EliteXC in Financial Trouble, Cancelling Shows
First EliteXC cancelled their September 20th Showtime event. Then they canceled a Cage Rage Contenders event set for August 16. Then their latest financial report bears an ominous similarity to some of the IFL's latter-day reports.
MMA Payout's Kelsey Philpott takes the glass is half full view:
It’s no secret that ProElite has been in trouble for some time now: the company is hemorrhaging money, has undergone significant upper-level management re-organization, and has wilted under the pressure of increased competition and greater expectations due to their network television deal. You can check out ProElite’s latest SEC filing here.
However, I will caution that this cancellation is by no means “the last straw” for the company. While this may signal financial trouble, it also indicates that ProElite is trying to do something about it.
The fact that they’re canceling shows and concentrating their efforts on the next CBS event suggests that they’re trying to reign in their costs. The risk-reward ratio is considerably more favourable for a network broadcasted event; and for a company that is quickly burning through its cash reserves, they must begin generating more than they spend.
FightOpinion's Zach Arnold has a different, more ominous, take:
The IFL is dead, and both Elite XC & DREAM are heading into dangerous territory. The MMA business at the end of this year may very well look exactly like the professional wrestling business on a worldwide scale — one major company (UFC… like WWE) and everyone else not even close.
When Pro Elite made the move to buy out a lot of B-level MMA companies, I thought it was a volatile and unwise move. How can you possibly manage four or five different MMA organizations by sitting in an office in Los Angeles? Impossible to do. By buying out all of the major B-level promotions (except Strikeforce), Elite XC has basically accomplished what UFC could never have dreamed possible of doing — potentially killing off an entire farm system of promotions for building new MMA fighters. Essentially put, if Pro Elite goes out of business soon then it can be fairly stated that the company negatively impacted the business by paying off so many upstarts and not doing anything with those promoters they paid off. Remember — promoters like Terry Trebilcock signed multi-year deals, so they will be on the sidelines in the foreseeable future if Pro Elite tanks and goes out of business.
Philosophically, I'm wary of monopolies but let's face it, the UFC is the only player in the MMA business who has their shit together at the moment. EliteXC started out their business with some shady antics and its seems the piper is calling in his due.
My main fear of a UFC only world is that we'll never see Fedor, Josh Barnett, Frank Shamrock, or Joachim Hansen fight again. That wouldn't be cool, but its certainly better than a world without MMA at all.
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UFC should..
start a women’s division and snag Gino Carano when they fold. She is already a star on a crap of a promotion, she would be a superstar in the UFC.
Rob Dib
http://www.break-your-face.com
by Rob Dib on Aug 16, 2008 10:52 AM EDT 0 recs
I personally don’t want the women in the UFC. Not because I don’t want women’s mma, but because I don’t want the UFC any more thinned out. for instance, no 145’s or 135’s either.
Bring the LHW and MW divisions of the WEC over to the UFC, there are only a few guys that will survive, imo. Then put the women in 2 or 3 weight classes in the WEC. I think it would strengthen both orgs.
HOWEVER, could you imagine a female version of TUF? It would be like fightgirls all hopped up on Mountain Dew!
"The bigger the cushion, the sweeter the pushin'"
by BJJDenver on
Aug 16, 2008 12:46 PM EDT
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Female TUF would be absolutely hilarious.
But I think it projects the wrong image. They would absolutely be catshit crazy all over the place, and I don’t think the UFC wants to mess with their ’These guys are tough, dedicated, alpha-dogs" message to get confused.
Move the ladies to WEC, I’m all for that. I think women’s MMA is a good part of the sport.
There is no such thing as innocence, only degrees of guilt.
by misterjonez on
Aug 16, 2008 10:44 PM EDT
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I don’t agree with your statement about not seeing certain fighters ever fight again. If this happens it could give Affliction a boost and would make them a competitor against the UFC and would give them some cost saving fighters to level out their payscale. They wouldn’t need Fedor, Barnett, etc.. every show. And if it’s not Affliction, somebody will step up with some knowledge to give the UFC some competition.
by dedstrk911 on Aug 16, 2008 11:00 AM EDT 0 recs
I was referring to a scenario
in which UFC was the only major MMA promoter in the world. That presupposes the death of Affliction as well as DREAM, EliteXC and Strikeforce.
by Kid Nate on
Aug 16, 2008 11:42 AM EDT
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Plus
People need to stop thinking that Affliction is going to become major competition for the UFC overnight or if some other mid-level org folds. They are so far away it’s not even funny. Let them build there events and TV presence and advertisers and divisions over the next few years and THEN let’s see what happens.
by LiuLang on
Aug 16, 2008 2:23 PM EDT
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next few years?
affliction doesnt even have the next 6 months
by mmalogic on
Aug 16, 2008 2:28 PM EDT
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What exactly does Strikeforce have to worry about at this point? They’re doing fine
by smoogy on
Aug 16, 2008 5:33 PM EDT
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I think Strikeforce is going to make it.
