M.I.A: Missing in Affliction

Much was made of Joe Rogan’s absence from the UFC 83 broadcast booth, but an equally significant “no-showâ€� has gone almost unnoticed: the previously ubiquitous “Afflictionâ€� logo was nowhere to be seen. Despite conspiracy theories that he had been fired or quit the UFC, Rogan simply had a prior family commitment making it essentially a “non-storyâ€�. The Affliction absence, meanwhile, raises serious implications not only for their core business but for the UFC fighters they sponsor.

No one is suggesting that the UFC is wrong in “banningâ€� the Affliction logo at this juncture. With their move into the MMA promotional arena, and their announcement of a July card headlined by Fedor Emelianenko vs. Tim Sylvia in Dallas they’re now in direct competition with the UFC.  The new direction for the company has essentially made the display of the logo and their clothing not much different than the display of the EliteXC logo (albeit with more skulls, grim reapers and dragons). While it was somewhat strange as a fan to suddenly witness an Affliction-less UFC, there’s no shortage of clothing companies anxious to affiliate with the organization. Though its always foolish to take sponsors “for grantedâ€� its safe to say that at this stage of the game the UFC doesn’t really need Affliction.

For Affliction, however, the stakes are much higher. As a privately held company its difficult to get an accurate grasp on how big they’ve become and how much money they’re making, but suffice to say that they’ve become the dominant brand in the crowded fashion industry segment targeting MMA fans and the larger audience of twenty-something clothing buyers. While many of their competitors have gone “downmarketâ€�  seeking to get as much of their product into as many distribution channels as possible Affliction has done just the opposite. They’ve kept their product exclusive, almost elusive, with limited retailers and high prices. Even in a large metro area like Portland, OR, where I reside, Affliction clothing is hard to find. Only the Nordstrom chain carries a dependable supply and displays the brand along with other “high endâ€� jean and t-shirt labels like Diesel, Marc Jacobs and Ed Hardy. 

The exclusivity of the brand has also allowed them to demand a higher price for their product than most of their competitors. A t-shirt will set you back in excess of $50, a thermal shirt around $70 and a pair of jeans around a couple of c-notes. Many fashion and clothing companies struggle mightily to find a balance between “luxuryâ€� and “mass marketâ€� to maximize their revenue. History suggests that the greatest risk, ironically, is in making your products too “accessibleâ€� and damaging their cachet and prestige. Cautionary tales abound, from Polo Ralph Lauren to Coach Leather to Tommy Hilfiger. Staying in the luxury market allows for higher prices and greater “perceived valueâ€� but limits the number of units sold.  Finding this balance is perhaps the greatest marketing challenge facing fashion industry managers as they work to increase revenues and profits.

To give credit where credit is due, Affliction’s designs are the “trendsettersâ€� among the countless MMA clothing companies. Their products are of higher quality than many competing products (at least in my experience) and are often very intricate in their design and workmanship with a variety of materials and finishes in a single garment. Their over the top skull and sorcery inspired heavy metal graphics might not be everyone’s taste, but they do a good job in both the design and construction of their products. They’re also not shy about trying new things, while the overwhelming majority of their competitors rely on copying ideas that have already worked.

Affliction, however, is trying something that most clothing companies don’t have the experience, connections or, quite frankly, the balls to attempt: they’re hoping to maintain their clothing brand while they enter a completely different industry. Despite the huge popularity of MMA, there’s still considerable debate as to whether that popularity is reflective of the growth of the sport or is more indicative of the UFC’s strength as a brand. While its clearly early in the game, the reality that the UFC is the only company to consistently make money promoting mixed martial arts in America—and even their profitability is a fairly recent phenomenon—underscores the risk implicit in Affliction’s new venture.

