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Arnold M. Knightly

Ultimate challenge for Stations exec

19 June 2008

LAS VEGAS, Nevada -- What started as a side business for Station Casinos' Fertitta brothers has grown large enough to require some full-time attention.

Station Casinos President Lorenzo Fertitta said Wednesday he is stepping away from his role with the casino company to oversee the day-to-day operations of Ultimate Fighting Championship and to focus on expanding the mixed-martial arts organization into new foreign markets.

"The thing has grown to the point where we have an international media company that is changing the way that the fight business is operated," said Fertitta, who will be taking over as chairman and chief executive officer of the UFC's parent company, Zuffa. "We got to the point where we felt we were better off dividing and conquering."

Although the 39-year-old Fertitta brother will not be involved in day-to-day operations of the gaming company, he will remain vice chairman of Station Casinos and a large shareholder.

Brother and Station Casinos Chairman and CEO Frank Fertitta III will assume the title and role of the casino company's president.

Current Zuffa President Dana White, who owns 10 percent of Zuffa and was Lorenzo Fertitta's high school friend from Bishop Gorman, will remain in his position.

"He is by far the best promoter on the planet right now," Lorenzo Fertitta said of White.

The day-to-day operations of the UFC are not expected to change, and fans will not see much of a difference in the short-term, White said.

"I don't think you'll see me run the company any different now that he's here. I'm still going to be saying stupid things, and I'm still going to be swearing too much."

Fertitta has always been active in the company, and his expanded role will not likely be obvious right away.

"(Lorenzo) and me talk 30 times a day. We live next door to each other," White said. "We talk and work UFC all the time. He'll just be able to do it full-time now. It's business as usual for me. Believe me, I'm so excited about him coming over here."

White said Fertitta's efforts will be more apparent to fans several years down the road.

"This is probably one of the cockiest things I've ever said, and I've said some pretty cocky things, but this will be bigger than the NFL and bigger than soccer in the next eight years."

The Fertittas, who each hold a 45 percent stake in Zuffa, wouldn't say whether the move was also part of a widely rumored plan to take the mixed martial-arts organization public in the near future.

The Fertittas paid a reported $2 million in January 2001 for the UFC, bringing in White to run and promote the company.

At that time, the organization had four employees, UFC matches were banned in all but five states and the organization was struggling to stay afloat financially.

Today, the league is valued at close to $1 billion with 100 employees across the United States and Europe.

Matches now are legal in 36 states, and the UFC is expected to generate $250 million in sales this year, according to a May 5 issue of Forbes that featured the Fertitta brothers on the cover.

According to the article, pay-per-view buys for UFC events have increased from 145,000 in 2001 to 5.1 million for 11 events last year.

"From a sporting standpoint, we believe that our potential to grow goes beyond that of the NFL or the NBA or Major League Baseball, because of the fact that our product translates so well internationally," said Lorenzo Fertitta, who was a commissioner on the Nevada State Athletic Commission from November 1996 until July 2000.

"I don't think people realize the magnitude of this, but we're 300 million households worldwide," Fertitta said.

The UFC has staged five events in Great Britain, but is looking to expand to mainland Europe, Asia, South America, the Middle East and Australia, according to Lorenzo Fertitta.

"We're creating a global footprint to grow this thing going forward," he said, adding the fights are available in 170 countries and territories on television. "That's really posed a new set of challenges that I'm going to be going over there to try to tackle.

"I've always been involved over there since the day we bought the company," Fertitta said.

"It just allows me to be more deeply involved and do more things. It was difficult when you were spending a small portion of your time working on something like the UFC and 90 percent of your time on Station Casinos. Now it just allows me to put 100 percent focus over there."

After buying the UFC, the Fertittas poured $44 million into the organization to grow its visibility and stability, according to Forbes.

However, it was the $10 million the brothers spent to produce "The Ultimate Fighter," a television show built around White and the fighters that is credited with helping the UFC turn the financial corner.

The show became a cable television hit, leading to spinoffs and a library of DVDs that now are a key to the UFC's estimated $1 billion value.

Frank Fertitta said his brother will still be involved in the strategic planning for Station Casinos.

"We're going miss him over here, but by the same token we have a very strong team over here and it's business as usual moving forward," Frank Fertitta said.

"While he won't be here every single day full-time, his thoughts will be taken into account on where the company's going and what's going on."

The decision for Lorenzo Fertitta to leave Station Casinos comes nearly seven months after the Fertitta family took the gaming company private for $5.4 billion in partnership with Los Angeles-based real estate investment firm Colony Capital.

Frank Fertitta said he and his brother made the decision about the change after they sat down and discussed what would be best for both businesses.

"Once we came to the conclusion of what we thought the best structure was, we sat down with (Colony Capital founder and Station Casinos board member) Tom Barrack, our partner," Frank Fertitta said. "He was fine with the situation."

The Fertittas, along with sister Delise Sartini and her husband, Blake Sartini, own 24.1 percent of the gaming company following the buyout. Colony Capital controls the remaining shares.

Ultimate challenge for Stations exec is republished from