Where's the TKO victory lap for the UFC 306 Sphere event?
Pardon us for noticing how distracted management is for fight week.
For a company that is proclaiming a record UFC gate, TKO management sure seems distracted. They’re paying more attention to other headlines and situations than they are promoting an event they are labeling as a crown jewel and elite accomplishment.
I don’t know about you, but if I was promoting an event that generated a $23 million dollar-plus gate I would be pumped as hell about it. Especially with that wretched fight card.
Instead, the reaction of management types — from Dana White to Mark Shapiro to Hunter Campbell — reveals a UFC office that seems preoccupied with a lot of other business outside of their UFC 306 Sphere event in Las Vegas.
The question is why.
Part of the answer has to deal with the fact that Endeavor is a political shop first and foremost, which means they prioritize process over substance. As long as the substance is just good enough then the process of value extraction can continue apace. There’s always a new metric and a new master to please.
Just imagine what the atmosphere would have been like if Lorenzo & Frank Fertitta were the main promoters of the UFC 306 Sphere event. The level of grandeur and importance would have been off the charts. Special would have been an understatement. Not only did the Fertittas know how to work the boardroom, they worked the business elite into buying into a company that was destined for greatness in combat sports.
They knew how to sell a title fight. They knew how to convince the public that fights were worth betting on. They got the high rollers and whales. They got a new generation of fans to abandon boxing.
The Old UFC aimed to increase sportsbook and casino-related action on fights.
All that celebration has gone out of the window with Endeavor’s Walmartification + Hollywood vibes with UFC.
With Hollywood comes all of the destructive backstabbing politics and knife-fighting that can suck the joy out of the customer experience.
Endeavor is Hollywood marketing fights. They’re not primarily fight promoters, they’re just marketing product inside the fight business.
At least Sports Business Journal finally jumped into public relations mode to brag about all the new “activation” of sponsors debuting at UFC 306. And how about Dustin Poirier being the Bud Light guest bartender? At least they’re having him do it at The Venetian rather than at a college football tailgate where that kind of thing might not go over as well.
Fans can feel the difference between Ari Emanuel & Mark Shapiro’s value extraction style vs. the style of Frank & Lorenzo Fertitta.
As we recently profiled, the Fertittas — and Dana White — sure as hell extracted value from UFC before selling the company. They extracted approximately $5.5 billion dollars worth of cash in the ownership process.
I think there’s enough money to service their $250 million dollar yacht.
So, how did UFC’s old ownership understand how to capture and celebrate the raw emotion of their success and convince the masses to buy into the UFC’s triumphs as a success they had a share in?
Something is missing from the magic formula under Endeavor’s ownership. The spreadsheets look great. But you know something doesn’t feel entirely right. Maybe you can’t put your finger on it, but you sense it.
The question is what is missing and why.
Two interesting moments from UFC 306 fight week demonstrate exactly where Endeavor’s mindset is and why there seems to be a great deal of cognitive dissonance — internal conflict if you will — with how management feels about The Sphere event and the state of the company itself.
Dana White’s Legacy Week
You’re not alone in observing The Face of UFC seemingly wanting to celebrate his past icons this week.
UFC 306 at The Sphere was supposed to be Legacy Week for Dana White. The event of all events. The event that cemented his permanent status as the GOAT of MMA promoters. A spectacle that forever changed the way business operated in the fight space.
Instead, UFC is fighting for A-side show coverage against Canelo Alvarez in Las Vegas.
Under Ari Emanuel’s stewardship of UFC, Dana White’s responsibilities have dramatically changed. As TKO boss Mark Shapiro noted on a Wednesday conference call with Goldman Sachs, it was Mr. White who ended up being a “great teammate” by accepting the UFC’s move to ESPN+ & ESPN PPV — a guaranteed revenue model that removed the promotions’ dependence on quality fight cards.
As Dana has transitioned into his new role at TKO, you can see what truly motivates him and what his comfort zone is now.
Other than the party fights in his backyard featuring degenerate gamblers and fighters begging on their hands and knees for slummy contracts, what’s there to get Dana’s juices flowing? When guys like Kevin Lee are telling Jon Anik that he’s willing to go on the Dana White Contenders Series to get back into the UFC, how can Dana not get a rush from that kind of groveling?
OK, so there are those loud and obnoxious Tiktok fight promos with whiteboards on the walls and Dana is screaming into the camera. The irony of watching Dana navigate social media today as compared to Donald Trump at age 78 (on the supposed advice of Barron) is highly entertaining.
Once you strip away the carnival barking and backyard cage matches, you discover relatively quickly that what Dana is most comfortable — and emotional — talking about is UFC’s past history and successes.
