SIMILARITIES AND DIFFERENCES BETWEEN THE UFC AND OTHER

PROFESSIONAL SPORTS LEAGUESNick Dawson

OVERVIEW Discussion of professional sports History of Mixed Martial Arts (MMA) Market similarities between the UFC and other professional sports organizations

Labor similarities between the UFC and other professional sports leagues

Future outlook

ORIGINS OF SPORTS Exact origins of sports is unknown There is a lot of difficulty in defining what exactly constitutes a sport With the evidence we have it can be difficult to determine if an artifact is actually depicting a game or sport

Humans appear to have an innate desire to engage in play Every culture has various types of sports

Racing Hand to hand combat Stick and ball games Feats of strength

WHY DO WE PLAY SPORTS? Skill development Hunting Fighting

Social Status Means of signaling social status Demonstrating ability to work

Religious and Cultural significance To honor the gods Pay tribute to ancestors

Entertainment Break from the mundane To entertain others

HOW DID PROFESSIONAL SPORTS COME ABOUT? Antiquity Nationalistic pride

Ex. Greeks and the Olympics Athletes competed to honor the Gods Bring glory to their homeland Personal gain

Demonstration of wealth Sponsoring an athlete was something only the wealthy could do For leaders, it increased popularity and distracted people from true problems

WHAT ARE THE ORIGINS OF PROFESSIONAL SPORTS TODAY? Sports continued largely unchanged over the centuries Sports were largely for the wealthy to participate in and watch

The Industrial Revolution changed professional sports Shift in population demographics Disposable income and leisure time Mass production Cheap and fast transportation Mass communication

WHAT IS MIXED MARTIAL ARTS? “Broadly speaking, MMA refers to any activity which entails an amalgam of un-armed combat styles though different striking techniques, grappling techniques, and fighting on the ground. Bouts are decided by knockout, submission, or decision”

WHAT IS MIXED MARTIAL ARTS? MMA is comprised of a variety of hand to hand combat disciplines with unique origins Emphasis of striking on the feet

Boxing Kickboxing Maui Thai Taekwondo

Emphasis on fighting on the ground Wrestling Brazilian Jiu-Jitsu Judo

ORIGINS OF MMA A means of determining the “best” style of fighting Predecessors Pankration in ancient Greece

Combination of the existing Olympic sports of boxing and wrestling Rules

No time limit. Bouts only ended via knockout or submission No weight classes No biting or eye gouging

Became the most popular sport of the original Olympics

HISTORY OF MMA Crossover Bouts Became popular during the 19th century

Contests between western styles of fighting Boxer vs. Wrestler Tough guy contests Sideshows

Demonstrations by practitioners of Eastern styles of fighting Jigoro Kano developed Judo through the study of ancient Japanese martial arts

Students such as Mitsuya Maeda set out to demonstrate the effectiveness of Judo

HISTORY OF MMA Vale Tudo “Anything goes” fighting in Brazil

Maeda eventually settled in Brazil Taught Judo to the Gracies

Led by the Helio Gracie, the family further developed their own style that became known as Brazilian Jiu-Jitsu

In order to learn and prove the effectiveness of their style, the Gracies engaged in Vale Tudo challenge matches Immensely popular in Brazil

HISTORY OF MMA The Ultimate Fighting Championships Prior to UFC 1

Prior to the UFC, fighters fought within their disciplines There was no way to determine what style was the “best”

Rorian Gracie Moved to the United States to spread Gracie Jiu-Jitsu but found his ability to do so limited. Met Art Davie, an advertiser for Tecate beer looking for something that appealed to 18-34 year old

males.

UFC 1 The Idea Davie thought that Rorian had money making potential.

After consulting movie director John Milius, the three men came up with the idea of a mixed martial arts tournament known as “War of the Worlds”. The idea was pitched to pay per view company SEG. SEG executive

Despite initial skepticism, Campbell McClaren pushed the idea to SEG owner, Bob Meyrowitz Name was changed from “War of the Worlds” to “The Ultimate Fighting Championships.”

UFC 1 The event was to be a one night tournament aired on SEG Fights took place in a caged pit became known as the Octagon.

