twitter google

Did Dana White blow it in 2007?

Kid Nate has a very good article available at BloodyElbow.com where he analyzes recent reports that Zuffa’s credit rating was lowered based in large part because of disappointing performances during the second and third fiscal quarters.

The UFC is by no means in any sort of long-term trouble. And, whether they are in short-term trouble is very relative as they remain a highly profitable company.

However, there is a risk that their 2007 fiscal campaign might not be as profitable as 2006. It shouldn’t be a surprise if it turns out that 2007 wasn’t as financially rewarding as 2006 because Zuffa undertook several measures to build towards their financial future. These measures, such as the acquisition of PRIDE, expansion into Europe, and the developing the WEC were not cheap.

So while Zuffa deserves some slack because they made moves this year to invest in their future, Kid Nate raised a valid question as to whether those moves are smart after all.

At the top of Nate’s list is the PRIDE acquisition:

The disastrous PRIDE acquisition

I think this is the fiasco most of the others follow from. Ironically, as much as Dana disses internet fan boys, he’s one himself. Only a fanboy would pay what Zuffa shelled out for a mortally wounded promotion whose scandals had already cost them their TV deal. Only a fanboy would be so threatened at the prospect of PRIDE mounting a financially disastrous Las Vegas show that they panic and start offering money. Clearly due diligence wasn’t performed or Zuffa would have figured out BEFORE the sale that PRIDE’s contracts with its fighters weren’t transferrable. Basically, Dana and his crew got played. And while they were busy getting screwed they took their eyes off a lot of other important matters.

On a whole, Nate did a great job with his piece and I highly recommend you check it out in its entirety. However, I’m not really sure anyone should be saying the acquisition of PRIDE was a failure or a success.

First, the numbers reported by the Associated Press in regard to the purchase price ($65-70 million) may not be entirely accurate.

CLICK HERE TO READ THE REMAINDER OF THIS ARTICLE ON SAM CAPLAN’S PROELITE.COM BLOG

20 COMMENTS
  • Evan says:

    Buying PRIDE means Zuffa owns the vast majority of recorded MMA history.

    It also means any company signing an ex PRIDE fighter can’t be marketed with their PRIDE fight footage.

    Worth every penny in the long run.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Tom K says:

    Exactly… and if I were Zuffa, I’d rather lose money on purchasing an essentially useless Pride (other than the tape library) than have some other group with money buy it and then finance it back into being a top tier competitor. At the time, there were two major orgs: UFC and Pride. If only UFC is left, then it’ll be awhile before another org the level of Pride comes along.

    I don’t know why this credit thing is such a big deal. Between the Pride purchase, the WEC, the WFA and the European expansion costs (which in the long run should go a long way) there are many legitimate reasonable reasons that the UFC had a “down” year. It’s not like people suddenly don’t like MMA anymore…

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Freedom says:

    I think that the acquisition of Pride was the only (and best) business option for Zuffa at the time. In hindsight if they had waited a few months Pride would have self destructed. It is a growing company and as such will have expenses related to growth. A lot of times international growth is painful but necessary. The most important thing is understanding the foreign market, which Zuffa clearly did not in the case of Pride (Japan).

    Zuffa does not seem to be in any sort of financial trouble. That amount of debt is pretty normal for a company this size. The fight cards promoted by Zuffa is the second half of this year was not the best, they could have had better fights. Profitability is a function of good fight cards and once this is taken care of (and expenses related to growth are controlled) I see no problem with this company. A lot of times ratings agencies get it wrong especially when they do not understand the nature of the business (they never got the action/adventure sports industry) and I am of the opinion that this is the case with the UFC.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    you guys are totally off…. there were no other real buyers for thier libarary or contracts… if they paid 60 mil for libary and contracts , who seriously out there was gonna pay 10 mil for non transferable contracts and a libary…..

    hate to bring up pro wrestliing again but when wcw (went out of buisness) the wwe knew there was no other real promotion that was gonna shell out major money for a worthless federation and its libarary even though its libaray was pretty vast…. so what did the wwe do? the lowballed the hell out of them and bought it all for like 5 million … zuffa was bidding against themselves and overpaid…

    im sure they did think those contracts were transferable and thought they would force the great figthers for pride to work for them but it backfired (fedor)

    not exactly a smart buisness model if you ask… wtf was heros or elite xc gonna do with the pride libary if they didnt have access to the fighters…

    ufc got played hard

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Evan says:

    How do you know who else was in the bidding?

