Issuu on Google+

SPECIAL REPORT | MMA

Introducing the challenger Such is the strength and strategy of the UFC that the numerous challengers to the MMA promoter’s mantle over the years have either crumbled or been ruthlessly destroyed. Bjorn Rebney’s Bellator brand, now the clear number two in the market, looks set to break that mould. By Tom Love

P

opulated by hot-blooded presidents and gunslinging superstars who shoot from the hip, much like the sport itself, the industry behind mixed martial arts (MMA) is a volatile one. Following the sport’s resurgence in the mid 90s – largely thanks to organisations such as the Ultimate Fighting Championship (UFC) and the Pride Fighting Championships in Japan – countless promotions have risen in a desperate attempt to cash in on a worldwide MMA boom and, after a brief spell in the limelight, nearly all have been banished to the history books. Indeed, though there have been numerous pretenders to the UFC’s now well-established crown, few properties have survived more than a few years before ceasing their operations entirely, with notable recent casualties including the likes of Affliction Entertainment, Elite Xtreme Combat and BodogFight. And for those who have experienced limited success within the MMA industry, an alternative end can be found through the acquisition of their assets by the UFC’s parent company Zuffa, a fate that has so far befallen the World Fighting Alliance, the International Fight League (IFL), World Extreme Cagefighting, the once world leader Pride and to a lesser extent Strikeforce . However, there is a third outcome. Based in Chicago, Illinois, the Bellator Fighting Championships has slowly but surely been carving out a slice of the US MMA market to the extent that it is now held up as defence against claims that the UFC operates a monopoly on the sport. As the organisation’s chairman and chief executive Bjorn Rebney explains, “There are literally two substantial players in this space, there’s obviously the leader, which is the UFC, and then there’s us.” As to the reasons for Bellator’s

“There are literally two substantial players in this space, there’s obviously the leader, which is the UFC, and then there’s us.” continued existence in an industry where so many others have failed, Rebney highlights sound business principles and a realistic strategy for growth as the key to success as opposed to “pie-in-thesky pay-per-view (PPV) projections or otherworldly sponsorship assumptions” that promotions past have relied upon. “When I first started building Bellator, when I first started constructing the initial business model and creating the first projections for what I believed the company would do – those numbers were based on reality,” he says describing the process which saw him leave his post as president of promotional company Sugar Ray Leonard Boxing to establish his own MMA promotion in 2008. “I had spent many years promoting live fighting events, dealing with commissions, selling content internationally, structuring television deals, signing fighters to longterm contracts, promoting those fighters, etc. I knew what the real costs were and I knew what the real potential was in this industry. I understood it because I’d been in it.” Rebney believes the lack of experience within the fight sports industry is the overriding reason for the successive failure of countless promotions. “No disrespect intended to some of those other people, and I don’t mean to be flippant, but when I go to the dentist’s office what he does looks remarkably simple but I never go home and try it myself,” he says. Indeed, in the case of Affliction Entertainment and

BodogFight, while Affliction is a popular MMA clothing brand, BodogFight was run under the brand name of an online entertainment company. “One of the other things you have to look at,” he says, moving on to the failings of other properties, “is that EliteXC and the IFL were public companies. So, as someone who understood this industry, I did a lot of due diligence and pulled a lot of the information off of available websites and it became completely obvious to anyone who understood the fighting sports business, as it related to television and venues and other potential income streams, that they had no chance of succeeding. It took me one read through and it became very obvious that those models would fail. They didn’t have any long-term pliability. To a large extent, they were pipe dreams. “So when I was constructing the plan of Bellator I spent a long time looking at the failures as well as the successes. That was absolutely key for us because it kept a very tight control on what I believed could work and what I believed very strongly wouldn’t. We didn’t go out on a limb and spend millions of dollars signing fighters that we thought could create a market for our brand,” he says – a notable failing of Elite XC, whose last disclosed payroll saw the promotion dish out well over US$1 million to high-profile stars, a figure that does not include often lucrative bonuses. “Instead, we built our brand from within based on fighters that we created on our own dime.” In that respect,

