Wednesday 26 October 2016

McGregor's Las Vegas bout represents a knockout payday for UFC

Simon Rowe

Published 05/07/2015 | 02:30

'Two years ago, Conor McGregor was on the dole, fighting in front of 100 people in GAA halls and getting €150 per appearance. Now he is standing at the pinnacle of the sport," says Dave Allen, the Dublin-born marketing whizz who runs the European business arm of Ultimate Fighting Championship (UFC).

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The once controversial sport of cage fighting has gone mainstream and transformed itself into a global brand. At last count, it was ranked as the 10th most valuable sports brand in the world, worth an estimated €1.4bn.

A massive payday now awaits Irishman Conor McGregor next weekend when he fights for the UFC interim world featherweight title in front of a 16,000 capacity crowd at the MGM Grand Garden Arena in Las Vegas - watched by thousands more on pay-per-view channels across the globe.

McGregor's journey from dole office to box office is no fairytale, however. It is the culmination of a no-holds barred marketing assault on Ireland by UFC management.

UFC is of one of the world's fastest growing sports and Ireland is seen as a potentially lucrative market - with the obvious spin-offs in terms of attracting the worldwide Irish diaspora of mixed martial arts fans.

Together, Irish duo Allen and McGregor make for a formidable tag team - a mixture of brains and brawn. David Allen (the brains) is a former League of Ireland referee with a track record working for global sports brands. Conor McGregor (the brawn) is a former plumber from Dublin who has "a masters in unarmed combat" and a black belt in blarney.

Allen was appointed boss of UFC's EMEA operation in January. Before taking on the role, he had worked with Adidas, Nike and Umbro. Working from UFC's London office, he now manages a team of 16 across a marketing territory that spans 129 countries.

With his extensive contacts book, Allen is spearheading a campaign of partnering UFC with mainstream sponsors.

Corporate giants are queuing up. Sportswear giant Reebok has signed a deal worth €60m over six years. This follows a seven-year broadcasting deal with Fox Sports, worth €615m, which has elevated mixed martial arts (MMA) into the top tier of American sports, alongside the NFL, baseball and basketball.

For the likes of Reebok, partnering with the UFC represents an opportunity to target the sport's 18-34 male audience. It also allows Reebok to increase its presence in the fitness space alongside the rollout of UFC franchise gyms across Ireland, the UK and Europe. UFC already has in excess of 100 gyms around the world.

Outside the ring, McGregor is no slouch when it comes to business either. He has inked lucrative sponsorship deals with Reebok and Monster energy drinks. As well as being a brand ambassador for Volvo, he has signed a book deal and is sponsored by clothing brand Dethrone Royalty. Dethrone pays McGregor a monthly stipend, a per-fight bonus and royalties based on sales.

It's been a busy year for the 26-year-old Dubliner. In addition to being "executive producer" on a six-part RTE documentary about his life, Notorious, shown earlier this year, he also found time to set up McGregor Sports and Entertainment Limited with his long-time partner Deirdre Devlin.

Industry insiders estimate McGregor could earn upwards of €1m annually through endorsements alone if he becomes UFC champion.

When quizzed about UFC's appeal, Allen rattles off statistics in quick-fire jabs.

"On Facebook we've got 16 million followers globally - bigger than Formula One. On Twitter we've got in excess of three million followers - bigger than most Premier League teams. In terms of TV, we are in excess of one billion households worldwide. Our Fight Pass offering is in 147 countries around the world in 21 different languages..."

The numbers are impressive. But when quizzed about the financial figures behind UFC's business, Allen is more circumspect. "We are a private company, so we don't release financial figures."

UFC management are notoriously shy about disclosing financial details. UFC is run by a company called Zuffa LLC, owned by US casino moguls Frank and Lorenzo Fertitta and Dana White.

The brothers bought a violent fight club called Ultimate Fighting Championship 14 years ago for $2m, and have since built it into a billion-dollar sports empire with 570 athletes on its books.

"What they did was to take a great concept and brought governance, rules and regulation around the sport," explains Allen.

Fight nights and pay-per-view subscriptions, which are the commercial lifeblood of UFC, were reportedly down last year. Reports suggest the firm suffered a 40 pc drop in profits due to injuries and cancelled bouts involving some key fighters. International expansion costs, such as marketing spend in Europe, also dented profits.

While precise figures are hard to come by, McGregor lifted the veil in a recent tweet when, referring to his Vegas fight against Chad Mendes, he wrote: "$16.3m collected at the gate alone. I couldn't be humble even if I tried."

McGregor will be hoping for a share of this cash pile plus a percentage of the pay-per-view income from digital TV subscriptions.

The big money for UFC fighters is in pay-per-view (PPV). Top UFC fighters receive a cut of PPV revenue on top of their guarantees and bonuses. By cutting the champion fighters in on the PPV action, UFC ensures that the stars of MMA promote the UFC events to help drive up PPV income.

This explains why motormouth McGregor is so valuable to UFC - he generates interest in the sport and drives up PPV buys.

"We reckon this will be the biggest fight ever in the history of the UFC in terms of viewership figures around the world," says Allen of next Saturday night's McGregor-Mendes fight.

In addition to a fight purse and commercial endorsements, McGregor and his fellow fighters can rack up "win bonuses", "fight of the night bonuses", "knockout of the night bonus", and a "submission bonus".

Allen says two factors have made UFC so successful. Firstly, they use a mix of broadcasting platforms for fights: free-to-air, pay-per-view on digital TV channels, and its own digital streaming service Fight Pass. "People can access our product in a number of different ways around the world and that's why we've been successful: we don't have a one-size-fits-all model."

Secondly, eschewing traditional media channels and investing heavily in social media has reaped huge rewards.

"Our target market doesn't get up in the morning and switch on RTE or the BBC. Our target consumer gets up in the morning and opens their Facebook page, looks at Twitter and goes on Instagram. They are not listening to the radio or watching TV first thing in the morning. We are a business that is 14 years of age, so you have to think in a different way."

Allen was head-hunted to UFC in 2013 by former Man City boss Garry Cook. Allen subsequently took over from Cook when the former football exec moved to UFC's headquarters in Las Vegas to become global brand chief.

Allen and Cook knew each other from their days at Nike. "Garry invited me along to a UFC event in October 2013," he recalls. "I came away thinking there is something special going on here."

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