    Even Cuban was looking at this…

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Dizzle says:

    El Boxeo…since you seem to be the business guru around here.

    What would you have done?

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    what was cuban going to pay for a worthless libaray considering he has none of those fighters … its worthless if you cant use it to promote the future fights …

    was cuban gonna shell out 20 mil to run pride replays on fox sports west…

    who else is as big as the ufc that can afford to shell out millions for a libaray.. what would be the point… if the fighters would be there to promote..

    dana got swindled because he over paid BECAUSE HE THOUGHT THAT THE CONTRACTS WERE INCLUDED…. but they werent…

    be honest.. pride wouldve folded by now cause they had no tv deal… all those contracts wouldve been expired and everybody wouldve been free agents like most of them became anyway..

    and the libarary would been vastly underpriced….

    what major fights have been made since the “acquisition” of pride that dana needed to shell out 60 mil for.. henderson v. jackson….

    never got fedor.. they just now got silva…

    dana jumped the gun cause he thought he could resurrect pride… yeah good call dana … way to do your research….60 mil down the drain for worthless contracts and a libaray…

    the libaray only makes sense if 1. you are opening a cable channel (like the wwe did wwe 24/7 ) so they needed all that content… ufc doesnt need all the pride content for a channel like that .. so who cares if they have the history of mma pride … 2. you have some super major organizaion that could benefit from it… ufc is the only game in town… nobody is gonna shell 10x out what they make in a year for video of old fights that they wont have access to the fighters..

    you think the ufc really beneifted from having 30 second clips of old fights of cro cop or silva….to promote future events… im sure other orgainzations like elite xc or heros would not have overtaken the ufc with a libarary of fights years old…

    and that is alot of money to be shelling out…even 20 million…for what…..thats like a couple sellout events…

    they shouldve just waited for pride to wither on the vine… then lowballed them and swooped in… and they shouldve done their research about the contracts which then they couldve just bought the libaray (if it was that importatn) on the cheap… the best thing that couldve happened (and what pretty much did happen ) was all those pride fighters ended up being free agents… BUT INSTEAD DANA WANTED TO PLAY HARDBALL AND TRY TO FORCE SOME OF THESE FIGHTERS TO BE STUCK WITH THE UFC THROUGH THE PRIDE CONTRACTS THEY JUST BOUGHT… yeah great move.. to bad the pride contracts were crazy

    you dont pay top dollar for a depreciating asset.. and thats what pride was…. fact is the UFC wouldve still had its sellouts and still been popular right now without pride (they didnt even recognize the pride belt when hendo v. jackson fought) and if they probally couldve done the same deal right now for 10X less money… what could pride have done other than die without a t v contract….

    and lets assume another company comes in and makes an offer .. WHATS SO HARD ABOUT THE UFC JUST COUNTERING THAT OFFER BY LIKE 5% MORE…negotiations… whats hard about that… and who could afford 1/10 of what the ufc paid…???

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    let me correct myself… i guess 60 mil is a rumor.. or whatever they paid… but im pretty sure its what ever they really paid 60 , 40 . 20 , 10 mil… it was 1. 10x more any of their competors could afford and 2. enough to put the ufc in the negative column with regards to thier money situations (which is pretty big deal considering theyve had good sellouts even inspite of going over seas)..

    so while the number might not be 60mil.. it was enough that it hurt the ufc in its pocketbooks…

    basiccally this was a dumb move on dana part because dana was trying to be greedy and force many pride fighters to fight under thier ufc banner without free and new negotioation… cause he knew that it could possilbly lead to some fighters asking for more money(fedor) and once they found out what the contracts entailed… they were screwed…

    they still couldve got hendo, silva when pride wouldve died by itself… fighters werent going no where..