74 | SportsProMedia.com

074-077_Belator_v1.indd 74

06/03/2012 15:29:31


since launching the first instalment of Bellator in April 2009, the promotion has cultivated a respectable roster of ‘home-grown’ talent with many of the organisation’s top fighters – particularly middleweight champion Hector Lombard and lightweight champion Mike Chandler – coveted by the UFC and its fans. What’s more, owing to the type of contracts signed by those under its banner, Bellator has ensured that, though its brightest stars doubtless have the ability to cut it in the UFC, the notion of fighter poaching is of no concern at this moment in time. It is a reassuring thought for the minor league brand given the reliance of the fight sports industry on the ability of fighters to turn casual fans into paying customers. In Rebney’s own words, “They’re the fuel that makes the whole machine go.” “When we created our contracts they were long-term agreements – I’d imagine it’s very analogous to what the UFC does,” he says. “When we sign a fighter, we sign him on a two-year period with options in that agreement that – if he achieves a certain level of success and makes hundreds of thousands of dollars fighting for us – allow us to extend that agreement so that as he does better with us and is on television more and makes more and more money, we have the opportunity to have him continue to fight for the organisation for a longer time. It means we can see a return on that investment of time and energy and TV spots and promotion and marketing and advertising that we do behind him. “Equally,” Rebney adds, “if those contracts do come to an end then we’ll have an exclusive negotiating period which lasts a series of months and if we’re unable to do a deal then we’ll have what’s called a ‘right to match’, which is exactly what the UFC has and what most fighting sports promotion companies have with their athletes. So that if an athlete goes out and gets an offer from another promotion we have the ability to match it and if we choose not to match it then he’s free to go to another company.” However, though Bellator has, to a certain extent, the power to rebuff the advances of the UFC, the Zuffa-owned promotion remains the biggest threat to the Bellator brand’s continued existence.

SportsPro Magazine | 75

074-077_Belator_v1.indd 75

06/03/2012 15:29:37


SPECIAL REPORT | MMA

And, while the two organisations remain on opposite sides of the cage, albeit in different weight categories, Rebney has no qualms in making his admiration for the UFC well known. “Probably more than anything I have a lot of respect for the risks that they took. Regardless of how wealthy you are it takes a fair amount of chutzpah to be willing to put US$45 million dollars at risk to try and build something,” he says in reference to the UFC’s level of debt as recently as 2005. “If you’re an MMA fan it’s pretty hard to say that you don’t like what the UFC does. Well, I am and I do,” he adds pointedly. “Really from the very infancy of mixed martial arts I have been a fan of the sport. I had been one of those guys early on that used to watch the early incarnations of the UFC before anybody knew what it was. There was no MMA industry at the time; when you said ‘MMA’ to people they thought you were talking about mergers and acquisitions,” he chuckles. “Then, lo and behold, in April 2005 a little known channel called Spike TV launched a reality television show called the Ultimate Fighter and it gave birth to an industry. Literally when overnights came in after the first show it opened my eyes to the fact that there could potentially be the opportunity for somebody like me to get paid to do what I had been paying to do for a number of years. That’s when I really started thinking about taking my knowledge and expertise that I had garnered after many years of working in the fight business and transfer it to what was becoming an industry.” Though he openly credits the UFC for his own inspiration – and admits to having bought the previous weekend’s PPV – Rebney insists that creating a carbon copy of the promotion was never the way forward for his brand. “There are some elements of what the UFC has done which I think are terrific and then there are other elements of what they’ve done where we try to differentiate ourselves in a fairly substantial way. “The UFC follows a model called ‘matchmaking’. That model is one where their league matchmaker sits behind a desk and decides who fights who, for what and when. It’s a subjective decision and that’s the way the organisation works,” he says, later citing a lack of

“The most exciting meetings that I ever have are the meetings at Viacom’s offices with the guys from Spike Network.” objectivity as a major weakness in boxing over the years. “Our model is completely objective; we follow a very simple tournament-based format, where if you progress to the final and win then you walk away with a US$100,000 cheque and the right to fight for our world title. It’s a simple concept that has been a mainstay in sports since sports’ infancy. It doesn’t matter how good your hair looks or how nice your teeth are of if you’re dating a supermodel, all that matters is, when that cage door shuts behind you, whether you walk out of it with a W or an L. “When I set about creating Bellator, I didn’t want to change the cage environment or the rules because that’s what consumers and fans like myself were comfortable with. What I did want to change was the very essence of what philosophically made our organisation what it is. I wanted to change the way that the sport worked and that’s what we’ve done. It’s allowed us to go from the number five player in a rapidly evolving and fast-moving segment of the sports entertainment arena, to four, to three and now to two.” In Rebney’s mind, that year-on-year rise through the ranks of the MMA league table can be attributed to the accuracy of his initial projections. “There was a real model behind how the evolution of the brand would occur and thankfully three years in the projections that I made and the model that I put together was pretty accurate and so we hit the numbers and the progression occurred as I thought it would and we’ve got our long-term future completely assured.” His last sentence is delivered with a fair amount of relief, for while Bellator is now widely regarded as the number two promotion on a worldwide basis, as history has proven time and time again, the road to success in fight sports is fraught with danger. Rebney, however, does have good cause for self-belief. In October 2011, shortly after the UFC announced its programming would move

