David Samuels: All right, man. You’ve put something incredible together here.
Lorenzo Feritta: It really has turned out to be that way. You know, when we first got involved in this thing—obviously, I’m sure you’ve heard this story, me and Dana were buddies.
DS: He was your cardio-boxing instructor?
LF: Yeah. Well we went to high school together, so I’d known him for a long time. We kind of hooked up again at a wedding, he told me what he was doing. And I was like ‘well, that sounds interesting, I’d like to try that out. I need to get back in shape.’ So I started training with him, and our friendship just came together again. And I started hanging out. And at the time, I was on the boxing commission. Both me and Dana had a great love for boxing. So it just blossomed into being best friends again, going to fights together and talking about fights, and that’s really what our life and relationship revolved around. And then we came across this, and thought, well let’s buy it.
DS: Isn’t that the kind of dumb thought that people with a lot of money aren’t supposed to have?
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LF: Absolutely. But it was out of pure—I don’t know what you’d call it. It’s a vanity business. We actually went down to a fight, when he was managing Tito Ortiz, we went down to a fight in New Orleans, and we got to New Orleans, and there was no feeling that there was even an event going on. Nobody knew about it and there was nothing going on. We got in the car and we drove out to the venue and it was kind of far away, and there was nobody there. I said, ‘you know, I want to buy a UFC t-shirt, it sounds cool.’ Nobody was even selling t-shirts. They weren’t selling programs. Maybe 15% of the seats were full. It was just amazing, and I was sitting there watching the event going ‘wow, this could really be something. What am I missing? What’s different about me—am I really that sick and twisted—that I REALLY like this? Not that I kinda kinda like it, that I really like it, and nobody else cares.’
I think the biggest thing is there was this stigma associated with ultimate fighting and the UFC. And there was such a bad feeling about it, and negative connotation associated with it, particularly among regulators, in general, because of the way they handled things in the early days. You know, they shied away—they kind of took on these governmental bodies saying you can’t tell us what to do, we’re gonna do it the way we want. You know, we don’t fall under your regulatory authority. Well, who’s gonna win that one, okay? You’re not gonna win that fight.
DS: How much money have you put into it since that initial 2 million bucks?
LF: I think we got up to like 44 million
DS: What was the year that you stopped putting money back in?
LF: I think we broke even and stopped putting money in—I think 05 was the breaking even year.
DS: And since then have you taken money out?
LF: Yeah, yeah, we’ve taken some money out.
DS: Have you gotten back your 44 million yet?
LF: We’ve never disclosed that. Um, so I’d rather not. But it takes a lot of money to get back 44 million, I can tell you that. But I’m happy with where we are. We’re on a good trajectory.
If you look at the business model of a boxing promoter, there’s really not a lot to the business model. Most operations are like four or five people. You have the promoter, a secretary, maybe a PR guy, and a fax machine. I mean, what do they really do at the end of the day for an event? They don’t risk any capital. They don’t put up any capital. They don’t do the production. They don’t do any of the creative, any of the production. They don’t do the marketing. Literally what a boxing promoter has to do is schedule the press conference and buy plane tickets, make sure the fighters arrive on time.
DS: And your business model here is what?
LF: We call it the wheel. The UFC wheel. You’ve got your core— the pay per view. That’s essentially your product, right? And then, you know, you have spinoff things. You can sell it on DVD. Then after you sell it on DVD, you repurpose it and sell it too, put it in syndication on UFC Wired, or on Spike TV. Then you have products that you then put on the internet through VOD and other VOD platforms. Then you have other licensing opportunities like apparel and merchandise and video games, and all the way down. So it’s a complex business.
And we want to build the infrastructure to be able to handle that. So we’re going to have a real marketing department, okay? And not just rely on the pay per view providers to say that they’re gonna market for us. I want to control that. We have an in-house team of people that have direct contact with the cable companies. There’s literally maybe a thousand different cable companies in the U.S. that you have to distribute this product to. And I don’t believe in just letting somebody do that for us, so we’re very involved with how that works. As well as with Direct TV and Dish. Beyond that, we have our PR department. And it’s not just about going and hiring a PR firm and saying go do this for us. We have it in-house. We want to build the relationships in-house, we want to know these people. Every other sport just hands everything over to a network and says you guys do whatever you want with it, we’ll have some input or whatever but HBO rolls in and does boxing. Even the NFL. The major networks roll in and they just do everything for them. We do everything. And one thing about Dana that has made us very successful—he is passionate and meticulous about the product, and he gets how the product should be, and how that needs to resonate with the consumer.
DS: He does a good job at what he does, but you’re the guy who’s put together a world-class business before, and when I look at this organization, I’m clear in my head about who’s probably thinking about this stuff and making these larger strategic decisions. When I talk to people in the organization, they all say ‘Lorenzo does that.’
LF: It’s just a different thing. But I will say that me and Dana make decisions together.
DS: You and your brother Frank have made a fortune from the Station Casino chain, which was founded by your dad.
LF: A lot of guys get frustrated because their dad won’t give them any control at all. I had a different sort of frustration. My dad literally said, 'Okay, here are the keys, you run it.' It’s like either you’re gonna drown or you’re gonna figure it out. It’s like throwing a baby into water. He did the same thing with my brother. He graduated from USC, and he was running the joint right away. And it worked out pretty good. My dad came to Vegas from Galveston and worked his way up in every casino in town as a dealer, and then a pit boss, and then a casino manager, before he started the Station Casino as a place for local people to gamble. He retired in 1993. We had one casino, and we went public that year. I can remember being on the road show, talking to all these big institutional accounts. I was 24, and my brother was 31. Now I guess with the internet age, it’s not as weird. You expect young guys to be doing this stuff. But back then, it was kind of weird. We built the business up to—what do we have now, 17 casinos? 18 if you include the one we manage. I think we’re the 5th or 6th largest casino company in the country. We’re traded on the New York Stock Exchange. We did a private transaction—I don’t know how many billions of dollars last year.
DS: You don’t take UFC bets at the Station Casinos. Why?
LF: When we bought the company, I went straight to the regulators here about it and said ‘Okay, this is what we’re doing. Do you have a problem if we take bets?’ And they’re like, ‘you know, legally, no, we don’t. But you know, why don’t you just see how things go?’ And I just made a conscious decision that of course there would never ever be anything untoward or wrong or illegal for doing that, but just from a public perception standpoint, a guy that makes a bet, maybe. Once those fights start, we hand those keys over to the state of Nevada. We don’t pick the refs, we don’t pick the judges, we make no decisions. Totally out of our hands! The average guy doesn’t believe that, know what I mean? So a guy makes a bet, and the judges make a bad call, the referee makes a call and he’s like you know—it’s just not worth it.
DS: I want to go around that wheel. Let’s start with the Spike tv connection. The idea of having a reality show that feeds into a professional sport gives the fan the sense that ‘I could, in some alternate universe, in my imagination, become a participant. The barrier between their world and my world is not absolute.’ In other words, one of the fantasies that you’re offering people in this sport is the reality contestant fantasy—that an average person, or a person with skill in the sport, could make that leap from the couch to the Octagon. Talk about how that idea came together and how the relationship with Spike came together.