You are no longer the UFC's primary customer
If this was bankruptcy court, fans would be ranked low on the list of creditors.
The primary lesson from UFC’s recent Fight Night event in the Kingdom of Saudi Arabia is that you, as a fan, are no longer the most important and cherished customer in Hunter Campbell’s UFC office.
You would be lucky to be ranked third in the pecking order.
In the world of Ari Emanuel, Silver Lake’s primary fight customer is now the government. State governments, the Federal government, and world governments.
This was made abundantly clear on Monday morning with TKO’s announcement of a gigantic government contract signing with Indianapolis to bring the Royal Rumble, Wrestlemania, and Summer Slam events to Lucas Oil Stadium.
The price tag to bring these three mega-events to Lucas Oil Stadium has to be in the tens of millions of dollars. Combined with sponsorship deals, we are perhaps talking 9-figures of guaranteed revenue streams.
It is incredible to watch this kind of taxpayer-funded corporate welfare that doesn’t involve building a stadium or buying real estate.
What kind of reaction did this news produce? Universal love and praise in Indianapolis. Civic pride is a strong tool of persuasion and often the most exploited.
At a time when the Carolina Panthers and Jacksonville Jaguars are drawing heat for getting taxpayer welfare to finance new stadium ventures, TKO is getting zero heat for their major payoff in Indianapolis.
Why? It’s all about visual persuasion. A rusty stadium is an eyesore. It’s a concrete mountain. Sports fans are constantly reminded of what a terrible investment a sports stadium is for a community.
A WWE or UFC government contract, however? The contract is not a visual. It’s content. It’s not the stadium — it’s the event in the stadium. It’s a feel good moment. Your friends and family are going to attend the show. It’s a celebration of civic pride.
And taxpayers have no veto power over these TKO contracts.
Now do you see why we spent the last year telling you that Ari Emanuel was converting TKO into a government contractor the likes of Boeing and Raytheon?
Nobody else in the history of the fight business has even attempted what TKO is accomplishing right now. No one.
Ari Emanuel’s unique skill set of being a major player in Hollywood, television, and American politics has allowed TKO to pull off the unthinkable.
As if you needed any more evidence of UFC as a political contractor, ESPN sent out an alert last night regarding increased involvement by the Kingdom of Saudi Arabia for the UFC 306 event in Las Vegas. It’s UFC’s unique event at The Sphere in which Dana White has been publicly agonizing about how expensive it has been to put together.
It was quite a political and business decision on 9/11 week for UFC to have a “Riyadh Season” event in Las Vegas. Now, the relationship has quickly deepened between the UFC and KSA. The Kingdom has more marketing involvement in the event:
Riyadh Season Noche UFC. At the Sphere. For Mexican Independence Day?
We weren’t warning you about TKO morphing into a government contractor to make ourselves feel good or feel smart. We were warning fans ahead of time about what was coming.
The fans’ interests are our interests, which — at this point in time — means we are more sensitive to our readership than the UFC office is to their loyal PPV and ticket-buying customers.
Government contracts, media outlets, talent agencies… and then maybe fans
One year ago, we embarked on a consistent article campaign to stress the business concept that Ari Emanuel was converting UFC into a taxpayer vampire. The label “government contractor” might fail the political persuasion test but it’s a dead accurate label nonetheless.
The reason this is so important to fight fans is that once it is understood that this is the TKO business model, fans may discover the limits of their purchasing power in relation to influencing the course of UFC matchmaking.
Ari Emanuel knows politics and celebrity. That is his natural DNA. He is hard-wired to see everything in business and life through this prism.
Only Ari Emanuel could take an ultrahazardous business with a 99% risk profile and strip the risk out of it by converting the front office into a political shop.
The UFC’s primary customers are now politicians. Fans, as taxpayers, are financing all of their shows and getting zero decision-making power in return. Not only that, fans have no veto power over these contracts.
As the recent legal fight in Texas over a FOIA request showed, fans will be lucky to even know that these kinds of corporate welfare payouts exist, much less find out how much of their tax dollars went into Ari’s pocket.
UFC is becoming a welfare king.
What does it mean for you as a fan? It means the quality of fight cards isn’t likely going to improve any time soon.
