The history of the fight business is rapidly changing before us and nobody is blinking an eye. Change is happening so fast, you can’t fully process it.
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2023 was a huge year for the UFC and combat sports
You could be forgiven for not being able to catch your breath at the sheer speed and volume of major events that have occurred in 2023. This year has felt like 20 years of activity compressed into one: The merger of UFC & WWE into TKO; Vince McMahon selling a healthy chunk of stock shares weeks after that said merger; UFC 295 at Madison Square Garden, which was supposed to be the crowning achievement for Jon Jones and erasing of Francis Ngannou after he left to go box Tyson Fury in Saudi Arabia; KSA investing $100 million dollars into PFL; The end of Showtime Sports and PBC on that network despite three 2023 events with $20 million dollar gates; Conor McGregor announcing a 2024 return to UFC and the expulsion of USADA running UFC’s drug testing program in favor of hiring former FBI boss George Piro.
These are monumental flashpoints in a fight business where the stakes are gotten so high, so quickly that the barriers of entry continue to skyrocket. We’re not talking about horse-trading millions of dollars any longer. We’re talking billions involving publicly traded companies and world governments.
With all of these data points, your brain isn’t naturally wired to process the bigger picture in such a hyperactive informational loop. That creates the perfect conditions for history to be constantly rewritten by those in power. It only takes one generation to erase the entire history of an industry. You may have had that feeling watching UFC 295 last weekend at MSG.
What 30th anniversary?
You didn’t know it was the 30th anniversary of UFC last weekend? You’re not alone in noticing what felt like a missed chance of a coronation & celebration of the organization’s history. Here’s former UFC public relations & Fight Pass staffer Ant Evans:
There have been videos released on UFC’s Youtube channel throughout the year, including this slickly-produced clip:
However you might feel about the people involved in the day-to-day operations of this current version of UFC, the truth is that 30 years is a remarkable accomplishment that completely defies all kind of business and entertainment logic. How we got to this point is certainly up for historical — and legal — debate. If you’re looking for a great primer on how this circus all started, I would highly recommend reading Is This Legal? The Inside Story of the First UFC from the Man Who Created It by Art Davie & Sean Wheelock.
For various reasons, UFC has a rather unique relationship with its past and how it views the present. It’s both fascinating and maddening for anyone who has supported MMA for more than five years. It’s occasionally terrifying if you’re been around since the beginning.
To provide some much-needed — and quirky — perspective about UFC history, this past weekend was also the 20th anniversary of a fight that would completely change the fortunes of both UFC and their global rival PRIDE.
Despite what you may or may have not been told about UFC history, PRIDE was a fast-rising MMA monster in Japan that was running major arenas every other month. The pipeline of talent from Brazil and America was extraordinary. Lead by agents Miro Mijatovic (representing Russian Top Team/Red Devil), Bas Boon (representing Golden Glory), “Booker K” Koichi Kawasaki (representing Chute Boxe), former Akira Maeda secretary Motoko Uchida (representing Brazilian Top Team), and Wallid Ismail, a new wave of powerful foreign fighters were traveling to Japan to challenge a limited amount of Japanese aces. This often led to incredible foreign ace vs. foreign ace fights that you didn’t think was possible to book. For old-school wrestling fans, it was reminiscent of the mid-80s when the legendary Giant Baba was able to book dream matches involving all non-WWE legends. Matches that never could or would happen in America were happening in Japan and airing on broadcast television. PRIDE was executing that same concept a generation later but in the Mixed Martial Arts space. PRIDE had the support of major broadcasting television partner Fuji TV. The promotion was drawing tens of thousands of fans to the major events while also drawing close to 20 million viewers.
A lot of American MMA fans didn’t know much about PRIDE, but UFC sure did. Dana White had his own ringside seat to check out the action. In what would go down as a shocking bet, Dana White & Lorenzo Fertitta went to Japan with Chuck Liddell to face Quinton “Rampage” Jackson. The idea was for Liddell to win both the UFC & PRIDE belts. How was the King of the Cage guy, portrayed by the Japanese as homeless in a bus while talking to pigeons, supposed to beat the UFC champion?
