It may sound obvious, but why is the UFC going global?
Sure, they already have to a real extent. And as the mixed martial arts brand leader, it seems reasonable to conclude there's more money to make, more markets to dominate, more of the sport to grow, more revenues to diversify. That much is obvious.
But no pivot is without risk. This is a true push into becoming a fully function global brand. Not all markets will respond favorably as others. Some may not respond at all. Moreover, as the company grows, can the left hand really know what the right hand is doing? By massaging international markets, could they be risking negligence here at home or the sport overall? Is this too much of a logistical challenge, a challenge that is unprecedented in the history of international sports?
To help explain the UFC's true pivot internationally and how they intend to deal with the aforementioned issues, Zuffa's Chief Content Officer (and the man once in charge of the London office) Marshall Zelaznik spoke to MMA Fighting. In this interview, Zelaznik explains the logic behind the UFC expanding this much, how they intend to nurture markets, why ensuring internal corporate communications is critical, the basic structure of overseas operations, the UFC's intention to grow the sport internationally, how they'll develop talent and more.
Full audio and partial transcription below:
True or false: the UFC sees itself now as not just where the best fight the fight, but strategically and where appropriate, a place where they also serve as a developmental league?
I think that's false, but it's a little bit compound. I think that no matter where we're putting on fights, we are going to put on fights where [it's] the best versus the best. Of course, there are gradients in the best versus the best as in any one of our big pay-per-view cards. The fight that starts the night, those fighters may not be the best in their weight division, but you know the UFC brings that sort of good housekeeping seal of approval that you know these are battle-tested fighters who deserve to be on the biggest stage.
While we are adding these events out in these regional markets, these are, without a doubt, the best of the best fighters that are competing in the market and what this expansion allows us to do is to - to use your words - develop and get access to more of these fighters so that they can get on the big stage. You've heard Dana [White] say before and you've some of the times we've had to cut fighters from the UFC. We've had for a long time very limited shelf space on where we can put fighters. These events will actually allow us to find out if some of the fighters who haven't had a chance to fight in the UFC are, in fact, the best of the best.
So, it would be the best relative to Singapore. The best relative to the Philippines. Is that a fair characterization?
I think that when we go into these regions of the world where we haven't held an event or a lot of events, Joe [Silva] has always, whether we were expanding or not, looked to try to find the best talent from that region. But you will find fighters on these cards that might even be from outside the immediate region where now we have the opportunity to get the onto cards.
In essence, the reason we like this series, which is I know where you're going, is it does allow us to develop more regional talent that otherwise might not get a chance to break through in the UFC.
Let's take a step back for just a second. UFC today is 85 to 90 percent market share of the best fighters on the planet. They own the pay-per-view space. They have a footprint in countries across the world. With all the success and all the distance between UFC and other competitors, why go global?
I understand going international to some extent, but some brands don't necessarily grow just to grow in order to preserve a greater good about their business. It sounds obvious, but I guess I'd like to hear it articulated: what is the reason for the UFC to go global in this capacity?
First of all, it's the strategy that we think will help to grow our business to even higher highs in these outer markets. When we first started our international business, we were selling, in essence, the same product that we were developing for the U.S. market. We had great success over the years when I was in London of taking our T.V. business when I started, which we were probably in 35 different countries around the world and I think within 3 or 4 years of our office being set up in London and building a team there, we got to 145 countries.
That was, in essence, selling all the same product that everyone here in the U.S. would see. One of the things we always said every time we were doing these events in these outer markets where we had big success, where the fans would come, they'd buy tickets, which aren't always cheap, they'd have an amazing time, the fighters would put on amazing fights, was that there was an appetite still for more fights. It was like Groundhog's Day a little bit as we ultimately moved into this endeavor. We tried to find ways to deliver more fights and we couldn't. When we now embark on this new initiative, it was really looking at an old problem, which was: there's insatiable appetite in these outer markets. We need to bring these live events to them. And, oh by the way, these live events end up helping driving our TV business.
I think that's a long way of saying that the reason we're doing it is, one, we're very bullish on what our international business can be and we think in order to continue to grow in this space, we have to be aggressive on how we grow our business. We think this is the way to do it. Anecdotally, if you watch what international businesses that have true international reach (outside of the sports world) in the consumer products world, if you look at their financials, you'll see that 40, 50, 60 percent of their revenues come from international markets. We look at ourselves as a global business, a global sport, and that's what we're trying to take advantage of.
Is there any precedent of this in sports? Observers suggest to me this is no different than the Barcelona soccer team recruiting talent as young as 13, but that's a significantly smaller scale.
I don't think so because I keep abreast of what other sports leagues are doing whether they're U.S. leagues or international. With the exception of football, which has many levels of participation from youth to amateur to academies to the pros and then those break down into various leagues, those are organized because of passion for sport. When you talk about, if you're looking at another U.S. sport what baseball or the NBA does, is they go in and try to build awareness and interest in their sport and then try to get people to start playing it.