It’s a much simpler and easier story for Dana to tell in 2024. At least he gives a damn about that subject matter. His kind of nostalgia has more appeal than the fights the UFC matchmakers are promoting right now.
Jon Jones is his proverbial creature comfort item. Dana has been ruthlessly mocked on Instagram for the non-stop slurping.
It wasn’t surprising to me that when Dana White was asked about his current version of a UFC Mount Rushmore, he picked the four most obvious names: Jon Jones, Ronda Rousey, Conor McGregor, and Georges St. Pierre.
I don’t know why we are talking about a UFC Mount Rushmore in 2024 but it does fit into the overall vibe from Dana White about this being Legacy Week for him in Las Vegas. In many respects, his four overall choices demonstrate the state of play for the current UFC and the conflict between the newer fans versus the older, more experienced (and somewhat checked out) supporters.
Ronda Rousey was a feminist icon a decade ago. Today, she’s getting the Hulk Hogan treatment from the terminally online MMA Guru-style fans. The irony is that many veteran insiders and fans in the business had their own complaints about her and have demonstrated a sense of schadenfreude about how everything has played out with her legacy in retirement.
Ronda was the perfect UFC ace. She never criticized Dana publicly. Her fights were often short. They made big money. She was his pioneer for women’s MMA.
The relationship between Dana White and Jon Jones is a very funny one. They once had a Vince McMahon/Roddy Piper dynamic. Now it’s turned into a Vince/Hogan dynamic. They are at peace with each other no matter what. Both needed — and still need — each other.
Which is a far cry from the kind of relationship UFC currently has with Conor McGregor. Who the hell knows what is going on there. I suspect UFC does not think Conor will ever fight again — at least for them. They can’t ignore what a cash cow he was (and still is) because it would be an indictment against their own office for booking him for a major summer show that fell through.
This leaves us with Georges St. Pierre, by far the most interesting candidate on Dana’s Mount Rushmore. Mr. Clean/Mr. Canada was a dynamic force for UFC. He made Welterweight a marquee weight class. It’s impossible to tell the story of UFC’s rise without discussing St. Pierre’s key role as a company ace.
A loud part of the discussion about St. Pierre’s championship run in UFC revolved around opponents accusing him of doping. He — and Dana White — vehemently denied those accusations. Dana reminiscing about St. Pierre at the same time GSP’s former top student and training partner (Yukinori Akazawa) is entangled in a major Japanese MMA doping scandal is something to behold. No one will ever ask him about that story.
(By the way, we haven’t seen a single word from GSP or his social media handlers expressing concern about Mr. Akazawa’s safety in Japan.)
If you haven’t already figured out, there seem be more people interested in talking about the past than there are talking about the present and that’s a unique dilemma for UFC. The vulture capitalists at Endeavor are value-extracting at a record clip while the vocal hardcore fans are expressing disgust at what the UFC product has turned into.
As Luke Thomas masterfully laid out in his Wednesday dissertation on YouTube, UFC 306 at The Sphere is the manifestation of UFC as a fight monopoly. What other promoter could run such a venue except the UFC? They have the cash to do it when no one else does. That’s the trick question that, ironically, got Dana into hot water regarding the expenditures and finances required to run a UFC-level event at the venue.
Endeavor’s natural inclination is the Walmart machine. Know every square inch of every show. Strip it down as cheap as possible and charge as much as possible because they’re the only game in town.
They’re the monopsony. Or monopoly. Your choice.
A big part of that magic trick is diluting card quality as much as possible, running deep on volume — or “inventory” as VCs like to say — and claiming everything is “premium” to your face. What else is a customer going to know if there’s no competition to demonstrate an alternative?
Endeavor went along with Dana White’s UFC 306 gamble at The Sphere because they bought into their own hype that fans would simply go along with a lousy fight card because they’re the only game in town.
Are they wrong?
Dana's hope is that he has a 50/50 chance that the fights on The Sphere card will be good-to-great and that it will make him look like a genius ex-post facto. It won't matter because the victors write the history.
Despite being the only game in town with disgruntled customers, business has never been better for TKO in terms of guaranteed revenue streams. UFC 306 at The Sphere is expected to generate $23-24 million dollars at the gate. This really should be the final piece of the puzzle to Dana White’s landmark UFC story before riding off into the sunset.
Dana wants an Oscar, an Emmy, and a Grammy for UFC 306. He wants a documentary. Why not?
I’m sure the Endeavor machine will make sure that Dana looks as good as possible despite the fact that TKO’s internal politics are leaking into the press in various pathways as Nate Wilcox recently discussed at The MMA Draw.
So, why are the knives out for Dana over UFC 306? Why is Endeavor leaking succession plans? Why are we hearing about some unhappy campers regarding the business-as-usual margins being violated by UFC 306?
