Interviews November 2008

Lorenzo Fertitta

Lorenzo Fertitta, the billionaire majority owner of the UFC, rarely grants interviews, but he agreed to sit down with David Samuels for his story for The Atlantic. Here is a partial transcript of their conversation
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LF: We went around when we first bought the company, and got together with United Talent Agency, UTA. At the time UFC was a small deal. I think they felt like we were lucky that we were working with them. Today it would be a whole different story. Dana and I flew to LA maybe 50 times. We met with—you name it. MTV. CBS. ABC. ESPN, HBO, Showtime, Spike, USA. We probably met with the Food Channel too. I don’t know. We met with everybody. And to a ‘t,’ every single person said ‘this won’t work. Get out of my office. This is a joke. It’s boring.’ We were just looking at each other going, ‘what are we missing here?’ 

So we had to take a step back. And we partnered up with Craig Pelligian, the reality show producer, who we had originally met through UTA, and then that relationship went away, and then about I don’t know how many years later, let’s say two years later, he called and said he wanted to do a reality show about a casino, and the only person he knew in the casino business was me. And would I be interested. And originally I said ‘nah, I’m not really into that kind of stuff, I kinda have a low profile.’ But we started talking about it and I said, 'You know what, it actually might help our business, and so for business’s sake, you know, we’ll talk about it.' So we ended up doing a deal. American Casino went on the Discovery Channel. It actually did okay.

So I got on the phone with Craig one day. I said you know the Ultimate Fighting thing again, he says ‘yeah, we gotta figure a way to get that on.’ I said ‘yeah, but we met with everybody, and everybody’s turned us down.’ And just through talking to Craig, he goes, ‘you know another way you could do it, is you could just bankroll, and then go and sell to sponsors yourself to finance it.’ I go ‘wow, I didn’t even know that, I didn’t even think of that. Maybe that’s what we do.’ So that’s essentially what the strategy was. So we sat back down with Spike. And Spike wasn’t real enthusiastic about it, but after about 3 or 4 meetings, they’re like yeah, okay, we’ll do it.  It was gonna be the Trojan horse. We were gonna let people see kind of how these guys are, that they’re not thugs, that they have backgrounds, they’re real guys, it’s gonna be great, they’re gonna live in a house and they’ll fight each other, and it’ll be great. And then I pick up the paper, and it’s like Oscar De La Hoya announces that he’s doing this reality show called the Next Great Champion, or whatever it’s called. And then a couple weeks later, Mark Burnett’s doing The Contender. So that didn’t help either. Because in trying to go and talk to a sponsor, it was like, this is the stupidest thing ever. If I’m gonna put money on anything, I’m gonna do it with Mark Burnett or with De La Hoya.

And do you know how many commercials we sold and how many sponsors we sold that first season? Zero. Spike didn’t promote it at all. We had funded this thing, 8, 10 million bucks to produce this thing, and about three weeks before it was gonna air, we’re like, they’re not gonna commit to any advertising or promotion.We’re screwed. So we spent like three million dollars buying billboards and radio and tv—going look—someone’s like—I’ve been playing blackjack for 8 hours, and I started with a thousand dollars, and I got 5 dollars left, I might as well put it all out.  Who cares at this point. So we’re like, let’s just go all in. If it works, it works, if it doesn’t, we’re toast. Put it on, and the ratings came back after the first one, we’re like holy shit. We started looking, compared to Spike’s ratings, we’re like ‘Wow! Those are huge!’

DS: My calculations are that the venue is making gross probably 4 or 5 million bucks a fight, in terms of hotel rooms, gambling, food and beverage. And you’re getting the gate and you’re paying them what to use the arena?

LF: Arena fee is around a hundred—I really don’t want it out there. It’s a six figure.

DS: Now one thing that people have been talking a lot about lately, some politely, some not, is the percentage of that pay per view and gate that’s going to fighters. It’s a low number, it’s 5-8%. You look at boxing, you’re talking about numbers that are, depending on who’s fighting when, 50%. Guys are going out in the ring, they can get killed. Why is the percentage that’s going to fighters in mixed martial arts so low?

