Fighting for Its Life
Grow Your Business, Not Your Inbox
At the risk of offending the Hells Angels, the two fighters boxing, wrestling, and jiujitsu-ing each other in the ring at the Orleans Arena in Las Vegas look like enforcers from that outlaw biker band. Both are meaty fellows with shaved heads, tattooed arms, and bellies that sag like sandbags. Their stares are unyielding and invite alteration with a brick.
The mixed-martial-arts card is being staged by the International Fight League. One martial artist lets out a wolflike howl, pounces on his cauliflower-eared opponent, and locks him in a half nelson. The 40-foot-high video screen behind the ring shows them dropping to the mat, where Cauliflower Ear breaks the hold, then rises to his feet and attempts to separate Wolf Man from consciousness with kicks to the head. As 3,900 onlookers cheer halfheartedly, Wolf Man gets up, and the combatants stagger around in a tight lock until Cauliflower falls on his back and-like some overturned turtle-flails his arms and legs at Wolfie, who hovers over him like an indecisive bird of prey.
Jay Larkin surveys the inaction with a weary, seen-it-all expression. "This isn't my idea of fighting," he says of the world's fastest-growing spectator sport. "To me, two guys rolling around on the floor is tedious, like watching gay foreplay."
That's not the sort of assessment you'd expect from the I.F.L.'s chief executive, but Larkin, who ran Showtime's boxing division for 25 years, is nothing if not brutally honest. He'll have to be brutal to keep his publicly traded startup-which has plowed through more than $30 million in the last year and a half-from going down for the count.
On Tuesday, Larkin announced the cancellation of the league's August 15 event at the Izod Center in East Rutherford, New Jersey. Bereft of fans, funds, sponsors, and marketable personalities, the fight promotion seems to be rapidly imploding. "Trying to revive this company is like doing open-heart surgery," concedes Larkin. "We're going to stick around as long as we possibly can."
Until now, the I.F.L. has been the best-funded of the dozens of mixed-martial arts outfits that have challenged and been smacked down by the Ultimate Fighting Championship, whose raucous, cartoonish format allows elbows to the head and puts combatants in a Mad Max-like cage called the Octagon.
"These rinky-dink organizations think all they have to do to compete with us is buy a cage and put three letters together," says Dana White, the U.F.C.'s blustery president. "Funny how they seem surprised when they get their asses whupped."
To White-a bald, beefy 38-year-old former hotel barman-ultimate fighting is not just a blood sport, it's a blood business. "Since 2001, when my partners and I bought the U.F.C., a new league has popped up every few months," he says with barely concealed glee. "They all stick around for a little while, and they all disappear."
On White's watch, the U.F.C. has dominated its rivals much like a skilled martial artist crushes his opponents. "Sometimes it has won by sheer aggression-demanding exclusivity from fighters and suing the ones who try to break their contracts," says Jon Wertheim, author of the forthcoming mixed-martial arts chronicle Blood in the Cage. "Sometimes it's clever defense work-letting other organizations overpay and bleed themselves financially."
Sometimes the U.F.C. intensifies its choke hold on the sport by chewing up the competition and spitting out pieces of bone and gristle. Last year it acquired its Japanese rival, Pride, for a reported $70 million. After consuming Pride, the U.F.C. devoured both World Extreme Cagefighting and the World Fighting Alliance. "It's the Microsoft approach," says I.F.L. middleweight Josh Haynes. "You know, absorb whatever's in your path."
The I.F.L. is not so much in danger of getting absorbed as annihilated. With the fledgling league on the ropes, White seems intent on taunting and teasing and tormenting the league before sending it toppling. "Our so-called friends in the M.M.A. [mixed martial arts] world are telling people that the I.F.L. is going out of business," says Larkin. "I like to tell people you can't spell fuck without U.F.C."
Once famously condemned by Senator John McCain as "human cockfighting," the U.F.C. is now so mainstream that Bud Light is a sponsor. Aggressive marketing and product bolstering helped reshape attitudes about the savage, free-form sport, transforming its image from scrawny freak show to brawny money machine. The U.F.C. routinely generates more income than boxing or professional wrestling, often at the same venues. Its tournaments have drawn 19,000 spectators; ringside seats have fetched as much as $1,000.
