This piece first appeared on The Bloody Elbow Substack on October 31, 2023.
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How much money did UFC leave on the table by letting Francis Ngannou walk away?
The UFC has trained a generation of fight fans to obsess over TV ratings, arena gates, and PPV buys. It will be an overarching theme for UFC 295 at MSG and a continuation of one of the most brilliant marketing campaigns in the history of sport to convince customers that the better business is for their (arguable) monopoly, the more validated you should feel as a UFC superfan.
Zuffa has created a self-fulfilling psychological loop of confirmation bias. Only they could provide fans with the best matches because of centralized economic control. Without it, MMA wouldn’t exist as a sport and would never, ever become a major player. Their version of greed was altruistic in stopping boxing’s version of greed.
Now the chickens have come home to roost. The fever has been broken. UFC’s psychological control is facing its most serious challenge yet.
The main story heading into Battle of the Baddest was all about the Kingdom of Saudi Arabia financing the world’s richest combat sports party. They built an arena supposedly in 60 days (wonder how that happened), bought a ton of media and celebrities to attend the event, and wanted to demonstrate not only their seriousness as a sports promoter but also as a global power that can provide safety and security with turmoil just hundreds of miles away from their borders.
The Saudis ended up buying a near-replay of 1990’s Mike Tyson vs. Buster Douglas classic upset at the Tokyo Dome. Playing the role of Evander Holyfield sitting at ringside was Oleksandr Usyk, whose bugged-eyed shock at Ngannou’s third round knock down of Fury captured the world’s emotions in a single scene. This wasn’t supposed to happen. The biggest heavyweight prize fight in modern history between Usyk and Fury was moments away from being flushed down the toilet.
Saturday’s fight in Riyadh between Francis Ngannou and Tyson Fury not only changed the trajectory of the boxing business but also changed the fortunes of the Mixed Martial Arts business, too.
A crisis of confidence for both UFC and the boxing world
Tyson Fury walked in as a 20-to-1 favorite to beat Francis Ngannou. It’s not quite the absurd 42-to-1 underdog story that Buster Douglas was against Mike Tyson, but it’s as close as we’re going to see for such a large underdog status in a modern major prize fight. Buster Douglas was a trained boxing professional. Francis Ngannou was making his boxing debut.
Ngannou drew first blood. Then came the knockdown and special dance that caused an industry earthquake. Fury was able to escape with a win but the damage was already done.
A man who was dirt poor for his entire life changed the fortunes of some of the most powerful people in fight sport. Mr. Ngannou validated both himself and KSA’s investment in him.
And everyone was left scrambling.
‘The boxing world’s gone mad!’
The boxing world is completely changed from what it was just 30 days ago. Showtime is out. Al Haymon is looking for a new home for PBC. Now there are serious questions about the credibility of the Heavyweight division.
What’s the most marketable fight now? Who is legitimate and who is a fraud?
There have been several boxing fights that have drawn magnificent gates in 2023. However, the allure and influence of a heavyweight prize fight cannot be understated.
A powerful 1-2 combination KO has completely altered the landscape of boxing economics. Tailor made for gloomy online fight fans, who will play conqueror one minute and martyr the next.
The boxing heavyweight champion looked horrible against the lineal MMA (and former UFC) heavyweight champion. He can’t travel to America because of sanctions against Daniel Kinahan. Tyson Fury’s inability to fight in America opened the door wide open for Saudi Arabia to promote his fights, some of the biggest in the sport.
Now juxtapose the reaction from the fans, boxers, and press to the muted response from Team UFC. Hunter Campbell and Dana White drew a line in the sand with Francis Ngannou. They could have had a piece of the action in either MMA or boxing with their best heavyweight. Instead, we got this gem from Dana White:
“Francis just thinks that he’s in a position where he’s got some Conor McGregor-Mayweather fight on his hands which he does not. Anthony Joshua called it a gimmick fight this week. You know? When asked about that fight, he’s like ‘I’m focused on fighting the best guys in the world. I’m not interested in a gimmick fight’ and that’s one of the big problems with boxing right now is it’s all about these gimmicky type fights and that’s just not what I do here. It’s not what I do.”
