UFC comes out fighting for worldwide expansion

Ayrshire's Joanne Calderwood competes in UFC's strawweight division. Picture: Getty
Ayrshire's Joanne Calderwood competes in UFC's strawweight division. Picture: Getty
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IT’S been billed a homecoming for Joanne Calderwood, Stevie Ray and Robert Whiteford, but for their employer, Scotland’s first go at hosting the Ultimate Fighting Championship is ­another step towards global expansion as trading gets tougher on domestic turf.

UFC, as the mixed martial arts group is commonly known, is watched in more than 140 countries. However, the bulk of its income is generated in its home nation of the United States, where revenues from the prevalent pay-per-view business model have been in decline.

The perception is we are a niche sport. We are not

Privately owned by Zuffa – the holding company of US cas­ino executives Frank and Lorenzo Fertitta – UFC is not obliged to disclose detailed ­fin­ancial information. But a ­rev­iew in November from credit rating agency Standard & Poor’s estimated a 40 per cent drop in profits for 2014 as the organisation struggled against injuries that sidelined some of its highest-profile fighters from the octagon.

UFC president Dana White has been leading an international expansion drive that rec­ently helped the group win a place on the Forbes “Fab 40” list of the world’s most valuable sports brands, with an estimated price tag of about $440 million (£288m) for the name alone.

One of the main targets for growth is Europe, where former Adidas and Nike executive David Allen is in charge.

Speaking last week in Glasgow, where UFC will hold its first live Scottish event in July, Allen deflected suggestions that the international drive is a direct response to sagging pay-per-view figures in the US.

The “new model” merely taps into UFC’s existing global fan base. That includes more than three million followers across various UFC Twitter
accounts – more than FC Bayern Munich – and 16 million Facebook followers, well ahead of Formula 1’s 1.6 million “friends”.

“The perception is we are a niche sport,” Allen said. “We are not. We are much bigger than many people think.”

As for the business model, Allen highlights the organisation’s flexibility to embrace a variety of distribution channels to suit various local ­markets. This includes sub­­s­cription, free-to-view and ­digital outlets.

UFC’s ability to chop and change is down to its centralised structure. All the fighters are contracted directly to the organisation, which has full command over the broadcast production of its live events.

“If somebody like the 94-year-old Rugby Union wanted to do something substantially different, they have many different places where they have to go,” Allen said. “They have to get the buy-in of all the clubs, all the players and all the sponsors before they can move in a new direction. It is kind of like turning the Titanic, whereas we can move very quickly.”