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Round 5 Gets Grip on Mixed Martial Arts Figurine Biz

This post is from guest blogger Joe Favorito:

One of the sports that continues to have perceived growth and potential is Mixed Martial Arts, and although the sport continues to flourish with its biggest brand, the Ultimate Fighting Championship (UFC), an alphabet soup of companies (EliteXC, IFL, AFL, to name a few) have made runs at cashing in on the growing sport.

But most have failed to find a sufficient audience before their funds dried up. What has been left are the local gyms, the apparel companies, and a handful of licensees who have been able to carve a niche and are serving the rabid fans of the sport a steady diet of low coast and innovative products.

One of the biggest coups, and an area of the sport in which the UFC may have been beaten to the punch, so to speak, is the collectibles business, where Markham, Ontario-based startup Round 5 this month is releasing its second series of figurines bearing the likeness of some of MMA's top stars. The company entered the marketplace ahead of the UFC’s deal with JAKKS Pacific this past summer, and by going right to the individual fighters and away from the group licensing deals that most sports have done, kept the UFC away from initial cash in on some of their biggest stars.

The first series launched in November 2007, and featured four of the sports biggest stars, Randy Couture, Matt Hughes, 'Rampage' Jackson and Tito Ortiz in a limited edition release to approximately 3,500 retail outlets. The overwhelming sales success and popularity in a collectable world always looking for new items allowed Round 5 co-founders, brothers Barron and Damon Lau, to sign up popular stars Rich Franklin, Sean Sherk, Anderson Silva and Wanderlei Silva for Series 2.

UFC Figurines

The difference, says Damon Lau, Round 5 president, is that instead of going after the UFC brand, the company works directly with the fighters, allowing each athlete full creative control of the look of his figurine as well as the ability to sell sponsorship on its trunks. Round 5 also provides the athletes a per-unit commission that is four- to five-times the standard for the toy industry. JAKKS Pacific Inc., a large marketer of toys and leisure products, deal with the UFC—a deal first announced on CNBC's "Power Lunch" on June 10—did not have the rights to the likeness’ of the majority of fighters on the promotion's roster, a problem for the UFC, but a big opportunity for Round 5.

"The process took over a year from start to finish," says Sherk, who has been very active in the creation of his figurine. "They approached me last year, we went through a few changes along the way, and I'm very happy with the finished product."

The Laus, fans of the sport for more than 10 years, drew their inspiration from a series of pieces produced by Hao, a Japanese Company, representing fighters from PRIDE, a now-defunct MMA promotion based in Japan. The Round 5 figurines, which retail at $16.99 when purchased at the Round 5 web site, are also distributed at K-B Toys,Champs Sports and f.y.e in the United States and Toys 'R' Us in Canada, and a third series is on the drawing board for 2009.

Although retail sales in the collectable market can be hit and miss, Round 5 has been able to sign stars and use the marketing popularity of the UFC to their advantage without any relationship with the promotion, and create a solid choke hold on what could be a very profitable niche both domestically and abroad.

Rounds One and Two In the MMA Collectable industry defiantly have gone to the Canadians at Round 5. Joe Favorito has spent over 22 years in the sports and entertainment communications, branding and marketing field. He has held high level strategic positions for brands like the New York Knicks, the USTA, SportsChannel, the Philadelphia 76ers and the IFL, and is currently consulting for a wide range of clients. Joe also has a best practices blog at his site joefavorito.com, is on the faculty at Columbia University and has written a text on the industry "Sports Publicity."

Questions? Comments? SportsBiz@cnbc.com