Distinguished the event from boxing. Made the contest easily viewable for those in attendance and those watching on PPV.

The venue chosen to host UFC 1 was McNichols Arena in Denver Colorado The rules were similar to those of Pankration

There were to be no weight classes No time limits Fights could only end via knock out, submission, or throwing in the towel. The only rules were no eye gouging, no biting, and no strikes to the groin.

UFC 1 Selection of competitors Rorian had a lot of influence in the selection process

Wanted to use event to promote Gracie Jiu-Jitsu Decided to use one his brothers, Royce Gracie, to represent the Gracie family due to his smaller

stature. Fighters came from a wide range of martial arts backgrounds

Gerard Gordeau (Savate) Teila Tuli (Sumo wrestling) Kevin Rosier (Kickboxing) Zane Frasier (American Kenpo) Royce Gracie (BJJ) Art Jimmerson (Boxing) Ken Shamrock (Shootfighing) Patrick Smith (Taekwondo)

UFC 1 The event was a surprising success SEG recorded over 86,000 pay per view buys despite limited advertising The audience had little understanding about MMA

First bout, Gerard Gordeau kicked sumo wrestler Teila Tuli in the face, knocking several of his teeth into the audience

Professional boxer Art Jimmerson was easily defeated by the smaller Gracie. Gracie went on to defeat former professional wrestler, Ken Shamrock in the semi-final bout. In the final bout of the tournament, Gracie choked out Gordeau and earned the title of UFC champion

and $50,000 prize. UFC 1

UFC: EARLY DAYS The violence and surprising result captured a lot of attention

Many wanted to see more Videotapes of UFC 1 were very popular Future events were planned

Others were appalled at the brutal nature of the sport Senator John McCain referred to it as “Human cock fighting” Politicians sought to ban the sport

Pressured cable companies and eventually UFC fights were only available through dish which meant fewer PPV buys

Difficulty in getting sanctioned by state gaming commissions Many states, including New York, banned the sport all together

The UFC struggled to put on events during the late 1990s Quality diminished as events were held in smaller venues Top fighters left to compete in the Japanese organization known as Pride FC

UFC: EARLY DAYS Rules were implemented to make the sport more acceptable Competitors were required to wear protective equipment

Gloves, mouthpiece, and cup Weight classes were established. Contests were limited to 3 or 5 rounds of 5 minutes.

This meant that fights could be decided via judge decision Rules were also instituted that prohibited certain actions during the fight

Head butting, blows to the back of the head.

UFC caught a break in 2000 when New Jersey began sanctioning MMA fights

ZUFFA OWERNESHIP Meyrowitz sold the UFC to Zuffa in February, 2001. Frank and Lorenzo Fertitta purchased the UFC for $2 million and made Dana White president. The Fertittas and White sought to turn the UFC into a legitimate sport.

The first four years of Zuffa ownership were challenging They succeeded in getting back on cable due to sanctioning and improved production value

Quality of events varied Fans had no connection to fighters

THE ULTIMATE FIGHTER In order to spur interest in the sport, the UFC and Spike TV created a reality TV show known as The Ultimate Fighter

Format Contestants lived and trained together under the tutelage of Chuck Liddell and Randy Couture

Challenge was to fight through a tournament and win a contract with the UFC Goal Refresh the talent pool of the UFC Introduce fighters to fans to increase viewership Promote the upcoming title fight between Liddell and Couture

THE ULTIMATE FIGHTER The popularity of the show varied greatly Contained many of the same elements of other reality shows of the time The quality of fighting on the show varied greatly

Finale Finale of the light heavyweight tournament featured Stephan Bonnar and Forest Griffin The fight was highly entertaining. Griffin won a decision but both men were given contracts due to the

quality of the fight Viewership spiked considerably during the bout Led to a long term deal between the UFC and Spike

TUF Finale

POST TUF Popularity of the UFC skyrocketed The sport was covered by the mainstream media A week later, UFC 52 set a PPV buy record of over 280,000 purchases

