Organizations in Trouble

Both the major orgs are in some degree of trouble. The UFC is facing attacks on all sides, from ICON in Hawaii, the IFL, the WFA, just to name the organizations buying up fighters that the UFC has spent money developing and promoting. Pride isn't bleeding fighters (the losses of Sakuraba and Rampage aside) and its pockets are still deep, but the loss of their cable contract in Japan is serious business. Today I plan to look at the model each business is using in these troubled times.

Revenues for the UFC are exploding, between TUF, UFN, whatever is going on with HBO, and an increased number of PPVs and growing PPV buys, monopoly rents are coming in like there's no tomorrow. Much of this money is surely going to grease the wheels of further deals, and more promotion, but some of it is getting kicked back to the fighters.

Rival leagues in sports cause this. When the UFC was the only game in town, they could pay whatever they wanted because they were the only ones hiring fighters. Just like baseball's reserve clause, when one has an effective monopoly in a sport's top league, profits go primarily to the owner of the league/team. When players gain power because they can switch to another league/team, prices don't go up (despite the claims of every baseball team owner in existence) the owners just get a smaller share of the profit pie. The prices are invariant here because they've already been set to maximize profit, the only thing that changes is the power relationship between the players and the owner.

That's why the UFC's solution to their problem is so interesting. A fighter like Chris Leben 2 years ago has no power over the UFC, sure he's a solid fighter and a rival league would be happy to have him, but they're not going to get into a bidding war for him. A fighter like Chuck Liddell or Randy Couture, however, did have this power. TUF means that Forrest Griffen sells like Couture. The UFC has created a two-tiered system this way. Couture, Ortiz, Liddell, these guys are getting paid big money contracts, as they'd be paid in any other organization, because that's what they're worth. They have huge drawing power created by their skills, and the UFC has to hold on to them. The odd part is the aforementioned drawing power of Griffen. Forrest is a product, not of his own skill, but of the TUF fighter machine. I'm not decrying his skills, but he is what he is today because he signed the dotted line and the UFC put their machine behind him. The key thing here is his signing on the dotted line. Forrest is a steal now. The guy is getting paid less than what Matt Lindland was being paid, per fight, with that “six figure” retainer spread over 3 years, and he's as big as Ortiz.

We all know that the UFC has many of these guys set up, and it has its hooks in deep with all of them. It owns these guys, and its banking on them for its future. Sure it's bringing in free agent lightweights, a weight class chronically underpaid in every organization, and I'm not going to talk about the heavyweight division, because there might be children reading, but the UFC is dropping Ivan Salaverry and Matt Lindland and replacing them with Nate Quarry and Chris Leben. Another factor worth considering is the reject TUF guys. Bobby Southworth, Lodune Sincaid, half the IFL. All these guys are getting face time and drawing (some) buys for other organizations, on the UFC's promotional dime.

Will reality television really bring in new stars for the UFC, or two years from now will we have the hardest working crew of contenders lining up to get knocked out by millionaire champions, for 6,000 to show. Of course, Rich Franklin will only be halfway through his contract by then, so he'll still be earning less than Mayhem Miller is getting to fight for Hawaiian crowds. I guess we'll have to wait for the proof to come out.

Pride doesn't bleed fighters a) because they have more money and b) because they rehab their fighters in-house. Ivan Salaverry lose on national TV? Toss him out on his ear, if he wins in other people's promotions, Dana White will consider bringing him back. Same with Baroni, Robbie Lawler, Nick Diaz, etc. Crocop get his ego hurt by Kevin Randleman? Pride gives him some pro-wrestlers (or the ever-durable kanehara) in a Bushido show. Granted, Pride USA seems to have chased off Rampage and Bas, but I'm pretty sure Sakuraba was whisked away on a flying carpet of yen notes in large denominations. Prides' problem is needing to make up for the loss of revenue from their missing PPV contract, without cutting production values too much.

The solution: raid shooto hardcore and sell Bushido. What do Japanese fans like more than japanese pro-wrestlers or judo players? Japanese fighters that have the skills to embarrass foreigners and be champions. Meaning the lower weight classes. It's cheap too, despite being the most professionally-run MMA organization in the world, Shooto isn't overflowing with cash. Gilbert Melendez was paid $3,500 for his win over Naoya Uematsu, and he was the number one contender. His, and other recent signings point towards Pride playing around with the idea of an official 143lb weight class through superfights at contract weights lower than 160, much as happened in the early Bushido shows prior to the codification of the weight classes.

For Pride, the question is whether the smaller Japanese fighters can draw big. Despite the incredible quality of the Bushido cards, more fans buy tickets to see the thundering heavyweights. Will Japanese blood outweigh foreign mass?

My only prediction is that we're in for a serious out-of-the-ring bloodbath on America's west coast. As fans, we can only hope it leads to more fights and more cooperation between top leagues.