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Rln says:

    “2. enough to put the ufc in the negative column with regards to thier money situations”

    Lol @ this. The UFC’s profits are up and up a lot. They’d probably be off the chart if they weren’t spending money to expand.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Dizzle says:

    “dana got swindled because he over paid BECAUSE HE THOUGHT THAT THE CONTRACTS WERE INCLUDED…. but they werent… ”

    There isn’t any factual information that you’ve presented to back your theory on that. Dana(zuffa) knows he had put himself into a bad position after he bought the company. Sometimes you need to take risks…and Dana took a risk but remember you can claim loses on your taxes. These guys know that they lost money on the deal, but who hasn’t ever made a bad decision when dealing in business? We all have made decisions and regreted what we’ve done due to: Never getting paid for a job, Getting under paid for a job in hopes of gathering new business, doing things for free in hopes of new business, ect…

    I’m sure Zuffa didn’t think all these other MMA orgs. would be willing to dish out the money to get these other guys on 1 or 2 fight contracts for a really good check. UFC knows that these guys will eventually gain a good rep and they’ll go in a buy out their contracts if needed to or they’ll end up eventually wan’t to prove themselfs and join the UFC.

    I think there other people right now making bigger and better decisions than Dana is. Dana is the president of the business….think about what the president of the USA does. He doesn’t get to make all of the decisions that we make as a country. I’m sure Dana isn’t making all the decisions that we think he’s making.

    Also, There is still a possibility in the future onces the UFC gets more established that’ll they’ll eventually end up doing something with PRIDE in Japan. I’m sure after things cool down a bit in Japan Zuffa will be able to get on good terms with these Networks and show them how legit the UFC is.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Dizzle says:

    “never got fedor.. they just now got silva… ”

    Yea the UFC didn’t get:

    Rampage
    Shogun
    African assassin
    Henderson
    Ryo
    Cro Cop
    Werdum

    These are just off the top of my head that I can think of.

    They got alot of prospects…and some of them haven’t performed…but you know they are adding to the hype of UFC and bringing on bigger crowds.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to dizzle

    Yea the UFC didn’t get:

    Rampage got rampage through wfa
    Shogun
    African assassin just got him through “free agency” not through pride acqui
    Henderson got him through pride cause they recongized the belts
    Ryo dont know
    Cro Cop didnt they sign him before pride was sold
    Werdum ???

    they tried to get fedor through the contract he had with pride.. but fedors was a non exlusive deal that made him a free agent.. just like sodko and just like a guy dennis kang (who the ufc didnt want but werent gonna get anyway)

    here is the thing.. they didnt pay 60 mil just for the libaray… why would anybody do that.. no money in it… dvd sales.. fox sports reruns… no they made that deal cause they wanted to keep pride moving and INHERIT ALL THOSE CONTRACTS … but they got swindled and were stuck with worthless contracts and a video libaray…

    does anybody think the lbaray is worth 60 mi.. i dont think it would be worth 10 mil IF YOU DONT HAVE THE CAPTIAL AND MONEY TO MAKE SOMETHING WITH IT ( BY SIGNING TOP TALENT) and no other organization had deeper pockets than ufc.. so they were in competion with themselves…

    they didnt buy pride for the name just to throw it away.. they wanted the orgaization to survive like the wec.. but they got ripped off… stuff is done different in japan i guess….

    and throwing 60 million dollars away is not exactly a great move or a move that can be just written off as expenses.. fact is they could be just as popular now (sell outs , great fighters , lots of buzz) WITHOUT DROPPING 60 MIL ON VIDOES… horrible move cause it doesnt beneift ufc only hurt them especally this year moneywise…

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to rin

    Lol @ this. The UFC’s profits are up and up a lot. They’d probably be off the chart if they weren’t spending money to expand.

    ^^^ WHEN WILL THE EXPANISON PAY OFF ITS 60 MILLION DOLLAR EXPENSE

    they didnt expand pride… failure
    couldnt get pride fighters contracts transfered … failure
    essentailly paid 60 mil for a libaray with no other real competition…super failure

    the fact that they didnt make a super profit should concern people cause its not the sport or evnents thats a failure but management decisons of the ufc mainly dana ….

