The Fertitta Files: The UFC Eyes China as Next Break Through Market
by Jonathan Snowden on Jun 9, 2010 12:25 PM EDT
in MMA News
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The sale of 10-percent interest in the company to the Abu Dhabi government-owned Flash Entertainment was about more than an influx of cash. Zuffa's eyes weren't on the Middle East at all-that move was all about China and the billion potential customers there:
"The Abu Dhabi deal was obviously more strategic than it was about money," Zuffa owner Lorenzo Fertitta said. "Not just for the Middle East, but all throughout Asia."
With a television deal in place, expertise in place, and a great product in place, success seems to be a given. But it isn't. Here are three reasons the UFC will find out what hundreds of American companies have discovered in the last century-conquering China is harder than it looks.
1. Much was made of Sheik Mohammed bin Zayed, Abu Dhabi royalty and long time MMA supporter and expert in the Chinese market. Unfortunately, we've already seen what the Sheik can provide in the Asian market-and it wasn't super impressive. He was the main financial backer of The Art of War. It's hard to get a clear media report on The Art of War event. All of the media present were flown in by the Sheik and obsequious beyond belief. This much is clear: the promotion was losing a bundle. Journalists called it "the Chinese Pride." That is true in a sense: the event had all the trappings of Pride, just none of the big money television ratings, big crowds, or tremendous interest in the community. bin Zayed has tried and failed in the market with an MMA event. Why would the same strategies work better with a promotion that even even more foreign than Art of War, which at least was fronted by two Chinese Americans?
The UFC is available on SoHu, kind of the Chinese Yahoo. But unlike Yahoo Sports, which calls their martial arts category "UFC," most of the martial arts content on the Chinese net is Sanda competition. The Sheikh can pay to fly in a crowd, celebrities, and brand name announcers and referees. What he can't do is make Chinese people care.
2. Chinese consumers are hesitant to embrace American culture. The Chinese are distinctly their own people and not easily influenced by American glitz. Even when they do embrace an American product, they do it on their own terms. The hottest American import in the automobile market? It's the Buick. That's just China being China.
Like many countries, nationalism is a strong force there. Take basketball as an example. Basketball exploded in China only when Yao Ming became an international sensation. Unfortunately for Zuffa, there are no Chinese stars on the horizon and interest in the area seems minimal. Will a Chinese audience embrace a sport with no history in China and no Chinese competitors at a top level? That's a question the UFC has to ask themselves-and give an honest answer.
3. The UFC proudly announced their television deal with Inner Mongolia Television, a network just as ghetto as it sounds. It's the same network that aired The Art of War, and reaches between 60-80 million homes in a country with more than a billion people. Worse, the television deal doesn't include the country's largest cities Beijing and Shanghai.
Television deals in China have to be painstakingly negotiated in each city, working with a collection of crooked government organizations that make the fight business seem pristine. A live broadcast of the UFC is also unlikely in China. Censors need to look over all programming, just another in a long line of issues.
The UFC intends to open an office in Beijing by the end year. They expect to be promoting in the country in 18 months. I wish them well, but am skeptical about whether they can sell a proud people a product they have no interest in with a cast of characters that include no Chinese nationals.
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The UFC proudly announced their television deal with Inner Mongolia Television, a network just as ghetto as it sounds
This seems kind of uncalled for to me.
Have you lived in China too, Jonathan?
http://www.twitter.com/TB_Money
by Tim Burke on Jun 9, 2010 12:08 PM EDT reply actions 2 recs
this along with various other things definitely made me ? this article
I’m not resting until I’m officially Anderson Silva status.- Jon "Bones" Jones
by AfroSamurai on Jun 9, 2010 12:24 PM EDT up reply actions 1 recs
In China, each province has its own TV channel (or even a few of them for bigger provinces). So Inner Mongolia TV is just one of 30 or so networks. I don’t think it’s any bigger or smaller than other provincial channels, but it sure isn’t a national channel like CCTV.
On the other hand I don’t know why he’d say that the deal doesn’t cover Beijing, because I’ve watched the UFC in Beijing before.
by koroshiya on Jun 9, 2010 12:45 PM EDT up reply actions 1 recs
Hey man, where and when were you able to watch? A few years ago or the past year? Did you watch it on network TV (CCTV or BTV?) I’ve been here in Beijing for the past 9 months and the UFC doesn’t get a lick of coverage on TV. I’ve seen a (horrible) M-1 show on TV and a live (meh) Art of War show show though. But I’ve only been able to watch PPV via streams. Would really help esp for UFC 115
working with a collection of crooked government organizations that make the fight business seem pristine
Huh?
Do you have any specifics besides the obvious ‘all politicians are slimy’?
are you familiar with the Chinese Communists?
they are a dictatorial regime that literally runs on blood and bribery. Ask a Tibetan.
Follow me on Twitter @KidNate
More generalizations with no specifics.
Sweet.
by Steve4192 on Jun 9, 2010 12:25 PM EDT up reply actions 1 recs
are you serious?
Do you want some wiki links about how many people Mao killed?
do you remember the poisonous children’s toys?
Here’s a study from Transparency International rating China as one of the most corrupt country to do business in — right up there with Russia.
Follow me on Twitter @KidNate
by Kid Nate on Jun 9, 2010 12:31 PM EDT up reply actions 6 recs
now go read and learn something.
this really ought to be common knowledge.
FYI if you get an email from Nigeria, it’s a scam. Just a tip.
