With Alliance MMA, regional promoters look for strength in numbers – and Wall Street payoffs

In the relentless MMA news cycle, it was a blip. An eye-catching headline, maybe, but not much more.

Alliance MMA becomes the first company in the sport to go public.

This was early October. The news made CNN Money. It made Yahoo Finance. A few MMA websites picked up on it, especially when the company brought on the UFC’s former “babysitter to the stars” Burt Watson as a board member and director of fighter relations.

After that? Just another minor development in the minor leagues, as far as most fans were concerned. The UFC selling for $4 billion was big news, but what did it even mean for some company few had ever heard of before to make a public stock offering? So what?

But according to longtime promoter and newly minted Alliance MMA President Rob Haydak, it’s a pretty big deal.

That’s not just because of the history involved (the International Fight League became a publicly traded company in 2006, but only after an acquisition by Pagligent Inc.). It’s also because of what it could mean for smaller promoters trying to scratch out a living in an unforgiving marketplace.

“A lot of regional promoters like myself, we wear a lot of hats,” Haydak told MMAjunkie. “It’s tough to scale our business. We just started thinking about it and felt like, you know, there’s got to be a better way to do this.”

Haydak, the former CEO of New Jersey’s Cage Fury Fighting Championships (CFFC), hopes Alliance MMA will prove to be the solution.

The idea is fairly simple. Alliance MMA brings together regional promoters from all over the country, pooling their talent, knowledge and resources in the hope that the resulting whole will be greater than the sum of its parts. It went public in part to raise capital, but also as a way of enticing regional promoters to join.

As Alliance MMA Chairman and CEO Paul Danner told CNN: “Now we can tell promoters ‘Look, we value your private company and will give you cash and stock in ours.’ There’s less loss of power for them and more involvement.”

That was a key selling point for John Rallo, the president of Shogun Fights, a well-known promotion in Baltimore.

At first, Rallo said, he worried about giving up too much control of the company he’d built. He also worried about losing local support if his product was too greatly altered by forces on Wall Street.

Those concerns were ultimately outweighed in Rallo’s mind by the potential benefits of joining forces with other like-minded promoters.

“For me, the appeal was that together we’re more powerful,” Rallo said. “The ability to do things like get our insurance at a cheaper rate, the ability to bring everyone more national coverage and national sponsorship, or national TV contracts, these are things we can’t do by ourselves. But together I think we can do them.”

The question of distribution is an especially tricky one for many local promoters. At a time when many smaller fight companies are finding a home for their content on the UFC Fight Pass digital streaming service, those on the outside have struggled to find ways to broadcast their fights to a larger audience.

In the past, some organizations streamed events through online services like GoFightLive, which was also recently acquired by Alliance MMA.

Those like Rallo, who wanted to get their product on local cable TV, usually had to pay for the privilege. Regional promoters who might, at best, put on eight or 10 events a year, simply can’t supply enough programming to attract interest from broadcasters otherwise.

“So right now you’re paying to get your product on television, because you don’t have enough content,” Rallo said. “But if you’re part of Alliance and their goal is to do, collectively, 100 shows a year, 120 shows a year, then when you go to an NBC or a CBS or a FOX, you have enough content where you can give them weekly shows.”

For Nick Harmeier, president of the Tennessee-based V3 Fights, the appeal was also the chance to share fighters across multiple promotions. Fighters in need of fresh challenges can more easily move from one Alliance MMA promotion to another, and the chance to match up a champion from Tennessee against a champion from Baltimore provides new marketing opportunities.

In addition, Harmeier said, there’s the chance to share some hard-won wisdom among fellow professionals in a niche industry like MMA promotion.

“I never thought there would be this many promoters who had the same style, the same temperament, the same personality that I do,” Harmeier said. “One of the beautiful parts of this is that you really get to dig in and see, hey, this is working really well for that promotion over there and here’s how they do it, so maybe I should try that with my promotion. I think that helps ensure that all the promotions (under Alliance) are successful.”

Still, the strength that promoters find in numbers won’t necessarily change the nature of the industry itself. No matter how many local promotions huddle under the Alliance MMA umbrella, they’ll never match the might or the spending power of the UFC or Bellator.

Fighters will likely continue to flee for the big leagues at the first opportunity, and Alliance MMA will let them, according to Haydak.

“One thing we’ll never do is impact an athlete’s ability to earn a livelihood, and we know that going to the next level is everyone’s goal,” Haydak said. “For us to stand in the way of that is not even up for consideration. If a fighter is given a better opportunity to fight in one of the top-tier promotions, whether that’s Bellator, the UFC, or ONE FC, we’ll allow that athlete to go.”

While the major promotions might be the NFL of this sport, Haydak said, there’s still room for someone to be the NCAA. And if the right local promoters can work together to improve all their lots as one, but without losing their own identities in the process, they might be able to do more than just survive in a fickle, fragmented industry where the money has historically been concentrated at the very top.

“But we all know what the UFC just did in their sale,” Haydak said. “It put a valuation on the 800-pound gorilla, and I think that piqued the interest of a lot of savvy investors on Wall Street. I also think people in the MMA space who are passionate about it, they’ve never had a chance to invest in it before. This affords them that chance.”

And with Alliance MMA stock currently trading at $3.94 a share on the Nasdaq – down from $4.65 in early October – that chance comes relatively cheap.