and other business issues facing the world’s largest mixed martial arts (MMA) organization.

The annual event drew a crowd of sports industry professionals, including executives from the event’s presenting sponsor, the USA Today Sports Media Group, as well as members from the Fox Sports Media Group, the event’s other major sponsor.

They were joined by SBI Executive Committee and Advisory Council members, as well as students, faculty and administrators from the USC Marshall School of Business and the USC Gould School of Law.

Fertitta is co-owner — with his brother Frank Fertitta ’84 and Dana White — of the assets of Las Vegas-based Zuffa LLC, which owns and operates the UFC, as well as the Strikeforce, Pride Fighting Championships and World Extreme Cagefighting brands. Frank Fertitta and his wife, Jill, recently donated a major capital gift to USC Marshall for a new undergraduate building and an endowed faculty chair.

Before the Zuffa acquisition in 2001, Fertitta said MMA was known for violence rather than athleticism, mostly unregulated and unable to appear on pay-per-view (PPV).

“The UFC was a defunct brand; it was really a broken business at the time,” Fertitta told the crowd, adding that their advisers and attorneys thought they were “crazy” to buy it for $2 million.

An avowed boxing fan since childhood, Fertitta said their aim was to create a global brand for combat sports, something boxing was never able to accomplish. He said they knew from the beginning that, in order to be successful, they needed to be on television.

In 2006, the UFC took over the boxing industry as the world’s largest live PPV content provider. Fights have been broadcast in 148 countries and territories, on five continents and in a billion homes.

While there is a lot of emphasis on social media in business right now, Fertitta said, “there is nothing more powerful than TV” for raising awareness and for branding your product. One strategy that grew from that belief was The Ultimate Fighter, a reality show that debuted in 2005 on Spike and has since transitioned to FX. The UFC draws winning talent from that show.

In 2011, the UFC scored a seven-year broadcast agreement with Fox Sports, taking it closer to the mainstream. However, Fertitta admitted, “I still think we’re a long way away from being a mainstream sport.”

Part of their challenge involves educating the media and the public about what the UFC really is, including how skilled the athletes are, what they do when they compete, and the strategy and training involved.

Though the UFC’s popularity has been with 18- to 34-year-old males, the organization started to expand its demographic last year when its first female fighter brought in mothers and daughters. The UFC signed its first female fighter, Ronda Rousey, an Olympic bronze medalist trained in judo, after the acquisition of Strikeforce, which had a women’s division. Rousey already has more pre-booked media interviews for her next fight than any other fighter in the UFC’s history.

“She found herself living in a car, because she was broke, because after the Olympics there was no outlet for her,” Fertitta said. “Now what we’re providing with our platform and the growth of MMA, Ronda Rousey is going to become a multimillionaire.”

Fertitta also discussed his company’s continuing plans for international expansion. Already with offices in six cities worldwide, including São Paulo and London, the UFC is currently exploring new opportunities in mobile. He explained that the UFC has 17,000 hours of content in its library; and in some places in Africa, for instance, 60 to 70 percent of the population view their entertainment on cellphones.

Meanwhile, continued efforts at building the UFC “lifestyle brand” include video games and 70 UFC gyms across the country where members can train like UFC fighters.

Despite all of the organization’s growth, Fertitta said he has not stepped out of the day-to-day operations.

“Dana and I are control freaks to some extent,” he said. “You have to continue to be a micromanager on some level.”

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