· Is Zuffa Positioning To Take Advantage Of NFL Labor Dispute?

When it comes to business matters in sports there is very little that can be chalked up to mere coincidence. The timing around the recent purchase of Strikeforce, by mixed martial arts giant Zuffa LLC may be a very calculated move. Given the timing of the transaction and the number of potential dollars at stake it would appear that Zuffa, with mixed martial arts organizations Strikeforce and Ultimate Fighting Championship are gambling on a drawn out work stoppage between the NFL and its players union.

Less than two days after labor talks between the NFL and its players died, Zuffa announced the purchase of their closest rival Strikeforce. Zuffa now essentially owns the contracts to nearly all of the top fighters in the world, as well as presiding over what is one of the fastest growing sports in the world.

So how does this tie into the labor unrest in the NFL?

Easily. If there is an extended labor stoppage in the NFL, advertisers and fans are not simply going to fall off the face of earth. There will still be billions in advertising waiting to be sold to someone, and millions of sports addicted fans looking for their weekly fix of entertainment. Enter mixed martial arts. MMA fans fit in well with NFL's demographics (Male 19-49), as well as showing a loyalty and fanaticism that is on par with other major sports. Additionally, MMA is essentially an untapped market for many mainstream advertisers, giving them opportunities to bring new designs and products to the market through ad campaigns.

Why no other sport fits the bill:

With sports such as NASCAR and Major League Baseball falling off and losing their grip on the coveted Male 19-49 demographic, television networks will likely flock to pick up one of the fastest growing sports in the same demographic as the NFL. Organizations like UFC and Strikeforce have seen exponential growth in their brands over the last few years, taking the sport of mixed martial arts out of the underground and placing it front-and-center in homes all over the world.

Just a few short years ago NASCAR sat in the same driver’s seat that mixed martial arts currently sits in. But since signing a remarkable eight-year, $4.48 billion media deal with Fox, ESPN, and Turner, NASCAR has lost nearly a quarter of its TV viewership base and has seen a serious erosion in the young-male demographic. In 2006, after NASCAR finalized its current media deal, it was averaging 7.85 million viewers per race on Fox, FX, TNT, and NBC. In 2010, NASCAR races averaged 5.99 million viewers over 34 races across Fox, ESPN, and Turner, meaning NASCAR has lost nearly 2 million viewers in the past four years, or near one fourth of its audience.

But it’s only temporary, right?

Whether a foray into mixed martial arts is permanent or only temporary for networks and advertisers, chances are the sport would be the most sought after replacement for NFL-related programming. With Zuffa now controlling the bulk of the market, there will be little decision about where to turn in the event that the NFL has lasting labor unrest.

Networks have been attempting to add mixed martial arts programming for a while now. However, UFC, the sport's biggest brand name, runs an incredibly successful pay-per-view format which makes negotiating difficult.

Networks such as ESPN, HBO, and FOX have all been rumored to have been in negotiations to broadcast UFC events, but overall numbers and production issues usually derailed the discussions for U.S. broadcasts. CBS had a limited run with organizations Elite XC and Strikeforce that had mixed reviews. While the numbers were good, many believe they were not good enough, and an in-ring brawl at the last CBS event likely sealed the deal for CBS to shy away from continuing the deal.

However, Fox Sports broadcast Bellator Fighting Championships in 2010, but often pre-empted the live broadcasts in favor of local college athletics, and in some cases high school athletics. ESPN broadcasts UFC events in the United Kingdom, and Zuffa has a deal with Fox Sports Latin America. There is some familiarity for the promoter with the major networks, as well as other cable outlets.

Whether or not mixed martial arts is a viable long-term substitute for the NFL, it has been a desired programming addition for networks and could potentially fill a year-round television role, rather than a few months out of the year.

So why has this not happened on this level before now?

This time around Danna White and Zuffa will be negotiating with more leverage, owning the two biggest brands in the sport, and the networks will be hard pressed to find more suitable programming to offer NFL fans. Networks certainly do not want to lose the ratings, audiences, or advertisers that go along with football, and will likely have to bow to some of the demands that have doomed negotiations in the past.

In addition to the needs of the networks, Zuffa is better positioned in terms of roster size and production teams to make a move. With the acquisition of Strikeforce, the Zuffa roster of fighters now stands around 375 contracted fighters, more than enough to withstand whatever frequency demands would come with a network television deal, while still allowing for UFC to produce pay-per-views.

And if the NFL labor dispute is resolved quickly?

Owned and operated by casino giants Frank and Lorenzo Fertitta, Zuffa should know a little about gambles. However, regardless of outcome of the NFL’s problems it appears that the house may have already won this hand. In the process of gearing up for a potential run at a multi-billion dollar network television deal, Zuffa has acquired their biggest rival, as well as absorbed a huge video library. If landing a spot on one of the major networks does not materialize, maybe we will see them open their own television network.