The man marketing Power Slap has spent a lifetime issuing a sales pitch that he is the only one giving you the fights that you want to see, unlike those other scumbag evil promoters. He’s on your side.
Look at Dana now. He didn’t want to pay the money it required to make the Francis Ngannou vs. Jon Jones fight happen. He relied upon the media parroting a talking point that UFC offered Mr. Ngannou “the richest heavyweight contract ever”.
Was it a case of déjà vu all over again for Dana? Did he see Ngannou as Randy Couture 2.0? That’s how Mr. Ngannou categorized contract negotiations. The old UFC playbook dictated that every time a fighter demanded independence, they would return to UFC on Zuffa’s favorable terms. UFC could always rely upon no one else paying what they would pay. 2023 is a different landscape. Your business frenemies are no longer individuals, they are world governments. With one big paycheck, Saudi Arabia entered the sports conversation and became the wildcard at the negotiating table.
Ari Emanuel knows this well because he has been busy converting UFC into a government contractor. Endeavor and Silver Lake are the ultimate mercenaries. If anyone understands the leverage of KSA, it’s Ari. Last Friday, Phil Mickelson went on Twitter and posted Exhibit A on Ari’s ability to play — with or against — KSA.
According to the legendary golfer, Endeavor and Silver Lake knew about KSA’s interest in starting LIV Golf and had offered the PGA a deal to run eight “elevated” tournaments with players getting 50% and Silver Lake getting 50%. Ari was supposedly using Saudi interest as leverage to score a big deal while framing it as a bridge to prevent player defections. Mickelson claimed the PGA said no on three occasions, never imagining that players would make the jump to Team KSA. Oops.
Kind of sounds like what Francis Ngannou did. How did Endeavor not see it coming?
Is Dana White capable of navigating this kind of political shop in 2023? As we recently saw in his Bud Light interview with Sean Hannity, his old playbook is toast. If Ari can sideline Vince McMahon from WWE creative, he can sideline Dana as well.
Ari Emanuel’s key decision on Conor McGregor & Floyd Mayweather
In 2015, it was impossible not to read an article or see an ESPN segment crowning the rise of Mixed Martial Arts and the downfall of boxing. It was insufferable to read thousands of “boxing is dead” thought pieces. It got so out of hand that Larry Merchant sent a hand-written letter to The Los Angeles Times.
“Last week you ran an opinion piece declaring that boxing is dead. Then last weekend you gave excellent coverage to its funeral, Canelo Alvarez burying Liam Smith before nearly 52,000 mourners at Cowboy Stadium in Dallas (and tens of millions more world-wide on television and the internet). May boxing rest in peace.”
Larry Merchant
Or, as he more succinctly put it, “Nothing will kill boxing, and nothing will save it.”
As accurate as Mr. Merchant was, the “boxing is dead” narrative was a critical storyline adroitly exploited by two individuals: Dana White and Al Haymon.
Dana White had convinced the general public that UFC was rising as the king of combat sports and that part of the success was their stringent control of purses.
Al Haymon built his Premier Boxing Champions empire under the premise that they would be on as many TV outlets, offering the biggest fights under one promotional banner. Through an endless hedge fund bankroll, they were going to force the hand of rival promoters to work with Haymon-aligned fighters to jack up the purse bids.
The yin and the yang of combat sports. It’s funny how Mr. White and Mr. Haymon always complemented each other. They served each other’s needs.
By 2016, Conor McGregor’s star had never been brighter. His fight with Nick Diaz sold 1.65 million PPV buys. He was the face of UFC.
Enter Ari Emanuel. His purchase of UFC from Frank & Lorenzo Fertitta for $4 billion dollars shocked the world. Dana White promised bigger and better things for the fighters and for UFC’s brand.
Conor McGregor wanted a bigger piece of the pie. Under Zuffa’s old ownership, no UFC fighter would ever box outside of the company. With the Fertittas gone, conditions changed. Conor had real leverage and threatened to sit out 2017.
Dana White proffered a purse bid of $50 million. Whatever the final number was between Conor and Endeavor to reach an agreement to negotiate with TMT, Stephen Espinoza (Showtime), and Leonard Ellerbe, the match with Mayweather sold 4.4 million PPV buys.