LF: A, that’s not true. That’s not true. B, What you have to understand is that the fighters make a base amount. Okay? And on top of that, they have incentives based upon how we perform. Because what was happening was, I was losing so much money every event that I wasn’t willing to go and guarantee big amounts. What I would say to a guy, —I’m talking about the guys that we think make a difference, like Chuck Liddell. ‘Obviously we want you in, we can pay you x, and you know, once we hit a certain mark, we’ll cut you in on the pay per view. Okay?’ I think Randy Couture broke his confidentiality agreement, put it all out, so everybody got a pretty good idea of how it works. It’s kind of, ‘you eat what you kill kind of thing.’ And the fighters like it. You know, they’re fine with it. So when people say, guys are only making 5-8% or whatever, that’s not counting the back end of the deal, which is multiples upon multiples greater than what the base amount is.

DS: They’re getting less than boxers.

LF:  Because it’s a different business model. In boxing, what happens is, the boxing promoter comes in, he doesn’t risk any capital. HBO comes in and does all the production. And does all the marketing. And they’re also carrying all the overhead. They got all the staff and everything. It shouldn’t be and it can’t be an apples and apples comparison. Now, do we make money? Absolutely we make money. But it’s not as simple as saying that boxers get paid 50% and we pay out 5-8%. That’s not correct. The guys that are complaining about their pay are making millions. I think Dana even put out there that—in '07, or '06, when Tito Ortiz fought three times, he made like 6 million dollars. Okay? And he’s the biggest guy saying I want to make more money.

And one thing that nobody could ever say about me or Frank or Dana is nobody’s check ever bounced, and we never went to anybody and said look, you know what, we can’t afford to pay you as much as we said . Everybody always got paid for the deal they were contracted for. And I will say this. We are the only promoters in the history of combat sport, that actually have paid fighters more than they’re contracted for.

I believe that what we built here is an incredible machine and an incredible brand. You hear a lot of criticism, ‘these guys all they care about is the brand, it’s not about the fighters.’ Well let me tell you what. This brand has made a lot of money for a lot of fighters who in and of themselves didn’t have a brand of their own before they fought in the UFC. So the brand creates a lot of value for these guys. 

DS: How do you understand your audience right now? Who are they? 

LF: At the end of the day, me and Dana are really 23 year old fight fanatics. I might have gray hair and be turning on forty, but I think like an 18-25 year old. I listen to that music. I like it. I dress like that. That’s just my lifestyle. I think we get our demographic and get our fans. And that’s what I was talking about with Dana. He knows that when he gets excited about a fight and the way it feels and looks and comes across, that the general public in our demographic is gonna get it.

DS: What is it about this sport now that is getting this audience under 35? I go out there, you’ve got 12, 13-year-olds to 35-year-old men and women, and they’re psyched. Is it because they were exposed to martial arts and different fighting styles when they were younger?

LF: It’s clearly a generational thing. You go back to the old western like a John Wayne movie where John Wayne would hit a guy, drop him, and then what would he do, grab him and literally pick him up and stand him back up! Right? So he could hit him again. I mean, it’s crazy! Who would ever do that? That’s not how fights work. We’ve all seen fights in bars and wherever, I don’t care if it’s a cowboy fight or whatever kind of fight. They didn’t used to fight like that. But that’s the way that TV influenced American culture, which evolved into, You don’t kick a man when he’s down. You don’t hit a man when he’s down.

Well, you go to Japan and Brazil and these other countries, they don’t think like that! You know, it’s not in their culture. And I think maybe through martial arts movies, or our impact on popular culture in the United States, that the younger generation didn’t grow up thinking that way.

Also, I think for the young male, it’s obvious there’s been a lot of research and everything that people’s attention spans are getting a lot shorter. You know, the ADD world that we live in. And you know, when I talk to my nephews, for instance, I’ll say, ‘Did you watch the fight the other night?’ They’re like ‘Oh there’s a UFC?’ I’m like, “No, the boxing match.’  They don’t watch that. It’s too long! I don’t want to sit there for that long. I said ‘Well what about UFC?’ They said it’s short, quick, and concise.

And there’s the holy shit factor. Actually, they said ‘the holy fucking shit factor.’ It happens at every fight. At least one or two times in every UFC show, whether you say it out loud or you say it to yourself, you go, ‘holy shit did that just happen?’ I mean, you might see somebody do a flip, get kicked in the head, get knocked out with a punch. At some point, you’re going ‘whoah, did that just happen? Did I really just see that?’ That’s the nucleus of what our product is.