Things did not go as planned. Rampage won. It was a shocking loss of face for UFC and a huge upswing for Rampage, who would later have to fight Wanderlei Silva in the same night. This would never fly in today’s scene but was often commonplace in Japan. Wanderlei would win the main event and grow his legend as the Axe Murderer.
UFC was stunned. They were losing money. They needed a change of direction. With the help of piggy-backing off the WWE wrestling audience, The Ultimate Fighter on Spike TV changed the game by developing a a new generation of MMA fans.
What should have been a major image boost for PRIDE and the Japanese power brokers instead turned into an outright civil war. With the sheer amount of cash at stake and the increasingly high visibility of a fight promotion that was the shiniest toy for Japan’s most powerful fight brokers, things quickly disintegrated at the Tokyo Dome event backstage. A tame yet colorful story by Marcelo Alonso revealed how explosive the politics were. The agents were completely antagonistic towards each other. Fighters often got into confrontations. Management wanted to destroy each other over who controlled PRIDE. What should have been a year of expansion and consolidation turned into angry chaos. I detailed this civil war a decade ago on Sherdog.
If PRIDE had operated within boundaries and showed proper business discipline, they had a great chance of competing against — if it not defeating — UFC. Once PRIDE disintegrated under the weight of its own politics, nobody else ever came close to competing with UFC. UFC grew quickly, demonstrated ruthless execution, and the rest is history.
The death of PRIDE and Zuffa’s subsequent purchase of their assets was one prong that helped UFC create the monopsony they have today, according to one of many legal arguments raised by attorneys for retired fighters in their antitrust lawsuit.
I can’t help but think about how differently UFC might have looked or operated if they had faced a longer period of legitimate promotional competition. Reading the antitrust court pleadings by UFC’s side, it is amazing how confident and repetitive they have been in narrative what is colloquially known as the Zuffa Myth. A circus with no rules, John McCain and human cockfighting, bought the operation in 2001, cleaned it up, introduced weight classes, made it respectable, and so on.
It’s as if Big John McCarthy or Nick Lembo at the New Jersey Athletic Control Board barely existed in helping with the Unified Rules. It was all UFC because Lorenzo bought it and got it sanctioned in Nevada. Every media outlet in the world parroted the Zuffa Myth and it was a long struggle to make sure a more… nuanced… version of UFC’s history was told to the public. Josh Gross, Loretta Hunt, my old tag team partner Whaledog (Jeff Thaler), Eddie Goldman, Jake Rossen, and yours truly did our best. No wonder we were so hated.
Even with the victors having the loudest megaphone to narrate their own history, now you know why UFC awkwardly struggles in detailing the earlier days of their company’s history. The antitrust lawsuit, at a minimum, will be a great on-the-record research tool to tell the real story of how the Las Vegas machine works.
Despite UFC’s rather curious coronation of their 30th anniversary at MSG, the event was undoubtedly a smashing success with a record $12 million dollar gate. The attitude of ownership, from Dana White to Ari Emanuel, is simply to remain in bulldozer mode. Nothing is going to stop them. As Dave Meltzer recently commented in a bittersweet tone:
It also speaks volumes about UFC when they’ve sold that many dollars worth of tickets, that instead of having [Stipe Miocic] fight for the title on that show, they pulled him off the show as well. As noted before, one of the things about TV rights being what carries these companies is that serving the fan is no longer as important because whether they do or not, their money is guaranteed.
With record gate revenues, PPV revenue, and rapidly growing sponsorship deals like the $100 million dollar agreement with Bud Light, UFC may as well call themselves Mr. EBITDA given Ari Emanuel’s growing confidence in his flywheel of fortune. Everything on the surface looks brilliant. In a stock market with growing questions about the stability of major corporations in the entertainment space, TKO looks very appealing.
And yet, market makers who were neutral or slightly skeptical were given a big reason to maintain their conservative position on TKO after Vince McMahon decided to sell 8.4 million shares of TKO at $76.41 a share. Quite a disruption in the current narrative Ari Emanuel is selling to the public about both Endeavor and TKO.
What does Vince McMahon know that we don’t?
It’s been one hell of a 2023 campaign for Vince McMahon.
