The largest wrestling championship UFC will open a subsidiary in Russia

The largest American organizer of fights without rules, UFC, has created a subsidiary of the Russian company. Its partners were the Russian-Chinese investment fund and Mubadala (UAE). The first UFC tournament in Russia will be held in September.
18.07.2018
RBC
Origin source
Key market

Established together with the Russian-Chinese Investment Fund (RCIF) and the Mubadala Foundation from the UAE, the company will prepare and conduct sports events under the UFC brand, "as well as other activities of the UFC in the field of MMA" in Russia and the CIS, including the production of licensed products, produced media content, electronic commerce and the conclusion of sponsorship contracts, told RBC in the press service of the Russian Foreign Investment Fund. The partners' shares and other parameters of the deal are not disclosed.

According to the senior vice-president of the UFC in the international direction and content of David Shaw, the Russian market is "one of the key for the UFC", the press service of the Russian Foreign Ministry quotes him.

The representative of the press service of the Russian-Russian Foundation for Trade (RKIF) told RBC that within the framework of the joint venture created for organizing tournaments under the UFC brand, "all parties will invest money," stressing that the joint venture received all the rights to use the UFC brand in Russia. He refused to name the planned amount of investments.

The first tournament in history UFC in Russia will be held September 15 in the "Olympic". The names of the contestants have not been announced yet, but it is already known that the main Russian star of fights without rules Habib Nurmagomedov will not take part in the tournament: he will prepare for the title fight, which will be held in the US in November.

The MMA fights are one of the favorite sports shows of Russian President Vladimir Putin: he repeatedly appeared on fights held in Russia. For the final match of the 2018 World Cup, Putin personally invited the star of the world MMA Connor McGregor, the fighter himself said on the air of Match TV. "I adore Putin, he's a tough guy. I also know that he is a big fan of MMA and martial arts, "said McGregor. Habib Nurmagomedov expressed confidence in December 2017 that Putin would support the arrival of the UFC in Russia. "Our government is interested in fighting MMA, Putin goes to fights, he likes it. The President himself was engaged in judo, "Nurmagomedov told Sport Express.

Another model

The organizers of MMA (Mixed Martial Arts, mixed martial arts) tournaments in Russia have always been exclusively domestic promotional companies, the largest of which are today M-1 Global Vadim Finkelstein, Fight Nights Ziyavudin Magomedov and DIA Mayrbek Khasiev.

What is UFC

Promotional company UFC (Ultimate Fighting Championship - Absolute Fighting Championship) was founded in 1993 to organize a single tournament. However, his success was so great that the UFC decided to hold fights on an ongoing basis. In 2001, the business that by this time was on the verge of bankruptcy, $ 2 million was purchased by the owners of the casino chain Station Casinos, the brothers Lorenzo and Frank Fertitta, and the promoter of boxing duels, Dana White, became the general producer and president of the UFC. Since then, the company has shown rapid business growth, its revenue in 2017 exceeded $ 700 million. In July 2016, the Fertitta brothers sold a controlling stake in UFC for $ 4 billion to the WME-IMG agency (renamed Endeavor), and in 2017 they also got rid of the minority share. The cost of the entire company Forbes then estimated at $ 5 billion.

One of the most famous athletes in the field of mixed martial arts is the Irishman Connor McGregor. At the end of 2017, he took the fourth place among the highest paid athletes in the world: Forbes estimated his earnings of $ 99 million, with $ 85 of them he received for the fight with boxer Floyd Mayweather. UFC acted as one of the promoters of this fight. According to financial indicators, that duel was the second on profitability from the sale of private broadcasts. The total revenue from its holding was more than $ 550 million. The UFC organizes more than 40 live events per year, completely filling the most prestigious sports arenas of the world, broadcasting battles in 165 countries in 40 languages ​​for more than 1.1 billion households.

The absence of UFC in Russia was due to the fundamental difference in business models, with the help of which the organizers of battles earn in Russia and the rest of the world. The basis for the income of foreign promoters is paid television. UFC contracts with major broadcasters: until 2019, it has an agreement with Fox, after its expiration, the new partner will be ESPN. The contract for 2018 brought UFC $ 160 million, the contract with ESPN will bring $ 1.5 billion in five years starting from 2019.

The UFC also sells so-called PPV cards to fans of martial arts - paid cards, which give an opportunity to view top fights on the air, as well as archive tournaments. The standard cost of viewing one online top-up battle is $ 40-80. According to Forbes, the sale of television content brings UFC about 75% of revenue, half of this amount is for the sale of PPV-cards. The record audience of paid content of the UFC was fixed in 2016 when on average one 667 thousand buyers of paid cards watched one fight. To sell tickets for the show, income from sponsors, etc. accounted for only 25% of the proceeds of the UFC.

In Russia, for the organizers of the battles, the revenues from television are virtually not available, told RBC founder M1 Global Vadim Finkelstein. According to him, TV channels either do not pay for broadcasting rights at all, or they pay very little. And for the viewers the image of mixed martial arts is blurred, due to the fact that in MMA in Russia there is no clear sports structure and almost everyone can open their federation. "The viewer no longer remembers his heroes and is not ready to pay for viewing," notes Finkelstein.

The press service of the Russian Foreign Investment Fund told RBC that co-owners of UFC Russia expect that they will still be able to monetize their battles with pay-TV. "At the moment in Russia there are millions of people who buy entertainment content: the market of online cinemas and video services is growing, although four or five years ago there was not such a market in principle," the spokesperson said. "In this regard, we believe that there are prerequisites for the monetization of sports content."

