Inside USD

Fertitta Returns to USD, Talks ‘Ultimate’ Business

Monday, February 21, 2011

If there’s one very important business skill Lorenzo Fertitta has mastered it’s knowing your audience.

The chairman and chief executive officer of Zuffa LLC, a sports promotion company whose meal ticket is selling mixed martial arts (MMA) through the hugely popular brand, Ultimate Fighting Championship, returned to his undergraduate alma mater, the University of San Diego, last Thursday.

“There are some UFC T-shirts outside and they were done in the (university’s) dark and light blue colors,” Fertitta ’91 (BBA, finance) announced near the end of his energized hour-long talk to an audience of USD School of Business Administration students, staff and administrators.

“I was very impressed,” said USD freshman Franco Macklis, a marketing major. “I’ve been to a couple of other (USD) speeches and I’ve never seen one so packed. You could see the interest and I’m pretty sure he enjoyed talking to us. It was all very interesting. He was pretty motivational. It was great to hear from an alumnus from USD who is so successful.”

Accompanied by UFC President Dana White, Fertitta talked all things UFC. He showed promotional videos with the volume matching the “high octane, high testosterone” energy of MMA, a sport that has grown by leaps and bounds from its niche status in the early 1990s. Lorenzo and older brother, Frank, formed Zuffa and purchased UFC from Semaphore Entertainment Group for $2 million in January 2001. Today, UFC events have been viewed by over 450 million people in more than 140 countries worldwide.

“We had no business experience in sports, pay-per-views, etc. People thought we were nuts,” said Fertitta, who was raised in a family business atmosphere that included the gaming industry, managing investment portfolios and more. He has been a top executive for Gordon Biersch Brewing Company and even served as a commissioner on the Nevada State Athletic Commission.

But Fertitta and White, a childhood friend, had followed MMA for some time, even attending events. Fertitta, who grew up as a huge boxing fan in Las Vegas and was originally recruited to USD for football, took a keen interest in MMA. He gained contacts in the business. He developed a personal interest in martial arts training, including Brazilian Jiu-Jitsu, which is one of many disciplines UFC competitors employ in their matches. He said the training became an addiction.

“It’s all about the art, technique and respect,” he said.

So when White told him that the UFC brand was for sale, he was ready to take the risk. Having seen it firsthand as a customer, he recognized the potential earning power of the sport, and put his business education from USD and an MBA at Stern School of Business at New York University to immediate use.

Fertitta employed marketing, advertising and just about anything else he could think of to gain visibility and build the brand. One of his toughest tasks was getting UFC on television.

“Nobody wanted us,” he said. That was until they went to cable’s Spike TV and self-financed a deal. In exchange, Zuffa maintained all rights to the material. Spike TV agreed. It made Fertitta and his partners work that much harder, but it also provided the reward.

“When it was time to re-up with them, that’s where the value was,” he said. “We owned all the rights.”

The pay-per-view business is, according to Fertitta, responsible for 80 percent of the company’s revenues. As UFC’s visibility increases and the pay-per-view business grows and content continues to be repurposed, profit and popularity follow. Live events regularly draw A-list celebrities, and are a must-have ticket in Las Vegas. The UFC also continues to take its brand to new markets. Most recently, 55,000 tickets were sold in 29 minutes for an April show at Toronto’s Rogers Centre.

Shows such as Spike TV’s “The Ultimate Fighter,” — a competitive entity with a reality-show component —have been important for expanding the brand. It actually adds to UFC’s talent base, too, as many show participants have found a place in UFC or other MMA organizations. High-profile sponsorship deals legitimize the company’s appeal to key age demographics. Social media success through Facebook, Twitter a UFC Channel on YouTube, White’s video blog and creative marketing approaches keep UFC relevant to the masses.

“I’ve heard a lot about the UFC and I was intrigued by the marketing aspects he talked about,” said Christina Brunini, a USD sophomore marketing student who is from Las Vegas. “I learned about all of the different fields of promotion for it. Watching the videos he presented inspires me to do something like that.”

The success of UFC has enabled Zuffa to buy out several of its MMA competitors, though some remain. Fertitta admitted it keeps him focused on being the best.

Fertitta was asked about ways UFC is giving back. In the U.S., the company has been raising awareness and money for the Intrepid Fallen Heroes Fund. The nonprofit organization helps severely wounded U.S. military personnel, veterans and families of military personnel who are lost while serving their country. UFC has televised two of its three “Fight for the Troops” events, the most recent taking place in January at Fort Hood, Texas.

Fertitta said the company continues pushing itself into international markets. In 2009, Zuffa sold a 10 percent stake to the investment arm of the Abu Dhabi government and said it has helped establish connections in China and India. Additionally, Sydney, Australia’s Acer Arena will host the UFC 127 PPV on Feb. 26.

He demonstrated throughout his presentation at USD that, to be an entrepreneur, “going with your gut” to attain success, requires passion, hard work and dedication. Attention to all the details is also a necessity.

“I’m a big believer that you have to be a micro-manager,” he said. “We were 24/7 before the first event (UFC 33).” He’s still hands-on, along with White, who is often as visible as UFC’s fighters.

Fertitta certainly showed last Thursday that his experiences reinforce what current business students can use as they search for their desired career path.

“I was interested to know that he was a finance major because it showed that he learned so much about all of the different business disciplines,” said Bernardo Macklis, a senior finance major. “He talked a lot about marketing. In my education, I know not only about finance, but also about marketing and other aspects, that will help me grow a business or become part of a successful business.”

— Ryan T. Blystone

Photo courtesy of Rodney Nakamoto

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