Industry Dominance: The UFC and Its ‘Monopoly’ in the MMA Market Greg Byron January 24, 2014 Spotlight This past week, perhaps the most revered champion in UFC history, Georges St-Pierre, came out in criticism of the UFC’s supposed monopoly over the MMA market. St-Pierre’s words were clear: “There’s one organization that has a monopoly, so the fighters don’t have much power. They can’t really talk because if one says what he thinks, he will get punished.” This remark was, unsurprisingly, quickly rebuffed by UFC President Dana White at the post-fight press conference for UFC Fight Night 35. “As far as the other thing that he said that we’re a monopoly, Viacom is our competitor,” White told the assembled media. “They have a $40 billion dollar market cap—$40 billion dollars. I’m never going to see $40 billion as long as I live, neither will the UFC. So we’re not a monopoly either.” Whether we should applaud White for addressing the comments head on or see it as a public denial of his own insecurities regarding the whole thing, well, that’s a matter of opinion. After all, White has made a habit of publicly responding to just about any criticism of the UFC, no matter the source. With that said, is the possibility of the UFC being a monopoly really something new? When the UFC purchased Pride, WEC and finally Strikeforce, did this not eliminate viable competition in the MMA market for the foreseeable future? In business, all mergers are scrutinized to assess the impact that it would have on the overall market they trade in. With any merger, it needs to be examined whether the two or more companies coming together would weaken the market to the point whereby the newly formed single entity would be able to dictate and move forward in total control of the way the market acts. In this instance, it is hard to see why the UFC’s acquisition of its competitors on numerous occasions has not been viewed in a similar light. The impact that the great fighters acquired from Pride, WEC and Strikeforce had upon the development of the UFC over the last few years cannot be underestimated. Whether it be the arrival of Mauricio “Shogun” Rua, Wanderlei Silva, Nick Diaz, Jose Aldo, Urijah Faber or any number of others, they have all produced increased revenue streams for the UFC and at the same time diluted the talent pool outside the UFC. The fact that all of these great fighters are now encapsulated under the Zuffa banner, whilst great for matchmaking from a fan perspective, could definitely be seen as a barrier to entry for those looking to invest in MMA moving forwards. If we look to legislation for benchmarks on how a dominant company should act, we can see how the UFC stacks up by comparison to others. The European Union (EU), has competition law which applies rigid tests to the practices of dominant companies and mergers which include these dominant companies. In EU legislation, we have seen that firms classed as dominant assume a special responsibility to not act within the marketplace to the detriment of competition. In MMA terms, it would seem that the UFC would definitely be seen as dominant, given that its acts or omissions within the MMA industry certainly act as a precedent for others to follow. As a result, it stands to reason that the promotion should accept a similar level of responsibility for moving all aspects of MMA forward and not just those which serve its immediate interests. This level of assumed responsibility seemed to be what St-Pierre was trying to get at with regards to the drug-testing issue. GSP felt that the UFC should capitalize on its dominance by setting a precedent of holding MMA to a higher standard than we have come to expect from athletes in other sports. It seems that St-Pierre now finds himself in a position whereby he feels there is sufficient distance between himself and the UFC to allow him make these comments, given the aforementioned dominance and the tendency to punish fighters who don’t toe the party line. Regardless of whether the UFC is considered a monopoly or not, it cannot be disputed that its actions have wide-reaching impacts upon its so called “competitors.” Despite the impact the UFC has in the overall MMA market, White is seemingly trying to argue Viacom’s bank balance translates into market power and influence for Bellator. This is simply a bizarre stance to take and assumes that at any point Bellator CEO Bjorn Rebney can access any and all of that vast wealth. In practice, Bellator is a distant second to the UFC (based on market share, despite World Series of Fighting’s protestations to the contrary) and the promotion has to accept that it would ultimately lose to the UFC at every turn. On the whole, this reality seems to have set in and Bellator currently remains happy to co-exist in the hope its tournament concept can sufficiently differentiate the promotion from other organizations. Outside of Bellator, we have seen the recent repercussions that the UFC’s dominance has had upon Invicta FC, which was in the process of building a recognizable brand and fighter base, only then for the UFC to decide to introduce a women’s strawweight division and buy out the entire division Shannon Knapp and company had scouted and developed in recent years. Interestingly, World Series of Fighting introduced its own women’s strawweight division this past weekend and crowned its inaugural champion, Jessica Aguilar. This decision to move into women’s MMA at 115 pounds was made before the UFC made its announcement regarding the upcoming all-women’s season of The Ultimate Fighter show. The question will be, what happens to the women’s division in the World Series of Fighting and to Aguilar? Will she be happy to fight what is effectively second-tier competition outside of the UFC, or will she also become victim to the UFC machine and realize that in order to realize her potential, she must fight the very best, which even for the women now resides in the UFC? In order for the sport of MMA to grow, there needs to be a competitor to the UFC. MMA needs a competitor who is able to provide the fighters with attractive offers to give them options outside of the UFC. This would also lead—incrementally, at least—to increased fighter salaries, as no longer would one organization set the standard rate of pay dependent on its own needs. Instead, the fighters could accurately assess the public interest in their abilities and be paid what they are worth accordingly. Will this happen in my lifetime? Unlikely. Ultimately, the UFC is so far beyond its rivals that a catastrophic momentum shift would need to occur to even get a second organization within striking distance of the interest the UFC currently generates. Pingback: Friday Link Dump: Steroids From A to Z, Most Frightening New Fighters in the UFC, Stupid MMA Nicknames + More | MMA Bookmarks() Pingback: Friday Link Dump: Steroids From A to Z, Most Frightening New Fighters in the UFC, Stupid MMA Nicknames + More | Fight Pins | MMA Pins() Richard What could change things quickly is if Bellator went after GSP. I know GSP is under contract with the UFC. They would need to wait until the time period on GSP’s contract expired (most contracts are around 4 fights or 2 years so they would have to wait until the time period ends). The UFC’s contract claims the time period freezes and GSP is essentially under contract to them forever. For a long time there have been legal questions surrounding the UFC’s contract – everything from freezing contracts (which Randy Couture once wanted to test) to the championship clauses that automatically renew the contract. The UFC has had an advantage over their fighters and could delay court dates and effectively cripple a fighter financial forcing them to return to action before the contracts were tested in court. Viacom could afford to go toe to toe with the UFC. While this scenario would be ideal for fighters and give them much more leverage if UFC contracts were ruled against in court…it won’t happen since Bellator has copied many aspects of the UFC’s contract.