After publicly stepping down as WWE CEO & Chairman in 2022 for what Jim Cornette notoriously called The Illegal Paralegal scandal, Vince came back with a vengeance after he announced on CNBC an agreement to merge WWE & UFC into TKO. When McMahon resurfaced at WrestleMania in Sofi Stadium, he managed to somehow shock the world (again):
Passions burned hot among fans, especially those supportive of Triple H as WWE booker. Vince McMahon was back and it was both a nightmare and catnip scenario for the various WFAN-style wrestling podcasts on Youtube and Apple.
No more Saudi Arabia buyout talk. Vince was back and outsmarted everyone. Right?
A year-long negative campaign in The Wall Street Journal created a roller-coaster of emotions but Vince was back in power while also executing a financial maneuver to avoid high taxation. Then the ghost of the WSJ campaign resurfaced.
The Feds reportedly raided Vince McMahon. No one was sure what government agency or which jurisdiction was involved. As that news broke, it was revealed that McMahon underwent spinal surgery. He is currently walking around with a cane. For those who remember Vince’s first fight with the Feds over steroids in the 90s while sporting a neck brace, it was déjà vu all over again.
On September 11th, the TKO merger was completed. Ari Emanuel was now officially in charge. Vince McMahon was issued a $111 million dollar dividend and allegedly went with an undisclosed bank in a form of a prepaid variable forward contract. He put up 3.48 million shares of TKO for a reported $85 million loan due March of 2024.
Ten days later, Axios highlighted a major TKO disclosure: Vince McMahon’s TKO stock would be registered for sale immediately.
Then came reports that Ari Emanuel reorganized WWE executive duties, putting Triple H back in the catbird’s seat for creative. Shades of Bob Iger & George Lucas?
Vince was reoriented towards future negotiations in new television deals. Smackdown would be heading to USA Network. NXT is heading to The CW. RAW is the last domino to fall.
Despite a 40% increase in rights fees, Wall Street knocked TKO down a peg to $85 a share. Ari Emanuel went on offense, detailing the great strengths of TKO while also discussing Vince McMahon’s various legal issues as a liability.
Then came the earthquake: Vince McMahon triggered a sale of 30% of his TKO stock, 8.4 million share at a price of $76.41/share. A company whose stock was largely owned by insiders suddenly got a big injection of public exposure. A cash out of $641 million dollars.
The news dropped TKO stock to sub-$80 but has not plunged further downwards.
TKO told the public that Vince would have an open window to sell stock. He sold stock. They have been straight-forward in their actions. The question everyone is asking: why now?
With creative control reduced, cash is king. The memories of his last fight with the Feds is clearly on Mr. McMahon’s mind. The cost of impactful legal representation in 2023 & 2024 is significantly higher than what he paid to defend himself in his 1994 steroid trial in the Eastern District of New York. There are several factors working against Mr. McMahon. First, the public does not know the scope or extent of his vulnerability to pending criminal charges. If the venue is the Southern District of New York, this would likely be adverse to Mr. McMahon given his closeness to former President Donald Trump.
Second, any criminal or civil charges against Mr. McMahon would test the legal validity of settlements with Non Disclosure Agreements in Federal court.
Third, Mr. McMahon’s long-time attorney, Jerry McDevitt, was headed towards retirement. Now what does he do? Will Mr. McDevitt serve as his primary personal attorney in a second round against the Feds? Will Mr. McMahon have to pay a hefty premium to hire a fighter like Rita Glavin, Andrew Cuomo’s top attorney? It’s not unreasonable to guess that the legal bill Mr. McMahon would pay for defending himself in a Federal criminal trial would be in the tens of millions of dollars. The combination of prospective legal bills and restitution ordered by a court, if there is a guilty verdict, is absolutely a risk Mr. McMahon must be prepared to deal with. He knows what kind of impact lawfare can have on someone’s bank account and reputation, as noted by what has happened to two other New York icons – Mr. Andrew Cuomo and Mr. Donald Trump.