Making the stakes even higher is the fact that Affliction is not only betting that they can compete with the UFC, but that the future business model of the sport will be more like boxing’s “fighter-centricâ€� model. As we’ve discussed before, the UFC seeks to keep their fighter salaries low in the belief that their brand is what drives revenues. This is not unlike how the WWE promotes pro wrestling with a good degree of success;  once a wrestler gets “too bigâ€� they can easily be replaced with another star the promotion has “createdâ€� Many are suggesting, however, that the future business model of the sport will be essentially like boxing—with “big fightsâ€� between “big name fightersâ€� driving the economic engine. Based on the money reportedly being paid to the fighters on the July show, Affliction is literally betting a lot of black chips on this vision of MMA’s financial future: Fedor Emelianenko is reportedly making $1.5 million, while Tim Sylvia reportedly is getting $900,000. Sylvia’s pay alone could cover the entire fighter payroll for most UFC PPV events, and with a loaded undercard rumored to include big names like Matt Lindland, Josh Barnett and Andrew Arlovski the $2.4 million paid to the main event principals is only a fraction of the total fighter payroll for the Affliction debut card.

While the future financial direction of the sport and the viability of Affliction’s MMA promotional model can be debated ad infinitum, there’s another interesting question rising from this scenario: How much of Affliction’s success in their core business of apparel sales can be attributed to their relationship with the UFC? Clearly, they owe a lot of their name recognition among their target market to the fact that for several years virtually every major fighter has come to the Octagon wearing an Affliction product of some sort. Most top UFC fighters have their own “signatureâ€� t-shirt, which poses another question: how many of Affliction’s sales are to fans seeking to “representâ€� their favorite fighter? 

On the other hand, it could be a case where Affliction has “outgrownâ€� the UFC. In the past year they’ve expanded into boxing (Kelly Pavlik and Bernard Hopkins now have their own “signatureâ€� shirts) and heavy metal music (Ozzy, Black Sabbath and Korn all have “signatureâ€� shirts and there’s a rumor afoot that they’ll be doing the t-shirts for Metallica’s forthcoming US tour). Affliction is a primary sponsor of the May 4^th Oscar De La Hoya/Steve Forbes fight along with heavy hitters like Cazadores tequila, Tecate beer, Rockstar Energy Drink and Southwest Airlines. At times over the past few months they’ve been rumored to have a partnership deal with Golden Boy Promotions for their MMA efforts, and with Golden Boy publically seeking an entrée into the new sport it wouldn’t surprise me to see something eventually materialize. For the July Fedor/Sylvia event in Dallas, Affliction is working with HDNet Fights and Adrenaline MMA (Sylvia’s contract holder).  HDNet Fights is a particularly significant partner as they’re owned by someone with more money than even the UFC’s Fertitta brothers in  Mark Cuban. And, while we’re on the subject, the loose confederation of promoters working together for an individual event is also a more “boxing-likeâ€� approach and in diametric opposition to the UFC’s model.

As if there weren’t enough questions surrounding Affliction, some consideration has to be given to their future sponsorship of UFC fighters. The UFC has historically been “hands offâ€� regarding most fighter sponsorships. They’ll occasionally have issue with a fighter’s displaying a sponsor that isn’t “approvedâ€� (Matt Lindland most notably, though many have the opinion that they were looking for a reason to fire him) but in most cases if fighters can find someone to cut them a check they’re cool with it. That explains some of the stranger sponsors, such as CondomDepot.com. While in the short term the UFC is probably content with keeping the Affliction logo off of their broadcasts, in the long term there are serious questions. Will fighters be allowed to sign deals with Affliction in the future? On one level, this isn’t much different with a UFC contracted fighter taking sponsorship money from EliteXC which would certainly not be allowed. On the other hand, many top fighters have a long relationship with Affliction and the UFC might not want to rock the boat with their top names like Quinton “Rampageâ€� Jackson and Georges St. Pierre. Of course if they’re convinced of the superiority of their “promotion centricâ€� business model they might not care. 

At the present time there are plenty of questions, but few concrete answers. Many are of the opinion that the future of the sport will emphasize fighters more than the organizations they fight for, but the bottom line could dictate otherwise. Furthermore, the track record of companies that move beyond their core business is mixed. The WWE has failed on several occasions, most famously with the World Bodybuilding Federation and the XFL. Starbucks has seen their stock price erode as they’ve started trying to expand into music sales and movie promotion instead of just making coffee. On the other hand, many were critical when Apple Computer diversified from their core business of making computers to enter the as-of-then unproven market for portable MP3 players. They took a risk in making the iPod, but its gone on to change the very structure of the music business and make them a ton of money in the process. Could MMA promotion become Affliction’s version of the iPod? Stay tuned to find out….