The biggest UFC cheerleaders - the ones you see on YouTube celebrating spending thousands of dollars on tickets for Vegas or MSG events - will eventually smarten up to the fact that they mean absolutely nothing to the UFC office.
They'll delude themselves into thinking that they have some sort of super-secret magic line of communication to the powers-that-be. It will take these individuals two to three years to wise up.
Once they do wise up, they'll be out thousands of dollars and have given UFC tens of thousands, if not hundreds of thousands of dollars worth of free publicity.
UFC will have amassed hundreds of millions of dollars in government contracts with horrible matchmaking that taxpayers will have paid for.
The more money you spend on UFC and WWE, the bigger the financial sucker you are. I realize that stating this is the equivalent of a vegan pushing a PETA agenda at a 4th of July BBQ party but somebody has to say something about how taxpayer money is being spent.
Fans are spending more money on a product and watching both their purchasing and political power diminish. It’s an amazing development to watch.
TKO has made it a priority to place politicians first and fans last. They only need a baseline of steady fan interest to increase the size of their government contracts. I’m sure the Endeavor office would label this a “trade secret.” Since TKO’s paymasters are politicians and not customers, it’s a lot easier to be a pig at the public trough.
Ari Emanuel and Silver Lake want guaranteed money. Government contracts come first. Then come the major media platforms — themselves often in bed with the Feds through lobbyists and Hollywood connections in the form of regulatory capture.
UFC’s government contractor model expanding into media rights
Once you lock up guaranteed government cash, then you have to lock up guaranteed media cash. In a streaming environment, that is nearly next to impossible given how fast the rate of extinction appears to be on the horizon. (See: Paramount and Warner Bros Discovery.)
The clear king of guaranteed streaming income and revenue is Netflix. It is no surprise that Ari Emanuel wants a deep partnership with the one streaming entity that is making money and dominating world markets.
WWE’s new deal with Netflix was a blueprint of what’s likely to come with future UFC programming deals. Netflix is dabbling in NFL media rights but finding out quickly that, like Amazon, it’s hard to build your own production team and media ensemble.
You don’t have those problems with Ari Emanuel. Endeavor/TKO is its own ecosystem. They package and bundle everything into one giant service. It’s perfect for Netflix.
In return, Netflix offers TKO a chance to go live in so many different countries at one time.
A likely move to Netflix would indeed solidify a model in which UFC could shift their current PPV format into the PLE (premium live event) format that we currently see with WWE on Peacock.
The end of PPV, the end of ESPN+?
ESPN needs UFC. As Sports TV Ratings on Twitter noted yesterday, ESPN is down to 67 million cable homes in America. UFC going to Netflix would doom ESPN+. What is the value of ESPN+ without UFC PPVs? Raising prices repeatedly is not going to serve Disney well.
Ari Emanuel and his paymasters at Silver Lake want guaranteed cash flow. They’re likely going to get it with the king of streaming, Netflix.
From one monopoly to another. One of Netflix’s biggest allies happens to be Donald Trump’s former DOJ antitrust point man, Makan Delrahim. Makan Delrahim was a former lobbyist for the UFC.
Now you know why Ari Emanuel and UFC management would be thrilled to see Mr. Trump return to the White House.
The only question is whether UFC can escape the wrath of European antitrust laws. It won't hurt to have both the UAE and Kingdom of Saudi Arabia backing TKO.
It wouldn’t hurt to have actual European governments buy the fight shows they are supposedly overseeing antitrust enforcement over, either.
This is why we continue to stress that the customers that matter the most to TKO in 2024 are not the fans. The customers that matter are politicians, regulators, world governments, and major media tycoons.
Once Ari convinces them to buy his sales pitch, there is no system of checks & balances to stop the transactions. The only check is a fat one sent to TKO to cash and pay their top bosses through management fees and stock dividends.
What a Trump victory would be worth to UFC
In order for this TKO business model to blossom and stay legally secure, Ari Emanuel needs as many political allies as possible. He has the blessing of Utah Governor Spencer Cox, who just won his primary on Tuesday night.
Utah has a growing business portfolio building with TKO. Utah 2024 voters look a whole lot more like Bush Republicans than Trump Republicans, which works just fine for Ari Emanuel. He has no problem navigating the waters with both political stripes.
