UFC’s new head of operations in Brazil, Grace Tourinho announced last Thursday that the UFC would be ending its partnership with IMX in favor of staffing up UFC directed operations in Brazil to help grow the business.
According to a statement released to media January 2nd, “Our partnership with IMX was really important for UFC’s success and the growth of our activities in Brazil. [However] Today, thinking strategically, it makes sense that we have a local team dedicated to do our business to help (the UFC) to grow.”
While it may seem like a logical step towards the UFC’s growth in Brazil, there may be more of a rough road ahead for the promotion’s expansion as Brazil’s economy has taken a significant dive in the last few years. In December of 2011 it was announced by Reuters that EBX Group and IMG Worldwide would acquire Brasil1 to launch a Joint Venture by the name of IMX.
According to Reuters, “With the Acquisition of Brasil1 the IMX Sports & Entertainment Portfolio Includes Projects Like UFC, Volvo Ocean Race, LPGA Brazil Cup, Among Others; IMX Will Work With Sports, Entertainment and Venues.”
EBX is headed by Eike Batista, formerly one of Brazil’s leading entrepreneurs. However, since 2011 his empire has dwindle from a towering $30 Billion to a paltry $200 Million. According to an article released by the International Business Times on Thursday, “Many have pointed out that Batista’s collapse is a look into the weaknesses of [the] Brazilian economy: a state-managed capitalism, in which businesspeople benefit from billions of dollars of steeply discounted government loans under a strategy to back business considered critical for the growth of the country. Since 2009, Brazil has lent businesses around $100 million, adding to its public debt.”
IBT further expanded in their article by stating, “Brazil’s 2013 has run similar to Batista’s. After years of fast growth culminating in 7.5 percent GDP growth in 2010, Brazil’s economy slowed down to a disappointing 0.9 percent growth in 2012 and worrying figures in 2013, with Q3 seeing a 0.5 percent contraction. Analysts have called this Brazil’s “new normal,” adding that it will take a few years until Brazil is back to pre-financial crisis growth level. 2014 will be slightly better, with growth forecast between 2 percent (as noted by Citibank) and 2.4 percent (JP Morgan). The Brazilian government is remarkably more optimistic, forecasting growth for this year at 4 percent.” Closing out their story on the ailing business man’s fortunes with, “In that environment of slow growth and uncertainty, Batista will be trying to keep his remaining businesses afloat, along with his meager $200 million remaining fortune.”
If indeed Mr. Batista’s economic experiences are reflective of the country as a whole, how does this impact the UFC’s plans for expansion? With PPV models and generally higher ticket prices than competing promotions, will the UFC experience challenges with growth in an economy that is just beginning to recover?
Regardless of the outcome of their efforts, given the current state of Brazil’s economy and the history of Batista’s shaky business ventures, taking the management of their expansion into their own hands by hiring Grace Tourhino was likely a very prudent move by the UFC. The approach in Brazil may well need a change in perspective, which is just what this seasoned executive could bring to the table.