On Thursday, Alliance MMA (AMMA) went public on the Nasdaq, aiming to raise $10 million. Shares opened at $5 and closed at $4.19. The company is, for the moment, the only publicly traded mixed martial arts entity; if you want to buy shares in an MMA promoter, this is it.
But this is not the first time that an MMA company has gone public. MMA promoters ProElite and IFL (International Fight League) both offered “over the counter” (OTC) shares, but have both since gone out of business.
So, how can Alliance avoid the same fate?
By complementing the biggest professional MMA promoters, rather than competing with them, says CEO Paul Danner. Alliance aims to bring together, under one umbrella, small regional MMA promoters that have local popularity and hometown-bred fighters, but don’t enjoy the national brand-recognition of leading national promoters like UFC (Ultimate Fighting Championship) or Bellator.
Alliance will function like a minor league, or development league, for pro MMA. (In football, investors who bought the defunct USFL are aiming to do the same for the NFL.)
Think of Alliance as, well, an alliance—or a seal of quality. The company won’t dispense with the brand names of the regional promoters it acquires, but will add them under an Alliance umbrella, to “bring a level of professionalism to increase the value of the sport,” says Danner. “Some people have compared us to the relationship the NCAA has with the NFL: it showcases the best athletes, and the cream rises to the top.”
Alliance’s public offering comes at a time when the entire business of mixed martial arts is consolidating. The sport’s popularity has grown exponentially, but most of the national focus is on just three or four of the top promoters, most of all UFC. In July, UFC sold for $4 billion to an investor group led by giant entertainment-and-sports agency WME-IMG. In September, two regional MMA promoters, Legacy Fighting Championship and RFA (Resurrection Fighting Alliance) merged. And now Alliance will continue the consolidation.
The company started down that road this year by acquiring MMA ticketing site Cagetix.com and MMA video platform GoFightLive. Within the next 12 months, Alliance expects to have grown its national footprint to the point where it can put on 125 MMA events per year, which “will make us attractive to national sponsorships,” Danner hopes.
To be sure, some MMA journalists have doubts about Alliance MMA. (“Do not invest in this,” tweeted one). As longtime MMA writer Mike Chiappetta explains, “There is a natural skepticism whenever anyone comes into the MMA space with big ideas. The infrastructure and event-production demands are unrelenting.” Chiappetta predicts that Alliance, “will face the struggle of building brand loyalty, as even among the sport’s diehard fans, their acquisition organizations are not widely known outside of their respective regions.”
But there’s one big reason why operating as a regional feeder to big promoters like UFC, rather than a competitor, is so smart: UFC itself is expected to go public soon.
The league, home to Ronda Rousey, Conor McGregor, and most of the sport’s biggest stars, just announced an eye-popping group of 23 new celebrity investors, including Tom Brady, Robert Kraft, Serena Williams, Maria Sharapova, Ben Affleck, Mark Wahlberg, Michael Bay, and LL Cool J. Faced with a list like that, it might be tough for Alliance to build up its own name brand and buzz—but it may not need to if it focuses on the regional, grassroots game.