The U.F.C. not only outsells boxing and wrestling at the box office but, more impressively, its pay-per-view buys beat boxing and wrestling in all but the most elite bouts. In 2006, the league's payout was $223 million, which broke the industry record for a single year. Recent U.F.C. events have been bought by between 300,000 and 1 million homes, with shows priced up to $54.95. In contrast, the I.F.L.'s Las Vegas show was carried live on Mark Cuban's HDNet, a small cable channel that pays no rights fees and is unavailable in standard definition. It was cruel proof of the maxim "What happens in Vegas stays in Vegas."
The ratings of the U.F.C.'s weekly Spike TV reality show, The Ultimate Fighter, often stomp Nascar, baseball, and preseason N.F.L. games in the sought-after 18- to 34-year-old male demographic. Before tournaments, the names of its fighters are among the most popular entries on internet search engines. "The U.F.C. has done a phenomenal job of branding and positioning itself as the only name in the sport," says Larkin. "That's great for the U.F.C. in the short term, but terrible for the sport in the long term. The company is growing, but not the industry. For better or worse, mixed martial arts and the U.F.C. are synonymous."
Ultimate Fighting was conceived by a Southern California advertising executive in 1992 as a made-for-TV spectacle. Barefooted, bare-knuckled pugilists of varying styles were pitted against one another in an eight-sided structure with walls of chain-link fencing. "The first events were banquets of violence that lowered civilization's limbo bar," Wertheim says.
In those frontier days, the U.F.C. had no weight classes, no time limits, and only two rules: A fighter couldn't gouge an opponent's eyes or attempt to crush his windpipe. The competitions were informal; the spectators bloodthirsty; the bouts more Marquis de Sade than Marquess of Queensberry. An early slogan: "There are only three ways of winning: by knockout, submission, or death."
Unsurprisingly, politicians-notably McCain-campaigned to outlaw Ultimate Fighting. By 1997, 36 states had. Effectively banned from TV, the sport went underground, and events were organized on the Web. "Mixed martial arts wasn't even allowed on pay-per-view!" says White. "Porn was, but the U.F.C. wasn't."
Seven years ago, with the U.F.C. on the brink of extinction, two Las Vegas investors bought the league in a fire sale for $2 million. White was installed as president and given a 10 percent stake. The no-holds-barred approach was jettisoned, rules tightened, drug testing enforced, and state athletic commissions won over. In a matter of months, the U.F.C. had secured deals with an array of pay-per-view channels and was packing major arenas. Still, the new owners lost $44 million before The Ultimate Fighter debuted on testosterone-targeted Spike in 2005 and turned things around by becoming a must-see cult sensation.
The change in the U.F.C.'s fortunes did not go unnoticed by Gareb Shamus, founder of Wizard Entertainment Group in New York. The 39-year-old Shamus oversees comic-book conventions and a cluster of niche publications that includes Anime Insider, Special Ops Report, and his flagship title, Wizard, a pop-culture review aimed at nerds with Spider-Man and Angelina Jolie fetishes.
"I'm constantly scouring the world markets to identify what guys will be into next," Shamus says. "I saw Ultimate Fighting as a burgeoning sport with the potential to get really hot." And spin off lots of merchandise. Shamus and his partner, real estate developer Kurt Otto, fashioned a toned-down version that they thought would be more palatable to sponsors.
On November 29, 2006, exactly seven months after its inaugural event at the Trump Taj Mahal in Atlantic City, the I.F.L. made a public stock offering. Stoked by a 60 Minutes feature touting Ultimate Fighting as the next Nascar, shares shot from $4 to $17 by January 2007-a market cap on par with the most prosperous professional franchises.
The new league swaggered into the crowded field of M.M.A. contenders with $20 million in capital, weekly TV shows on Fox Sports Net and its emerging subsidiary MyNetworks, and plans to expand internationally. Thirteen events were planned across the country for 2007.
Itching for a fight, the U.F.C. rocked the upstart before it even answered the opening bell. No sooner had the I.F.L. announced its inaugural tournament than the U.F.C. sued the league for hiring two of its former employees. Though the case was settled out of court, litigation delayed the kickoff and spooked the unsigned Fox Sports Net and several sponsors.