The public at large is unsatisfied because the fight card is largely a stinker, especially compared to recently booked UFC numbered events.
Endeavor is unhappy because Dana violated the sacrosanct business margins required for maximum value extraction that allows management and their overlords at Silver Lake & Mubadala to get paid. There is quite a bit of debt to pay off, even though UFC appears to be a relatively safe combat sports version of an index fund.
What Luke Thomas points out is that both UFC fans and Team Endeavor deserve what they are getting because UFC 306 at The Sphere is the perfect manifestation of what a monopoly product looks like.
"How do you consistently get better card quality without, at its core, changing the business model? The card quality could be a little bit better, on the margins. It's at where it's at because of the business model."
Endeavor worships their business model. Dana violated this business principle with the financial structure of The Sphere event.
Despite the fact that UFC & TKO will generate an insane amount of cash for The Sphere, management is not loudly celebrating — yet.
You can see that pressure on Dana White’s shoulders. He’s starting to relax — a little bit — this week but he will be happy when UFC 306 is over and Endeavor will be even happier.
The natural order of the fight business has always been about risk inside and outside the ring. Endeavor stripped the risk out of the UFC and achieved the unthinkable. Now they are so wedded to that ideology that they are afraid of taking the kinds of risks that you need to maximize your growth potential. Ari Emanuel’s version of growing the pie is through big business and big government.
What the Big Money wants is different than what the old version of Dana White would pursue.
The TKO office doesn’t give a damn about fight quality. They don’t know what fight quality is if it stared them right in front of their face. The only thing Mark Shapiro knows how to do is cut promos with Andrew Marchand and claim that every UFC event is a “premium” event and that they have more “premium” content for inventory than anyone else. It’s preposterous.
For the old Dana White, the Sphere event would have been his biggest “f*** you” to his enemies. It still should be! But the new Dana answers to the venture capitalists and they are not in a jubilant mood.
What UFC 306 at The Sphere represents is a painful yet lucrative lesson for Endeavor in terms of internal conflict. Yes, they’re making money but it’s just never enough with these people. They can’t fully celebrate how much money they’re making because they’re under the microscope of an impending Federal antitrust trial. They also can’t fully celebrate how much money they’re making because Dana’s business vision for running a show at The Sphere violated the tenets of their Business Bible.
The ghost of UFC’s antitrust lawsuit
Which brings us to a rather interesting moment of clarity involving Ari Shapiro’s right-hand man, Mark Shapiro. Mr. Shapiro appeared on a Goldman Sachs conference call on Wednesday. While UFC was beginning a week of fight festivities for their Sphere circus, Mr. Shapiro was trying to keep spirits high for Big Money investors in TKO.
Endeavor has a unique balancing act right now with UFC. They can’t admit that they’re a monopoly. And yet, they have to continue assuring investors that they won’t change their monopoly-like business practices. Say what you need to say to one audience and say something different to another audience if required.
You would actually think that the UFC 306 Sphere event could be helpful to them on a public relations front as an example of how expensive it can be to promote a fight event. Only Endeavor has the skill and resources to pull off such a project. It takes money to make money. We’re turning a profit when no one else could.
The problem is Endeavor doesn’t have that natural instinct to make the argument with UFC. They seem much more comfortable talking WWE business than UFC business.
Endeavor has tied themselves into a Gordian knot over UFC fighter pay and how much cash they extract per show. That lack of communicative foresight and self-awareness is starting to really creep up on them as they approach the upcoming antitrust trial on Super Bowl 2025 week in Las Vegas.
You can see this weakness at work in Endeavor’s inability to coherently explain either a legal or public relations strategy for working over a potential jury pool for the antitrust trial.
As we previously laid out in a strategy analysis at The MMA Draw, TKO has no choice but to launch a negative campaign against Judge Richard Boulware in the Federal antitrust court case. It’s challenging for UFC to attack the plaintiffs in the case because attacking retired fighters is bad public relations. They are seemingly reluctant to attack the plaintiff’s lead attorney Eric Cramer because he hasn’t been a major flamethrower against UFC’s attorneys.
By default, the only play UFC has is to attack Judge Boulware. Attack the litigation process. It’s all they have. They can’t address the merits of the case because it immediately opens painful avenues for scrutiny. What they have to sell to Big Money is not necessarily the same sales pitch they would use in a courtroom defending their business practices.
What makes a negative campaign against Judge Boulware challenging is a compressed calendar. The US Presidential election is sucking up all the oxygen in the room. By the time the election is over, it will be mid-November. At that point, UFC has to decide whether they want to increase their settlement offer or not. If they don’t increase it by mid-November, the hard deadline of Super Bowl 2025 week is enforced and we’re onto a trial.
