The 1 Simple Rule 2 Brothers Used to Turn the UFC Into a Billion-Dollar Business

I have to confess. I am a big mixed martial arts fan. I used to wrestle in my early days, but a broken collarbone put an end to that. Now I’m just a boring CPA.

But do you know what I am a bigger fan of? Seeing my clients succeed in business. Unfortunately, some of them struggle. Let’s look at how the owners of the UFC overcame obstacles by following one simple rule.

Few have succeeded in business like the owners of the UFC. Back in 2001, Frank and Lorenzo Fertitta bought the UFC for $3 million. They promptly hired their childhood friend Dana White to be the president of the company. Even though the sport was in it’s infancy, they believed in the future of mixed martial arts.

Many said they were crazy. They didn’t think so. At the time, the UFC was faced with many challenges. U.S. Senators were calling the sport barbaric and states were considering banning the sport. The company had massive debt and was hemorrhaging cash.

When you start a business, it takes time. But the Fertitta’s had a vision. More importantly, they followed one simple rule: think long-term.

Overcoming the five obstacles to success.

Without a long-term plan, most companies will crash and burn. Success typically doesn’t happen overnight. The long-term approach enabled the Fertitta brothers to overcome many business obstacles. Let’s look at the issues the company had to overcome:

  • New market. Mixed martial arts was a new industry that took time to mature.
  • Brand awareness. The UFC had a tainted name in many circles and had to overcome a lot of adversity to establish a brand and build an advertiser base.
  • Government intervention. States were in the process of determining regulation requirements with 50 different laws in 50 different states.
  • Operational obstacles. Operational concerns included determining fighter compensation, negotiating television rights and analyzing fight promotions.
  • Financial obstacles. The UFC needed to make sure that the sport of mixed martial arts was financially viable, because historically it had not been.

New business owners face similar hurdles like the Fertitta brothers did. They just may not be as difficult as what the brothers encountered. But each business has pros and cons. Each has different regulatory, financial, and operational complexities. All of which can be conquered with a long-term approach.

My clients often learn the hard way.

When it comes to a long-term strategy, the real estate industry comes to mind. I have a lot of real estate clients and they make money in many different ways. Some of them do fix and flips and some have a buy and hold strategy.

The reality is that most of the fix and flip clients don’t make money. It’s a short-term game. But the buy and holds almost always make money. It’s a long-term game.

The billion dollar sale that most thought would never come.

There were some lean years, but the Fertitta’s sold a substantial portion of the business for $3 billion in 2016 to WME-IMG, a preeminent sports and entertainment company. The sale of the shares and valuation of the UFC made each Fertitta brother worth an estimated $2 billion. This is a return on investment of approximately 2,000 percent. A nice return for most investors.

What we learned from the Fertitta brothers is that sometimes it just takes time for a business to mature. It wasn’t a financial hit immediately. But most businesses aren’t.

Most people don’t want to put in the time to make something successful. I hope you are the exception. Remember, you’re in it for the long-haul.

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Stella Densmore