Dana White's Key Decisions


Jake Rossen did a post over at his blog on Sherdog on Dana White's best decisions.  It's hard to argue that any of his choices were bad decisions, but they don't get at the heart of why he's been so successful.  

Dana routinely makes very good month to month business decisions, but the most crucial decisions are the ones that aren't so readily apparent.  Signing Lesnar was great for business, but it doesn't explain why Brock's debut for the UFC did 650,000 buys while his actual MMA debut bombed on pay per view.  The following decisions get to the heart of the question of why the UFC is so successful.

1.  Promoting self-sufficiency over dependence:  Dana has a number of quotes he repeats over and over, but the most important is the following:  "I don't need anybody."  He's right, he doesn't.

The UFC controls virtually all aspects of their product.  They do the production, they work with the venues, they actively work with the press, they have close partnerships with merchandise distributors, and almost all of their revenue comes directly from the fans who want to watch their product.  

For a long time there was a belief that the future of media would be one of free products supported by ad revenue.  The entire field of advertising is now under siege, and a new line of thought suggests that the future of media is one of numerous choices where people will pay directly for what they want without being encumbered by excessive ads.  

Fans pay directly for the UFC, and as a result, the UFC controls its own destiny.  If it keeps providing big shows and big fights that people want to see, they will be in the clear.  No scandal that scares advertisers can bring them down, because advertising revenue is such a small portion of the pie.  If Bud Light left tomorrow over a Dana White slur, it would be a setback for the sport as a whole, but it would have virtually no effect on the UFC.  Third parties may not like Dana, but for the most part, it doesn't matter.  His main market he has to please are the fans that watch, not advertisers, and that's reflected in the product that we see.

2.  Building a loyalty-based model:  I don't think anyone can deny Dana's business style centers around loyalty.  Their payment model for fighters promises as little as necessary, and then gives them room to do extensive bonuses for fighters they deem deserving.  There are all sorts of moral reasons to criticize this model, but fighters are always willing to jump in on short notice and bend over backwards for a boss they feel does extra for them.

This loyalty extends to fans as well.  Why is it that nobody else has been able to succeed in the MMA market?  It's mostly because of loyalty to the UFC brand.  The UFC continues to do shockingly big numbers even in the midst of the worst recession since the great depression, even as the WWE struggles on PPV and boxing has mostly abandoned it.  They've established such a good rapport with their fans that they can get them to splurge even in tough times like these.  Once you realize the importance of this brand loyalty, it's easier to understand why Dana was so upset about Anderson's performance.  They ask fans to spend 50 dollars in a time where that money isn't easy to come by, and you don't want fans thinking they got ripped off.

3.  Resisting network pressure:  In 2007 and 2008, everyone anticipated a big UFC TV deal.  First it was with HBO, and then with one of the big 3 networks.  But when the UFC got into the room with these parties, it was clear that they wanted to change the product for mass consumption.  Dana made a key decision to refuse to let network executives take control of the UFC for chump change, and chose to control his own destiny.  Now he's the one raking in millions in the midst of a financial crisis while networks axe questionable programming left and right.  

This decision, roundly criticized at the time, was one of the best Dana ever made. Networks wanted to pay low rights fees in exchange for production and matchmaking control, things Dana was unwilling to give up.  These executives that wanted to mold the UFC knew nothing about mixed martial arts, and Dana was unwilling to put his future in the hands of people who answer only to the latest ratings trends.  If ratings fell, network executives would have forced the UFC to give away their biggest fights for free, robbing the UFC of its main revenue source and thus putting the sport at risk in an age of collapsing advertising revenue.

4.  Fighting Randy Couture:  This was a big one.  The UFC's most beloved star shocked White by resigning, and choosing to fight Randy could have alienated fans and turned them against the UFC.  Even worse, a huge Randy-Fedor fight was appealing to a number of networks that were chomping at the bit to air it if they got the chance.  If the biggest fight in the history of the sport happened outside of the UFC, it would have been a serious blow to the UFC's legitimacy as the suppoed NFL of mixed martial arts.

They spent huge sums of money fighting Randy on multiple fronts.  In the end, he was exhausted by the process and chose to come back and end his career with the UFC.  This decision was very risky, because there was a possibility of a judge publicly refusing to enforce one of their contracts.  But they were able to force it into arbitration, get a settlement, and send a message to any fighter that thinks about leaving in the future.

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