Violent sport finds its audience
Wednesday, July 12, 2006
NEW YORK -- Shortly after a group of investors bought the nearly bankrupt Ultimate Fighting Championship in 2001, the company put on a pay-per-view bout.
But the fight ran over its allotted time. Angry viewers didn't get to see the conclusion.
"It was a very bad start," UFC president Dana White acknowledged. "It took us a long time to rebuild."
UFC has since found its legs, and it's making money. The privately held Las Vegas-based company has been slowly bolstering its brand, forging a successful relationship with cable network Spike TV and reshaping attitudes about the violent sport.
More importantly to the bottom line, UFC has begun to attract impressive audiences with each of its pay-per-view fights, appealing to young men who yearn for a good slugfest in the absence of a strong heavyweight boxing card.
UFC is a mixture of martial arts, boxing and wrestling. The best fighters have mastered elements of all three sports. The combat takes place over three rounds (championships are five) inside the UFC's caged ring-- named "The Octagon" -- with judges scoring the bout.
But this is not Wrestlemania. The punches and kicks are real. The fighters are dead serious. The top ones train year-round. The atmosphere at the fights rivals boxing matches. It's a sport, albeit a bloody one.
"You have to be able to wrestle, strike and do submission," UFC lightweight champion Chuck Liddell said. "You have to be good at all three or you won't last long. The fighters have evolved."
Already sanctioned in more than 20 states, UFC has ambitions as big as the casinos in which its fighters duke it out.
The organization wants to legalize the sport nationwide, including New York, one of the biggest and most lucrative fight markets, and take its show to European arenas starting with a London office slated to open in October.
The UFC surprised the boxing world, hiring Marc Ratner, longtime executive director of the Nevada Athletic Commission, and John Mulkey, a former managing director at Wachovia Securities and Bear Stearns Co.
Ratner, who began in May, serves as vice president of Zuffa LLC, UFC's parent company, while Mulkey was named chief financial officer.
Ratner brings credibility to the UFC, which has been trying to prove it's a safe and serious sport.
Brazilian Royce Gracie, a Jiu-Jitsu master, helped start UFC in 1993. Back then, the no-holds barred UFC was brutal, with fighters using all sorts of now-banned practices like head butting.
Fights were held in small venues. Liddell said his first UFC fight was held about eight years ago in Louisiana in front of a couple thousand folks, "somewhere in the middle of nowhere."
Ratner recalled watching CNN in the 1990s while Ken Shamrock, one of the UFC's biggest stars, debated Sen. John McCain of Arizona. After the show, Ratner remembered thinking Nevada would never allow the sport.
But it was Ratner, ironically, who helped thrust the UFC into the mainstream when he decided the sport had to be regulated while he was with the NAC. The commission approved the sport in 2001.
Out went bloody head butts and other vicious blows that could cause serious harm. In came skilled and conditioned fighters.
"The biggest misconception that I've seen is that some people still think it's anything goes and there are no rules," Ratner said. "These guys are tremendous athletes."
Still, the UFC struggled. Only the deep pockets of Lorenzo and Frank Fertitta -- who bought the UFC for $2 million along with White -- allowed the company to stay afloat.
White said UFC almost folded in 2003. But its fortunes began to change with a reality show on Spike TV called "Ultimate Fighter" that has given UFC its biggest stage, averaging 2.2 million viewers in its third season.
"Spike was a perfect fit for us," White said. "We know who we are going after."
The UFC's emergence as the premier mixed martial arts sport in the country and the show's popularity have made UFC stars wealthy.
That first fight in 1998 earned Liddell $1,000. Now he makes more than a $1 million a year from UFC bouts and lucrative sponsorships.
"I can't complain," the 36-year-old Liddell said. "The TV show has helped us grow."
For Spike, the series brought in serious advertising dollars targeting men between the ages of 18 and 34, the network's prized demographic. Burger King, the U.S. Army and Taco Bell are among the advertisers.
Kevin Kay, Spike's general manager, said "Ultimate Fighter" was the network's highest-rated program and biggest revenue generator.
"There was a lot of consternation," Kay said. "Is it gonna work? Are advertisers going to run away from it?"
The reality show, along with other UFC programming, has allowed the UFC to create and market its fighters, who will ultimately decide the company's fortunes. Crowd pleasers such as Chris Leben and Forrest Griffin have become draws.
"We've given them a huge television platform, and we helped them in their pay-per-view fights," Kay said.
Company executives wouldn't disclose what kind of audience their pay-per-view fights are generating but they did say recent numbers are comparable to World Wrestling Entertainment, which had four events that averaged 482,000 pay-per-view buys in the fourth financial quarter of 2006.
However, UFC's cable ratings lag well behind the WWE broadcasts on USA Network.
White thinks the UFC could generate a million buys one day very soon. Saturday's rematch between Tito Ortiz and Shamrock, bitter rivals who starred in the latest "Ultimate Fighter," was expected to tally more than a half million buys.
For the second time, Ortiz beat Shamrock.
The event took place at the Mandalay Bay hotel-casino in Las Vegas. The fight sold out, with ringside seats fetching $750. About 12,400 people attended and tickets generated a $3.5 million gate.
While UFC attempts to conquer television, hurdles remain in getting the sport legalized across the country. In New York, the UFC faces a difficult battle; Gov. George Pataki opposes the sport.
The Fertitta brothers have poured millions into the UFC, and they haven't seen a return on their investment yet.
But the Fertittas aren't known for their bad bets. They made a fortune with Las Vegas-based Station Casinos Inc., a Wall Street darling.
"We saw this thing as a diamond in the rough," White said. "We haven't scratched the surface of this thing yet."