Follow me on Twitter @KidNate
by Kid Nate on Jun 9, 2010 12:32 PM EDT up reply actions 9 recs
if you get an email from Nigeria, it’s a scam
sonofabitch…
ALL OF YOU LISTEN TO MEE, DON'T DISTURB HERE, I WILL CALL POLICE CATCH YOU, DON'T COME TO MY BANGOLOW HOUSE, UNDERSTAND, O.K. I HATE ALL OF YOU.
by Chris Barton on Jun 9, 2010 12:33 PM EDT up reply actions
Your statements are kind of exteme imo
I always find it hypocritical when Americans criticize “how China does things” when China is probably the number one driving force behind the ridiculous American lifestyle that we take for granted. You want cheap stuff? You want cheap debt? On top of that you want China to be America-lite overnight? But I digress.
That said, I have done business in China before and you really can’t get anything done without local contacts. Business in China is strongly relationship based, relationships not only get you past government hurdles, but it’s really hard to even get a deal done without some sort of relationship or someone to introduce you. Which is why foreign companies usually hire a Chinese expat or well connected local, which the UFC would probably have to do.
by IpullguardIRL on Jun 9, 2010 12:39 PM EDT up reply actions
His statements aren’t extreme at all.
And you weren’t digressing, you were obfuscating.
Yes, American’s have a ridiculous lifestyle; yes that lifestyle is made possible by cheap commodities imported from developing economies (not just china, btw); yes, a large portion of Americas debt is held by China.
None of this makes what Nate is saying any less true. These are not conflicting facts, don’t try to present them as such.
(sorry, if this post sounded insulting or disrespectful, I dont intend it to be)
by ruckus on Jun 9, 2010 12:44 PM EDT up reply actions 1 recs
Truth
I worked in China for a few years, so I can say with great confidence, IpullguardIRL is on point. Chinese call it “guanxi” or relationship. No guanxi, no business. Why do you think so many deals are done over drunken karaoke?
Dana better learn to sing.
by INGO B on Jun 9, 2010 1:35 PM EDT up reply actions 1 recs
When the son of the deposed king of Nigeria emails you DIRECTLY, you respond!!!!!
"If I wanted to spend a half hour between two hairy legs I'd go to your mother's house." -Don Frye
Yes, I talked to someone who attempted to sell programming to a variety of Chinese networks.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:02 PM EDT up reply actions
What they need is a Chinese vs. Japanese fight. That would make the markets in both countries notice.
That’s not a soft and cuddly sort of fight, it’s more like a still angry about genocide sort of fight.
Yeah, think a swastika-tattooed white supremacist vs. a son of Auschwitz survivors – times half a million.
by Monday Morning Martial Artist on Jun 9, 2010 2:56 PM EDT up reply actions
haha
At the last Art of War show, undefeated Chinese fighter, Ao Hai Lin, fought Ryuki Ueyama, and the fans were shouting “kill the demon/soulless bastard.”
Facts don't come with points of view.
by Robert Livingston on Jun 10, 2010 1:17 AM EDT up reply actions
Before that
at AoW 12 Wu Hao Tian KO’d his Japanese opponent in the main event and the post-fight interviewer asked him how it felt to KO a Japanese.
Facts don't come with points of view.
by Robert Livingston on Jun 10, 2010 8:28 AM EDT up reply actions
With 2.4 billion people in China and India, they'll figure out a way.
MMA Aggregator - http://mma.ly
Boner kill
It will be pretty tough to get into china no joke
myspace.com/tbma <--- Give it a listen, let me know what you think.
Proud conductor of the Shane Carwin hype train.
Shane Carwin hits you and even if your payin the bill it doesn't matter. Your lights are gettin shut off.
by II SMASH II on Jun 9, 2010 12:23 PM EDT via mobile reply actions
Exactly. Jordan Breen talks about it a lot, but one point he makes clear is China’s nationalistic values. When there are MMA fights in China, and there are not many, it involves some sort of Chinese martial artists (a wushu practitioner, or wing chun practitioner, etc) versus an absolute ‘can’ of an MMA fighter. This is done to make the Chinese martial artists to look like they are superior to anyone else.
Also, I am under the impression that the Chinese people in general are not at all knowledgeable of MMA.
WWE has tried to get into the Chinese market for years, and they have not been successful. I point this out because WWE has been spreading their product globally for years much longer than the UFC has, and they have not been able to get into China.
Those fights do happen BUT
the Chinese fighter is a San Da fighter. In Chinese Wushu is a general term meaning martial arts. Wing Chun is a Wu Shu style. I have never seen a Wing Chun fighter fight MMA.
Most if not all Chinese fighters in MMA come from San Da, Shuai Jiao (Mongolian Wrestling) or Judo backgrounds, and the great majority from San Da.
Facts don't come with points of view.
by Robert Livingston on Jun 10, 2010 1:45 AM EDT up reply actions
I wish them well, but am skeptical
You have already said they should give up on Germany. That the UK has been a money pit. And now you are skeptical that China will work. So basically, your take is that Zuffa should abandon their global expansion and stick to their established North American market.
That’s some visionary leadership advice.
by Steve4192 on Jun 9, 2010 12:23 PM EDT reply actions 1 recs
That's not what he's saying
He’s saying there’s a reason to be cautious about grandiose claims as it relates to entrance into foreign markets. And there is.
Follow me on Twitter: @MMANation.
I’m completely on-board about there being a need for caution. But I’m not sensing caution here. I’m sensing “they’re making a huge mistake”. That’s not caution. That’s alarmism.
by Steve4192 on Jun 9, 2010 12:33 PM EDT up reply actions 3 recs
I don’t advocate giving up on Germany. I clearly said that interrupting the legal process to get back on German television by trying to ram another show into the country is a mistake.