Who invests in the Russian UFC

A Russian-Chinese investment fund with a capital of $ 2-4 billion was created in 2012 by the Russian Direct Investment Fund (RFPI) and China Investment Corporation. The first profitable investment for the fund was the share in the "Children's World". To date, the RCIFF 14% of the retailer. The RCIF also became a minority shareholder of Transneft: the fund's share in the spring of 2017 was 1.49%. Sovcombank, one of the largest private Russian banks, recently also fell into the sphere of the fund's interests, and announced its intention to invest in it for the development of the banking infrastructure and competition in Russia in June 2018.

The largest project of Mubadala Investment Company in Russia concerns investments in logistics infrastructure. In 2016, RFPI and a company from Abu Dhabi, in conjunction with other foundations, established Professional Logistics Technologies (PLT), which has since invested in logistics real estate throughout Russia. In 2016, PLT acquired from PNK Group areas in the Moscow logistics complexes and sites for the construction of warehouses for about $ 100 million. In 2017, the company from the same PNK Group bought a logistics real estate in the Moscow region and Novosibirsk in the transaction, which was estimated to 2, 9 billion rubles. In February this year, it became known about the first investment of the emirate fund in Russia's oil industry: the media reported on the approval of the sale of 49% of Gazpromneft-Vostok for $ 325 million.

UFC on the way to China

According to the founder of Fight Night Kamil Hajiyev, the main income for the organizers of MMA battles in Russia is the sale of tickets and advertising. At the same time, revenue from ticket sales for one major tournament is 15-20 million rubles. at a cost of costs for the organization of more than 30 million rubles. For a year in Russia there are about 50 large MMA tournaments organized by leading promotional companies. Based on Hajiyev's assessment, the organizers spend collectively on organizing battles in the year 1.5 billion rubles. (about $ 25 million). However, many of them do not pay off yet.

Tournaments UFC also would not pay off without sales of television content, said Hajiyev. According to him, the cost of organizing one UFC tournament is $ 3 million, tickets and sponsors allow you to return about $ 2 million from one event, so without the sale of teleports and broadcasts, the organization receives a loss.

In July 2018, the UFC announced the name of the first sponsor of the September tournament in Moscow - it was the international bookmaker company Parimatch. The amount of the transaction is not disclosed.

The organization of UFC fights in Russia is unlikely to arouse the interest of American viewers, who are the main consumers of the company's products and are accustomed to paying for online viewing of MMA tournaments, said Anatoly Sulyanov, the founder of the Moscow fight club Arena Fight Club. "This is likely to be not the most prestigious tournaments in the hierarchy of UFС - the men of the caliber of Connor McGregor will not participate in them. The big time difference between Russia and the US will also be a negative factor - live broadcasts in the US will begin at an inconvenient time for the audience, "he said. "Besides, among the Russian fighters acting in the UFC, only a few can attract the attention of a large audience - Habib Nurmagomedov, Alexander Volkov, perhaps, and all."

According to Suljanov, the arrival of the UFC in Russia is a kind of experiment, it can be connected with the beginning of the company's expansion into large Asian markets. "I met Dana White two years ago, and he told me that he wants to enter the Chinese market," Sulianov recalls. - According to him, the market with a capacity of solvent population of 400 million people can not be uninteresting. Considering that the Russian-Chinese fund is involved in the creation of the joint venture in Moscow, this may be the first step for the UFC to enter this market. Tournaments in Shanghai or Macau will be in demand by the public. "

Who develops MMA in Russia

According to the portal fightmatrix, in the top 5 of the promotional MMA-companies (estimated by the total number of fighters and the number of points scored in fights) - three Russian. The first two places with a large margin are occupied by UFC and Bellator (owned by the American Viacom). Right behind them are DIA, Fight Night and M-1.

The Chechen promotion of the Absolute Championship Berkut, which was established in 2014, is the largest in Russia in terms of the number of fighters on the contract and the number of tournaments per year: in 2017 there were 27 of them. At the same time, the company holds tournaments not only in Russia, but also in Western Europe, Asia, the USA, Australia.

Fight Night Company was founded in 2010 by the absolute world champion in kickboxing Batu Hasikov, vice-president of the Moscow federation of mixed martial arts MMA Kamil Hajiyev and captain of the team KVN "National team of RUDN" Sangadzhi Tarbayev. In 2015, Fight Night was bought by the co-owner of the "Sum" group Ziyavuddin Magomedov. The exact amount of the transaction was not called, according to Hajiyev, it was "about several tens of millions of dollars." In June 2017, Magomedov talked about plans to invest $ 100 million in Fight Night in five years and make a promotion as a global player and a profitable company. However, at the end of March 2018 Magomedov was arrested and charged with creating a criminal community. Hajiyev called the arrest of Magomedov a "blow to the mouth" for the company. In 2017 Fight Night organized 23 tournaments, mainly in Russia.

M-1 Global is the oldest promotion company in Russia, founded in 1997 by the manager of the famous Russian fighter Fedor Emelianenko, Vadim Finkelstein. At one time the co-owner of M-1 was the son of Federation Council head Sergei Matvienko, Forbes reported. In 2017, M-1 Global held 12 tournaments. Finkelstein says that he plans to cooperate with UFC Russia: his company will be connected to the selection and training of Russian fighters for participation in tournaments under the auspices of the UFC.

Another growing player in the MMA fighting market is the WFCA (World fighting championship Akhmat), owned by the Akhmat Foundation and supported by the Chechen President Ramzan Kadyrov. In September Akhmat signed Alexander Emelyanenko, one of the most famous Russian fighters. Almost all tournaments organized by the WFCA (in 1212, there were 12) are held in Chechnya.

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