DS: Do you think you’re gonna see more servicemen coming in? I mean, they’re training in a bunch of this shit, they’ve seen combat, they’re gonna need some outlet, you’ve got a hundred thousand guys now that have cycled through Afghanistan and Iraq in combat situations. If one percent of those guys want to fight, then you’re already dealing with a pool of—

LF: That’s possible. You know, it’s a good question. I’ve never thought about it that way. Really, what I think about more is that—look, this is an outlet where guys really can have careers and make a lot of money. Make millions of dollars. And if not millions of dollars, then enough money to live a damn good lifestyle and have a career. If you think about martial arts just in general in the United States, you could be in any major city, okay? Not even in any major city. In any quasi-major city. And be anywhere in that city, and draw a three-mile concentric ring from where your standing. And there will be a martial arts studio within that 3-mile concentric ring.

DS: One martial arts studio? There will be several dozen.

LF: There might be tons! But I’m saying at least a martial arts studio. To think, put it in a magnitude of how many martial arts studios there are. I think the last I saw, and don’t quote me on this, I don’t even know if it’s a relative statistic—one time, somebody told me there was like 12—it’s the largest—if you can call it a participatory sport, it might be the largest in the United States. It’s something like 11 or 12 million people have done or are doing some type of martial art, at some point in their life. Whether they took a karate class, tae kwon do, kickboxing, whatever it might be. So okay, you think about that just base of people. Okay. So as the pyramid is very large at the bottom, and you whittle your way up, that’s the elite, the best, the guys. Now a portion of those guys are gonna want to compete and put their skill level to the test. In addition to that, you have wrestling, okay? Historically, real wrestling has been an incredible sport, particularly all around the United States, but there’s never been an outlet.

DS: Nobody wants to watch real wrestling besides wrestlers.

LF: And if you don’t win a gold medal, there’s no outlet to make money, and even if you do win the gold medal, you probably won’t make money either. So what we have become is a great outlet for a guy—you don’t have to be an elite wrestler, you can just be a good high school wrestler. If you have that base, then you have the ability to be a good mixed martial artist. Got these guys now, they can be millionaires and have a career

DS: I have a cousin who’s a former elite Israeli commando, and he’s a black belt in jujitsu and has a bunch of other martial arts skills. For him, this is like a complex physical and spiritual discipline. He’ll go with his master to some place in Japan, and you know, I make fun of him sometimes, it’s like from a bad old karate movie. But it’s real to him. And he sees these skills as both a deadly and profound matter and as something that shouldn’t be mixed up with money. Is there a way that you turn these things that do have a spiritual component to them, and you turn them into a professional sport, you start putting millions of dollars out there, and you just fuck up the karma of these disciplines that were supposed to be about a more complex mastery of body and mind?

LF: You know, look, everybody’s got their own opinion. I certainly don’t subscribe to that. Boy, this is probably going to get me in trouble. Shit. I think there was a lot of people over the last 3 or 4 decades that made a lot of money putting out what I’ll call myths. Meaning that if you keep taking my class every week and paying me 40 dollars, I will show you that tae kwon do or kung fu or karate is the best martial art, and you will become a killer, and you know, it will take over your mind, spirit, and body. Well, the bottom line is, a lot of that shit doesn’t work. It’s not really fighting. So for me, I’m a purist. And the ultimate reality is what happens inside that octagon on a Saturday night. 

DS: Which brings me to the Gracie family. How would you define their role and their impact on mixed martial arts and on the UFC?

LF: It’s almost impossible to define it. They’ve had the most significant role that there is, ever. I mean, they created the whole way, the whole thing. They were the myth-breakers. They showed everybody that this is the most effective form of fighting.

DS: When you hear Rickson Gracie talk about how, at the age of 47 or whatever he is now, that he could beat the crap out of these UFC fighters that he sees on TV now, is that an older man’s understandable vanity? Or is he telling the truth?

LF: Let’s do it! I mean, that’s the ultimate test, that’s what I said, right? Let’s find out! If that’s the truth, then let’s find out! I mean, don’t just say it. Let’s do it!

David Samuels is the author of Only Love Can Break Your Heart, a collection of essays and reporting, and The Runner: A True Account of the Amazing Adventures and Fantastical Lies of the Ivy League Imposter James Hogue.
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David Samuels is a regular contributor to The Atlantic.

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