On the eve of the biggest mixed-martial-arts event Nashville has ever hosted — Saturday's UFC Fight Night, pitting fifth-ranked Glover Teixeira against former UT football player Ovince Saint Preux at Bridgestone Arena — the sport's future in the state is in doubt.
Earlier this year, it appeared that the state-run Tennessee Athletic Commission, which oversees boxing and MMA regulations, would cease operations due to financial instability. The commission got a last-second reprieve from the Tennessee Department of Commerce and Insurance, basically by agreeing to a smaller budget and getting folded officially into the department.
But in so doing, the commission may lose crucial clout within the sports world — at the time it's needed most.
Mixed martial arts in Tennessee officially became legal in 2008, when the governor and the House and Senate speakers appointed an athletic commission to decide on rules, regulations and assorted fees and requirements for promotions to run sanctioned events. Before then, fans had clamored for years to see professional MMA events like the Ultimate Fight Championship within the state, but without success.
The breakthrough came when lobbyists representing Tennessee venues that hoped to host MMA fight cards began to work the state legislature, claiming large revenue streams would one day course through the commission into Tennessee's coffers. Those claims were greatly exaggerated, a source familiar with the situation told the Scene on condition of anonymity.
"The lobbyists told all of the politicians that there would be millions of dollars rolling into the state annually through the fights, and millions coming through the commission's coffers," the source says. "For that to actually happen, the UFC would have to hold big events in the state twice a month.
"The politicians were misled, and they weren't happy once they realized it wasn't going to happen."
No one contacted by the Scene can recall exactly how much revenue the state was expecting to see from professional MMA. But exaggerated forecasts are nothing new in the MMA world, according to Jonathan Snowden, lead writer for Bleacher Report and co-author of The MMA Encyclopedia. Snowden says that one doesn't need to look any further than the UFC's continued lack of success attempting to move into New York, the last remaining state to outlaw professional MMA.
"Like most professional athletic franchises, the UFC makes a lot of bold claims about their impact on local economies," Snowden says. "During a recent PR blitz pushing their failed New York expansion, the promotion suggested two events in the state would create '$16 million in new spending.' Frankly, that's ludicrous."
Whatever lawmakers' expectations were, the state is not happy with the recent output. In records obtained by the Scene from the Tennessee Department of Commerce and Insurance, the Athletic Commission operated in a deficit in 2013 and 2014, and only managed to break even in 2012. The moneys accumulated from licensing fees, gross receipts taxes and contest permits grow only so large when the UFC visits your state just once every two years.
"The UFC's focus isn't on Nashville," Snowden insists. "It isn't on the United States at all. The sport is in the midst of a dubious international expansion. Last year they put on 22 shows overseas and only two in the American Southeast. In 2013 the UFC ran 33 total events. The closest they came to the Southeast was Fort Campbell, Ky. If Nashville wants more UFC, it better get in line."
Left to fill the needs of a rabid fan base and the cash-strapped commission are small regional promotions like Memphis-based V3Fights. V3 president Nick Harmeier says that even though he's worried about the future of MMA in Tennessee, he doesn't think the Athletic Commission should be let off the hook. He believes that the governing body was handled wrong from the beginning.
"I was happy to be a part of the first group of MMA promotions to run in Tennessee," Harmeier says. "To be a part of it from the very beginning to looking at where it is now, it's definitely scary. I think it's a sign of the failure of the commission. The way it was formed was basically copy-and-pasted from the commissions in Nevada and California, and if you look at those states, they get all of the biggest boxing cards and MMA fights.
"It's hard for us to be on the same level as a Nevada, but we operate our commission exactly how the UFC wanted. The key to our survival is to get the big UFC events. The events that I put on are just small dimples; the UFC is the big buns in the market for the state and commission in general."
When reached by the Scene, Tennessee Athletic Commission executive director Jeff Mullen declined to comment on the state's failure to acquire more big events from the UFC. Delve into the commission's financial particulars, however, and it becomes clear that the model on which it was built was doomed in our state.
Tennessee promoters of professional fights must pay the commission either 4 percent of gross receipt sales or $500, whichever is greater. That's fine when you're talking about an event the size of a UFC Fight Night, where Boston's UFC Fight Night 59 pulled in $1.34 million in gate receipts alone. Once you read the tax code on the expected millions brought in by broadcasting fees on cable and pay-per-view, however, the sad truth emerges. Especially since the gate on a V3-caliber fight, according to Harmeier, is closer to something like $10,000.
"Basically, small-level and mid-level MMA fights pay for themselves, so they basically break even; they don't make any money," a state government source tells the Scene. "The fights pay for themselves, which is great for them, but they're not making any money for the state. They're not paying for the everyday running of the commission and paying for the commissioner's salary, or any of the expenses therein, which was expected. We depend on the UFC to pay for the commission."
Complicating matters is that state politicians have so far refused to take into consideration MMA's effect on the local economies of hosting cities. When the UFC held a 2009 pay-per-view in Memphis, millions of dollars rained on Beale Street hotel rooms and restaurants. But since the amount directly flowing through the coffers of the commission was less than expected, it was considered to have an underwhelming effect on the state economy.
In a shortsighted effort to continue running MMA and boxing bouts for another year while assessing Tennessee's relationship with the sports, the duties of the Athletic Commission will be overseen by the Department of Commerce and Insurance. The two bodies have always been administratively attached, but until now the commission was always considered an independent body. In an effort to slash budget expenditures, current commissioner Mullen, widely considered one of the country's top authorities on MMA, will soon be shown the door. His duties will be handed to the head of the state department in charge of barbers and real estate appraisers.
"It's a very scary situation, because if you do away with the commission it goes back to the backyard brawls that the commission has stopped from happening," says Harmeier, echoing the thoughts of many local MMA supporters.
"It's almost like having no police force in a town. Someone has to make sure that these fights are being put on properly and that people are being protected, because the last thing you want is someone dying in the ring."