Getting Donald Trump back in the White House would be a major insurance policy for TKO.
Should President Joe Biden win a second term, UFC & WWE would have to be somewhat concerned at the prospects of the Feds - through Lina Khan’s FTC - pursuing antitrust action.
We already know that TKO has a tentative settlement proposal with retired UFC fighters valued at $335 million dollars on the table.
That proposed settlement is in front of Judge Richard Boulware, who will have his next scheduled court meeting on July 12th to determine whether or not to issue a preliminary approval.
It’s one thing to settle a private civil antitrust action. It’s a different ballgame when the Feds pursue litigation. Their budget and resources are endless.
If Donald Trump returns to the White House, there will be a zero percent chance of TKO facing Federal antitrust scrutiny. That alone is worth hundreds of millions of dollars in political protection.
Then throw on top of that the prospects of a second Trump administration dishing out tens, if not hundreds of millions of dollars in prospective government contracts toward TKO in the form of sponsorships and public-private partnership deals.
These could be the types of deals in which you would have to learn how to translate the language in the Federal Register and lobbying records into easy-to-understand English.
It’s a big club and the fans ain’t in it
The point of highlighting all of these sources of guaranteed revenue is to demonstrate that the purchasing power of fans is dwindling. That, in turn, means fans have less influence on matchmaking and product selection.
Not every location is like Nevada where a promoter has to give fans the option to refund tickets purchased for a canceled main event. Ask the ticket scalpers how they are feeling this weekend. Good luck to fans who bought tickets through third-party platforms and are discovering it’s not that easy to get a refund.
The business lesson UFC will take away from Conor McGregor canceling his fight date is not to build up a star to the point where that fighter has too much leverage and is uncontrollable.
With both government and big media in control of guaranteed revenue sources, it means fans face the prospects of a take-it-or-leave-it situation. Individual fans may burn out, but someone will be right there to replace them.
Will fighter pay disproportionately shrink versus growing revenues?
Massive amounts of guaranteed revenue from government and media sources should trickle down to the fighters and wrestlers who make TKO what it is, right?
Don’t bet on it.
Barring a rejection by Judge Richard Boulware in Las Vegas of the pending UFC antitrust settlement proposal, there is likely to be no deus ex machina that can stop the widening disparity in bargaining power between TKO talent and UFC management.
Fighting for $5k to show and $5k to win for a bottom-feeding fight? It will only take a few rich high rollers at the APEX to cover that cost.
Imagine making $50,000 to fight on a UFC show that generates $25 million dollars of guaranteed revenue.
There are tens of thousands of humans on this planet who would love to be a WWE wrestler or a UFC fighter. As long as this dynamic exists, Ari Emanuel will always maintain his leverage. His entire life is building a machine that knows more about what any athlete is worth than the players involved can possibly understand.
So how do you get attention and eyeballs in today’s UFC business landscape?
In Ari Emanuel’s world, fighters understand that the only way to create buzz and leverage is to become political actors. Ari may not understand fighting or the history of fight sports but he understands politics and political messaging.
When fighters make “outrageous” political statements and stream non-stop stupidity on podcasts, TKO is thrilled. They understand that American politics is the king of soap operas: the national spectator sport.
Many UFC fighters understand that the way to get cheap heat is to push a pro-Trump message. The same UFC fighters pushing Ayn Rand, Austrian economics, and anti-socialism messages are about to find out that a second Trump term in the White House won’t equal an automatic pay raise.
Can fighters increase leverage without government intervention?
We’ve seen several top prospects recently sign with PFL or other organizations claiming that they want to get “a few bags” before signing for the U Fight Cheap operation. There are two ironic points regarding this development.
First, can fighters & management really be sure that the non-UFC promoters they signed deals with are truly going to pay what they’ve promised? Or will fighters have to “re-negotiate” their contracts and extend it to get paid what they were initially owed in the first place?
Which highlights the other great irony — one that UFC itself pointed out in its antitrust litigation battle.
If you think UFC contracts are bad, wait until you see the competition’s contracts with all of their options clauses and intellectual property requirements.
If fighters can’t turn to rival promoters to get paid a fair amount of money while they’re developing their skills, where are they going to turn to?
