STRATEGICAL ANALYSIS OF UFC

A research work for the purpose of CA for Corporate strategy

Submitted by: Yargyal (11605781)

Submitted to: Asst. Prof. Maninder Singh

 STRATIGICAL ANALYSIS OF UFC

INTRODUCTION TO UFC

The Ultimate Fighting Championship (UFC) started in 1993 as a mixed martial arts (MMA)
tournament on pay‐per‐view to determine the world’s greatest martial arts style. In the
beginning of its introduction to the mass, its main draw or backdrop was its lack of rules.
Weight classes did not exist and rounds continued until one of the competitors got knocked
out or submitted to his opponent. Although the UFC initially achieved underground success,
it was regarded more as a spectacle than a sport and never attained mainstream popularity.
The perceived brutality of the event led to political scrutiny and pressure leading to slow or
rather a bitter beginning.

Attacks from critics regarding its lack of rules poor safety norms, it caused the UFC to
establish a set of unified rules with greater emphasis especially placed on the safety. The
UFC later on also successfully petitioned to become sanctioned by the Nevada State Athletic
Commission and later on getting recognized in some ( ) number of states in America.
However, these changes occurred too late to have an impact and by 2001, the parent
organization of the UFC was on the verge of bankruptcy.

The brand was later sold to Zuffa LLC, marking the beginning of the UFC’s dramatic rise in
popularity. Over the next eight years, the UFC evolved from its underground roots into the
premier organization of a rapidly growing fight sports.

What sets the UFC and other competitor in the fight business of MMA apart from other fight
sports is the drama in the cage and the controversies outside of it regarding the fighters. And
one of the most interesting part of this sport is the backstories of the fighters, some are former
Olympians, some are wrestlers, some boxers, some BJJ, and etc.
SWOT ANALYSIS

1. STRENGTHS

a. A key strength of the UFC is its strong brand recognition. For many people, MMA
is synonymous with the UFC. Combined with a first mover advantage, this brand
recognition has allowed the UFC to recruit the best fighters in the sport. This
brand recognition has also led to greater gate revenues and allowed the UFC to
attract high‐profile sponsors such as Harley‐Davidson, Modelo – Official Beer
and Malt Beverage of UFC, BodyArmor – Official Sports Drink of UFC, AirAsia
– Official Airline of UFC, Hospital for Special Surgery – “Official Hospital of
UFC, etc.
b. Next to the above strength might be their roster of 250 + fighters and 60 of top 70
fighters in the world.
c. The acquisition of other competitor in the fight business: zuffa purchased World
Extreme Cage fighting, they purchased fledgling Pride Fighting Championships
from Dream Stage Entertainment, and they’ve also purchased Strikeforce which
was their next biggest competitor.
d. UFC’s T.V network deals with top media channel allows for more exposure to a
larger target market, they’ve had deal with Spike T.V followed by FOX Sports in
2011 and latest deal being started in year 2018 1st Jan – UFC and ESPN will work
together for the next five year.
e. UFC – M-1 Global Partnership; On July 18, 2018, it was announced that UFC has
entered into a partnership with Russian MMA promoter M-1 Global. M-1 Global
will serve as a farm league to scout Russian fighters for UFC and will participate
in organizing UFC events in Russia. The deal also gives M-1 champions the
opportunity to sign with UFC. On September 15, 2018, the first UFC event in
Russia was held at the Olympic Stadium in Moscow.

2. WEAKNESSES

a. One of the biggest weaknesses of UFC is MMA’s violent perception. Critics

contend that the MMA is still too brutal to be considered a sport. This is reflected
in the fact that MMA is still banned from twelve states. This presents an image
 problem for the UFC and hinders it from becoming as popular as family‐friendly
sports like football or basketball. It had also made it more difficult for the UFC to
attract mainstream sponsors in its early times.
b. One of another weakness of UFC is the fact that it lacks the benefits of free
marketing which many sports enjoy. For example, anyone can participate in
football or basketball since these sports are widely accessible through schools,
gyms, and amateur leagues. Consequently, this involvement increases the
possibility that a person becomes a fan and supports his sport’s professional
league. Currently, there are very few places to learn or participate in MMA. Thus
the UFC is missing out on many potential fans.
c. Nest to that, its biggest weakness might be the fact that they don’t have any
subscription plan regarding UFC’s pay-per-views for loyal fans.

3. OPPORTUNITIES

a. As the sport grows internationally, the UFC’S biggest opportunity is to expand

globally through its ties to IMMAF.

