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Editorial: Learning from Elite XC’s Mistakes

With the recent collapse of MMA superbrand Elite XC, it appears it may be as difficult to survive outside the ring in MMA as in it. Here we take a look at what it takes to build a successful and consistent show in the knock-down, drag-out world of the fight business.

It’s hard to pin point one area in which Elite XC made the mistakes which led to their downfall. It seems they failed to heed nearly every good precedent set in the building of a profitable MMA promotion. We look to monsters of the sport, UFC and star performer Strikeforce for how it’s done.

Elite XC came flying out of the gates, investing heavily in smaller, more regional promotions such as Cage Rage, Icon Sport, King of the Cage and South Korea’s Spirit MC. The idea is said to have been that this was the quickest way to establish a foothold on the global market and a stable of talented fighters. With strong financial backing this seemed a fast track to instantly become a big player on the MMA scene. What the suits failed to realise was that each of these promotions had become success stories due to being someone’s baby. For example Cage Rage was built from the ground up by Andy Geer and Dave O’Donnell, along with a handful of other employees. They knew the fighters, the local scene and their audience, and had invested blood sweat and tears to make it work. In buying out Cage Rage, they diluted the promoters’ enthusiasm and lost part of the company’s most valuable asset. In attempting to run all of these promotions centrally, they required an infrastructure, new personnel and overheads such as offices. Furthermore, the fighters they acquired may have been a good draw locally, but many would not be on the larger stage Elite XC aspired to be on. Acquisition and running of Cage Rage alone is reported to have cost them $18 million of their approximately $55 million debt at time of closure.
In terms of staff they made some mistakes, but also some good choices. Bringing on board Kimbo Slice and Gina Carano did wonders in drawing casual viewers to their CBS shows. They had a reasonably good stable of mid-level fighters to vie for belts in most divisions and some entertaining and talented champions, such as Robbie Lawler and Jake Shields. It could be said their worst staff were those behind the scenes. A top heavy management structure helped to quickly suck dry the capital which could have been used to acquire fighters or on marketing. Worse still, many of these managers were relatively new to MMA (Gary Shaw), new to fight promotion (Jared Shaw) or had poor track records with previous promotions (Jeremy Lappen was CEO of the WFA, who sold many of its assets to Zuffa not two years ago before ceasing operations). Conversely, even the UFC ran with only a handful of management and administrative staff for years whilst trying to get their brand off the ground.
A good example of how to do it can be seen with Scott Coker’s Strikeforce MMA promotion. They hold shows mainly along the pacific coast, showcasing local fighters, promising talents and good value draws. They find their home in San Jose, California and have made local heroes Cung Le, Frank Shamrock and Josh Thomson the cornerstone of their shows. They have recently broadened their operating area, spreading to Washington, where they headlined local boy Bob Sapp, and doing shows in the Playboy mansion for broadcast on NBC. Strikeforce’s strength is a solid local following, a seasoned promoter who knows his fighters and his area, and a slow expansion using low risk strategies. They have been rewarded with steady profits and national exposure via television. Having scouted and developed talent of their own they should be set for more good fortune in the future. Even Dana White, usually quick to trash his competition, has commented that he has no problems with Scott Coker and some admiration for his way of doing things. Who knows, maybe eventually Strikeforce will be able to scale its success to the lofty heights all but the UFC can only dream of.

So enough negativity, what did Elite XC do right, and what can we learn from their story and the story of Bodogfight, IFL, WFA and many others who fell by the wayside?
1. Crossover appeal. Despite drawing the ire of many a purist, their use of Kimbo Slice and Gina Carano was an undeniable success, propelling their viewing figures toward the top of the list of most viewed MMA shows ever. Their show headlined by the Robbie Lawler vs Scott Smith title fight failed to reach these dizzy heights of viewership, highlighting the difference Slice’s internet brawling following and Carano’s American Gladiators celebrity made.Promoters will surely make more use of this approach in the future, cashing in on the Bobby Lashleys and Kurt Angles of the world to put butts in seats.
2. Get on TV. It seems obvious, but being on TV at nearly any cost is a benefit to any promotion. Even with all the pitfalls Elite XC fell into, their TV deal with CBS came close to saving them and catapulted them to the big time in the MMA world way ahead of time. Although they were unable to survive long enough to capitalize, they were quickly becoming a nationally recognizable name. Zuffa’s Ultimate Fighter show exemplifies what TV exposure can do for a promotion.
3. Don’t try to compete with the UFC. Much as in a fight, while you have to be wary of what your opponent is doing, it is most important to fight your own fight. Building up slowly and steadily has been proven the way to go. Perhaps Affliction could pay attention to this example, having recently further angered the UFC after being in talks to cease the fight promotion business and return to the UFC as a sponsor and clothing manufacturer. The UFC chose to put a dent in Affliction’s first PayPerView tally by airing a show of their own free on Spike TV at the same time. It may be better to let sleeping giants lie when it comes to Dana White and the Fertittas.
4. Take it slowly. UFC struggled for many years to build its brand, and they already had the name of the original MMA institution in the USA. Building brand awareness is a very expensive business, especially when the market is dominated so by one uberbrand, namely the UFC. Much like Coke or MacDonalds, you’re not going to blow them out of the water with their household name and rich history, so don’t blow your wad too quickly trying.
5. Make sure each asset you purchase represents a good return. If you pay a fighter $500k a fight, will they make you more than half a mill back? Kimbo did! If you pay a great fighter with few fans $100k a fight, will he get you a return? Possibly not. If you pay a CEO a million a year or buy a show for $3 million, will it make you that back and a profit? Not likely. Developing your own talent is also a necessity, as signing free agents can prove an expensive luxury. In fairness to Elite XC, they had attempted to do this with their ShoXC shows, but died before being able to reap the dividends.

One observation struck me whilst compiling the list of mistakes catalogued in this article. That is that Affliction has made nearly all of them. Hmm, best of luck with that guys. Hope I’m wrong.