Trying to poison a jury pool and create jury nullification with a negative campaign during a Holiday season is a big task.
This means that when Endeavor has moments to go on attack — like Wednesday’s conference call with Goldman Sachs — they must maximize those opportunities.
The problem is that Mark Shapiro is the wrong guy to be the legal attack dog. The more you listen to him talk, the less you believe in what he's selling. In small doses, he can hobnob with crowds from the Hamptons or the French Laundry. He speaks in platitudes but with great intensity and confidence.
The problem for Mr. Shapiro is that if the audience knows the subject matter more than he does, then his depth (or lack thereof) of knowledge is quickly apparent.
Mr. Shapiro issued three talking points on the Goldman Sachs conference call regarding TKO’s current position in the antitrust case.
First, it’s not fair that Judge Boulware rejected our proposed $335 million settlement. It’s unprecedented. It’s only helping lawyers line their pockets with cash.
He’s wrong on recent legal precedent. Several judges have rejected preliminary settlements in antitrust cases, especially in the Ninth Circuit, only to approve revised preliminary settlements later on.
It’s laughable for TKO to argue that attorneys are lining their pockets as this process plays out because the plaintiffs’ attorneys haven’t been paid in a decade. They’re not lining their pockets. TKO may be lining the pockets of their attorneys at Paul Weiss but that’s the high-priced white shoe firm they chose for representation.
Paul Weiss is the insider’s law firm for the politically connected. Karen Dunn from PW recently helped coach Vice President Kamala Harris for the debate against Trump. She’s working on the antitrust case against Google. UFC’s attorney from Paul Weiss, Bill Isaacson, is reportedly close to DC Judge Tanya Chutkan. The judge who would love to throw Trump in prison.
It’s a big club and you ain’t in it.
Mr. Isaacson has had a questionable run recently. Things backfired on him with Judge Boulware’s rejection of the preliminary UFC class action settlement. And, as John Nash recently pointed out, Mr. Isaacson finds himself in the middle of an ethics/legal spat in Federal court over allegations of sharing evidence in the Google antitrust trial.
TKO chose to hire the attorneys they are now complaining about having to pay for. They could have saved some time and money by reading John Nash, Fred Garvin, Erik Magraken, or yours truly. We had a better read on the case after class certification was granted and didn’t ask for 4-digit billable hours.
Second, we (TKO) are not going to increase our settlement offer one penny.
"Because we're not going to just be writing a bigger check."
If the next proposed settlement doesn’t start with a 5-handle, I highly doubt Judge Boulware is approving any revised preliminary settlement.
I guess we’re heading to trial. And what’s the defense strategy?
Third, we will appeal and win. Appeal, appeal, appeal.
Relying on appeal from either the Ninth Circuit or the Supreme Court is a recipe for disaster. That’s betting on hope and politics, not legal strategy.
It’s like building a retaining wall and hoping it will repel a giant tsunami after a massive earthquake. Do you want to risk billions of dollars based on relying upon someone else’s interpretation of your case?
It’s interesting that Mr. Shapiro cited the reversal of the jury’s findings in the NFL Sunday Ticket case. That was an extraordinary and shocking reversal for several reasons. It should not be considered a normal standard.
It’s also an unusual talking point. For a company like Endeavor which is in the sales business, they are curiously talking past the sale — in favor of the plaintiffs.
Of course legal counsel is going to instruct TKO to not talk about the merits of the case. The problem is that TKO spends so much time issuing public statements in the press — on the record, off record, and on background — that it’s impossible for a company like this to remain silent on the actual facts of the case.
Which goes back to the theme of this article. No matter how successful Endeavor is in business and politics, they always manage to contort themselves into painful conversations where there is some sort of internal conflict over their business philosophy and practices. Any sort of deviation leads to discomfort.
And silence on the merits of the antitrust case goes against UFC’s current instincts. It feels like every other week there’s a new UFC documentary with a new spin on The Zuffa Myth and how the company started, who they vanquished, and who deserves the credit. There is a constant obsession with rewriting the company’s history and reminiscing about how much credit certain individuals should deserve. I’ve never seen anything like it before with any other major sports or entertainment property.
It’s this constant tug-of-war about UFC’s company history and their business practices that leads to some very unusual tensions. We’re seeing this play out behind the scenes under Endeavor’s stewardship, especially with UFC 306 at The Sphere.
They don’t want you to call them monopolists. You just have to understand that when it comes to making money, know your role as the customer and taxpayer.
The machine is everything. Celebrate the machine. Leave the money printers alone.
Zach Arnold is a lead opinion writer for The MMA Draw on Substack. His archives can be read at FightOpinion.com.
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