MMA startups a bad bet nearly every time

Let's say you wake up to tomorrow and find yourself the lucky owner of a winning Mega Millions lottery ticket. Then let's make the further supposition you aren't the practical type and you decide starting a mixed martial arts promotion is the best way to use your winnings. You're ready to forgo the McMansion, trophy spouse, and fleet of European luxury cars in order to devote your millions to building your own personal MMA empire. Well my impetuous friend, there are a few things you might want to consider before staking your newfound fortune on what has historically been a bad bet.

First off, you're going to need fighters. One would think that should be the easy part. In fact you might start to feel like a Maxim cover girl in a bar full of single guys at closing time when you think of all the unsigned fighters out there looking for a payday, but therein lies the problem. Almost everyone with an established name who currently isn't under contract to the UFC is a free agent for a reason - either he was cut because he couldn't hang at the UFC level, he's a relic from the past who doesn't know when to give up the ghost, or he has more baggage than the underbelly of a 747. There may be a large potential talent pool of former stars to draw from, but by and large these types will make your promotion look like the Island of Misfit Toys in the eyes of fans.

For an example of this type of hand me down card look no further than this past Saturday's premiere World Series of Fighting event on NBC Sports. This show had it all, well if by "it all" you mean a main card consisting primarily of UFC rejects and over the hill stars of yesteryear that is. Look at the star attractions in the top three fights on the card: Anthony Johnson - cut from the UFC for missing weight a mind boggling three times; Miguel Torres - committed career suicide when somehow he failed to learn from his first UFC firing that tweeting rape jokes isn't the best way to remain employed with the company; Andrei Arlovski - hasn't been relevant since before current UFC light heavyweight champ Jon Jones began his career. I don't know about you, but I would hardly call this an auspicious debut.

Some upstart promotions are able do a better job than the WSOF at striking a balance between up and comers and fading stars. This past Friday's Resurrection Fighting Alliance 4 card was main evented by former UFC lightweights Tyson Griffin and Efrain Escudero, but there were a number of younger fighters with potential upside on the card as well like Chidi Njokuani and Sergio Pettis. RFA seem to understand the best way to utilize names from the past is to use whatever star power they have left to draw in viewers who will then in turn hopefully become fans of the younger fighters. You simply can't build a brand on hand me downs from the dominant industry leader.

Which isn't to say the RFA model isn't without its flaws. RFA president Ed Soares had made it know the company doesn't harbor any illusions they can ever compete with the UFC. It begs the question however, just what is the RFA's business plan then? To run smaller regional shows using the mixed bag of talent available to them and hopefully draw decent enough live gates to turn a small profit? Seems like they are setting their sights pretty low if this is the case. Do they have any plans to grow their business beyond this level?

If so they will run into the second problem now faced by you, Mr. Aspiring Promoter: it's exceedingly difficult to turn a profit promoting MMA on a national level in the US. In fact, it's so hard there's only one promotion who has done so with continued success - the UFC. Unless you have some brilliant promotional vision nobody has thought of before, odds are you're going to end up in the MMA graveyard alongside Elite XC, Bodog Fight, The International Fight League, and Affliction. Don't forget about Strikeforce either, who got themselves into such financial straits they were forced to sell the company to Zuffa despite doing good ratings for Showtime.

Luckily for you Fedor Emelianenko is now retired so you won't face the alluring temptation of signing "the best fighter alive" - a claim that has long since been dispelled by three successive losses - in exchange for a king's ransom. I'm not saying the Last Emperor's exorbitant asking fee alone sank these companies' fortunes, but the haphazard glee with which Tom Antencio and Scott Coker broke the bank to bring in Fedor is certainly emblematic of the tendency among promotions to spend more than they are taking in without a solid plan to later recoup these loses. Time after time promotions have shot the moon on high fighter salaries and top notch production values only to end up spending themselves into oblivion.

Granted the UFC was a money trap for years before they finally took off, but the chances of you being able to sustain your money losing startup on your lottery winnings alone are slim to none unless you get someone with deep pockets to invest in your company. Unfortunately investors usually have a nasty habit of wanting to see a return on their investment, which only gives you a few years to figure out how to make yourself profitable.

Ah, the holy grail for all upstart MMA promotions: monetizing your product. This is the third major obstacle you face in making your company a success. First of all, you're going to need television. I'm sorry to be the bearer of bad news, but finding the right TV deal is a headache unto itself. I'm sure you wouldn't have too much trouble striking a deal with AXS TV, but given that hardly anybody gets AXS TV this isn't going to do much for your visibility. If you're feeling particularly risky with your money you could go the WSOF route and find a network like NBC Sports that is willing to sell you air time, but this is only going to expedite your financial ruin if you don't do boffo ratings that convince them to pick you up after an episode or two. Perhaps your best bet is to look at what Bellator Fighting Championships did and strike a short term deal with a smaller network in hopes you can use it as a stepping stone to bigger and better things.

However, Bellator themselves have yet to get around to tackling that pesky ol' profitability issue. With Spike TV's parent company Viacom now owning a majority share in the company, it's a bridge they won't have to cross for some time. Viacom will be happy with Bellator if they can pull in decent ratings for Spike. However, even if Bellator can stick around long term as a television product, they aren't going to be able to compete with the UFC for talent unless they can open up a new revenue stream beyond TV ad rates and live gates.

Inevitably, for all fight promotions including the UFC, this means pay per view. In order to draw on PPV you need stars people will pay $50 or so to see. This is next to impossible without the right television deal in place as a platform to build stars. Even with a great TV partner you've just come up against the biggest problem an MMA promotion can face the moment you decide to do PPV.

Now you're stepping on the UFC's turf. You better have a huge war chest because you've just entered into a struggle for survival against a promotional juggernaut that has slain every enemy unfortunate enough to cross its path. Be prepared for your make or break debut pay per view to be counter programed by a huge UFC event on FX or FOX. Know in advance that the UFC can and will poach all of your top stars with offers you can't afford to match and the fighters can't afford to refuse. Understand that the most powerful and successful MMA promotion in history will now stop at nothing to crush your dreams like a petulant child knocking down an ant hill with his dad's hammer.

Are you sure you wouldn't rather take your winnings and buy a yacht?

Follow me on Twitter @BorchardtMMA or reach me via email at steveborchardtMMA AT gmail DOT com

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