Conor McGregor made more money in his Mayweather exhibition fight than all of his UFC bouts combined. It changed the financial landscape for future MMA fighters, who viewed UFC as a spot to build their brand and eventually land a “boxing pay day.”
It makes sense if you view UFC’s restrictive contracts and arbitration clauses as more of a business model resembling a talent agency than a fight promotion.
Instead of UFC taking advantage of their dominance in the combat sports landscape by paying fighters higher purses, they opted to let McGregor do the exhibition bout with Mayweather. This flashpoint would surface in the Ngannou/UFC contract talks.
Whether the fight was a salary dump, an easy agent’s cut, an attempt to placate their top draw while not changing the underlying business model, or smothering a temper tantrum, the end result is that many UFC fighters started to develop a wandering eye.
What if UFC had paid Conor McGregor more money to stay strictly in MMA? McGregor had already been a two-division champion. He beat Eddie Alvarez. What would the 2017 campaign have looked like in UFC? It’s one of the biggest “what ifs” in modern combat sports history.
McGregor vs. Mayweather was a short-term win for UFC in terms of keeping their top fighter happy but it cemented an image of the “inferior” status of MMA fighters against boxers in the eyes of the general public.
It also cemented the image of UFC half-heartedly letting a fighter find out what they’re worth under quasi-free agency. The eye-opening gap in purses between Mayweather/McGregor versus major UFC main events created some much-needed public scrutiny. If MMA was truly the king of combat sports, why didn’t they pay fighters more money?
All the parties involved in promoting Mayweather-McGregor saw it as an opportunity to maintain the status quo. Dana White and Ari Emanuel wanted to maintain their core UFC profit margins while locking in new media deals.
Leonard Ellerbe and Al Haymon were busy raising their profile and enticing new talent recruitment into TMT & PBC. They swallowed up most of the top prospects.
Showtime’s plan of dominating a post-HBO boxing world was on a fast track. Showtime was king and Leonard Ellerbe was busy calling DAZN “an app that nobody watches.”
Six years later, Paramount pulled the plug on Showtime Sports. Floyd Mayweather sold an exhibition match to Abu Dhabi, who turned around and cut a deal to air it on DAZN. Mr. Haymon is now facing a much tougher media rights market for PBC.
You would think that these developments would prove to be a source of vindication for the vaunted UFC “business model.” Wall Street values TKO stock at $80-83. They’re signing new state-sponsored contracts left and right. They just signed a $100 million sponsorship deal with Bud Light.
Part of UFC’s business model revolves around a form of restrictive free agency with champion clauses, tolling, and matching offers/windows. When a fighter generally does reach free agency, they’re usually on the downside of their career. It is rare to see a UFC champion in their prime test free agency and find out their true value.
Francis Ngannou had one shot at free agency. He had one chance to cash in big. UFC dared him to leave. Every UFC fighter watched Conor McGregor cash in his leverage and get the big boxing payday.
The company’s greed and rigid ideology led them to make a big miscalculation that no one would even come close to paying what it would take to keep Francis Ngannou to set up the marquee fight with Jon Jones. Penny wise and pound foolish.
Guess who was in attendance in Riyadh to watch Francis Ngannou score the biggest pay day of his fighting career? Conor.
For UFC, it shouldn’t have gotten to this point. They had the money to make the fight everyone wanted to see with Francis Ngannou and Jon Jones. They blew it. It didn’t have to be this way.
Let the second guessing begin.
How will UFC respond to the growing threat of billionaire opposition?
Old-school UFC business ideology would indicate that Dana White will simply wait out Francis Ngannou getting one or two more pay days and hope that he vanishes from the face of the Earth.
Power through this, let things burn out, and hope that he loses in embarrassing fashion so that the candle flame is extinguished.
Current-school UFC business ideology would consider creating an off-ramp to placate fighters while maintaining full portfolio control. One example would be to buy out Bare Knuckle Fighting Championship or Jorge Masvidal’s Gamebred Bare Knuckle promotion.
Acquire a bare-knuckle company and legislatively package it with Power Slap to try to force regulation and legislation through as many state athletic commissions as possible. It would be another cog in the suffocation strategy to offer an extra sold show event in a traveling circus to a state or country near you. UFC could use Mike Perry and Eddie Alvarez as examples of how to score a larger, but controllable purse.