For those of you who didn’t live through Vince McMahon’s American wrestling expansion in the 1980s, you missed out on the master of manipulation and psychology. No one could revise history in a public narrative to sell to the masses like Vince McMahon. Everything UFC has ever been accused of in terms of strong-arming the competition while sugarcoating their business practices, Vince McMahon is at least ten times as … imaginative.
When the Feds came after Vince for allegations of steroid distribution, he brilliantly waged a negative campaign against his enemies both inside and outside of government. He was lucky to have a foil in Phil Mushnick in 1994, as you can see in the video below. In 2024, he may not be as lucky.
Vince McMahon certainly doesn’t want to spend the rest of his life in jail or under house arrest, but a guilty plea or loss to the Feds in court? Given how defiant he was in the 90s, that would certainly impact his psyche. He’s been in control of his business and his public narrative most of his adult life. From announcing to producing to promoting to making billions in business deals, Vince McMahon nurtured and crafted the skills required to become the ultimate control freak. Quite fittingly, he managed to merge his business with one of the few individuals who shares his level of aggression and take-no-prisoners attitude. The masters of situational ethics.
TKO’d by political instability?
Right now, everyone is saying the right things. Dana White repeatedly talks about what a killer Vince McMahon was to him and how Vince is a great business partner is to have. Lots of old war stories, like Vince allegedly sabotaging a UFC TV deal with NBC & USA Network, are suddenly being revealed. I’m sure all of those sentiments carry some truth to them. It’s also true that there is great value in keeping your friends close and your enemies closer.
If there is one thing that you cannot question about Vince McMahon, it’s his ability to read the room and be ahead of the curve. He dominated cable TV. He dominated PPV. WWE mass marketed merchandising of wrestlers in every way possible, from ice cream bars to Slim Jims. He was a First Mover in the streaming space and managed to digitize all his content. WWE’s far ahead of other sports shops in terms of being able to migrate and navigate their library from one platform like Peacock to another platform like ABEMA.
Vince McMahon clearly sees a reason to be hoarding cash right now. Is it to prepare for a lengthy legal battle? Is it to have extra powder to buy more TKO stock if the stock market crashes? Mr. McMahon saw the disappointed reaction from market makers who didn’t think a 40% increase in TV rights fees was good enough. If the market is disappointed by that, then what would make them happy? The wrestling audience is shrinking for TV viewership while TKO’s monetization continues to skyrocket. UFC’s core business numbers are booming and look spectacular.
So why sell 30% of your TKO shares? It might very well be a precautionary maneuver in preparation of a post-TKO antitrust business model should the retired fighters suing UFC win a large settlement or judgment in a Las Vegas Federal court room.
Which brings us back to UFC’s unique relationship with their past history and how it may come back to haunt them.
A large cash award combined with injunctive relief by Judge Richard Boulware would certainly change the structure of UFC fighter contracts. The fact that fighters were able to obtain class certification and survive the appeal to the 9th Circuit Court of Appeals should be the red warning on UFC’s dashboard. Instead, there doesn’t seem to be any sort of appetite for a pending settlement. Perhaps UFC’s confidence in drawing a favorable jury pool is warranted.
At the UFC 295 post-fight press conference, Dana White made it very clear that UFC has no intention on co-promoting a fight with Francis Ngannou. Dana also made it very clear that there is interest in growing a boxing portfolio for UFC Fight Pass with promoters such as Tom Loeffler. UFC expanding into boxing would inevitably make sense for a supersized TKO portfolio.
An adverse outcome for UFC in antitrust litigation is a big problem for TKO. The company’s words and deeds, as elucidated through the legal discovery process in Federal court, may very well come back to haunt UFC. How they built their machine while paying fighters under 20% of revenue is why they are as big as they are today and it’s also why they are vulnerable by attacks from external forces outside of their business control. UFC is proud of their corporate history and yet is simultaneously conflicted about whether or not they should run away from detailing the process that made them so rich.
As Politico recently stated, antitrust is now hip. That’s a threat Mr. McMahon clearly understands. UFC is staring down an antitrust challenge and WWE could as well. He has always prided himself of being several steps ahead of his competition and winning any fight, especially if it’s against the Feds.
Will everyone involved in TKO continue to help build an unstoppable monster or will their past historical deeds catch up with them?
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