They can stay strong in CA, and occasionally have shows throughout the country, while being televised on HDNet and it will work out nicely for them.
Them and Adrenaline and a few Canadian shows have the right idea.
There is demand for MMA in certain communities, it is tough/impossible to compete with the UFC nationally, so why try? You can have a ton of success being a mid-level regional org. Heck, the UFC might even play nice with you if you don’t try to compete with them.
by Phildo on
Aug 16, 2008 7:51 PM EDT
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mmapayouts spin...
These guys are like fox news spinning everything…
They predicted by end of 08 the mma world would have evolved into such a state where Zuffa would have no choice but to start co-promoting.
I don’t believe people understand what zuffa is so let me explain:
In boxing you have:
1. the “producers”: HBO, Showtime, ESPN.
2. promoters: arum, golden boy, king, etc…
3. sanctioning bodies: wba, wbc, etc…
Now imagine if there were an entity in boxing that was the “producer”, the promoter and the sanctioning body…
Well In MMA there is one entity that is just that… their name is Zuffa.
The more people understand this the more intelligent analysis we will see and the more intelligent business plans will be deployed.
From my estimation if were to compete in this arena i would set up regional farm systems with a combination of manager/promoter agenda finding propsects building them up and the back end being getting them in the UFC.
Second area is the WNBA to Zuffa’s NBA… a female league.
Beyond this there is no prayer. Zuffa created the F-1 version of their Nascar with the WEC.
Everybody said afflictions paying fighters this is great for the sport… Not really because when they go out of business there will be pain.
What would have been good for the sport is if affliction set up a good business plan where they can stay in business.
by mmalogic on Aug 16, 2008 11:23 AM EDT 0 recs
MMAPayout is run by Sherdog fanboys with a business degree
by cyph on
Aug 16, 2008 12:00 PM EDT
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no, they haven’t been more balanced lately…. they have been doing the same stuff they always have….. you are like anyone else..you praise it when you agree with it and throw it under the bus when you don’t
Mike Goldberg on robnashville:
"His analysis is so analytical"
by robnashville on
Aug 16, 2008 12:09 PM EDT
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You obviously didn’t read their one-sided attack pieces earlier… even go so far as to suggest government intervention. They are a fan of the Ali act as well.
by cyph on
Aug 16, 2008 12:22 PM EDT
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yeah… i tend to read most everything on there
Mike Goldberg on robnashville:
"His analysis is so analytical"
by robnashville on
Aug 16, 2008 12:25 PM EDT
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cyph is unhappy….cause we don’t do “uplifting pieces” on the UFC…… we don’t do uplifting pieces on anyone….. we give you our take as we see it, just like any other site…it is up to you if you value that …
i don’t break out the pom -poms to cheer for anyone… that upsets folks like cyph
Mike Goldberg on robnashville:
"His analysis is so analytical"
by robnashville on
Aug 16, 2008 12:27 PM EDT
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I won’t claim to be unbiased because I don’t claim to be a fair and balanced news source. I give credit where credit is due. Your fact based reporting is good. However, your previous opinion pieces were biased. In fact, two articles in particular stick out in my mind, UFC Pay contract and the UFC Indian expansion were biased. In fact, these two were heavily discussed here on BE. There were more before that but I don’t remember.
To be fair, it wasn’t your articles but some one else who wrote it. I call it as I see it. I credit you guys for being more fair recently, but if you feel that MMAPayout have always been fair, then that’s fine. There’s no point in arguing about opinions. However, there are quite a few readers who share my views as well.
You can take the criticism as constructive or you can dismiss it. It won’t affect me either way.
by cyph on
Aug 16, 2008 12:39 PM EDT
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the point is...
The point is the bias really doesn’t help anyone…
we realize you guys get a hard on because finally an org has given you credentials – but at the end whats the point when that org fails?
What I am trying to say is logical analysis is very important to this industry and it is actually disservice to these new start ups if there thinking is not challenged.
For example…
Affliction started with 10m. Their thinking was 3 shows and then an assesment of where to go from there.
They also assumed worst case they would be break even at that point…
Now they are scrambling to revamp their business model because they are 4m in the hole with all these contract obligations.
A logical analysis would have helped a lot in this situation.