Since 2005, the sport of MMA and the UFC have continued to grow In 2011, the UFC left Spike and signed a 7 year, $700 million television deal with FOX Sports Live events Replays Talk shoes TUF

The UFC is set to celebrate a major milestone with UFC 200 on July 9th, 2016 From 2008-2012, the average number of PPV buys was 526,470

THE UFC TODAY Weight classes Men's

Flyweight (125lbs) Bantamweight (135lbs) Featherweight (145lbs) Lightweight (155lbs) Welterweight (170lbs) Middleweight (185lbs) Light Heavyweight (205lbs) Heavyweight (265lbs)

Women’s Flyweight (125lbs) Bantamweight (135lbs)

THE UFC TODAY Expansion of rules Has grown from 3 to 30

Deal largely with the safety of participants Ex. No kicking, stomping, or kneeing the head of a downed opponent Medical suspensions

Standard uniform Trunks No shoes, kneepads, braces, etc… Gloves, cup, and mouthpiece

THE UFC TODAY Owned and operated by Zuffa, LLC Headquartered in Las Vegas Offices in London, Toronto and Singapore

Produces more than 40 live events annually and is the largest Pay-Per-View event provider in the world Broadcast in over 129 countries and territories Nearly 800 million TV households worldwide

Regularly airs events through FOX Sports 1 Four live events broadcast on the FOX network annually UFC Fight Nights Thousands of hours of programming broadcast on FOX properties FOX Sports 1 and FOX Sports 2.

Includes The Ultimate Fighter®, the longest running reality TV show

Estimated worth around $3 billion

COMPARISON The turbulent history of the UFC is similar to that of other professional sports leagues

New sports usually face opposition at first and develop as a subculture

As time goes on, changes in regulations and increased exposure to the sport allow for growth

Eventually the sport gains mainstream acceptance

BASEBALL Origins date back to before the Civil War Helped spread “New York” style baseball around the country and this resulted in the formation of the first professional baseball team, the Cincinnati Red Stockings, in 1869.

Baseball’s popularity exploded during the late 1800s and early 1900s. Professional teams arose in cities across the country and a variety of leagues were formed to govern

them. Two leagues came to dominate the sport National League American League

These leagues were characterized by conflict and instability. National Association was formed to govern the two leagues. The two leagues utilized the World Series to determine which league’s champion was superior. The national Association eventually evolved into the MLB and helped to expand the scope of the

league during the latter half of the 20th century

FOOTBALL The legitimization process of professional football was a tumultuous one Football emerged as an altered version of soccer and rugby sometime in the middle of the 19th century. The first “official” American football

Initially, football was exclusively an amateur sport reserved for colleges and amateur clubs. The first instance of pay to play occurred in 1892

The precedent for play for pay led to the creation of numerous regional football leagues The first attempt at a national league was in 1920 Mainstream acceptance during the 1950s Formation of the American Football League occurred in 1960 and led to fierce competition between the two leagues NFL and AFL merged into the National Football League in 1966

HOCKEY Historical evidence suggests that some form of the game existed as early as the late 1700s.

The sport gained popularity in Canada where it developed into the game we know today.

The first attempts at regulating the sport took place in the 1880s and began to be played professionally in the Lake Michigan League in 1904. Numerous organizations came and went before the establishment of the NHL in 1917. The league remained largely unchanged between the 1920s and 1960s. Underwent period of expansion during the 1960s and 1990s. In both instances, the league sought to

expand its geographic scope in order to increase revenues.

BASKETBALL Basketball made a quicker transition to the professional level than the other major leagues

Invented by Dr. James Naismith in 1891 By 1894 professional leagues began to form NBA was formed and in 1949 it merged with the National Basketball League

In 1967 the American basketball Association was formed to challenge the NBA The premise was on presenting consumers with a different and more exciting style of basketball that emphasized play above the rim and three point shots

The ABA enjoyed a successful run and in 1976 the ABA’s top four teams merged with the NBA

INDIVIDUAL SPORTS Tennis and golf Can trace their origins back to the Middle Ages. The current governing bodies of these sports can trace their roots back over a century The International Tennis Federation was formed in 1913 Professional Golfers Association was formed in 1916

NASCAR The American racing organization can trace its roots back to runners of moonshine during Prohibition. Drivers began to race one another and stock car racing was born. In 1947 the National Association of Stock Car Racing was formed. Since then, NASCAR has expanded

its racing divisions and grown into one of the most popular spectator sports in the United States.