Would such a strategy stop UFC fighters from jumping to Saudi-backed combat sports contests? Perhaps, on the margins.
The new world we face in the post-Ngannou/Fury era requires a different level of thinking. As long as UFC is tying up with government actors to finance A and B-level events, it would make sense to negotiate with ESPN to cut a deal with either Todd DuBoef (Top Rank) or Al Haymon (PBC) to create a boxing silo that allows the prospects of some boxing-style paydays for top UFC fighters while maintaining full control of who fights whom and where.
This would instinctively go against Ari Emanuel’s gut feeling about always being on the right side of the trade. It would incontrovertibly go against UFC orthodoxy of minimizing fighter salaries but they may not have a choice.
Market Distortion vs. Market Control
As billionaires and foreign governments jump into the sports business, the value of doing business is getting severely distorted. However, market distortion does not equal market control. You can accomplish both but all it takes is one rich money mark to create chaos. Think of activist investors in the mold of Nelson Peltz & Carl Icahn.
WWE controls the global professional wrestling market but Tony Khan has created a large market distortion by spending nine-figures in US dollars over the last five years to run All Elite Wrestling (AEW).
UFC controls the global Mixed Martial Arts market but governments like Abu Dhabi and Saudi Arabia have the resources to radically distort fighter salaries with large events.
If Tony Khan is his own bank, the Saudis are a thousand Tony Khans. Regardless of how long they decide to stick around as a dominant player in the combat sports space, their mere existence has already dramatically distorted the market now and after they exit or scale down investment.
The barrier to entry in combat sports is getting more expensive by the day. Revenue streams supporting an entry into wrestling or boxing or Mixed Martial Arts are shrinking. The cable industry is in a stage four collapse. The yakuza in Japan is severely diminished. Streaming is proving to be a terribly volatile business model. What you’re left with is Wall Street, oligarchs, and governments.
There is a bittersweet irony that the biggest threat to UFC’s monopoly in combat sports is Mohammed bin Salman. You couldn’t provide stronger prima facie evidence against UFC’s market control than by pointing out that it took the Kingdom of Saudi Arabia to shake things up.
Those Wall Street analyst warnings about KSA investments being a threat to TKO stock? Francis Ngannou is now Exhibit A.
UFC has spent twenty years denying MMA fans some of the biggest interpromotional fights that could have expanded the sport’s popularity. You have to go back to 2003 for Chuck Liddell vs. Rampage Jackson at PRIDE’s Tokyo Dome event.
PRIDE’s biggest aces didn’t get a chance to fight during their prime years in the UFC. When Dana tried to sign Fedor in the later stages of his career, a failure to reach an agreement was blamed on “those crazy Russians.”
UFC remained a closed shop. That strategy obviously worked for Frank & Lorenzo Fertitta in helping them sell UFC for $4 billion dollars. However, the economic conditions have changed for both Endeavor and UFC in 2023. They’re a publicly traded company with debt that needs to be serviced in a higher-for-longer interest rate environment.
Ari Emanuel has always taken pride in being on the right side of every trade. The money, leverage, and energy is flowing towards Francis Ngannou and KSA. The master of the political shop has an important decision to make.
Is he willing to make a deal to generate the biggest payday for his operations or will he stay married to the artificial pay ceiling he put on the the sport of Mixed Martial Arts in 2017?
Francis Ngannou is positioning himself to build generational wealth for both his family and the sport of Mixed Martial Arts.
UFC still has the opportunity to make a fight between Jon Jones and Francis Ngannou. For the price of one or two years’ worth of Bud Light sponsorship, Ari Emanuel could pay Francis Ngannou and PFL enough money to co-promote a fight the public wants to see.
That’s a hell of a better way to market the new UFC/Bud Light business partnership than by having Sean Hannity argue that UFC fans should be good Christians and give Bud Light a second chance for redemption.
For the first time in his life, Dana White is now on the sidelines and has limited power in making a monumental fight that could permanently change the course of Mixed Martial Arts. Francis Ngannou may have lost his battle with Tyson Fury on the scorecards, but he won big betting on himself and betting on the future of a sport outside of UFC’s control.
Will he be able to convince the world that Mixed Martial Arts does not automatically equal the UFC?
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