All options open for Strikeforce

On Saturday, when Ultimate Fighting Championship president Dana White announced that parent company Zuffa LLC had purchased its leading competitor, Strikeforce, the term he used to describe things going forward was, “business as usual.”

But on Monday, when White was joined for a press conference by UFC chairman and CEO Lorenzo Fertitta and Strikeforce boss Scott Coker, it became clear that anything and everything is still up for consideration.

Ultimate Fighting Championship CEO Lorenzo Fertitta joined a news conference to discuss the company's acquisition of rival Strikeforce on Monday.
(MMAWeekly photo)

Two things were clear after the news conference: One is that where Strikeforce goes from here remains a work in progress; the second was a concerted effort to push the idea the combined company does not create a monopoly in the sport of mixed martial arts.

“There are thousands of other promoters, thousands of other options (for fighters), plenty of competition,” Fertitta said. “There’s no barrier to entry. Anyone who wants can go in.”

“All you have to do is raise some cash and jump in the business, try and get a TV deal and have some big balls,” White said.

But the reality is different, at least at present. Nearly every major star and potential legitimate championship-level fighter in the sport is now locked up and under contract to Zuffa. The only exceptions are a few fighters in Bellator and featherweights Bibiano Fernandes and Hatsu Hioki, both of whom have no name value outside of Japan.

For a top fighter, there is nobody outside of Zuffa who can afford the kind of money the elite fighters can get. Putting the two leading companies under the same umbrella removes the leverage fighters had in terms of getting better deals.

The majority owner of Strikeforce was Silicon Valley Sports and Entertainment, the company that runs the HP Pavilion in San Jose, the company’s home base since 2006, and the San Jose Sharks.

SVSE didn’t seem interested in expanding to compete on a national level against UFC. But as long as they were running something bigger than a local-level show, they were at war with the combative White, whether or not they wanted that battle.

Coker, a local martial arts promoter going back two decades, was part-owner of the company. Under terms of the deal, Coker gets a long-term contract to work for Zuffa but no ownership stake.

Coker wouldn’t say who else was bidding to buy the company, but Pro Elite, Inc., which had the Showtime deal in 2007 and 2008 before going belly-up and having its assets purchased by Strikeforce in early 2009, had raised new capital and had reportedly made a $40 million offer.

Other names, including Shelly Finkel, Mike Tyson’s manager, were reportedly interested. While Fertitta said he was not aware of other offers while negotiating this deal, insiders with knowledge of the negotiations said the UFC deal was more lucrative and they kept raising the ante until the deal was agreed upon.

“Silicon Valley Sports and us were great partners,” Coker said. “They wanted to get back to their core business, the hockey business and expansion of their other sports businesses. We had a long conversation and started taking different offers and then we started talking to Lorenzo. They had a really good time in this business, but they wanted to get back to their core business. I wanted to stay in this business and this is how we hooked up.”

As soon as the deal was done, rumors began swirling that Strikeforce would exist as a separate company to fulfill the Showtime contract, but that eventually the brand would disappear, similar to what happened with World Extreme Cagefighting, which merged into UFC at the end of last year.

White laughed when the idea was floated at the press conference and didn’t deny it.

“Who knows?” he asked. “Anything’s possible. I’d never say never to anything. For now, Strikeforce will continue to run shows on Showtime. We own Strikeforce now. Showtime runs the production. There’s a lot of things we can do in house to make it a better experience for fighters and fans.”

White and Fertitta talked about the new partnership as a way to get enough fighters under contract to expand internationally. Both talked of running more shows in markets like Europe, Asia and Australia. Fertitta noted that there is a demand for more shows than the company is supplying, particularly in the U.K. and Australia.

There is no question a demand for live events in more markets than the promotion is currently supplying. But as a television and pay-per-view product in North America, there are questions about whether the company is hitting the saturation point.

Pay-per-view last year set records in the combat sports genre for the third straight year. But television ratings for both UFC and Strikeforce declined in 2010. The UFC’s major live event specials on Spike TV decreased from a 1.73 average rating in 2009 to a 1.26.

The most recent UFC live event, on March 3 on Versus, did a 0.67 rating, the lowest for a full live event in the history of the company and 33 percent down from the previous two UFC events on Versus. The ratings were lower than many of the former WEC events on the station.