INDIVIDUAL SPORTS Boxing The sport that MMA resembles the most Very popular in the United States was during the 19th and 20th centuries

During the 20th century, an emphasis was placed on being a champion Various publications and sanctioning bodies began labeling fighters as champions during the early

20th century and title fights became huge draws The number of sanctioning bodies began to grow and there were more and more discrepancies

about who was the true champion at any given weight Being recognized as a world champion required a consensus among sanctioning bodies such as

the National Boxing Association, the World Boxing Association, the World Boxing Council, and the International Boxing Federation

Decline Starting in the 1990s, boxing began to experience a decline in popularity

Participants and spectators had turned their attention towards other spectator sports Lack of star power within boxing.

MARKET STRUCTURE In sports, teams band together to form leagues in order to improve the quality of competition. Schedule stability Common set of rules

The goal of leagues is to maximize the profits of the entire league Competitive balance must exist on the playing field Competition must happen on the field. Competing with each other off the field would diminish the monopoly power of the league

Revenue sharing This paradox of competition on the field and cooperation off of it makes sports leagues unique examples of cartels.

MARKET STRUCTURE While the UFC is the industry leader in MMA, it operates differently than other professional organizations Other organizations must attempt to maximize profits for the league The UFC operates more like a traditional company than a cartel

It seeks to maximize its own profits It is privately owned and operated

The UFC reached its dominant position by acquiring rival organizations WEC Pride FC Strikeforce

WEC Established in California in 2001 Focused on lighter weight fighters UFC placed a greater emphasis on fighters in the welterweight (170lbs), middleweight (185lbs), light heavyweight (205lbs), and heavyweight divisions (265lbs)

WEC focused on bantam weight (135lbs), featherweight (145lbs), and lightweight (155lbs)

The WEC sought to differentiate itself from the UFC by providing fans faster, more active fighters To further increase the level of action in its fights, the WEC utilized a smaller cage

The WEC enjoyed success because it was the premier fighting league for smaller fighters. The WEC was popular enough to secure a TV contract with the NBC owned network Versus in 2007

ACQUISITION OF THE WEC Zuffa bought the WEC in 2006 Aligned its regulations with those of the UFC. Began to integrate weight classes into UFC

Heavyweight and Super Heavyweight (2006) Light Heavyweight and Middle weight in (2008) Welterweight (2009) Lightweight, Featherweight, Bantamweight, and Flyweight (2010)

Allowing the WEC to continue to operate benefitted the UFC Fighters such as Chad Mendes, Urijah Faber, and Benson Henderson all made their names in the WEC Developed into the type of draws that would attract PPV buys

PRIDE FC Based in Japan Enjoyed success as the UFC struggled Many top American fighters took their talents to Japan Pride events and grand prix tournaments paid much higher salaries and bonuses than the UFC was able to at this time

Pride events were major hits in Japan Crowds of over 70,000

ACQUISITION OF PRIDE FC As the UFC was growing, Pride began to decline Scandal

The organization had long been rumored to be connected to the Yakuza gangs of Japan In 2006 the Japanese media began covering the matter Forced Fuji TV to pull PRIDE from the air

PRIDE attempted to bring its shows to the United States Put on events at Caesar’s Palace Moderate success

Live gate attendance was on par with UFC events PRIDE was unable to achieve the same type of PPV results

The UFC was able to secure a deal to purchase all of PRIDE’s assets. Eliminated a competing company Gained a large amount of talent

STRIKEFORCE Initially began as a kickboxing promotion Moved into the field of MMA in 2006 Carried fighters at seven different weight classes ranging from Bantamweight to Heavyweight

In addition to the seven male weight classes, Strikeforce also operated two female divisions

Zuffa’s acquisition of Strikeforce in 2011 has improved the quality of the UFC Addition of women’s division Talent infusion