In the environment that TKO is fostering with massive government contracts, fighters may very well be forced to turn to politicians and leaders in world governments to be their representatives at the bargaining table.
It could be the difference between whether or not you get booked for a major event in a location like Saudi Arabia or Abu Dhabi.
Think the current battle over conflicts of interests with “friendly” UFC managers is bad enough? Wait until fighters start recruiting leaders of oil money to negotiate on their behalf.
Put yourself in the shoes of a current fighter. You see that UAE has massive investment in Silver Lake and Endeavor. You see the Kingdom of Saudi Arabia heavily involved in boxing and wanting to build a footprint in MMA.
They’ve seen Mark Zuckerberg pay for a UFC APEX event and training sessions with wizards like Mikey Musumeci. What message would you take away from all of this?
Until fighters fight fire with fire and engage with Ari Emanuel on a political level, nothing is going to change economically.
Study the past investment of those with financial resources regarding fighter recruitment and development: Ted Ehrhardt of Team Takedown with Johny Hendricks; Dan Lambert with American Top Team.
These individuals spent millions of dollars to train and invest in some of the very best combat sports talents in the world.
Now imagine what the financial barriers of entry are in the 2024 TKO landscape. Throw in the UFC Performance Institute training to the mix and suddenly the old ways of doing business don’t make as much sense.
Despite UFC having hundreds of fighters under contract and participating in Dana White Contenders Series fights and Road to UFC fights in Asia, there is not enough financial pressure on UFC to pay more for better talent.
Everyone wants to be a UFC fighter. There are only so many slots open. The UFC has hundreds of guys under contract. They just turned away someone as valuable as Kyoji Horiguchi.
As long as UFC can maintain a certain baseline for fighter development and fan interest, their business model and talent practices will continue as is.
Given these kinds of arrangements and the pressure for “value extraction” by Silver Lake in the name of “cost savings”, do you expect fighter salaries to go up… or go down?
The fighters barely have a say in the matter. Fighter managers face a take-it-or-leave-it proposition. Fans are finding out that their own negotiating power is diminishing as well.
UFC sees themselves as Boeing or Airbus. If you want to fly, you have to choose one of those two airplanes. If you want to be a fighter, you fight in the UFC and you watch UFC fights as a customer. There is no other universe.
Now what we do?
There’s no point in focusing on all of these developments if there wasn’t a path to at least make your voice heard.
The problem is that formulating a battle plan to gain back our bargaining rights as both fans and fighters requires extensive attention to detail. This is not going to be an easy fight, but there is an obtainable path in achieving some small victories.
In future articles at The MMA Draw, we will explore some strategies — media-driven, financial, political, and legal — that we can all pursue to obtain some of the power that we have lost in this new TKO business environment.
There’s no need to cry about the situation. It is what it is.
Ari Emanuel is a genius.
He’s a once-in-a-lifetime operator in combat sports. He understood how to take a brilliant marketing plan by Lorenzo & Frank Fertitta and turn it into a government welfare monster.
You can enjoy UFC and WWE programming but also acknowledge that you should have more of a say in business matters because it’s your taxpayer money financing the operation. Your tax money is going to Wall Street investors.
Those investors, in turn, are paying Ari Emanuel and Patrick Whitesell and Silver Lake big management fees and dividends. They’re making hundreds of millions of dollars on paper.
It doesn’t mean that we, as fans, have to settle for sloppy seconds — and we won’t. We just can’t rely on others to do our dirty work. No prospective judge or attorney or money mark is going to save the day. Voting out politicians isn’t going to work in this game of whack-a-mole, either.
There is a path for change but it is going to require actors from outside the industry.
You may not be interested in political warfare but political warfare in combat sports is interested in you — and your tax money.
Zach Arnold is a lead opinion writer for The MMA Draw on Substack. His archives can be read at FightOpinion.com.
gotta say you nailed this one early, Zach.
yea this looks like its right on the money, ever since i saw them meddling in boxing i figured there was a wider media strategy for the monarchy here, its honestly quite effective too. MMA fans are already politically primed to slurp up bullshit from a monarch and repeat it as a sign of true fandom. This is especially clear when you see how many mma fans parrot the Crown Tomato