I don’t advocate not attempting to penetrate the China market either. I’m saying it won’t be as easy as some have speculated.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:06 PM EDT up reply actions
hit post too soon
I don’t care if it makes me sound 12, that did make me giggle. Work makes me punchy.
I clearly said that interrupting the legal process to get back on German television by trying to ram another show into the country is a mistake.
Based on the majority reactions to that article it should be clear that it wasn’t clear… :S
I understand that idea, but that is not at all what I picked up from the germany article.
I suggest you find anything in the article that would make you think I advocated them abandoning all attempts to promote there.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 2:02 PM EDT up reply actions
The fact that a court case was mentioned once
in the second to last paragraph does not lend to the idea that said court case is the central issue of the article. The four paragraphs that outline everything Zuffa was doing wrong on germany and around the world were a far more obvious focal point.
The central point of the article is that they went in before the country was ready, got tossed off TV as a result, and now are going to try to push back in before there is a resolution to the dispute. It’s too fast and too hard. Too American.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 3:09 PM EDT up reply actions
I understand what you are saying
but the fact that the tone was so negative really distracted from the message… Too many pointed words / ideas, opinions and assumtions completely overwhelmed the overall message.
FWIW
This one is much better. A couple of the same issues, but mostly a more solid fact based piece.
hey
they’re losing money on the Vancouver show too.
I agree with Jonathan that they’re biting off a lot with the international expansion.
They’ve already lost a fortune and failed in Japan.
The UK was a loss leader for 2 years that may or may not begin to pick up.
Australia did really well.
Germany was a fiasco.
Abu Dhabi cost them money.
what’s visionary about blindly expanding?
Follow me on Twitter @KidNate
The US was a loss leader for a few years too, was it not? I completely agree that they might be looking to expand too fast, and that China is extremely hard to break into. Snowden’s overall point is sound. But they’re going to lose money in almost every forgein market they enter initially, aren’t they?
http://www.twitter.com/TB_Money
yes
which is why it might behove them to make a go of Canada before pouring so much gold and time into Europe, etc. And China is very very deep water.
Follow me on Twitter @KidNate
You can see the UFC’s point about Europe though, can’t you? It will take a while, but establishing a solid market in the UK and Germany, which are the 2 biggest economies and (arguably) the 2 most influential members in/of the EU, is worth a lot more monetarily in the long run than Canada. Dude, I’m Canadian myself…I’d say we’re the most rabid MMA fans out there. But there’s only 33 million people here. There’s only so much money to make. There are over 800 million people in Europe. Establishing a base there would seem to be a much smarter business move in the long run.
The same thought process COULD be used about China, but they’re not understanding how hard it will be to bust into that market. I think that’s the difference.
http://www.twitter.com/TB_Money
by Tim Burke on Jun 9, 2010 12:39 PM EDT up reply actions 3 recs
agreed that europe should come before china
but why not nail down the easy money first? canada and australia then the uk then europe…etc
Follow me on Twitter @KidNate
Well, Toronto’s the big nut to crack money-wise in Canada, and it seems like they’re doing everything they can to get into there right now, without success (so far). WEC is running Edmonton, after failing to book Calgary. UFC has run Montreal and is running Vancouver. That’s 5 of our 6 biggest cities, and almost half of our total population. I’d say they’re doing what they can here.
Australia is something else entirely though, and they should be working harder there.
http://www.twitter.com/TB_Money
our population in australia is even smaller than canada. arent they already getting their part out of australia by holding their first card and already saying they want to do a yearly show here?
what else should they be doing? the sport is growing here, more and more ppl are getting ppv’s/going to bars to watch them. we got increasing coverage on our free to air sports channel
wat else do they “nail down”? they cant realistically start doing more than 1 show a year here cause it takes away from their primary money making areas too much
In my opinion, the reason for the rapid expansion is as much defensive as offensive. The UFC provides what to the sport? A logo. By going into these markets and converting any potential fans into UFC fans instead of some other promotion they have effectively eliminated a potential rival. One that could conceivably do better in that market, but now – more importantly – doesn’t have the revenue to drive up costs.
by John Nash on Jun 9, 2010 12:51 PM EDT up reply actions 1 recs
Is it wrong that I immediately compared you description there to what Christianity did back in the day?
http://www.twitter.com/TB_Money
This is what I was wondering. Every time I have heard Dana or Lorenzo talk about expanding they always talk about looking at the data they get from merchandise and TV among other things and basing their expansion plans off what the numbers tell them. Meaning they are going where the numbers tell them the interest in their product is at. So I can’t believe they are going in to these expansion markets blindly without looking at the data and knowing there is something there.
Just BE.
Granted, Zuffa is too big and has been too succesful to be blind about the expansion. Being in such a damn hurry about the whole thing is a whole another thing.
by Monday Morning Martial Artist on Jun 9, 2010 2:58 PM EDT up reply actions
But are they being in a hurry about it?
Sure they may have these plans and hopes of promoting a live show in 18 months there but that can be pushed back if the numbers tell them the market isn’t quite ready for a live show. So my guess is the UFC hasn’t set that 18 months as a must have date for China. It’s a plan to work with going forward but those plans can be changed based on the data they get.