Robbie Lawler, Fabrico Werdum, Daniel Cormier, Luke Rockhold, Rhonda Rousey, and Miesha Tate

CURRENT COMPETITORS Bellator MMA Top rival

Television deal with Spike TV Lured Benson Henderson away from UFC

Not a major threat at this time Lack of overall talent Weak PPV sales Fight quality

World Series of Fighting Broadcasted by NBC sports Similar profile as Bellator

ONE Based in Singapore Largest promotion in Asia

Potential Long-term threat

SIMILARITIES TO OTHER PROFESSIONAL SPORTS Baseball National League and American League united under the National Association

Later known as MLB

Football Merger of the NFL and the AFL

Basketball Merger of the NBA and ABA

VIEWERSHIP MODELS Seats at live events Same across all sports

Contracts to air events on television The UFC relies heavily on a PPV model to generate revenues Other sports do not

Team sports and individual sports such as Tennis, Golf, and NASCAR have many events over the course of their respective seasons This makes PPV impractical Free cable

Large followings of these sports appeals to sponsors Sponsors appeal to television networks

VIEWERSHIP MODELS OF OTHER LEAGUES In recent years, major professional sports such as the NFL and NBA have begun testing the idea of PPV programming Barriers to viewership

Time zone differences Cable provider options Blackout zones

Premium viewing packages Sunday Ticket, Extra Innings

Enables viewers to watch any game that is taking place Paying for unused content

VIEWERSHIP MODELS OF OTHER LEAGUES The NBA has begun to pioneer a response to this dilemma Use of single game purchase Enables customers to watch the game they want, wherever they want to

It will be interesting to see if the NFL, NBA, and others move fully into PPV broadcasting Will consumers be willing to pay to watch games that they are relatively indifferent to?

Professional leagues will likely use a PPV model to price discriminate against certain customers

UFC VIEWERSHIP MODEL UFC is expanding its viewership options in the other direction Under the SEG and the early days of Zuffa ownership, the UFC followed an exclusively PPV model

UFC turned to Spike TV to generate interest in the sport The success of TUF ensured that the UFC would survive

White envisioned weekly fights on cable like Friday Night Fights This vision has taken the form of “UFC Fight Nights” and “UFC on Fox”.

Typically feature contenders and newcomers to the organization on their fight cards Maintains the UFC’s foothold in the world of mainstream sports Showcases up and coming fighters

UFC VIEWERSHIP MODEL PPV purchases are affected by a number of factors PPVBUYS = b0 + b1 TRENDMONTH + b2 POSTTUF + b3 TREND*POSTTUF + b4 HOLIDAYWEEKEND

+ b5 SBWEEKEND + b6 MAINTUF + b7 MAINBETTINGODDDS + b8 COBETTINGODDS + b9 MAINTITLEDEFENSES + b10 COTITLEDEFENSES + b11 COTITLEIND + b12 MAINTITLEWW + b13 MAINTITLEMW + b14 MAINTITLELHW + b15 MAINTITLEHW + b16 DAYSSINCELASTUFC + b17 STARS + b18 NFLSUB + b19 NCAASUB + b20 MLBSUB + b21 NBASUB + b22 NHLSUB + b23 PPVPRICE + e

UFC VIEWERSHIP MODEL The UFC on Fox is the name given to the 4 UFC events that are aired on FOX’s main channel

The UFC on FOX is also offered on FOX Sports 1 and FOX Sports 2 prior to main events Viewers can watch the preliminary bouts of a main event for free immediately before the PPV segment of the event

While watching the preliminary fights, fans are also bombarded with promotions for the impending PPV main card Teasers Short documentaries about the upcoming headliners

The goal is to attract viewers and then convince them to buy the upcoming main event when their interest is highest

CONNECTING WITH FANS Importance of attracting and retaining viewers The UFC seeks to connect fans to the fighters

UFC Countdown Creates in depth documentaries about the headliners

UFC Embedded Camera crews follow a fighter around his or her daily life about two weeks out and culminate with

the weigh ins the night before the fight.

