Case: International Fight League

Case: International Fight League

1) Would you have used the public stock market to fund the launch of International Fight League (IFL), as its CEO? Or would you have sought institutional investors? Why?

The most important reason why companies are open to the public, the income value of the company's shares is the new value of the company. I would use the public stock market to fund the launch of International Fight League (IFL). In order to launch IFL, company needs fund. Funding this need by using public stock market is better and more rationalist  rather than finding institutional investors. Because IFL is not newcomer project thus they don't need investor companies. By allowing institutional investor to fund the IFL company, they will get share from IFL. I wouldn't want to make them my shareholder because the money that I want is only to launch the company. The IFL raised over $20 million in cash at its IPO, which provided an important buffer to cover the upfront expenditures for its first season.  The need of that money is only in short term. In long term the company will get enlarge. What IFL need is initial money to open the company and operate its first actions. Thus, I would public stock market to fund the launch of IFL

2) While considering IFL’s various strategic options for growth in mid-2007, would you as its CEO focus on trying to expand internationally?

I would focus on trying to expand internationally as IFL’s CEO did. By expanding to the world will bring IFL prestique and increase its brand. IFL is new for the market and it need to develop brand awareness. By expanding to the world and signing with important corporations especially international broadcast and arranging international events will be great steps to  create prestige. IFL company first stage on becoming international was FOX Sports Net’s distribution arrangement with Rogers Sports Network which led broadcasting to Canada. Then IFL reach an agreement with Alfred Haber Distribution and American Forces Network for international broadcasting. Also, MMA was considered to be an innately international sport, given its origins and its underlying mission to find “the best fighter in the world”. For that reason, it attracted fighters from different countries where different types of martial arts were considered mainstream sports. By doing so, it’s popularity and revenues increased. For example, the average international event that WWE held in 2006 (such as in England and Australia) generated approximately $630,000 in box office revenues (with 9,160 average attendance), in comparison with approximately $185,000 in revenues from its U.S.- based events (with 4,990 average attendance).

3) As IFL’s CEO, what strategy would you follow to maximize growth and profitability from mid-2007 onward? Some options are: (a) Strategic focus on live events and merchandising revenue model; (b) Strategic focus on sponsorship/advertising; (c) Strategic focus on PPV and Broadcast TV revenue models; (d) Vertical Integration, by partnering or rolling up existing MMA training schools; and (e) Other.

In my opinion (c) strategic focus on PPV and Broadcast TV revenue models are the best strategy to follow. What IFL need is to make is to make is to develop awareness for IFL. Broadcast TV's are good way in order to reach the large masses. Furthermore TV broadcastings are really helpful to generate loyal followers and fans. According to IFL’s March 31, 2007 Quarterly Report, revenue from television rights is 61.5% of its total revenue. It can be seen that TV broadcasts have really important portion. In order to maximize growth and revenue IFL should focus on Tv broadcast deals and they should work hard in order to spread to the world. Also PPV revenues also important they should also focus on PPV too. IFL should focus on spread to the world with international events. As a result of this they will maximize the PPV revenues and have high-margin TV broadcast agreements.

4) You have decided to follow your preferred strategy, from question 3. What might UFC feasibly consider doing (if anything), in order to retaliate? How defensible would that strategy be, vis-a-vis the UFC and your smaller MMA competitors?

The best strategy they would do is dispossessing coaches and fighters from UFC and MMA competitors. Also while UFC was having problems at some states of USA because of violence rules in fights, IFL saw the opportunity and get in the market with prohibited moves that were considered excessively violent  and set its fights in oversized boxing rings rather than in octagon-shaped cages. The IFL adopted stricter rules than other MMA leagues, to increase security and reduce violence.

5) Should IFL try to merge and/or consolidate the MMA market?

IFL don't need to merge the MMA market. They should consolidate the MMA market. Fighter unions had not yet been established in MMA. As a single-entity model, the IFL attempted to balance the power between the league and its fighters.It negotiated partnerships with MMA’s well-known athletes and coaches, building 12 city-based teams. Two or more teams typically showcased in each of IFL’s events, with five team match ups of one-on-one competitions between athletes The aspect of MMA’s business model was the league-fighter relationship. More mature sports leagues, such as the Major League Baseball (MLB) and National Basketball League (NBA), worked under a distributed team model and often developed athlete unions with varying degrees of influence. Fighter unions had not yet been established in MMA. As a single-entity model, the IFL attempted to balance the power between the league and its fighters, by trying to position itself as a fighters league.