When Dana or Lorenzo talk about expansion they always talk about getting on TV in a new market. Then they talk about looking at the numbers on those TV shows. Plus the sale of DVD’s and other merchandise in that market after the TV shows begin airing. When they talk about expansion they always go over those same points. They have never just jumped from point A to point Z. They talk about stuff they look for to know when the market is ready for a live show there. I just can’t believe as many times as I have heard all those same talking points about opening new markets that they will be throwing that all out the window and rushing in to a new market before the numbers tell them it’s ready.
Just BE.
by mattman73 on Jun 9, 2010 3:46 PM EDT up reply actions 2 recs
How were those metrics in Germany? I think you may be living in the Zuffa bubble.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 3:54 PM EDT up reply actions
Just sharing my opinion.
I read more MMA sites per day than i care to admit. So if I am living in the Zuffa bubble then I am blaming it on this site and several other MMA sites that I read daily for my MMA news.
Look I’m not some insider with access to UFC’s files. I am just fan who bases my opinion on things I read from this site and others but if your insider status allows you to get those metrics I would be very happy to check them out.
Just BE.
by mattman73 on Jun 9, 2010 4:24 PM EDT up reply actions 1 recs
There was no groundswell in Germany for the UFC. Little interest in their television or DVD products. They went any way. They are going again. It flies in the face of the quotes you mention above….
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 5:20 PM EDT up reply actions
what are the numbers?
How can we look at them? If thats even possible to get access to that type of data.
by Johnnynumber5 on Jun 9, 2010 10:18 PM EDT up reply actions
They announced their first appearance in Cologne before DSF announced the first television deal. So, it could have hardly been driven by ratings.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 10:26 PM EDT up reply actions
Well see this is new information for me and definitely effects my opinion. Previously all I have ever read and saw is that same stuff. All their talking points about how they go about deciding what market to go after next.
So this was a much better response than the first one you gave to me.
How were those metrics in Germany? I think you may be living in the Zuffa bubble.
I didn’t even know what to make of that response. I didn’t know if you were just being a smart ass or what.
Just BE.
The UK shows have been profitable since 2007 according to S&P
Mainly due to Setanta/ESPN and THQ handing most of the marketing and Setanta & ESPN handing over $10-15,000,000 a year in TV money.
by Mat Parker 116 on Jun 9, 2010 1:19 PM EDT up reply actions
The Vancouver show was also the fastest sellout in UFC history was it not?
Once the regulations are sorted out future shows there and eventually in toronto will be money grabs.
Yeah. I am surprised they haven't done one...
Alberta is game for MMA. There shouldn’t be much of any resistance at all.
There’s a WEC show there in 11 days (in Edmonton). Not sold out. Not even close, I think.
http://www.twitter.com/TB_Money
WEC is not UFC though
We have only had live WEC events on TV since Jan this year and the WEC is largely unknown up here aside from the hardcores.
WEC was on TV long before that, it was just buried on TSN 2 and tape-delayed. I get what you’re saying about the WEC not being the UFC, but I don’t think Alberta is the insane market that people think it is, especially for the UFC. Running Edmonton or Calgary would mean running a city that’s smaller than pretty much every US market they’ve run. It’s not as feasible as it sounds.
http://www.twitter.com/TB_Money
WEC was on TV long before that, it was just buried on TSN 2 and tape-delayed
Yeah. it wasn’t really visable and if def wasn’t live.
As for the population thing…
If the UFC held and event in Calgary, there would be a lot of people driving down from Edmonton and there would be a number of people who would make the trip from Winnipeg and Sakatoon. I think the event cwould do alright.
They said the same thing about Portland (people from Seattle, Vancouver would come). Those 2 are bigger population bases combined than the 4 you mentioned combined, and they still had to heavily paper to get a good crowd.
Believe me, I’m Canadian…I WANT it to work in Canada. I just think there aren’t many places it will work to the degree that Zuffa can make a lot of money off of it.
http://www.twitter.com/TB_Money
I would love to see a UFC event live
But you’d have to give me free tickets to make me do that Godforsaken drive from Seattle to Portland AGAIN.
Seriously, there is nothing wrong with giving up.
Companies give up the international thing all the time and become more profitable. Unless of course you believe in the economics of sinking money into lost causes for the sake of pride.
This is off-topic, but
have you ever been snowed in, Jonathan? Because I think that would be a hoot. (in Stewie Griffin voice)
by MMAInFeRioRiTy on Jun 9, 2010 12:27 PM EDT reply actions
Me in 1986. True Story*
*Not a true story
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:13 PM EDT up reply actions 4 recs
source?
"Justice is the whim of a judge, check his chest density
It leaves much room for error, and the rest left to destiny."
-Sage Francis
by DamnSevern on Jun 9, 2010 2:12 PM EDT up reply actions 7 recs
And....that's a rec.
When you watch the Orioles every night, a beer after dinner turns into a six pack WAY too many times. Stacey
I don’t understand why Zuffa doesn’t take the low hanging fruit first. Start in countries that are most like the US and therefore willing to absorb some of our culture. Obviously China and Japan are great markets to get into but what about Korea? Heck, I thought that’s why they signed Akiyama.
They would probably be better served in the long run by opening an office in China, establishing contacts, and helping some fight camps expand internationally to develop kung fu fighters with ground skills.
by Reciprocity on Jun 9, 2010 12:31 PM EDT reply actions 5 recs
Yeah, Korea would seem to be a much better choice for a new market. There’s a reasonable amount of money there, and the UFC actually has decent Korean fighters. Not to mention a presence in Korea would help get their foot in the door with China and Japan.
I'm not aware of ANY Korean fighters in UFC besides Dong Hyun Kim and... well, Sexyama
Chan Sung Jung doesn’t count because he’s WEC.