    60 mil is lot of money for something they will never see become successful in any way…PRIDE

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to dizzle…

    but we do know that the contracts , dana thought they were transferable.. the same thing occured when they bought the wfa for the sole reason of acquiring q. jackson.. they wanted to the same thing with bigger stars like silva, fedor…

    as far as your 60 million dollar write off…. thats bad buisness no matter what.. and it wasnt even like a freak occurance.. it was that THEY DIDNT DO THIER HOMEWORK and got burned….

    this isnt signing a 50 million dollar pitcher and he blows out his arm in spring training..THATS A CALCULATED RISK ..

    this is more like overpaying a pitcher with tons of history of shoulder problems the max contract on the assumption every thing is okay…

    its cool if its a fighter like cro cop who has been a expensive dissapointment.. but you cant gauge that…

    but 60 million for what…video … i wonder how much people think zuffa made this year… hope you guys arent think its in the billions..lol

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Rln says:

    “60 mil is lot of money for something they will never see become successful in any way…PRIDE”

    Here’s a fact for you. They didn’t pay 60 million for Pride. They paid 16 million.

    “couldnt get pride fighters contracts transfered … failure”

    UFC now has:

    8 of the top 10 heavies
    10 of the top 10 light heavies
    8 of the MW

    The depth of all their divisions is incredible and only because they were able to pick up the contracts of Pride fighters. All of the best fighters in the world, with the exception of a couple, are now under contract to the UFC.

    “the fact that they didnt make a super profit should concern people cause its not the sport or evnents thats a failure but management decisons of the ufc mainly dana ….”

    Dana White had very little to do with the purchase of Pride. Why don’t you take the time to actually get a clue before talking out of your ass.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to rin

    yeah they were able to pick up the contracts of pride fighters other than the best fighter of them all fedor…

    again.. the question becomes could they have had the top 8 of 10 heavies and the top 10 of the 10 light heavies and 8 (wtf) middlewieghts WITH OUT HAVING TO SHELL OUT MONEY FOR A WORTHLESS ORGANZIAIOTN AND ITS LIBAary

    YOU think them gettin sodoku was part of the pride acquisiton… he was a free agent and went to the ufc… please feel free to name the other 7 middle middlewights other than hendo that have strengthen the ufc mw dividison…

    here is a clue… could they have gotten all this talent without wasting money in pride… or do you think 16 mil (please expalin how you know this amount considering in the article its anywhere from 20 to 60 mil and zuffa according to the article has never disclosed it cause they are private) or 60 mil was a great move…

    please explain how it was a great move… a libary, a worthless belt they disposed of and a name… for 10’s of millions of dollars….

    All of the best fighters in the world, with the exception of a couple, are now under contract to the UFC.

    ^^^ they didnt need to waste money to buy pride to acheive this goal^^^^

    Dana White had very little to do with the purchase of Pride. Why don’t you take the time to actually get a clue before talking out of your ass.

    ^^^wtf who had to do with buying pride… ferrita… he comes out of ownership position to run day to day ops in place of dana…. yeah thats beliveable..lol

    whatever the amount was they paid you do realize that their 2nd and 3rd fiscal quarters were not that good FOR SOME REASON.. and it wasnt because they were not selling out arenas… SO how do you sell out arenas and not make as much money as they expected… could it be shelling out money for stuff that is overpriced and worthless…

    dana overpaid for a depricating asset and got played cause he didnt even get what he paid for… could saved himself 16 or 60 mil by just watching pride die without a tv contract and then swoop up and buy the libary and the existing free agents and be in the same place there in now except millions richer… YEAH HE DIDNT BLOW IT…

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to rin…

    such depth huh…

    bispbing v. evans… as a main event…. wow such depth

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Rln says:

    Dude, you’re a complete mental midget. Let me try to spell it out for you. I’ll even type slowly for your benefit.

    You’re fixated on a fictitious internet number and are unable to grasp the big picture. If the UFC hadn’t bought Pride, someone else would have. Then they wouldn’t have access to those fighter contracts. Fighters like Sokoudjou, who only want to fight the best competition, wouldn’t choose the UFC because their LH division was extremely weak without the addition of Prides fighters. He could’ve fought for EliteXC or K1 but he choose not too because their stable of fighters is a joke(when compared to the UFC).

    “please explain how it was a great move… a libary, a worthless belt they disposed of and a name… for 10’s of millions of dollars….”