The benefit we have, which is why in a lot of ways this is unprecedented, is the sport we are promoting is a sport that is organically growing around the world. There are MMA gyms. There are boxing gyms, which are turning into MMA gyms. There are jiu-jitsu gyms, which are turning into MMA gyms. There are karate gyms that are turning into MMA gyms. People are starting to become practitioners of this. There are smaller promotions being built and because of this organic growth, it allows us basically bring the UFC brand, identify fighters who have the potential to fight professionally in the UFC. It allows us to hit the ground running.
I guess the closest analogy, although I think it's a bad one, is NFL Europe. The problem with NFL Europe is there was a real lack of understanding for what the NFL product was in Europe, which is probably one of the reasons it didn't have the success the NFL ultimately desired and why it shut down. For us, the sport as Dana says, is in our DNA. It doesn't take a lot to understand who's winning a fight, so we have a product that is much more portable than some of the other sports properties.
You previously said this international series will allow UFC to find the next Conor McGregor. But didn't Cage Warriors do a really good job of that? What is the UFC solving for if these regional promoters can do this job already?
I think we turbo charge it in a lot of ways. Conor McGregor, had we started this extension of our promotion say 3 years ago, 4 years ago when we first started contemplating this, you might've seen Conor McGregor come in to the UFC a lot sooner and then he'd be on the world stage a lot sooner. Who knows, maybe he would have progressed quicker through the ranks than he is now? He's an amazing talent.
The U.K. and Ireland are interesting because they're very mature MMA markets. There's a lot of MMA happening there. If you go to Jakarta, you might have a few hundred MMA gyms. There might be one or two MMA promotions going on. There may be very quality guys there who just don't have enough opportunity to continue to hone their skills. What the UFC coming, these guys end up progressing into the undercards of some of these fights a lot quicker where there talent can be tested a lot quicker. We can watch them mature and everyone who is a part of this can watch these guys mature in their own eyes instead of having them just come on the scene as phenoms like Conor.
So, the UFC believes it can kickstart a market in the way a regional promoter, left to his own devices, simply cannot?
Yeah, I think so. I think the only nuance to that is the one the UFC is doing is putting our stake in the ground to say that we're making not only a commitment to these markets like we've had before, but we're going the extra mile to bring these markets more events, which means these fighters who are training now have a real goal to know that, boy, there's an opportunity for me to get into the UFC. This isn't me waiting for the next spot to open up on an event in the U.S.
You're not going to take over these markets in totality, but should regional promoters be worried? How much of their space is the UFC moving into?
I don't think there's a reason to worry. In fact, the high tide rises all ships. I think when we come in and start doing our events it will shine more of a light on the values in the sport, why this sport this interesting. It brings a whole world or international flavor to the events and then any of the local promoters that are operating, they'll be a lot more awareness and interest because just like our events where you have the undercard and our fans come to the fights early, they want to see who is the new talent that's coming in.
All of these other smaller promotions become, in essence, feeder leagues to the UFC and most promotions realize that. They're happy to be part of the sport and be part of the foundation for the sport. I would not be worried if I were them. Again, I think it's good for the overall business.
Is there any discussion about using this international expansion, where some of these governing bodies aren't in place yet, to experiment with different forms of cultural expression? I'm not suggesting going back to PRIDE rules, but ONE FC judges a fight as a whole. Is there any discussion of tinkering with this?
No, I think that, at least as it relates to the way we intend to present the event we'll look very familiar. You'll see a similar format to how we present it.
If we're talking about whether we adapt the rules of combat to become more culturally sensitive, I know the answer is no. We haven't spoken about that.
Look, I was on the front lines internationally. I used to have to be involved in conversations with certain people who didn't like the knees on the ground or could we put a pad on the knee or a pad on the elbow, the skin to skin contact. Are these elbows right? These conversations come up from time to time, but the reality is - and we believe strongly in this, which is why we believe in the unified rules - if this is going to be proper sport, you need to know you have the same rules of conduct as any other sport. The rules of baseball are the same, the rules of football or soccer is the same and offsides applies the same way in soccer in the U.S. here as it does around the world.
For us, we feel very strongly that we can't be in a situation where a different set of rules applies to an event in a different venue or location.
To play devil's advocate, tennis does not. Tennis has clay, grass and a standard court. Different athletes often succeed and fail based on the surface. No one is suggesting a return to stomps, but let's say with open scoring, you don't think there'd be any merit to test that out?
Whether or not is has merit or not, I'm probably not in the perfect position to discuss that. All I can say is that we're not discussing it. I think that this is an ongoing issue, trying to bring uniformity to the way judging happens and the way scoring occurs.
