Profit kick (cont.)
Posted: Friday March 9, 2007 3:58PM; Updated: Friday March 9, 2007 4:47PM
First, the team concept. Just as there is no "I" in team, there isn't one in money, either. The league features 12 teams of five fighters based in major markets across the country (New York, Chicago, the Quad Cities, Seattle, Portland, San Jose, Los Angeles, Southern California, Nevada and Tucson) and two abroad (Toronto and Tokyo) coached by legends of the sport such as Renzo Gracie, Ken Shamrock and Miletich. The teams will fight a nine-event schedule, culminating in a semifinal bout on Aug. 2 at New Jersey's Meadowlands and a final bout on Sept. 15 in Los Angeles' Forum.
"It's difficult to build products that were based on a single individual," says Gareb Shamus, co-founder and CEO of the fledgling league. "You get wider distribution and wider appeal when you're dealing on the team side of it."
The team concept is one aspect that convinced Miletich, coach of the Quad City team, to join the league because it allows the fighters to develop without the overwhelming fear of losing a match, and then their livelihoods. "By doing the team concept, it's impossible for an organization to use up a guy and throw him out like a piece of trash," Miletich says. The IFC is also generating good will among the fighters by offering them a stipend and health insurance.
Drawing on famous fighters such as Miletich offers another significant advantage for the IFL: a pipeline of talent and fans. Since most famous fighters/coaches have their own academies across the country filled with hundreds of students who interact with the celebrities of the sport on a regular basis, a natural affinity builds between the fighters and the fan base. The IFL pushes the interface between the recreational participants and the pros as one of its major selling points.
"The cool thing about this sport is that I can't go and practice with the Dallas Cowboys or the Chicago Bulls, but if a guy who's an orthopedic surgeon gets good enough, then he's rolling around and competing pretty well [with the sport's top fighters]", says Miletich. "It's pretty powerful when the fan base can actually do the sport."
And who makes up this fan base? According to a recent article in The Wall Street Journal, a great number of participants are Wall Street types looking for the competitive and physical challenges posed by MMA. That connection to the nation's financial heart plays right into another IFL strategy: being a publicly traded company.
Unlike the UFC, the IFL opted to place its business on the open market. "By appealing to the business world, we're appealing to our audience," Shamus says.
When the stock, traded under (OTC.BB: IFLI), hit the market in December, it went for just under $3 per share. As of Thursday morning, the price had more than tripled to $9.66 per share. The IFL also created stock incentives for the fighters and thereby gave them a vested interest in the performance of the stock.
After a Minnesota investment bank helped raise more than $24 million to launch the IFL, FOX chipped in an additional $6 million. The IFL format, which is broken down into three, quick, four-minute rounds, plays perfectly into new digital media. FOX, which owns the digital rights, will be able to stream the fights on its other properties, like MySpace. "We have access to all of [FOX's platforms]," Shamus says.
The one thing the IFC doesn't have access to are fighters not on the IFC circuit. Should the IFL take off and match the UFC in popularity, the rift between the two leagues could prevent fans from seeing the best IFL fighters compete against the best UFC fighters.
At this point, though, Dana White, president of UFC, remains unconcerned about the emergence of other leagues. "There are no competitive leagues," he says. "All of the other shows out there are just feeders to the UFC." The primetime ratings from the IFL in the coming weeks will tell if they'll be tapping out or tapping into the money pit that is the MMA ring.
Loose change ...
In newspaper sports sections across the country over the last few weeks, dozens of letter-writers have mourned the impending break-up of the Los Angeles Dodgers and their beloved Dodgertown. How could Frank McCourt and Co. forget about Sandy Kofaux's walks along Vero Beach when he struggled with this command? Or about the nights players snuggled together against the blowing winds in the rickety barracks? Or the pond? How could he leave the heart-shaped pond former owner Walter O'Malley dedicated to his wife?
Like most break-ups, once the tears dry and the hurt ends, the city of Vero Beach -- which has asked the Dodgers not to go -- will look back and realize this was all for the best. While watching the team leave might be painful emotionally, the town will be better financially, at least according to some independent academic research.
As Arizona puffs its chest because of its ability to seduce four teams in recent years away from Florida, the jilted state might get the last laugh. "Arizona will get no return on this," Dr. Philip Porter, a University of South Florida economist who has studied the economic impact of major sporting events on local economies, says. "The only person getting rich off of this is Paris Hilton."
Porter's logic goes like this: With no permanent changes in infrastructure or additional housing built due to events like spring training, there really is no lasting, effecting change. Hotels are not built for an event that takes place six weeks out of the year. What hotels do, for example, is simply raise rates during Spring Training, which coincides with Florida's peak tourist season, anyway. Most of the additional profits earned by the hotels during Spring Training go back to the lenders who financed the hotels, meaning the money goes back to the international markets, not the local economies.
Research by Dr. John Zipp, a political scientist at the University of Akron, looked at the economies of Spring Training sites both before and after the 1994 baseball strike, which cost the '95 spring slate of game. You know what he found? Nothing. There was a negligible difference between the money pumped into the towns with or without Spring Training. Becky Bovell, director of the Charlotte County Tourism Office, watched the Texas Rangers leave her jurisdiction and found that the stadium where the team used to play is more profitable now that it hosts concerts and various sporting events than when it was held by the team.
Shortly before pitchers and catchers reported, the Florida state legislature tried to make the state sexy again for baseball through the Spring Training Retention Fund, which awards up to $75 million in state-matching funds to help municipalities upgrade their facilities. But just this week that same legislative body is fighting to reform a tax-system and spending habits that "must be curtailed somehow," according to the St. Petersburg Times.
In the end, Florida, watch Arizona lure Major League Baseball teams with their spiffy new diamonds and know that not all that glitters turns into gold.