Strikeforce major events on Showtime fell from a 1.40 average rating in 2009 to 1.29 in 2010. But they’ve fared better so far in 2011, drawing strong numbers for a show featuring Herschel Walker, and breaking Showtime MMA viewership records for a Feb. 12 event with the first round of a heavyweight tournament featuring Fedor Emelianenko.

Emelianenko will remain under contract with Showtime, which opens up opportunities to do matches like Emelianenko vs. Brock Lesnar that were previously impossible.

The heavyweight tournament will continue as planned, and White indicated that the finals would likely become Strikeforce’s first foray into pay-per-view.

White and Fertitta have never subscribed to the idea there can be too much product, citing sports like football and baseball which produce countless times the number of events as UFC does. Right now there is no clear answer, because as the company has expanded its number of dates, pay-per-view and television numbers give conflicting messages. But there is also a clear message that the UFC fan base is less interested in watching what they consider to be secondary shows.

Fertitta talked about using the larger roster to run far more frequently, particularly overseas. He used the booming Australian market as an example. UFC has run twice in Sydney, over the last two Februaries, with both events selling out immediately.

He talked of that market, and the U.K. market, as being able to run one or two major events per year, similar to the type they already get, plus 8-10 smaller events.

The company has also talked of the idea of doing an Ultimate Fighter show geared toward those two markets, with an Australia vs. U.K. theme, to showcase new fighters who can be promoted as local stars. The idea of doing specific Ultimate Fighter shows in different countries like Mexico, Brazil and European countries has been talked about for a few years as a way to expose and develop new stars and raise awareness of the brand.

As far as Strikeforce itself goes, its scheduled events, starting with a minor show on April 1 in Stockton, Calif., and a major show eight nights later in San Diego, will take place and air on Showtime as scheduled. The only obvious change is that elbows to the head on the ground, which had been banned by the Strikeforce organization, will now be legal.

Strikeforce will continue to use a six-sided cage, as opposed to an octagonal cage, but both organizations will use identical rules.

“We’re really in the early stages,” Fertitta said. “We haven’t had a chance to meet with the Showtime guys. As of now, there’s a contract in place (through 2014) where Strikeforce is going to deliver 16 fights for Showtime.”

This creates an interesting dynamic, since many in the Zuffa organization have been very critical of the Strikeforce announcing crew, and White and Showtime announcer Frank Shamrock, in particular, have had issues for years.

“This is one of those weird situations where we go in and do this deal and there’s a lot of people (in Strikeforce) who aren’t big fans of mine,” White said. “We can still do business. Scott Coker is going to be running the day-to-day operations of Strikeforce. They’re never going to have to deal with me. If they have to, they can do business with Lorenzo.”

An issue has already arisen where Paul Daley, who was set to challenge Nick Diaz for the Strikeforce welterweight title in the main event on April 9 in San Diego, is publicly having second thoughts. Daley was fired by White from UFC in May when he sucker-punched Josh Koscheck after a loss. At the time, White said that Daley would never fight in UFC again, and on Saturday, he said while all contracts would be honored, that Daley would still never fight in UFC again.

Daley tweeted after getting word of the sale, “Not sure what I’m gonna do right now, honestly … fight for Strikeforce and be Strikeforce champ, put money in ZUFFA/Dana White’s pockets? Or fight here in the U.K. for BAMMA, who appreciate my brand, and have my loyal fans, family and media support me. For real.”

On Saturday, White talked about the organizations being run separately and that fighters would not cross over. But he said that has already changed.

“That has changed from Saturday until today,” he said.

White has, as one of his regular talking points, talked of boxing, and saying that they are students of boxing and have learned from boxing what not to do. One of the things Zuffa has done is attempted to try and avoid diluting the value of championships by creating too many, but in one fell swoop, they go from seven championships to 14.

UFC has seven men’s championships, while Strikeforce has five men’s titles, plus two women’s championships at 135 and 145.

“They (the Strikeforce champions) were champion on Saturday and they are today,” White said. “Will these guys (the UFC and Strikeforce champions) never face each other? No. Our job is to make the fights people want to see.”

Dave Meltzer covers mixed martial arts for Yahoo! Sports. Send Dave a question or comment for potential use in a future column or webcast.
Updated Monday, Mar 14, 2011