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четверг, 6 августа 2009 г.

M1 Global and Its Business in MMA

M1 Global has been at the heart of the historical events that have been unfolding in mixed martial arts among the heavyweight divisions in the world especially over the last few years. This promotion has been able to stir up so much controversy and anger leading up to today that it is worth seeing why this is the case.

So what is M1-Global?

-----First the background

In March 2007, Dream Stage Entertainment sold Pride Fighting Championships to Zuffa LLC which owned UFC. At this point the mixed martial arts world began changing. Most of the successful fighters from Pride started moving over to the UFC in USA to compete in the biggest mixed martial arts promotion in the world. Pride staff over in Japan were laid off and soon the organization ceased to exist entirely.

Although most fighters were lured by handsome paychecks offered by the UFC, some including the heavy weight champion at the time, Fedor Emelianenko, failed to make this transition.

-----Back to Russia

Back in Russia, Vadim Finkelstein and Sergei Matvienko were running M-1 Mixfight, a loss-making Saint Petersburg-based promotion trying to develop mixed martial arts since 1997.

Sergei Matvienko in fact is the son of Valentina Matvienko, a powerful Saint Petersburg governor and politician in Russia and it is no doubt that M1-Mixfight business strategy was to gain support from the government and monetize as much as possible. (remember the dinner they had with Vladimir Putin after the Bodog event)

Although some very limited air-time was given to M1-Mixfight, the market and the audience was not ready. MMA remained unknown in Russia which translated into a losses for M1. Something had to be done.

Both Vadim and Sergei were entrepreneurs, not professional managers. They were not focused on creating a viable business out of M1-Mixfight by gradually developing the pool of quality fighters and creating a distribution channel through pay television and pay-per-view. They focused on deals, doing deals with fighters that were ready to sign with them and doing deals with state representatives to get coverage. This didn't really work at all and its no wornder. They did not invest the time and money, and they didn't get anything back.

Vadim Finkelstein however got lucky. In 2003, Fedor Emelianenko won the Pide Heavyweight Championship. At the time he was part of the Russian Top Team but his success forced a conflict between RTT leaders and Fedor. Fedor accused his manager at the time Vladimir Pogodin of deceiving him on financial matters. The result was that both Fedor and his brother Aleksander Emelianenko left to join Red Devil Sport club in Saint Petersburg, a club founded back in 1996 by Vadim Finkelstein.

Vadim Finkelstein became Fedor's manager. Fedor Emelianenko was not happy Mr. Pogodin, his previous manager, represented him and this was the guy that he chose to represent his interests.

-----The Creation of M1-Global

M1-Global was born in 2007 as a result of an unlikely deal. Sibling Entertainment, a small entertainment business involved in theatre and production of Broadway shows got interested in mixed martial arts and finalized a deal to purchase M-1 Mixfight. Sibling, although claimed to be a relative success by its President, Mitchell Maxwell, struggled lately as it continued to make bad investments and lose money in a whole series of ventures such as downloadable films, battery companies and many others.

M1-Global hired Monte Cox, one of the biggest fight agents in the sport to become the CEO. At the same time, the infamous Vadim Finkelstein became the President of the new company. Joost Raimond and Apy Echteld, a promoter, event management expert and an MMA trainer were also hired. While the team had undoubtedly substantial knowledge of the industry, experts puzzled for a while over how the company without a real business model was expected to succeed. Very soon a preview of the strategy became revealed.

-----M1's money-maker

Within a matter of months (that same year, 2007), M1-Global signed Fedor to a six-fight, two year deal worth nearly $2 million dollars per fight and a $1.5 million signing bonus with the prospect to hold a piece of the pie if he sticks with M1-Global for five years. After a lot of talk, fans were given the impression that M1 is planning to create the new Pride that could compete with UFC as it did in the olden days. The question remained however, why would fighters of the highest calibre sign with M1 Global? Unlike UFC with its millions PPVs and pay television coverage, M1 Global did not have any real distribution channel. Essentially it could not sell its product and collect money to pay its fighters.

Today's Perspective

Looking at M1-Global today, it promotes a series of tournaments under M1-Selection and M1-Challenge. The goal of the organization is to popularize in MMA (including in Russia) and to make a profit while doing so. The M1-Selection tournaments are aimed at selecting the top talent in Russia while M1-Challenge is an international series of tournaments where new fighters develop their careers in country team-based events.