I don't know. I know it is an interesting discussion to figure out ways to adapt it. I know in boxing in the Olympics there have been adjustments and changes. The prospect of those things changing are not in our frame of mind as 'Oh, we can use these outer markets to sample things'. In fact, it's quite the opposite. We want to make sure we're delivering a similar product and albeit, people may have criticisms the way judging happens and the 10-point must. That's the system we're working in and we're going to continue to operate in that system.
Is there an ideal number of events? Is there a point where you say no matter how successful, we can't do more than X number of shows?
We certainly aren't talking about a number here. I know that with the expansion of these regional fight nights that we have expectations of having this grow over time and no one internally is talking about a ceiling on those. It's one of those things you watch it mature. You find out if the product you're delivering is a quality product and you keep trying to manage it. If you expand too quickly in other business, you can find that your distribution gets lacking or your quality's lacking something people are used to.
We're going to pay close attention to it. The one thing that Dana and Lorenzo [Fertitta] are passionate about is the quality of the fighters. The quality of the events and the experience. We're going to continue to try and deliver on their commitment to that.
How wide a swathe does a regional office cut, geographically speaking? The office in Beijing. How far does that, say, reach into India and other Asian territories?
We set them up by regional. If you think about the London office when I was there, we managed the world from the London office. Now what we do, the London office deals with Europe, Middle East and Africa. That's everything from Russia over into the U.K. and then you've got the entire continent of Africa and all of the Middle East.
Then when you look at our office in Beijing and the office in Singapore as well - we've got dual roles there - they do everything in the continent of Asia, all the island nations in Asia. They would in most business structures probably manage Australia and India, but we don't manage it that way. That's basically the Asian office.
Then we have the office in Toronto, Tom [Wright]'s office, who recently, we put under his remit, Australia and New Zealand.
India, for the time being, is being managed by me and a couple of other people here in Las Vegas because we have a partnership with Sony and that's something we've nurtured over time and we're trying to continue to manage that relationship from here. Over time, that could easily move to one of those other offices.
How autonomous are the offices?
In terms of the independence and the outer offices, it's something we're always trying to balance. You mention the fight cards. Sean Shelby and Joe Silva still manage the fighter development and the fight matchmaking and they'll continue to do this as it evolves. That, in essence, is one of the main ingredients for our success. The fighters and how well they perform.
When it comes to marketing and promotion, the outer offices are looked to come up up with their own strategies and their own marketing budgets. Those get blessed from here in the U.S. We have weekly meetings with those offices.
The outer offices have the ability to hire staff as they see fit. When it comes to managing the events, they're very independent. These offices can manage their events and manage the fighter movements when the events are happening.
The independence for these outer offices is growing over time, but again, one of those things about a maturing business is they always say you want to think globally and act locally. I don't like using cliches, but that's a cliche that gets used and that's what we're trying to do.
A question I get from fans all the time is South Korea and why the UFC hasn't gone there. They seem poised for UFC entry: strong middle class purchasing power, a roster of fighters, TV deals. Why hasn't UFC gone there yet?
It's funny. About 2 years ago, we went through South Korea looking at venues, knowing that the Seoul Olympics had been there. The biggest problem we have right now in Korea is the venues. Now we overcame it in Brazil and we have started talking about South Korea again because we now have a model to deal with venues that don't have the necessary infrastructure for us.
We're a lot more confident about our ability to move into some venues that may not have all of the luxuries of home, if you will. It's actually on our hit list. We don't have anything confirmed, but we are going to South Korea. I don't know exactly when. I'm not sure if it'll be '14, but it could be in '14. Lorenzo is all over it. He asked the same questions to our Asian office: why aren't we there? It ultimately comes back to the venues aren't the kind of venues we're used to being in. But again, we've now gone through Brazil, so our confidence is high to be able to manage through those.
Does every country have a timetable for what it might look like is 2, 3 or 4 years?
We were just going through our business planning now and up until the last few years we've really been growing our business very organically. We've studied the market with our TV. The fighters are there, we do PR tours with them. We watch markets develop. But now with this acting locally concept, these outer offices are building their strategies, so yeah, that's probably fair in relation to what we might consider a key country in a territory.
Effectively managing a global operation: is that the biggest challenge the UFC faces in the next 5 years?
I think it's related to that. I was employee 36, I think, in 2006 when I joined. We are close to 300 employees now. I think the challenge as the company faces as a whole is managing our growth because like any good family, which we are here, it's all about communication. As you're growing so fast and you're getting so big, it's ensuring you have appropriate communication through all of the departments so everyone knows what's happening. It's a challenge now, so when we get to the place of doing the number of events you suggested, that will be a challenge; making sure that we've created a foundation of communication and structure that will allow us to exploit the opportunities in a way that is efficient and that continue to drive our business forward.
We're doing a really good job now. I'm really proud of what we've done, but there are big challenges ahead. You've highlighted one of them.