    Keep flipping those burgers and thinking that is the only thing the UFC got out of the purchase of Pride. The list of positives far outweigh the small list of negatives.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • el boxeo says:

    to rin…

    are you slow…

    Fighters like Sokoudjou, who only want to fight the best competition, wouldn’t choose the UFC because their LH division was extremely weak without the addition of Prides fighters

    ^^^ sokoudjou is going there to make the most money…he was free agent… JUST LIKE ALL THE OTHER FIGHTERS WOULDVE BEEN IF PRIDE WOUDLVE DIED..

    who else wouldve bought pride… anybody dumb enough not to see how messed up the organization was got what they deserved… (ufc) … if the ufc couldnt resurect pride with all its money , what makes you think any other organizaition or person could have… your acting as if the ufc didnt try to keep pride alive… they couldnt for a reason…

    He could’ve fought for EliteXC or K1 but he choose not too because their stable of fighters is a joke(when compared to the UFC

    ^^^ he was going to go with one of them but the money wasnt right… AGAIN THE MONEY WASNT RIGHT.. not the level of competion… and what does that have to do with buying pride… had pride died by itself… where do you think all these pride fighters wouldve ended up in … THE UFC ? only place in town with deep pockets…the ufc was prides golden parachute…

    please elaborate what the positives of buying pride were… at this point you are saying the pride purchase was a success…right??

    here are the negatives…

    1. couldnt secure top level contracts of top level fighters .. fedor… and other fighters like soduku were free agents that went to ufc regarless of pride acquisiton… where was rua gonna go… he went where there was the most money..

    2. over paid for the libaray… like i said before… its cool to have a libaray to promote fighters but 20-60 million is wayy over priced…. to run old dvd’s and fox sports reruns…

    3. evidently they didnt make as much money in 2nd and 3d quarter… well they did spend money on other stuff that i guess hasnt paid off yet.. could that investment failure be pride.. cant be!

    4. they wanted to keep pride going like wec… but they couldnt.. cause “stuff is diffrent” over there according to dana… when the bought the wfa it was for q jackson contract.. that was it… when they bought wec it was to have another organziaion… when they bought pride it was for both.. and both were failurers….

    please when you can get yourself away from the top level c.e.o. job at a fortune 500 company can you please elaborate the great success of acquiring pride for the price they did….how has the ufc reaped the benfits of overpaying for something that was falling in value…

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Dizzle says:

    Boxeo It was a loss no doubt…but you have to remember that it takes money to make money.

    Pride is still able to be an org in Japan in 5 years down the road.

    Let me put this into perspective with you.

    Lets just say you went out and bought a brand new car…the car salesman really had you thinking this was a great deal and that you’re getting this huge discount and what not. So you pay the guy 15,000 for the car…but what you don’t really know is that the car was purchased wholesale from the manufacturer for 11,000. So did you really just lose 4,000 on the car? No because you “thought” you got the best deal because the car salesman tricked you into thinking that you did. The salesman needs to get paid too my friend.

    Same thing goes when you buy a business…Dana just didn’t talk to the owner of Pride at the time and pull out his checkbook. You had lawyers their trying to get their money along with perhaps a business brokering salesman trying to get his cut. Alot of people got money out of the deal which is being able to be put back into economy.

    Now lets say that a month later after you bought your car…you blew a rod in your engine and you didn’t get the warranty with the car because you thought you wouldn’t need it.

    Did you just get burned? Yea you did…but you can put $2,000 back into the car and revive it….This is what UFC will do with Pride when the time and money is right.

    Boxeo you’re thinking that UFC made this super huge mistake. It’s really not that huge of a mistake when you think about an investment that they are just sitting on when the time is right.

    It’s like buying a piece of land when Real Estate is at the highest of the high. Then a year later your land isn’t worth what you paid for…but you know it’s an investment and 5-10 years down the road that land would have went up in value by double.

    Everything can be considered an investment in business…Patiences is a virtue…these things take time.

    I have to say that Boxeo is pretty good with some internet debate.

    Agree or Disagree: Thumb up 0 Thumb down 0

LEAVE A COMMENT!

You must be logged in to post a comment.

Follow 5OZ