In the digital world which we live in, news doesn't just travel fast...it's instant! On Saturday, March 12, people across the globe may have been left asking themselves, "what is a Zuffa?" One doesn't have to follow the fight game to know the name Dana White. White is the marketing genius and President of the Ultimate Fighting Championship (UFC), the mixed martial arts promotional company that has solidified the sport in history books. According to reasearch, the word "Zuffa" is an Italian word meaning "brawl", "scuffle" or "fight with no rules." It is also the name of the parent company of the UFC brand.
Zuffa, LLC, a Nevada company backed by creative and intelligent billionaires, celebrated their 10th anniversary January 2011. What a monumental anniversary it has proven to be, and it's only March. Only two months after hitting their ten year mark, Dana White announced that Zuffa purchased its top competitor, Strikeforce, for an undisclosed amount.
This past Saturday, Dana white spoke to video reporter and writer Ariel Helwani regarding the latest acquisition by Zuffa and what the future will hold for Strikeforce. In that interview, White commented that it would be business as usual for their old rival and that there weren't any immediate changes slated for Strikeforce. However, to investors, "business as usual" is another way of saying "the company will do what it has to do to ensure the brand's success, thus protecting its parent company's investment." I would be disappointed in the triple threat team of Dana White, Frank Fertitta III and Lorenzo Fertitta if changes for the entire company were not in view. To grow, change is imminent in any business, so fans should not take it personal when the honeymoon is over and it really is "business as usual." I have never been involved in a business or any relationship where change didn't exist. It is a natural progression.
Many disenchanted fans and members of the press simply believe the UFC is killing the competition by purchasing Strikeforce and will eventually kill the brand. On the contrary, investors see Strikeforce as a great vehicle to make a push into the global market. There are more facets of such a business acquisition than cutting out the competition. Strikeforce may have been number two behind the UFC, but the gap was still large enough between the two brands that Strikeforce was not a significant and immediate threat to a powerhouse like the UFC.
However, while the threat of Strikeforce may have been less than one might think, the value is in the brand. From a business perspective, the value of intellectual property is the attraction to a company like Zuffa. Fans, fighters, and perhaps the owners of Zuffa truly love the fight game, but without a prosperous company that can go the distance, there wouldn't be a fight game unless it's in the streets. Zuffa is strategically positioning the UFC to meet their growth expectations and ensure a return on their investment.
Saturday, White said, "As we continue to grow and expand in more countries, one of the things we need are more fights. Strikeforce is a brand that fans have come to like. They do have a following, people enjoy the fights that they are putting on, and it made sense to us."
It makes sense to me as well. Smart companies build brands. Apparently, this was one of the strengths of Strikeforce management. However, even prominent brand recognition in the marketplace doesn't exempt a company from the one problem that many face: cash infusion to maintain the cost of doing business in order to grow the company to be profitable. Many brands grow to a point where they have to throttle back just to exist. If you're not going forward, then you're going backwards. Enter the deep pockets and this becomes a minor issue for the likes of a company like Zuffa, LLC. Cash flow, along with proper management, and creative marketing aligned with brand recognition, is a formula for success. Once pesky issues. such as the lack of buying power, are resolved, then the rewards of growth and profitability sit justly at the end of the rainbow. True value is always in the brand and should always be protected.
In my opinion, this purchase is exactly what White summarized in his interview. Horizontal development is growth by increasing more of what a prosperous brand is currently doing, expanding geographical territory, and/or internal expansion, thus creating greater and more diverse capacity, capability, and prominence in the market. It is the power of two or more. It helps a company make the push into a new market without eroding the major brand and spreading itself too thin. The help of another brand increases the bottom line and helps the parent company facilitate expansion for itself, as well as the industry.
From a business perspective, the purchase of Strikeforce is another smart move by Zuffa, LLC. It has also possibly secured the future for the number two MMA promotional brand that fans have grown to love. This acquisiton is not only a smart move for investors, it's a good move for the fighters, as well as fight fans. The acquisition will help Zuffa push MMA promotions into global markets, expanding the value of both brands, and will hopefully lead to bigger and better fights ensuring the best will fight the best.
So did Strikeforce tap out, was this move a draw, or did the UFC score a win by unanimous decision? Personally, I think everyone is winning in this one.