I don't like getting into anyone's business
but expanding too fast too soon is such a horrible way to lose money. You have to be patient.
lol I’m reminded of all the resource building strategy games I’ve played over the years.
I’m probably in the minority here but I would prefer less Zuffa business/Dana White drama and more info on the fights/fighters.
The problem with doing business in China is that there's no consistent rule of law.
If the government decides you’ve offended them in some way, they just take your assets. And since that’s the established pattern, there’s no reasonably complaint you can make. It’s not like you didn’t know they’d do that.
I’d rather do business in Indonesia or Vietnam.
I like using semi-colons; they make me feel smart.
by Llewdor on Jun 9, 2010 12:38 PM EDT reply actions 1 recs
"Chinese consumers are hesitant to embrace American culture."
David Stern would disagree.
by goodbadugly16 on Jun 9, 2010 12:38 PM EDT reply actions 1 recs
As well as several major fast food chains
"It's fourth and fifteen and you're looking at a full-court press." - Lt. Frank Drebin, Police Squad
by SSreporters on Jun 9, 2010 12:49 PM EDT up reply actions 1 recs
LOL, I specifically mentioned the NBA in the article…
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:07 PM EDT up reply actions
It's a matter of generation
young Chinese embrace it more.
Facts don't come with points of view.
by Robert Livingston on Jun 10, 2010 1:28 AM EDT up reply actions
Not necessarily true.
The Chinese have ripped NBA programming off the airwaves whenever it did not feature Yao or Yi. They don’t give the NBA any exposure unless it features Chinese players, which is exactly the point Kid Nate was making with the UFC’s expansion.
Sounds like someone is being a Negative Nancy
Why shit on all of their plans before they even happen?
The NBA is still huge there, and Yao has not played nearly at all in the last 2 years.
Of course China will not be an instant success, but comparing it to Art of War in unfair.
GO SPURS GO!!!
zuffa is looking longterm at this...
dont know why thats such a shock, they have tons of cash flow with no debt…if they want to waste 100million trying to break into china, more power to them! honestly they could probly spend 10 mil like on TUF and sign chinese fighters.
oh and John Snowden welcome to BE but ur articles seem awfully negative, i think u might even be up there with kid nate :)
freedomwatchonfox.com lp.org
Isn’t a big portion of the loan to pay dividends to the owners?
It is interesting to note that the term loan was originally proposed at $275 million, as of the May 22 S&P report, only to be increased to $325 million by the time of the Sept. 14 S&P report. This time frame coincides with the closing of Zuffa’s purchase of Pride’s assets, though the significance of the increase and its connection to the purchase of Pride is purely speculative.And $75 million of the $100 million dollar loan Zuffa took out last year was used to pay dividends to the owners. So the bulk of Zuffa’s debt is really an accounting trick to payout to the owners. This would also mean that the Zuffa has paid out at least $350 million to its three owners between 2006-2009.
Proceeds of the term loan were used to pay a one-time special dividend to Zuffa’s owners, the Fertitta brothers (90 percent) and Dana White (10 percent), and to refinance the company’s existing debt. The amount of debt Zuffa refinanced and the amount it paid out in dividends can only be speculated.
Plus...
the exact same article goes on to say Zuffa should have absolutely zero problems repaying that loan.
GO SPURS GO!!!
There are a couple of reasons why a company would want to keep debt. A company’s leverage ratio is the ratio of debt/equity (debt being money owed, equity being sum of all assets — just to clarify). I can think of two reasons off the bat why a company would want to increase their leverage. The main reason, and the one I think that is going on here, is that by borrowing more money (and thus incurring more debt) a company has more money to invest, leading to greater potential profit. It’s the same logic behind why you borrow money to make an investment or buy a house. The second reason is that interest payments on debt are tax deductible, which means that by taking on more debt you have a tax shield.
That being said, carrying a lot of debt and having a high leverage ratio can be dangerous. The more debt a company has, the more likely the company is to go bankrupt. So, for example, if a company has a lot of debt and something happens in the market that makes their sources of income (equity) go sour, they are more likely to go bankrupt. Anyway, this means that the more debt a company holds the closer they are to bankruptcy at all times, which is scary for management and stockholders, etc
Inhale deep, like the words of my breath—I never sleep, cause sleep is the cousin of death
Gooood god, this nonsense again? Please stop trying to rail about this debt. Please figure out why they owe this money and why its not a big deal at all.
by sadface on Jun 10, 2010 4:37 AM EDT via mobile up reply actions
Good luck, Zuffa. China is a huge market with just about unlimited upside – but if they’re having trouble negotiating with Russians, well, Chinese are a whole another problem. A single badly placed f-bomb by Dana may mean they can kiss the market goodbye. You can not force your way in there.
Chinese bureaucracy is on a whole another level from anything Zuffa has dealt with anywhere else – and one disagreeable bureaucrat can doom the whole project or at least delay it ad infinitum. While NBA and some fast food chains have made huge inroads in China, well, UFC isn’t McDonalds.
I wish them well, but it might be a good idea to first get a stable foothold in some easier markets. Japan and Brazil come ton mind.
by Monday Morning Martial Artist on Jun 9, 2010 12:58 PM EDT reply actions
Whay hasn't the UFC gone into Brazil?
What’s the backstory there?