Are the goals set out by M1 being achieved? M1-Selection has recently held their fifth event but it looks like there is no success in finding new stars. Most of the fighters in M1 events from Russia are now mature athletes with so-so records. No new "Fedor Emelianenko" has been found while Fedor himself remains as unknown as ever in Russia.

M1 Global does nothing to develop not only media coverage of the events, but they also do nothing to improve the quality and supply of new fighters. Instead of supporting clubs to develop new talent, they do not do nothing of the sort. The latest video's of Fedor training in his hometown in Stary Oskol were simply shocking. He trains in a kinder garden playground with no facilities at all, no good sparring partners of his own level of skill and size. Could Vadim Finkelstein (his manager) and M1 do something about this? Absolutely, but instead they choose only to milk him for everything he can give them as I will describe further.

So what has M1 been upto in the last two years and the last few weeks then that is stirring so much disappointment and outrage among the fans across the world?

After M1-Global was formed and managed to sign the #1 ranked heavyweight fighter, its demands began to grow to enormous proportions without any real business justification.

Perhaps the first example of this was when M1 managed to agree a deal with Bodog promotion for a co-promoted event BodogFIGHT Clash of the Nations. Fedor had to fight against Mat Lindland, a middleweight fighter that was no high in any kind of rankings. Many fans across the world might have asked the question: "why did this fight happen? why did Fedor fight him?" Dana White famously said that Fedor did not fight top competition in 2007 and 2008, and few can argue him wrong. He was right and everyone knows this. This fight happened because M1 wanted its first co-promoted event. After the tournament, Vadim also explained that they will never work with Bodog again. M1 logos were not visible and Bodog did everything it could to hide the fact that it had to partner with M1. Why? Well, because it did not many any kind of business sense. M1 has nothing to offer when doing co-promotion deals apart from its only asset, Fedor.

Affliction, the mma promotion that has shockingly collapsed last month actually organized events in partnership with M1 Global. They were supposed to be 50-50 partners with the name "Affliction M1-Global". It is a surprise therefore that Vadim Finkelstein, the president of M1-Global actually blamed the failure entirely on Affliction. M1-Global co-organized the event and should get its 50% share of the blame as well. Of course, that is not how Vadim sees things.

After Affliction's demise, M1-Global quickly sought to negotiate with a number of other organizations. UFC, Strikeforce, Electronic Arts to make a video game and at least another 3-4 other promotions.

There is not doubt in my mind that Fedor was offered perhaps the best deal offered to any fighter by the UFC. This was swiftly declined by Finkelstein, the guy that was supposed to care about Fedor's interests. Only a week later, M1 Global signed a co-promotion deal with Strikeforce. Great, now we can all watch Fedor fight in a minor league with only 2 or 3 fighters of the same level as Fedor.

What is even more interesting is that Fedor has signed for only 3 fights. There is no one else to fight there if he beats Alistair Overeem, the current Strikeforce Heavyweight Champion, an almost certain free-agent two years down the road, it could certainly be that the career of the greatest fighter in the history is effectively over.

One might ask then, well isnt Fedor the owner of a stake in M1-Global? This is the company where most of Fedor's salary goes. Fedor's salary that helps balance out the losses that Vadim has in M1. Once Fedor retires, Strikeforce will almost certainly not want to share revenue with M1. Two years down the road, we will have Fedor cheated and left with his stake in M1, thats the only thing he will have left. The fans will be gone, disappointed that he could not fight Brock Lesnar, the UFC champ that he should have defeated. The money will be gone, invested in a bunch of loss-making ventures that Vadim and his entrepreneurial mind came up with.

The only thing that Fedor will have left will be his stake in M1-Global.

What is that worth? Well, lets see. M1-Global will lose its partnership with Strikeforce and go back to being the entrepreneurial outfit running the M1-Challenge/M1 Selection tournaments that it was recently. There are many stories about companies like this. Vadim & associates will be back to square one with a loss making outfit that is M1, not worth a dollar and soon to be pronounced dead. Fedor is not getting any younger and can M1 get lucky and make another deal thereafter? Sure, but in all certainty the story will not have a happy ending.

Fedor has not tried to limit M1-Global's ambitions and has let down his fans. He kept telling us how he wants to fight for his country (Russia) and for his fans, but really in practice he fights for Vadim Finkelstein and the private company with unknown beneficiaries that is M1-Global. He could have achieved far more fighting for the UFC, taking the title and retiring. By doing so he would have done so much more for his country and his fans than by fighting in a minor league for the benefit of M1 Global.

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