You don’t even need business acumen to realize this – just look at the past precedent set by pride, wfa, etc…
by mmalogic on
Aug 16, 2008 12:51 PM EDT
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Many MMA websites have a long way to go in regards to journalistic credibility and Payout is no different. You writefor it, of course you think you’re fair and balanced. It doesn’t change the fact that cyph is right and there have been articles I’ve read and been left thinking what the UFC did to make the writer seem so mad at them in their piece. Anyroad, both Payout and Junkie have been better lately.
by LiuLang on
Aug 16, 2008 2:45 PM EDT
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So...
So are you the doogie howser looking guy on the videos?
by mmalogic on
Aug 16, 2008 2:31 PM EDT
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mmapayout is sherdog junior
Everything the UFC does is negative. I quit reading that site because its so slanted.
by banter on
Aug 16, 2008 12:35 PM EDT
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MMA payout and Sherdog are so anti UFC and Zuffa its sickning. Just listen to Jeff ,TJ and Gregg Savage talk you would think buy all that shit they say about the UFC its has never done one good thing for this sport.
by Shocbomb on
Aug 16, 2008 3:53 PM EDT
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They have certainly sucked less of late. Not sure what that’s about.
by Richard on
Aug 17, 2008 12:35 AM EDT
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a business degree...
These days a business degree and a quarter will buy you a bag of potato chips :)
by mmalogic on
Aug 16, 2008 12:31 PM EDT
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or just sell T-Shirts then overpay for fighters… oops, what were we talking about?
by cyph on
Aug 16, 2008 12:41 PM EDT
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mmapayouts spin…
These guys are like fox news spinning everything…
“It’s no secret that ProElite has been in trouble for some time now: the company is hemorrhaging money, has undergone significant upper-level management re-organization, and has wilted under the pressure of increased competition and greater expectations due to their network television deal.”
how is that spinning the company in a positive light? if they are in the bag …why did Payout report the gary shaw out the door scenario before anyone else?
that $3 million you reference below is coming from CBS/Showtime…..they are spending other people’s money and finally having to answer for their spending habits. With someone else to answer to because of the continued loans, ProElite is looking to judiciously spend their money instead of throwing money about in a “make it rain” fashion that lead to the situation they are in now.
EliteXC will hang around as long as they have the CBS folks bank rolling them….. when there is a crisis of confidence from CBS is when the company will go belly up….
Mike Goldberg on robnashville:
"His analysis is so analytical"
by robnashville on
Aug 16, 2008 12:20 PM EDT
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I don’t think Elite XC will totaly go out of Business we’ll not yet anyways ?. But I do think they will be off CBS within the next year and have to sell off all the other small companys they bought like cage Rage,Icon etc if things don’t start looking up fast, What I think will end up happening is they will just end up going back to showtime putting on a handful of shows a year like when they started. ???
by Shocbomb on
Aug 17, 2008 11:50 AM EDT
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that’s when they lost about 30mil when they were on just showtime…
They have no money to operate after 08. .. so yeah if the october 4th shows just generate some financing for them they are done.
by mmalogic on
Aug 17, 2008 12:14 PM EDT
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from sec filing:
from the sec filing that is most telling:
“Even if the Company successfully closes on such financing, it expects to report in its Quarterly Report on Form 10-Q that its capital resources are sufficient only until the end of the year, and only if the Company makes significant reductions in operations and expenditures. The Company is also actively seeking additional financing beyond the $3.0 million to enable the Company to execute its operating plans without significant reductions in operations, but there is no assurance as to whether any such financing will be available on reasonable terms or at all.”
by mmalogic on Aug 16, 2008 11:31 AM EDT 0 recs
Looks like the downsizing is ramping up:
http://www.mmahawaii.com/content/view/719/30/
a contenders 11 event which is part of cage rage in the UK was canceled today.
cage rage is down to 3 full time employees.
by mmalogic on Aug 16, 2008 11:55 AM EDT 0 recs
it looks like...
