DREAM reports $230,000,000 backing
DREAM’s American representative says the Japanese promotion’s prosperity depends not only on new capital, but a plan to spend it…
DREAM’s American representative says the Japanese promotion’s prosperity depends not only on new capital, but a plan to spend it well.
And when that happens, DREAM hopes more fans will part with their cash.
Mike Kogan, Director of FEG USA, on Friday told MMAjunkie.com that the lucrative new deal between DREAM’s parent company, Fighting and Entertainment Group, and Shanghai-based investment bank PUJI Capital is an important step in regaining MMA’s foothold in Japan and the rest of the world.
But for DREAM to thrive, Kogan said it’s crucial that the company converts some of its fanbase to “a paying public.”
FEG, which also heads the preeminent kickboxing promotion K-1, recently announced that PUJI will stake the fight promotion company in an aggressive worldwide expansion effort – to the tune of up to $230 million U.S. dollars, according to the investment bank.
While the shape of the expansion is not entirely clear, FEG president Sadaharu Tanikawa said the effort will begin in 2011.
Tanikawa said the expansion is a “declaration of war against the WWE and UFC,” though the company plans specifically to avoid the U.S. market, where he feels they are outgunned by the pay-per-view giants. The company has not promoted a show in the mainland U.S. since August 2007 for the K-1 World Grand Prix in Las Vegas.
Tanikawa admitted the company has lost a huge portion of its market share in the martial arts business and that its business model needs to change.
“From Asia, we will take the world,” Tanikawa said.
This is not an announcement of an immediate capital injection; FEG has not yet secured the $230 million in funding. PUJI Capital is forecasting that it will be able to raise $230 million for FEG, but that is anything but a foregone conclusion.
Normally, you don’t make an announcement like this unless you’re sure you can get the money, but I wouldn’t be surprised if this announcement is more of a PR stunt than anything else. The news has been well-received by the entire MMA community – many of whom long for the glory days of Pride and more competition in a landscape dominated by the UFC – and FEG is definitely looking to generate some renewed interest in its fight brands to help it raise new money.
However, FEG has yet to prove that it can manage its assets with any sort of fiscal responsibility. I’m skeptical that PUJI can raise $230 million in the first place, but further question the notion that more money, and an ambitious international expansion plan, is going to solve FEG’s current problems.
If FEG does manage to raise significant funds, it should focus on its home market, first: establishing a strong foundation in Japan with a solid fan base and predictable revenue streams. Yet, rebuilding Japanese MMA is also a tall order. Many believe that much of the success MMA has had in the country is linked to professional wrestling (cross-over and freak show fights were the real draws on many nights); with pro wrestling on the decline, it may be difficult to bring MMA back to where it once was.
If, and only if, FEG can establish a strong fan base, with a solid fight product and firm financial footing, can it look to expand beyond Japan and into other markets. The Asian-Pacific is the most logical destination (Korea, China, Australia); likewise, South America (Brazil) remains relatively untapped. But I’m not sure how much success they, or anyone else, will have in Africa at this point.
This is definitely something to keep an eye on. The MMA fan in me wants to get excited, but FEG and Dream/K-1 still have a long way to go.
