FACEBOOK TWITTER RSS APP PODCAST Opinion & Analysis : Guest Editorials ARNOLD: K-1's new war declaration against UFC is really just a whimper

Jul 19, 2010 - 9:49:33 AM

By: Zach Arnold, Special Guest Columnist

Whenever I hear about fight promotions finding new sources of money to back their operations, I immediately think about some of the biggest promotional implosions in wrestling.

There was Herb Abram's UWF promotion in New York, which taped shows and spent more time focusing on naming jobbers after sheet writers (Davey Meltzer) than they did on drawing fans to the events. There was the famous Paul Alperstein AWF promotion with Sgt. Slaughter and Tito Santana that burned through money like, well, America's Government is these days. Then there was Jerry Lawler and the USWA, which was supposed to be saved by a man named Larry Burton. Instead, the promotion folded up like a used lawn chair. Of course, the biggest implosion of all-time was WCW when Turner burned through a cool couple of hundred of million bucks before selling off the assets to WWE.

In MMA, we've already seen one big implosion with PRIDE. After they lost their Fuji TV network deal in Japan, the company cut a deal with Ed Fishman to run shows in Las Vegas. Meanwhile, while Fishman was trying to promote shows at the Thomas & Mack Center in Vegas, Nobuyuki Sakakibara was (according to Mr. Fishman) negotiating with Zuffa to sell the PRIDE assets to UFC. UFC, of course, ended up buying the assets and then held a press conference in Roppongi Hills, Tokyo, promising the Japanese fans that they would run shows there. It never happened.

In the short, the lesson to be learned in the fight industry is that unlike the real world, when someone promises big things because they found a new money source, it usually means the end more than it does a new beginning.

K-1, owned by Fighting and Entertainment Group (FEG), who also own DREAM, announced last Friday at a press conference in Tokyo that they cut an investment deal with PUJI Capital (PUJI Group), whose front man Michael Cheng told the media that there would be a focus on running shows in mainland China and throughout Asia. The claim was made that this investment group would put in a couple of hundred million of dollars to K-1. It was typical Japanese bluster.

I talked to someone who has been involved in the MMA scene and who is in China. They said that they had not heard about PUJI Group before. Usually, if you have a company that has that much cash to invest, you would think that a lot of people would know who they are. In this case, I couldn't find anyone who knew anything about the money group.

If there is one thing that we know about China, it's the following -- they may use a partial form of capitalism at times, but it's also crony capitalism. In other words, if you aren't politically approved, you aren't going to be able to be a mover and a shaker. In this case, with K-1's new deal with PUJI, it's hard to see how it will increase K-1's chances of running a show on the mainland. It has been everyone's dream -- from WWE to UFC to K-1 (who was first) to run in China, but it has not been allowed because the Government and politicians have said no to it. It's hard to believe that money from PUJI Capital will make things any more positive for shows on the mainland.

What it does open up is the opportunity to finance shows in Hong Kong, Singapore, Indonesia, and perhaps Australia. The end game for Kazuyoshi Ishii, the Godfather of K-1, is to have someone else promote shows throughout the world and then let K-1 collect the rights fees from the broadcasts in Japan. In other words, maintain the pipeline to the television system in Japan and keep everyone else out. It makes great sense. However, it makes less sense when you have to promote your own shows and put your own capital to rent out buildings in a market that is decaying, which Japan is right now.

So, the easy solution is to find a money man to finance your shows and just cash in on the easy part. That's what K-1 thinks they have gotten here. In a sense, I understand it. Singapore's MMA scene is starting to grow via the casino world on ESPN STAR telecasts. Plus, Singapore has a big Indoor Stadium that could host a K-1/DREAM mixed event just fine. Hong Kong is also a natural fit to run shows and draw strong crowds with kickboxing audiences.

All of this sounds great, but here's what it indicates -- the money has dried up in Japan and that means the money has dried up on K-1 domestically.

Like all good fight promoters in a business built partially or fully on selling a con, K-1 front man Sadaharu Tanigawa told the press that drastic measures needed to be taken because the landscape of the fight business has changed. He pointed out Shin'ya Aoki's loss to Gilbert Melendez last April as one example of Japan no longer being the dominant force in MMA. He also pointed out that UFC President Dana White is able to make offers to fighters for more money than the Japanese promotions are able to right now. After announcing their new source of money, Tanigawa stated that K-1 would retake their mantle as the #1 fight promotion in the world away from UFC and WWE. He also noted that FEG, his company operating K-1, has not been sold and that everyone on staff would be retained.

All of this sounds great on the surface, but the initial reaction was the following: Is this a parachute to set up PUJI Group to buy out K-1 after they invest a certain amount of capital into the promotion to run events? What will happen if PUJI pulls the plug after losing money? Is there a way K-1 can use PUJI's money to produce events and keep the TV revenue and keep the TV deals with Fuji TV and TBS so that if PUJI backs out that K-1 will still exist and get the better end of the bargain?

None of these are questions that you ask about a healthy organization. These are questions that you ask about a dying organization.

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