Im hearing a buy out may be on it’s way…
Im also hearing they are having crazy cash flow issues… to the point where emergency measures are taking place to hopefully put on the cbs show.
by mmalogic on Aug 16, 2008 12:17 PM EDT 0 recs
Not fair to say UFC is the only company with its shit together. Strikeforce has done a hell of a job getting to the level it has by working with what it has, playing to its strengths, and not trying to be something bigger than it actually is.
by andherewego on Aug 16, 2008 1:22 PM EDT 0 recs
But...
we have yet to see how they fare without Cung Le and Frank Shamrock. Going by their last show, I don’t think it did that well. Strikeforce may be totally dependent on their two stars.
by cyph on
Aug 16, 2008 5:35 PM EDT
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well, even then, they’ve been smart in picking their spots. They drew a Washington state gate record using Bob Sapp near his hometown. They’re invited back for a second card at the Playboy Mansion, so they must have done something right the first time. You’re right in that they’re probably not going to sell out the HP Pavillion without Shamrock, but I think they’ve resaonably demonstrated sound business sense all around.
by andherewego on
Aug 16, 2008 10:05 PM EDT
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Almost all of the smaller and mid size shows like XFC,MFC,Strike force,King of the cage,TFA,etc make money back and bring in a profit. Its just the big org’s that try to go up against the UFC that fail. You have to start out small and build your way up all these new Big orgs think they are going to become the UFC overnight I just don’t get there business plans at all ?Jesus just look at all the other big orgs that have failed and went under the last few years following the same business plan. Every one who even thinks of starting up a new MMA org should look at and follow what strike Force has done.Its the same shit in Japan with the small and mid size shows Shooto,Deep,Cage Force,Demolition,etc all do pretty good.
by Shocbomb on
Aug 17, 2008 6:39 PM EDT
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I see the UFC being, far and away, the most dominant MMA organization in the world, but I just can’t see a monopoly as long as MMA is popular. The fact is that MMA is a tough business to make profitable. Zuffa’s been working at it for years. ProElite’s strategy is somewhat reminiscent of what technology companies were doing late in the 90’s. They were spending like mad, trying to ride the potential for large profits in the future. That largely didn’t work out. It’s just a strategy that arises when a business is viewed as new and hot. In some situations, the small businesses swallowed up by the high-flying tech firms of the 90’s were sold (back to the original owners in some cases) and resumed life as they were before they were purchased. I could see ProElite divesting these regional promotions. They may be regional entities once again.
Putting on an MMA event is relatively inexpensive relative to the cash outlays required for many other (mainly team) sports. In that regard, I think there will always be investors willing to step up and try to make a profit promoting MMA as long as there are a significant number of fans wanting MMA. If you’re talking about a real threat to unseat the UFC, or whoever the dominant organization happens to be, I don’t know if that scenario is in the cards. I’m not sure I would trust anybody who acts as if they do know what the landscape will be in the years to come. I’m wouldn’t pretend to. It’s all speculation at this point.
by Cannon Jacques on Aug 16, 2008 1:51 PM EDT 0 recs
Robert Joyner has some follow up on the earlier story from MMA Payout. He explains the jump in Pro Elite’s stock price yesterday and the financing they are seeking.
by Cannon Jacques on Aug 16, 2008 3:09 PM EDT 0 recs
Don't Worry be Happy
Please Don’t worry about never seeing high profile fighters that are not in the UFC like Fedor, Josh Barnett, Frank Shamrock, Eddie Alvarez, Joachim Hansen etc ever fighting again as for Japan even if Dreams goes under there is WVR Sengoku in japan for them to fight in and I am sure FEG or another company will start another Org if Dreams goes under to take Dreams place. As for the U.S if Affliction and Pro Elite go down there is always strike Force for fighters to sign with plus you know dam Well another Big MMA org will strat up and only stay in business a few years but atleast the fighters will have a place to call home no matter how shiort it is until this one goes out of Business and the next one starts up, There seems to always be another Org that comes in after one fails to take its place using the same stupid ass business plan that made the othr fail, So there will always be other big options out there beside the UFC in Japan and the U.S for the fighters to sign with.
by Shocbomb on Aug 16, 2008 3:43 PM EDT 0 recs
Yeah I’ve heard Smackgirl is all but officially dead. Very sad. Roxanne Modafferi was trying to get a deal with AFL, who just signed Tara Larosa. Interested to see if any of the US promotions try to snag Megumi Fujii.
by Chris Nelson on
Aug 16, 2008 6:38 PM EDT
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I think Strikeforce has done well up until now, but they are way too dependent on Frank Shamrock and Cung Le. Le is looking to a future with the UFC or in movies, and SHamrock won’t be around much longer. The last show did really badly live without them.
by Michael Rome on Aug 16, 2008 6:42 PM EDT 0 recs
you think they did badly on that show?….they did around 7500 for that show…….from scott coker’s mouth he said that with either frank or cung on the card without the other they usually did in the 8k to 10 k range…….. i thought they did a decent job of retaining most of the non- blockbuster match-up crowd……cung vs frank together did 17k/sold out the place, but that is an outsize number that theu can’t use as a baseline.
source:http://www.mmarated.com/articles/article/news/20080625/radio__the_state_of_strikeforce_w__scott_coker-14314.html
Mike Goldberg on robnashville:
"His analysis is so analytical"
by robnashville on
Aug 16, 2008 7:17 PM EDT
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It’s not bad because look at the payouts.
