It’s no secret Japanese MMA isn’t what it used to be. DREAM (and K-1) parent company FEG knows this, and it appears they’re actually taking steps in hopes of correcting that. FEG officials announced earlier today that they’ve partnered with Chinese investment firm PUJI Capital in the hopes of raising 230-345 million USD in the first three years of the partnership, and laid out a vague plan for becoming the world’s largest combat sports organization through global expansion similar to the FIFA soccer organization. Sound familiar? The UFC has similar plans for global domination, and it seems FEG’s intention is to beat them to the punch.
“This is a declaration of war against the WWE and UFC. From Asia, we will take the world,” [K-1 President Tanikawa stated.
“When K-1 and PRIDE were competing against each other, 80% of the martial arts market was in Japan. It is now the opposite and Japan is only 20%. We were worried that Japan would be left behind if we let this continue, it is unacceptable. We needed to change our business model.”
Of course, becoming the “FIFA” of combat sports is a lot easier said than done, and as HKL notes, unlike the UFC, FEG is doing this more out of survival than building for the future.
Let’s be honest here, international expansion is a survival move that companies use when their domestic business is starting to encounter hardships. UFC is an example of rather poor international expansion and strong domestic business, but a company that has enough forward looking to understand that establishing these global markets early on will mean a seamless transition into an international focus if domestic numbers begin to slip…
The question is no longer about money, as they have an investment bank to prop them up. The question is for how long and to what extent. We know that PUJI has airmarked this to be a “three year investment.” So that means PUJI will start pumping money into the project very shortly and most likely revisit the financial status and to what scale they believe this whole experiment should be. My best guess is that after a year PUJI sees if FEG has a true future to make money for them, and if not they will continue on a scaled back course for the remainder of their promise and then dump FEG into the dust. Tanikawa insisted that FEG was not sold, which means the damages would not be total if this happened.
Despite the “declaration of war” against the UFC and what the above graphic shows, FEG wisely doesn’t have any intention of trying to break into the North American market. They’ve deemed it “too developed and not lucrative.” Instead, they’ll be focusing on the Asian market first, and then expanding into Europe and other international markets. Zach Arnold points out that with PUJI’s backing, FEG should be able to compete with the UFC for high-value fighters once again.
Update: US FEG representative Mike Kogan tells MMA Junkie that pay-per-view is also a part of their plan.
He claims an average primetime DREAM broadcast on Tokyo Broadcasting System (TBS) draws 11 to 12 million people, while a late-night broadcast garners around 3 million.
“Imagine if Strikeforce received 12 million viewers (on CBS),” Kogan said. “(CBS executive) Les Moonves would be doing cartwheels all the way down into the cage. Nick Diaz and Nate Diaz could beat the [expletive] out of the whole crew; they could have melees every other day and nobody would give a [expletive].”
“The (Japanese) audience was brought up watching it for free on TBS and Fuji,” he said. “Well, they’re not a paying public. The UFC has a hardcore fanbase that’s ready to lash out $50 for whatever the [expletive] they put on TV, with at least an average of 300,000 (pay-per-view) buys. So the UFC knows that they will receive at least $15 million dollars in revenue.
“Put that in perspective with Japanese MMA. Imagine if out of those 12 million people, half a million were ready to cough up $50 each time DREAM was on?”