The CBS news program 60 Minutes recently aired a segment on Luxottica, the conglomerate who has a virtual monopoly on the eye wear business. Name a popular sunglass or prescription frame brand and there's a good chance that the brand is owned by Luxottica. Ray-Ban? Luxottica. Oakley? Yep Luxottica owns them too. Luxottica didn't just buy these companies and hope to coast off that brand name's reputation, they improved the business operations and raised the reputation of the brand thus increasing the value of their investment. Ray-Ban went from a $30 per pair gas station brand to the top selling premium sunglasses brand in the world today.
Just as Luxottica is the leader in eye wear, Zuffa is the leader in the sport of mixed martial arts. It is staggering to consider how much the UFC has grown since Zuffa's purchase of the property in 2000 for $2 million. Along the way, Zuffa has purchased a number of other MMA companies during its ride to the top: IFL, WFA, Affliction, Pride, WEC, Strikeforce. Some of these purchases were made to simply acquire the video assets and/or fighter contracts of a company that was set to go or already broke. In other cases they discovered it's easier to use the same money you'd spend fighting tooth and nail against a competitor and just buy them out instead.
However, unlike Luxottica whose properties have grown in value since their purchase, Zuffa has so far shown the lack of ability to foster the growth of any MMA promotion not named UFC.
Zuffa's purchase of Pride in 2007 represented an excellent entry point for Zuffa to own the Asian MMA market right off the bat. Pride was damaged by corruption charges but it still remained very popular among MMA fans around the world, they were by far the leader in Asian MMA and many thought they equaled or surpassed the UFC. Under the new guidance of Zuffa, it was hoped Pride could not only recover and continue their dominance in MMA, but also grow even more popular given better management and the possibility of super fights with opponents from their rival promotion across the Pacific. Unfortunately the Pride revival in Asia never materialized. Pride never held another event after Zuffa's purchase and Zuffa's opportunity to become the lead promoter of MMA in Asia slipped away.
Of course the Pride acquisition was not a total loss for Zuffa, UFC gained a much needed influx of talent from the acquisition of Pride which was one of Zuffa's main goals with their purchase. However the larger, longer lasting opportunity here of gaining a stranglehold of another MMA market but this time in the world's most populous continent, Asia, was lost.
Years have passed since Pride folded and Zuffa still finds themselves starting from the ground up as they slowly try to build up a presence in Asia with the UFC. Given the natural inclination for a population to be more interested in watching its fellow countrymen compete in sports, Zuffa may have benefited more from having a specialized brand for Asia like Pride could have been rather than try to spread the UFC brand too thin across the world.
With the WEC which Zuffa purchased in 2006, Zuffa had a promotion which specialized in lighter weight classes. Rather than dilute the UFC with more weight classes and have the situation where flyweights would need to compete against heavyweights for attention from fans, the WEC represented an excellent vehicle for the smaller fighters to be the main attractions. Unfortunately Zuffa failed to grow the WEC into anything more than a small arena show with free shows that aired on cable tv. A few months after WEC 48, their first and only PPV in April 2010, the WEC was folded into the UFC.
Zuffa's purchase of Strikeforce in 2011 for a reported $40 million was perhaps the most clear cut case of Zuffa purchasing a rival to eliminate it as a competitor and to buttress the roster of its pride and joy, the UFC. So in their case, the often rumored folding of Strikeforce should be expected. However, we need to realize that like Luxottica, Zuffa can make more money through owning and operating more than one MMA promotion. Zuffa does not just have to equal the UFC only when it comes to MMA.
Showtime was willing to renew their contract with Strikeforce last year even after the UFC had raided it of most of its talent because MMA represents a popular sport among the demographic advertisers crave the most, 18 to 34 year old males. As a premium channel, Showtime wants to be able to proclaim they offer movies, boxing, and MMA to subscribers, even if that MMA promotion was stripped of a few parts. However even Showtime eventually reached their limit of what they deemed acceptable of airing as the only two remaining 2012 events have been canceled due to injuries.
It's clear Showtime is ready and willing to pay for MMA programming as is NBC, FOX, Spike, MTV2, etc. It's also clear that the UFC cannot appear on every network to meet this need as networks want exclusives. Zuffa so far hasn't been able to fulfill this need and deliver an acceptable product with Strikeforce. Make no mistake, another MMA competitor will rise to fill the gaps that Zuffa leaves behind. After spending such a large amount of money on Strikeforce, why let it die out when the seeds of another promotion will just grow to fill it? This is yet another lost opportunity for Zuffa.
Zuffa has done an excellent job resurrecting the UFC and turning it into the juggernaut of MMA it is today. However they've dropped the ball when it comes to growing and operating the other promotions they have acquired. There is room for multiple MMA promotions as the demand and market is out there for it. As Luxottica has demonstrated, the path to world wide domination of a market does not have to rely on banking on a single brand. In fact, reaching that goal may be best achieved by having an arsenal of brands or in Zuffa's case, promotions, under your umbrella.