They paid out 203,000 (plus whatever they paid to one fighter as an advance) and had a gate of 355,487.
They are being smart, when they have a superstar that can sell out an arena and do great ratings, they pay them that way, when they don’t have the draw, they don’t fork out the cash (like Affliction did).
by Phildo on
Aug 16, 2008 8:03 PM EDT
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That is a big net loss though. The vast majority of the costs of running that kind of show are not fighter payouts. It’s running the building, local ads, and all of the administrative costs of producing a show.
by Michael Rome on
Aug 16, 2008 8:49 PM EDT
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Strikeforce has their costs under control though, something EXC has yet to master. Its highly doubtful they took a “big net loss” on that show, though perhaps we have a different definition of what a big loss is
by smoogy on
Aug 16, 2008 9:04 PM EDT
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strike force...
Strike force is the only smart player out there…
They aren’t making much money – but the important thing is they aren’t losing any money.
That’s an enormous accomplishment.
They’ve created some really solid stars and following. Also they get more brand equity from their 3am TV deal than elite gets from primetime cbs. (comare the 2 and you’ll see what I mean)
If I was Coker My customer would be Zuffa… for a nice pay day.
by mmalogic on
Aug 16, 2008 9:58 PM EDT
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I think they did ok on the show though.
Between whatever they got from HDNet, plus other advertisements and stuff, it’s nowhere on the level of what Affliction lost on Banned and what Elite seems to be losing regularly.
The main point is that they balance the payouts with some sort of realistic projection of the ratings/gate they are going to get for the show.
Shamrock/Le isn’t a great example, because it was a co-promotion, but it had double the fighter payouts and almost 4 times the gate.
From what people were saying, it seems like Affliction didn’t realize how bad of a loss they were going to take on Banned, it just seems tomake that Strikeforce knows exactly where they belong.
by Phildo on
Aug 17, 2008 12:52 AM EDT
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If Elite XC goes down, then all fighters will be transferred to DREAM since they have a partnership. Elite XC hates the UFC, they will never be bought by them.
by Hookem325 on Aug 16, 2008 7:02 PM EDT 0 recs
And I highly doubt the fighters would all be transferred to dream if the promotion went down, it doesn’t even make sense.
by Michael Rome on
Aug 16, 2008 7:04 PM EDT
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Who’s to say DREAM will be around that much longer? I wonder if they’ve paid Nick Diaz yet. EXC is on shaky ground. It looks like CBS is going to provide them with enough cash flow to get them through the Oct. 4 event. If they do have to sell out, they won’t really be in a position to do a lot of buyer screening. I’m not sure the UFC would want what’s left, anyway.
by Cannon Jacques on
Aug 16, 2008 8:41 PM EDT
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Ya, I’m sure they all have a “if EliteXC fails, then you go to Dream” clause in their contract. Duffus.
by LiuLang on
Aug 16, 2008 8:55 PM EDT
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watch the name calling
it’s against the rules here at BE — aka “not Sherdog”.
Also, fyi, it’s “dufus”
by Kid Nate on
Aug 16, 2008 9:26 PM EDT
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WRONG
They won’t have a choice in the matter who they sell to ! when you are going out of Business you sell to whoever is going to give you the most $$$ for your corporation not who you like and dislike-LOL- and Elite’s fighters contracts will not extend over to Dreams unless they buy all of them out if they go under every one is a free agent.
by Shocbomb on
Aug 17, 2008 11:33 AM EDT
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There can be only one -- Zuffa!
It’s one thing to make a quick buck off guys like Kimbo Slice but to build an organization off them is poor planning. If youre gonna build a company around selling fights, you need access to guys who can fight. This is what makes Zuffa great. Every well of talent is immediately tapped, bottled, and sent to Zuffa by the satelite training camps around the world. And, on top of that, Zuffa does their own drilling (TUF). They’re the only company that has this kind of access and therefore, no company can reach their level. If you decide to build a company selling Zuffa’s crumbs, you need to pay these fighters what they’re worth. If they were worth 500k a fight, Zuffa probably would have offered it to them. I don’t see why these competitors have to go out of businees — I just don’t think they can get very large — there will always be some decent talent that doesn’t want to fight for Zuffa.
I told you I can't build your candy house! It will fall apart, the sun will melt the candy, it won't work!
by mma_dude on Aug 17, 2008 9:56 AM EDT 0 recs









