How UFC went from $2 million to $10 billion
Can a boxer beat a wrestler? That’s the question Art Davie wanted answered. And so, in 1993, he and a few friends organized a 8 man tournament. Each person was chosen from their field of expertise: boxing, wrestling, karate, kickboxing, Brazilian jiu-jitsu. And they were made to fight against each other to see who came on top!
That’s how the Ultimate Fighting Championship originated! Surprisingly, the UFC tournament did so well that Art Davie decided to make it an annual event instead of a one-off thing. Over 86,000 people paid for its pay per view in its first year!
Soon, the sport saw fighters adapt and learn tricks from competing martial arts. And a whole new sport of mixed martial arts was born!
But by 2000, UFC was in decline. They were making losses and had to sell a lot of their assets. They even sold their domain name. When they were about to close down, Vegas billionaires Frank and Lorenzo Fertitta along with their partner Dana White bought the UFC for $2 million. Their accountants questioned their purchase because the UFC had no assets. All they were buying was the right to use the name!
But the Fertitta brothers realized that the brand was its most valuable thing.
A lot more money was spent behind advertising UFC. With their contacts, the Fertitta brothers also secured sanctioning for the sport in key states of Nevada and New York. And they got in a few sponsors too! The sport created fighters like Tito Ortiz and Ken Shamrock household names.
But the UFC never made any money. They were averaging a mere 45,000 pay-per-view purchases per year. In 4 years, the UFC made losses over $34 million!
Saving UFC
The Fertitta brothers and Dana White were nothing but persistent however. In 2004, when the reality TV show “American Casinos” featured them, their popularity shot up and they saw a spike in viewership! Seeing an opportunity, Dana White thought of creating their own reality TV show: The Ultimate Fighter. Where they would take people behind the scenes and show them how someone rose up to become a UFC fighter.
But there were no takers for the show. No studio or TV network approved the show. Finally, they approached Spike TV and said that they would put up the $10 million to make the show themselves. And that got them the green signal!
The Ultimate Fighter was shown right after WWE Raw and so it generated a decent viewership. And that’s what saved the UFC. Because that year, a record million people bought their pay-per-views!
The second wave of popularity
Joe Pompliano, the writer who covers how sports makes money, tells us that UFC started becoming even more popular after 2011. And that’s because of its smart use of social media.
While sports like NBA and NFL were penalizing their players to use social media, UFC embraced social media with open arms. And in fact, came up with an incentive program: they would pay $5000 extra to three athletes every quarter who gained the highest percentage of Twitter followers in that quarter!
UFC also hosted a half day educational workshop for 300 athletes where they were taught how to use social media well, and how to be creative with their content.
The results were phenomenal! Some of their athletes built a followership of millions of people! And as the athletes got more famous, so did the sport!
In 2019, ESPN signed a 1.5 billion 5 year contract to show UFC fights on their channel! Today, UFC is valued over $10 billion!
But what if the competition starts poaching your popular players?
Most of us frown on wasting resources in making our colleagues and employees famous. A lot of companies are even secretive about their client list and don’t publish their client success stories. Because it comes with an obvious risk. They’ll start receiving a lot of offers from competitors who would want to poach them.
But more often than not, the rewards are worth the risk. One of the reasons Harvard is considered as the most prestigious University is because they started a Harvard University Press way back in 1903. They focused their effort in making others popular, and they in return became a lot more popular too!
If you run a shoddy ship then of course this strategy is going to backfire and your employees will leave you. But otherwise, they’ll feel more empowered. Because this whole thing is a flywheel. Their growth will propel you ahead. And your growth will add to their fame even more!
And even when they do leave for other opportunities, their name will always be associated with you. Case in point: Guy Kawasaki. Kawasaki has worked for successful companies such as Google and Wikimedia and Canva. But any article written about him always mentions that he worked with Steve Jobs and Apple. Because he was Apple’s first tech evangelist. He helped promote the Macintosh computer. And Apple helped promote him.
Action Summary:
- Create tools that can promote you – just like UFC created a reality TV show to promote their tournaments.
- Show people what happens behind the scenes. Show them your processes. Reality TV shows are popular for a reason.
- Spend resources in making your colleagues heroes. Make them famous. Provide them incentives to grow their following.