When you watch the Orioles every night, a beer after dinner turns into a six pack WAY too many times. Stacey
They did an event there in October 1998, but haven’t returned there since (although I hear they’re certainly thinking about it). As to why they haven’t gone back, I don’t know either – could be simply that the ‘dark ages of MMA’ got in the way and Zuffa has been busy enough elsewhere.
by Monday Morning Martial Artist on Jun 9, 2010 3:04 PM EDT up reply actions
the other thing to take away from this is the fact that although the shiek hasnt been succesful in promoting MMA in china in the past, he does have valuable knowlege of running a promotion in china. and all the minute details that are involved. so look at it this way….he paid for 10% ownership of the UFC, but not only did zuffa get the money they also got a valuable asset that to them may have been worth more, the money couldve been just icing on the cake… couldve been a great business move by zuffa, see u couldve put that spin on ur article just the same as the negative spin
freedomwatchonfox.com lp.org
Every other MMA site blindly gave the spin you suggested. Plenty of that to read if you’d like.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:08 PM EDT up reply actions
You could do yourself a huge favor by ratcheting the self-importance way, way down, Jonathan. Everyone except you simply offers blind spin? Really? I’m sure the moderators will scold me for daring to speak out against the almighty Jonathan Snowden, but, whatever.
by raidernationz on Jun 9, 2010 1:21 PM EDT up reply actions 4 recs
And you can try ratcheting down the martyrdom. No moderator is going to ban you or even warn you for a statement like this. Criticism is fine. You’re not victim.
Follow me on Twitter: @MMANation.
by Luke Thomas on Jun 9, 2010 2:41 PM EDT up reply actions 1 recs
Show me an article from a major “Zuffa” site that didn’t essentially release a UFC sponsored statement about the glorious Chinese Revolution and I’ll applaud you…
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 2:51 PM EDT up reply actions
Luke: That’s fair
JS: You’re the one saying that everyone except yourself merely offers blind spin, but you offer no concrete examples of such. How about if you give us examples, aside from UFC.com which is obviously a house organ, of specific columns that you consider “blind spin,” and break down for us specifically what in the articles constitute “blind spin?”
by raidernationz on Jun 9, 2010 2:59 PM EDT up reply actions
and to make myself clear, I mean “blind spin” as it specifically pertains to the UFC in China, as the topic at hand.
by raidernationz on Jun 9, 2010 3:00 PM EDT up reply actions
You disagree with my premise, YOU do the work to prove me wrong. I’m not sifting through dreck on the internet to dance for you….
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 3:10 PM EDT up reply actions 3 recs
Nice try
No, Jonathan. You’re the one who made a broad generalization without providing a single fact to back it up. The burden of proof is on you. What you’re doing here is the rhetorical equivalent of calling a broad group of people communists without evidence and then demanding those people prove they’re not communist.
So, you can’t back up your claim that everyone except you offered “blind spin” about the UFC in China with even one single concrete example?
by raidernationz on Jun 9, 2010 5:39 PM EDT up reply actions
As an objective observer
in this particular argument the onus on providing evidence for the claim would be on Snowden.
ALL OF YOU LISTEN TO MEE, DON'T DISTURB HERE, I WILL CALL POLICE CATCH YOU, DON'T COME TO MY BANGOLOW HOUSE, UNDERSTAND, O.K. I HATE ALL OF YOU.
by Chris Barton on Jun 9, 2010 6:13 PM EDT up reply actions 1 recs
The onus is on me to “prove” something I didn’t even write in the article? I don’t think so.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 6:58 PM EDT up reply actions
“
Every other MMA site blindly gave the spin you suggested. Plenty of that to read if you’d like.
“The best book on the real history of MMA that I’ve seen,” Dave Meltzer
by JonathanSnowden on Jun 9, 2010 10:08 AM PDT up reply actions "
Third request: Please provide one single, concrete example of the blind spin you claim that everyone besides you gave on the subject of the UFC in China. If “every other site” gave did so, it can’t be too difficult to come up with a single fact to back up your claims.
by raidernationz on Jun 9, 2010 9:00 PM EDT up reply actions
ZZZZZZZZ.
You’re boring and wasting my time. Look in the post itself. There is a link to a “story” that is essentially identical in every substantive way to the UFC’s own press release.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 10:18 PM EDT up reply actions
I've banned this user
Creating a second account to go after me today was bad enough. Creating a THIRD account for the sole purpose of recommending your own comment is too far.
Let it no longer be said I am a moderating virgin:
YE BE BANNED.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 10:38 PM EDT up reply actions 1 recs
I am enjoying it
Thanks for welcoming me Bloody Elbow!
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 11:23 PM EDT up reply actions
Just remember that for every jerk off that shows up there are dozens of us that are happy to have the articles and the converastions that go along with them.
Good. I assume as much. I already know who many of the good commenters are. And many of them disagree with me frequently. The discourse is good-it’s important to remember we all have much in common just by being here!
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 10, 2010 12:11 AM EDT up reply actions
Opinions like this are why Jonathon Snowden is an author and not a CEO of a billion dollar company. Great CEOs take calculated risks with more detailed knowledge than outsiders (even educated outsiders). They look at the risks and then go forward when they feel the odds favor them. Love him or hate him, Dana White has been nothing but a great CEO for the UFC so far. I see no reason to think that has changed. Yes, it will be difficult, but Dana has the attitude and intelligence of a successful CEO so I think it will work out in the long run.
by thekiltedwonder on Jun 9, 2010 1:08 PM EDT reply actions 3 recs
Dana White is not making these decisions. For God’s sake man.