On the surface, there was a lot to like about the I.F.L. The league was paying its athletes a respectable wage and, unlike the U.F.C., providing them with health insurance and a monthly stipend to train. "Unfortunately," says Larkin, "the profit projections were naive and unrealistic." But not nearly as naive and unrealistic as the cost projections. "The rich guys behind the I.F.L. looked at the U.F.C. and said, 'Holy shit! That league is all the rage! Maybe we should start our own,'" says White. "I'm flattered that we make it look that easy. The truth is, this sport is a cash-burner."
The I.F.L. quickly learned just how flammable M.M.A. can be. March 12, 2007, was the night of its maiden MyNetworks telecast. Of the 11 fights jammed onto the card, many were so dull that the network whittled them down to highlight reels. As the I.F.L.'s prime-time time slot shrank, so did its audience. By the end of October 2007, the viewers had dwindled to 362,000-a number that barely registered on Nielsen's scale-and their average age (49) was almost twice that of the typical U.F.C. fan.
Major advertising and distribution deals never materialized, and the I.F.L. reported revenue of $1.6 million in the first quarter. Alas, staging its four live events during those three months had cost $5.6 million.
In June, the league got another $12.6 million in new funding, but that money quickly evaporated. By last fall, I.F.L. stock was tracking as a pink sheet at less than 10 cents a share.
With the league reeling like a punched-up pug, it is left to Larkin to engineer one of the biggest comebacks in ring history. He retooled the organization by dramatically cutting staff, travel, and the event schedule. Production costs, once more than $1 million per show, have been trimmed to about $125,000.
Reluctantly, Larkin discontinued the monthly stipends, and restricted medical coverage to only the most elite fighters. "Those perks were a great idea, but they didn't square with the hard facts of the real world," he says. "The I.F.L. had been fair and generous to the point of putting itself out of business."
His boldest move was to euthanize the team format and replaced it with camp affiliations: Each squad is now identified by the coach with whom it trains. "The original idea of having the Happy Woodchucks fight the Angry Beavers flew in the face of everything combat sports is about," Larkin says. "Nobody had any idea who was on what team, and which team represented what city."
To survive a few more rounds of ultimate infighting, the league needs a national contract on a premium channel. It won't be with HBO, the home of World Championship Boxing. The I.F.L. was close to striking a deal with the network last spring, but talks fell apart over which company would produce the telecasts and whose announcers would call them.
"HBO wants Hertz," says Larkin. "They're not interested in Avis." Evidently, neither is ESPN, which runs U.F.C. highlights on SportsCenter. Though ESPN seems like a natural fit, the Disney-owned network is in no hurry to dip a toe into the M.M.A. pool.
The fatal blow may have been administered by another contender, Elite Xtreme Combat, which just signed a multiyear pact with its part-owner, CBS. The agreement calls for four two-hour prime-time specials in 2008. The first telecast, a May 31 card that featured YouTube sensation Kimbo Slice, was a dreary show but a huge draw, increasing the network's average ratings among men 18 to 34 by 271 percent.
"I had hoped that the first big network deal would spark others," Larkin says. In fact, he has received offers, though none he can't refuse. "The networks want our product for free," he grouses. "For years, M.M.A. companies have been willing to give it away for the sake of exposure. I'm not going to. You give away, give away, give away, and before you know it, you're out of business."
Larkin would rather consolidate than donate. He is open to a merger, if not an outright partnership. On the other hand, a would-be umbrella organization calling itself the World Organization of Mixed Martial Artists has lobbied to rank every M.M.A. fighter and sanction title matches between competing companies.
But the U.F.C. wants no part of such an alliance, and Larkin says the plan is pointless without its participation. "How can you hold a Super Bowl without the N.F.L.?" he asks. "If the U.F.C. didn't take part, the entire enterprise would be a sham."
The I.F.L. has about $2 million cash on hand. Its share price hovers around 2 cents. "If the league can keep getting new money, it can stay alive," White says. "But how much more pain is the I.F.L.'s investors willing to shoulder?" Larkin says that unless a heavy TV hitter steps up to the plate, he won't seek a third capital raise. He hasn't stanched the hemorrhaging of his fight club, but at least it's not yet on life support.
The league is on the block. The asking price is $1 million, but Larkin says any creative offer will be considered. "We're debt-free," Larkin says. Then again, bankruptcy is in the eye of the beholder. "The I.F.L. is making money," insists Matt Lindland, the coach of Team Quest. "It's just spending more money than it's making."