from the Viacom-owned Spike to Fox and its network affiliates, Viacom purchased a majority stake in Bellator. “The Viacom agreement provides us with a tremendous amount of confidence. Formerly, the challenges were economic challenges based around the fact that, to a large extent, we were funded by investment capital. Today we’ve reached a point where we’ve achieved a cash-flow break even position which I think only one other MMA promotion has been able to achieve and it sure does lower my blood pressure.” Indeed, with it giving the media group a vested interest in the success of the Bellator brand, Viacom’s involvement affords the MMA organisation much needed breathing space from a cash-flow perspective in addition to the further benefits of promotion across the Viacom family and increased production quality. “To have one of the largest media conglomerates on the face of the earth – whose content reaches 600 million consumers around the world through brands like MTV and Nickelodeon and Comedy Central and Paramount Pictures – as your partner in a venture like this is a dream. “We’re moving to Spike Network in ten months’ time,” he says, speaking in the latter half of February. “It’s a channel that, given their expertise and knowledge as catalyst to the crossover of MMA into the general market, has really become synonymous in the minds of US-based viewers and consumers with MMA. They really understand this space better than anyone and they’ve got the track record over the last six years to prove it. “The most exciting meetings that I ever have are the meetings at Viacom’s offices with the guys from Spike Network. A lot of people’s parents will tell them, ‘Be the smartest, be the best,’ but my mother always told me: ‘In business, strive to not be the smartest guy in the room. If you’re going to succeed, surround yourself with really smart people who know more about their areas of business than you do.’ And

76 | SportsProMedia.com 77

074-077_Belator_v1.indd 76

06/03/2012 15:29:37


“We built our brand from within based on fighters that we created on our own dime,” says Rebney of the likes of middleweight Hector Lombard (middle) and lightweight Mike Chandler (top)

man, is that the truth. To be in meetings with these guys on a weekly basis, and to sit with them and talk about how to evolve the programming and how to get a better connection with consumers, is a gift. I’ve been in the TV business for a lot of years and I’ve never had this kind of working partnership and relationship with people who know the space that I’m working in so well.” Asked about the differences fans can expect to see when Bellator airs on Spike in 2013, Rebney explains, “As well as massive promotion behind the shows

and increased production quality, there’ll be a lot of evolutionary updates to what we’re doing from a content, delivery and distribution perspective that will just continue to build the brand. “As the UFC and the Ultimate Fighter have proven, being successful in this space is not just about delivering live events. It’s about the shoulder programming and the connectivity with consumers through alternate forms of television, whether it’s a ‘best of’ programme, a behind-the-scenes show or some sort of digital interactivity. Those

are key, key pieces in building a brand and getting consumers more connected and more devoted to fighters, who really are the centrepieces of what you’re doing. MMA consumers live online. They live in a digital universe and so to be able to traverse from both the televised universe and the digital universe and back and to be able to have a more interactive fan experience is something you’ll see an awful lot of as we start to make the transition to Spike. “Thanks to Viacom’s majority ownership, those issues that I’ve had to deal with since I created the business plan and started pitching it to investors are gone. Now it’s an execution issue, it’s a refinement issue and from a business perspective it’s just about the greatest gift you could have. We’re at this stage now where we’re just looking to make every aspect of the business more exciting, more entertaining, more connected across multiple platforms. We’re partnering with Fremantle Entertainment Worldwide on a five-year alliance to distribute all of our content internationally and the commitments they’re getting out of panregional broadcasters across the globe are just spectacular,” Rebney says with some degree of excitement. “I really think that the potential for this company’s growth in the next two to five years is unlimited.” Indeed, though the MMA industry remains ever-changing, with new promotions staking their claims on a seemingly never-ending basis, for Bellator the business is no longer a fight for survival. Having proven its worth through five seasons of tournaments, and with season six shaping up to be “the strongest season ever”, in the years to come it appears that the Bellator brand – under Rebney’s guidance, Viacom’s backing and Fremantle’s distribution – is looking to hold onto that number two slot while at the same time close the gap on the market leader. “Sometimes when people get into business like this, they start to talk about exit strategies. To be honest with you, I’m the chief executive and chairman of a company whose business it is to put on events that if I wasn’t the chief executive and chairman of I’d pay to go to. I’m not looking at this from an exit strategy perspective.”

SportsPro Magazine | 77 76

074-077_Belator_v1.indd 77

06/03/2012 15:30:03


Bellator - Introducing the challenger