By the way, I would not suggest a billion dollar company hire me to run it. You and I agree there.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 1:10 PM EDT up reply actions 2 recs
I wonder why everybody assumes that Dana White makes literally every decision pertaining the UFC. And even if it was just one person unilaterally running it, it would be Lorenzo. Dana is the hype man. Lorenzo is Chuck D, Dana is Flava Flav.
"I am a man who pisses largely and frequently, which they say is a sign of great mental activity" -Henry Miller-
Dana white has done jack shit for the UFC as a CEO.
Absolutely nothing.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
by pdl on Jun 9, 2010 1:21 PM EDT up reply actions
I beg to differ
He has become the UFC’s biggest star. Now we can argue if that is a good thing or a bad thing.
Gotcha, bitch!
He did that as PRESIDENT of the UFC. He has done nothing as CEO because he’s not the CEO.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
by pdl on Jun 9, 2010 1:27 PM EDT up reply actions
lol
I thought he wasn’t the CEO, but I wasn’t gonna be that guy to correct you.
President/CEO, it’s all similar and the point is the same.
"Someone is WRONG on the internet. What do you want me to do? LEAVE? Then they'll keep being wrong!"
-Randall Munroe
by pdl on Jun 9, 2010 2:58 PM EDT up reply actions
You are corrrect.
LOL. I apologize for mist-stating…. He is president not CEO. I still stand by the rest of my opinion though.
by thekiltedwonder on Jun 9, 2010 3:34 PM EDT up reply actions
Comments like this are thekiltedwonder is a reader and not an author of the best book covering the history of MMA. Great authors research their topics and collect sources from experts. They look at the landscape and try to collect as much meaningful, helpful information as possible to tell the story of the truth as best as they can determine it. Love him or hate him, Snowden has been a great author for MMA so far. I see no reason to think that has changed. Yes, it will be difficult sometimes, but Snowden has the attitude and intelligence of a successful author, so I think it will work out in the long run.
Follow me on Twitter: @MMANation.
by Luke Thomas on Jun 9, 2010 2:45 PM EDT up reply actions 4 recs
I totally wasn’t trying to discredit JS as an author nor his education. I was pointing out the difference between successful CEOs (and as I stand corrected in Dana White’s case, presidents) and the general populace, even those such as JS that are extremely educated in the subject (which I alluded to, even if I didn’t state directly).
My comment was much more targeted at the fact that JS was very negative on the UFC’s prospects while CEOs/presidents have to be positive or nothing gets done. It’s much easier to see why things won’t work that to see how they will. It is the president/CEO’s job to find the most profitable path and the way to get it done.
by thekiltedwonder on Jun 9, 2010 3:32 PM EDT up reply actions
The UFC may be expanding way too quickly.
I understand why they are going to China. The huge consumer base, the ability to make some offensive moves and essentially get into a market and brand the sport there before anyone else can get to it… but I think they are rushing things a bit. They have time. More importantly, they have no real serious competition. Strikeforce may be a threat, but you don’t hear them talking about going to China, do you? Heck, they can barely struggle to find a can to take on Bobby Lashley, let alone expand into a foreign market. Dream? Yeah right. That’s a laugh. The UFC has time, but they’re acting like they have a five year window and after that, it’s caput! This kind of rapid expansion is costing a lot of time and money. Why not make sure the sport is firmly entrenched in Canada, the UK and Australia first? The sport has yet to be sanctioned in NY! If they’re losing money on the Vancouver show because of an inability to negotiate a better insurance deal with local officials, what do they think will happen in China? (The insurance thing in Vancouver is, to be fair, not really the UFC’s fault. The politicians here in Vancouver are wussies.)
While the Chinese market is a huge opportunity, with a growing middle class that is ready to consume, consume, and consume, I think Zuffa will find it really tough there. They’re in for a rude awakening. The Chinese people won’t just consume any product, especially one thrust on them with cowboy diplomacy. On top of that, any product must be filtered through the many layers of the communist government, local officials, media, etc. Tibet an issue? No problem. Zuffa can just photoshop out a tatoo or keep those fighters off Chinese cards. But that’s the easy part.
Is there any proof that the UFC is going to lose money on 115? Insurance is going to cost them more but they aren’t bringing any expensive talent with them and they have huge profit margins on all the other shows.
As for China they aren’t going to be making much if any money on the TV deal. I have a hard time seeing them charging $500 a seat in China where wages are way lower. This has huge money looser written all over it.
I have been wondering after reading your (Snowden’s) book about the influence of other organizations in these markets. It’s interesting how the Fertitas came from mob ties back in their family and mobs have always been mixed up in various fight biz and gambling biz here in the US. The huge influence the Yakuza had in Pride and other competing fight orgs in Japan. The accused thuggery of M-1 sometimes (thought that is more rumor and accusation). So it always makes me wonder if there are already some other entities in these other markets, legit or not; already having a hold on some version of the fight game. Maybe I’m making it too big; but just a curiosity.
FWIW...
60-80 million homes in a country with more than a billion people.
That would mean the broadcast would be available in about about 22% of the countries households (that actually have a television) and could reach about 248 million people.
Only 3 of the worlds countries have more than 248 million people
It’s alot of people. It’s also the US equivalent of a network that reaches Alabama, Georgia, Louisiana, and Mississippi and doesn’t hit LA, Chicago, or New York.
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 2:03 PM EDT up reply actions
I don't know a lot of specifics of the deal,
but if someone from a market where you have zero visability is willing to pay you to share your product with 248 million people it shouldn’t be looked at as a bad thing.
The UFC isn’t a developed and popular product in China, is there any reason to believe that a better offer was available? Are 248 million new viewers bad? I’d say it is a success to get that far. Everything needs a starting point.