Every sport has some sort of documentary series NFL series Hard Knocks

The NFL usually designates a team undergoing change or trying to recover from a lackluster season as the topic of the show

Camera crews document various story lines that emerge throughout training camp. Star players, journeymen, and newcomers fighting for a roster spot are all included in the series to thicken the plot

SPONSORSHIP IN SPORTS Advertising is common across all professional sports Sponsors realize the mass popularity of sports and that this serves as a means of reaching millions of potential customers

Producers and sellers of every product or service imaginable use sports sponsorship as a means of reaching out to customers

The advertising for the sponsor can be located in many different facets of the sport Traditional advertising Arenas and stadiums can have a company’s name attached to it Sponsored gear, uniforms, and apparel

SPONSORSHIP IN THE UFC The UFC’s sponsors in 2015 included Bud Light Reebok Harley Davidson MetroPCS MusclePharm EA Sports Toyo Tires FRAM

SPONSORSHIP IN THE UFC Commercials and product placement at media events are used just as they are in other sports leagues Sponsors are also mentioned during the prefight introductions and commentary

The Octagon itself serves as a means of marketing Promotions are printed onto the floor and posts of the fencing

The fighters themselves serve as a promotional tool Upon entering the cage, the fighter’s corner will unravel a banner listing all of their individual

sponsors The gear that fighters wear is also a form of promotion

SPONSORSHIP CONTROVERSY IN THE UFC Currently fighters are issued Reebok fighting gear that they are required to wear This move was designed to give the UFC the aura of prestige that the big four enjoy with their sponsorship deals

The move to standardized gear has hurt fighters financially Fighters could “sell” space on their gear, warm-ups, and post fight clothes to sponsors Reebok pays the fighters for wearing the Reebok trunks they are required to wear by the UFC Pay scale is based on the number of fights a fighter has had

The Reebok deal hurts the earnings of the vast majority of fighters The move has driven away individual sponsors

Many fighters need sponsorship dollars in order to train and continue to pursue a fighting career Fighters must make up for the difference by taking more fights, more frequently and extending their careers

OFFICIAL UFC PRODUCTS UFC Gyms UFC FIT UFC Apparel UFC Magazine UFC Videogames

LABOR MARKETS IN SPORTS Professional sports, especially individual ones are dependent on talent When a lack of star power occurs in individual sports, the demand for those sports drops very quickly.

Boxers during the 20th century carried name recognition Jack Dempsey, Muhammad Ali, Joe Frazier, Sugar Ray Leonard, and Mike Tyson dominated the sport.

Fans were willing to watch fights through PPV because of popular fighters A lack of star power since the new millennium has caused boxing to decline

LABOR MARKETS IN SPORTS The UFC has been able to feature star fighters Premier organization in the world

Best fighters in the world Emphasis on exciting styles of fighting

Bonuses for top performances, knockouts, and submissions Most pressing issue is the marketability of fighters

Promotion is a huge part of the sport Fighters with big personalities become bigger draws

Key UFC personalities Bruce Buffer (The voice of the Octagon) Joe Rogan (Color commentary)

FIGHTER COMPENSATION Fighters are Independent contractors This differs from other professional sports that tend to use collective bargaining There is little transparency in regards to fighter contracts

Contracts and Compensation vary greatly from fighter to fighter Due to a host of factors

Base salary Gate and PPV splits How big of a draw a fighter is determines how much they are paid to show

Ability to promote Performance bonuses Locker room bonuses Individual sponsors

FIGHTER SAFETY During training Types of training Protective equipment Weight management

During competition Pre-fight meeting with doctor Rules of the Octagon

Post-fight evaluations Medical suspension Drug testing

POST CAREER Coaching Commentary Acting and television careers

FUTURE CONCERNS Players compensation The UFC holds a lot of leverage over fighters in terms of compensation

Formation of a union? Long term consequences of fighting

Similar to concussion settlements with the NFL

Continuing to improve the safety of fighters Weight cutting Drug testing

The rise of rivals Boxing ONE Championships

Developing and maintaining a core of marketable fighters Oversaturation

THE END QUESTIONS?