4. THREATS

a. UFC, having its major part of earning and dominance in the media – has its
biggest threat as online piracy. A trend of using vpn to watch ufc fight nights
without paying has been on rise and thus poses a huge threat to the ufc.
b. Another major threat to the UFC is regarding its fighters personal lives. Due to the
strict rules regarding usage of sports enhancing drugs or dope, lots of top fighters
using such banned drugs in their daily life gets involved in controversy making
them unable to appear for fights and ultimately affecting the UFC negatively. It
had happened for lots of time, major example being regard to Jon Jones ( light-
heavyweight champion)
c. Another major threat is fighters personal brawl and fights amongst themselves.
One of the biggest example justifying this threat might be the recent brawl
between Conor Mcgregor vs Khabib Nurmagamedov, which resulted in both the
fighters being suspended for period of six months and nine months respectively
and being fined $50,000 for Conor and $500,000 for Khabib.

d. The ali act: Congressman Markwayne Mullin introduced a bill to extend the
Muhammad Ali Boxing Reform Act to mixed martial arts in 2016.
The Muhammad Ali Act protects the welfare of the fighters to prevent them from
being exploited. The act has two major implications for the UFC’s business
model.
 Firstly, it would force the UFC to disclose all revenue made from fights, thus
helping fighters increase their leverage. This would likely help push fighter salary
up to NBA/NFL/MLB levels and greatly increases the expenses the UFC faces.

Secondly, the act would force the UFC to either accept the act or become an
official league like the NFL. If the UFC becomes an official league, fighters go
from being contractors to employees and benefits, taxes, and other expenses
greatly increase.

Either way, the passing of the act threatens the business model of the UFC itself
and greatly increases the amount of expenses the UFC has. This, combined with
the high debt load, poses a large issue to long term growth.

STRATEGIES DEPLOYED IN LAST TEN YEARS

a. ACQUISITON STRATEGY:
UFC, in order to null down its competitors in the MMA fight business, has used this
strategy in the past when it acquired competitors WEC in 2006 and PRIDE in 2007, etc.
These acquisitions gave UFC control over the contracts of many prominent fighters and
boosted the brand strength of the organization. Today, no acquisitions would have a
similar positive impact since the UFC controls 90% of the market and offers a superior
product due to the quality of its fighters.

b. GYMNASIUMS STRATEGY:
A natural expansion opportunity for the UFC had always been either partnering with
existing gyms or making new gyms to create a place where people can discover and
participate in MMA.
UFC gym was founded as a co-venture between UFC and fitness conglomerate New
Evolution Ventures, it is not a fight gym or fight club, it is a full- service training gym
with a wide range of classes including MMA training providing a place for members to
train.
UFC gyms would also increase brand exposure and create an additional revenue stream.
The gyms would likewise benefit from the ability to provide more options for its
members. At this moment, UFC Gym has its development going on in 21 countries
around the world.
The main component of this plan is offering of martial arts classes at these gyms. These
classes target a wide audience and aim to be accessible to young kids who want to learn
self-defence as well as aspiring mixed martial artists.
 Expanding into gyms allowed the UFC to gain exposure to new customers, which
increases awareness of the sport and made MMA more accessible to the public. In
addition to these classes, the UFC sells licensed gloves and other equipment needed for
the classes as a way to increase revenues and promote the brand as well as advertise
upcoming UFC events.
As a part of this strategic plan, the UFC could also host local tournaments for fighters to
show their skills. And if enough fighters train at these gyms, the UFC could develop a
scouting program for gyms to evaluate talent. The gyms could aid in finding untapped
talent and the next generation of stars in the UFC.

c. INTERNATIONAL EXPANSION STRATEGY:

The first UFC event to be held outside the contiguous United States was UFC 8 in Puerto
Rico, a US territory, in 1996. Subsequently, the UFC has visited 15 countries
in Asia, Europe, Oceania, etc. Since then, UFC clearly noting the importance of
international expansion, have tried their level best in exploring and footing down their
stages in various countries, latest successful events in international area being in Russia
and they’ve recently due to the great fighters coming out of Africa (Kamaru Usman,
Isreal Adesanya, etc) – they’ve shown interest in expanding their reach in Africa.
Although fans all over the globe wants the fight in their country, but due to the legislation
and political scenes, UFC has time and again found it hard to expand into other country
even though they are willing.

d. SOCIAL MEDIA STRATEGY:

The UFC has 20 million followers across all social media channels, 80 brand accounts, and
they use paid media, branded content, sponsorship integration and influencer marketing to
successfully market their product.

Their most recent event, UFC 200, was one of the most successful in UFC history, with over
13 billion impressions. They had 3.2 million engagements on Facebook, 246 million
impressions on Vine, their custom UFC 200 emoji was used over one million times, their
Instagram had 4.3 million engagements, and they gained over 270,000 new fans across
Facebook and Instagram during the event.