I don’t say it is a bad deal. But people were talking about tens of shows in China in the next few years. I think it’s worth pointing out that the UFC TV is not available in the most important markets in China….
"The best book on the real history of MMA that I've seen," Dave Meltzer
by Jonathan Snowden on Jun 9, 2010 3:11 PM EDT up reply actions
Their goals are lofty.
Putting on a show in China wont be easy, especially if it is a numbered UFC event.
I am really curious to see how it plays out. Will it be a chinese MMA show catered towards their interested or will it be a force fed American UFC product. Without knowing that and without knowing their overall plan it is pretty hard to say they are doing it wrong.
That’s how they should do it. I think every country should have it’s own mini UFC with thier nations TUF and fight nights. Only once fighters become great can they move onto the actual (global) UFC.
I get more rec's then a Toyota!
I agree.
My understanding was that the people at a UFC China office would look into this and the political dealings.
Once a company has done the proper research, hiring someone (the right someone) on the ground in a foreign market is the most important step of international expansion.
That is their plan. Assuming they hire the right person, the new UFC China head will tell them when they are being overly agressive and help them through what ever steps are needed.
Sure there are lots of things to figure out and China won’t be easy, but it is doable especially if they pace themselves.
I'm going to go back to the previous statement...
Doesn’t it make more sense, if you’re going to expand, to expand and do some shows in Japan, South Korea, Indonesia, India, and all the other places in that large general region, find a couple of Chinese fighters that aren’t terrible, and in the mean time only really work on broadcast deals with China?
Then once you’ve got a large following all over that area, and some Chinese stars, and a small presence in the country, you could then talk about doing a show in HK or Beijing or something.
It just seems really strange to go after China head on since it’s a huge market for sure, but also a relatively poor general market. Also with a complete lack of IP rights and such, it’s safely assumable that any merch sales and/or video sales are going to be null and void. Even advertising is going to be a fickle beast since you’d better believe they are going to have to approve anything on the mat or the fighters or whatever.
The only money in China is in TV and live shows as far as I can see, and I don’t see a direct route doing a whole hell of a lot.
Associate Writer - WindyCityGridiron.com - Artist formerly known as Sklz711
China is a tough egg to crack but the upside can be quite huge. Heck take Buick as an example. In 2009 GM sold 1.8 million cars in China(aiming to break 2 million sales in 2010) and the Buick brand has become a presitge brand there (they sell 4 times as many Buicks in China as they do in the US, China is the only reason that Buick didn’t go the same way as Pontiac and Hummer did). For General Motors China has become their second largest and most important market in the world and it’s basically propping up the company(well that and the US and Canadian governments). There is money to be made there and the Chinese will accept a foriegn product if it’s done right and presented properly.
If the UFC goes in and develops their product with China in mind instead of just trying to sell them the current UFC stars then they could really build to something there. The first step would be to find and build up Chinese talent and start doing Chinese only shows for a while. It’s going to take a long term plan to get established there. Things just won’t happen overnight like they have in other more open markets.
they should get dan hardy to headline in bejing
anyway. thailand would be a sweet place for the ufc to try since theyre allies. plus more than half the fighters ufc muay thai as their stand up.
Thailand has been in a political uproar for a while now, it’s not really a place to try to start business in until they get their political issues worked out. Still it is a great country with some very great people and would be a good market to get into(and I’m not just saying that because I have a half sister there). There could probably be some issues due to Muay Thai being so ingrained in the culture there but due to all the Mauy Thai being used in MMA and all the MMA fighters who train over there that could also help open the door. The ground game probably would take some getting used to for them but they love a good stand up fight there.
There is actually a MMAThailand website out there and UFC programming is available in South East Asia.
yep.
He had lots of bouts here when he was really young (duh), but he had a 2 bouts in the Philippines after he became a huge boxing star… Against Oscar Larios (before his 3rd bout against Morales) and Fashan 3k Battery (tune up bout for his 1st bout against Morales)..
by Anton Tabuena on Jun 10, 2010 10:23 AM EDT up reply actions
YES PLEASE.
Dana did say something about bringing the UFC to the Philippines back in 2008 or 2009 right?
Momentum was lost though when Brandon Vera started losing and when Phillipe Nover stopped winning. Yeah, we got Munoz but, i dunno, too early to tell and he’s quite one-dimensional now.
But yeah, Pinoys would totally go apeshit for this! We get TUF and PPVs for fee on cable for a long time now and i think we’re very knowledgeable about the sport now.
China and Asia
When talking about China and even Asia, you have to talk about Hong Kong and Taiwan. Both are small in size but have a huge impact on all of Asia economically. And Hong Kong is in many ways of course still a very distinct and western-like city. The UFC has to have Asian stars no question about it. The NBA got it’s foot in the door with Yao but they huge staying power because of their superstars. All of the NBA stars are celebrities in China now. The youth of China are as progressive and savvy as anyone, and will be moved by excellent entertainment that can be filled with the world’s next great Chinese MMA star. The way to do it is somehow build that guy or find him. The UFC’s got to go back full circle in China. Maybe have a much better Asia-centric TUF there, or a UFC 1-like tournament really challenging China, the “birth place” of martial arts. Remember Pride in the beginning really tried to sell the martial art versus martial art build ups and all the trappings that come with it, honor, discipline, courage, tradition, pride. Ultimately if Mr. Snowden could only get a “Eff U” filled rant from Dana, saying, “Does this guy want MMA to be successful?!”, maybe we’d know that the UFC has heard our thoughts.
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