UFC president, Dana White hired PR firm Digital Royalty to teach the fighters how to
properly use social media. He gave the fighters a simple instruction: “I want you to twitter
your asses off,” recalled Amy Martin, Digital Royalty’s founder and CEO.
e. EVENT MARKETTING STRATEGY:
I consider myself as one of the biggest fan of UFC amongst all of my friends, and for me
UFC event planning and marketing is honestly one of the best things to watch among all
other sports there is to watch. UFC not only focusses on the main event, that is the fight
itself, but it relays equally importance to events such as pre-fight interviews and pre-fight
conferences building up hype leading to the fight itself and later on post-fight interviews
and conferences.
During the pre-fight, the fighters usually get themselves involved in trash talking and sort
on and during their post-fight interview, the fighters reveals their fight plan/design and
they also challenges other top fighters hoping to get a title shot, which happens rarely.

f. STRATEGY OF USING COUNTRY FLAG

UFC, with the help of digital royalty – have started this strategy of using the flag of
country in the poster of their top fighters, and this simple move has very huge impact on
the fan base. Conor Mcgregor vs Khabib Nurgadamedov, where the former is from
Dublin, Ireland and the later from Degistan, Russia – has had all their countrymen
holding onto their seats during their fight. This simple strategy of using country flag has
made it almost like a fight between two counties and thus it has increased fans loyalty
toward the brand as well as gave fighters more sense of responsibility to fight harder than
before.

FUTURE STRATEGY FOR UFC

While there isn’t any doubt to the success that UFC has earned for itself from its
inception till to this date – being sold to zuffa for just $2 million in the year 2000 and
then being sold to WME-IMG for whopping $4 billion in year 2016. But still being an
avid ufc fan, I can see some areas where they can improve and might probably increase
their brand value even more.

1. NEW RULES OR NEW SERIES OF FIGHTS:

It is not a new thing to know that most of the UFC top fighters have their background
in BJJ or Wresting. Having top knowledge in the BJJ and Wresting – they have the
top of the line ground works, so basically they most of the times, pin their opponents
to the ground and fight there using various submission methods. While some fighters
love this kind of fights but most of the fan base don’t like this kind of fight (where
major of the fight takes place in the ground), rather they love to see fighters fighting
in crazy insane tricks and lots of punches and kicks and jumps. So I believe that if
UFC successfully introduce new series of fights in which the ground game is not
allowed – I honestly believe that it will be a huge hit.
 2. THE BELLATOR:
Bellator was rather a new MMA promotion company founded in year 2008 and
doesn’t really have any special edge to win over the competition of MMA business
but still they’ve rather few interesting fighters whom many fans believe have
potential to defeat the champions of UFC. So I personally believe that if UFC can by
any tricks or appeals brings these bellator fighters in the UFC octagon, it will have a
huge positive impact on UFC.

3. GIVING SPECIAL FOCUS ON THE TOP P4P FIGHTERS:

I personally do believe that if UFC give some special focus on their top P4P (pound
for pound) fighters, while improving the quality of the staple of fighters it will also
have a huge positive impact on its own earning and also on improving the brand
image as whole. Because most of the time, the champions are dethroned easily which
makes it hard for the fans to stick onto a single fighter.

4. FOCUSSING ON WOMEN FIGHTERS

I believe that in any sport, there is a complete set of fans especially for the women
who are involved in it. And the same case goes for UFC, in its recent women fights,
UFC had Ronda Rousey, a women fighter and a champion. But these days, UFC’s
roster of female fighter seems to be lacking that competition in itself. Champions in
bantamweight keep on changing since Ronda Rousey lost to Holly Holm after 6 title
defence (longest title defence in women), Holly Holm was defeated by Miesha Tate
and who was also defeated by Amanda Nunes.
So one can infer from above that the champion and the competition of the women
leagues aren’t that hard and thus entertaining at the same time, so focussing on their
women fighters and improving their quality would inversely affect them positively
and will help the brand in long haul too.

CONCLUSION:
The UFC has established itself as the dominant organization in MMA with its brand
recognition and elite fighters. However, there are few areas of improvements and area to be
creative, and if they work on it successfully – there’s high probability that it will help them in
long haul. One of it being regard to introduction of a new fight league or championship
focussing only on standing combat (rather than ground games involved hugely in BJJ and
Wrestings).
Onother one being placing some special focus on their top P4P fighters and women fighters.

If the UFC can successfully tackle the challenges and work creatively in this current MMA
business , the UFC can stay the MMA leader as the sport grows into a multi‐billion dollar
industry.