A fight to the finish

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The new business partners grinned broadly as they welcomed invitees to the gala opening of their $300-million casino resort in Henderson, Nev.

Inside the sprawling complex, which includes a 500-room hotel, eight restaurants, 2,200 slot machines, and a pool surrounded by a sandy beach, guests mingled with actress Charlize Theron, boxing promoter Bob Arum and watched a performance by former Guns N' Roses guitarist Slash.

The 2001 opening of Green Valley Ranch was to have been the triumphant first joint venture between two men, Brian Greenspun and Frank Fertitta III, whose families were Las Vegas fixtures (the Greenspuns in real estate and publishing, the Fertittas in neighbourhood casinos, down-market joints catering to locals).

For a time it was, but the relationship soured earlier this year.

And the ensuing legal saga and other court filings provide detailed insight into how Frank Fertitta, 48, and brother Lorenzo, 41, who control a multibillion-dollar empire that includes the Ultimate Fighting Championship, conduct their business.

Though the spotlight usually focuses on minority partner Dana White, the bombastic, high-octane face of UFC, the brothers are the quiet impetus behind one of the fastest-growing sports businesses on the planet.

And in many ways, their corporate strategy mirrors UFC's inside-the-octagon ethos: aggressive, brash, relentless, few holds barred.

Take the way the brothers acquired the company in 2001 for $2-million (all figures U.S.) from previous owner Bob Meyrowitz, who was looking to inject cash into the moribund league.

"I came back to him and said 'Look ... if we are going to do this we don't want to have partners. We'd like to make you an offer to buy you out of the entire business.' And probably about four to six weeks later we had struck a deal," said Lorenzo Fertitta, who spends most of his time as chairman of UFC. Frank mostly runs the casino business.

Court documents and regulatory filings show the Fertittas are unafraid to deploy hard-nosed business tactics.

Zuffa LLC, the parent company that owns UFC, is a frequent and aggressive litigator, especially when it comes to infringements on their brand.

"I don't know that it's really different than any other business," said Fertitta, later adding "there's literally people that infringe on our trademarks every single day ... whether it's piracy on the Internet or people using our marks to try to help their own business, we're going to fight that in a very aggressive way."

Last month, lawyers for Zuffa - it's the Italian word for punch-up - sent a cease-and-desist letter to Google, demanding it stop linking to illegal video-streaming sites.

They've gone after agents, websites and copycats, and have sued fighters who stray from conditions imposed by their UFC contracts.

It hasn't stopped them from signing athletes away from other companies - one of them, Roy (Big Country) Nelson, is the subject of a lawsuit from his former promoter.

Zuffa, which claims to control more than 90 per cent of the mixed martial arts market, is also embroiled in a dispute with rival Bellator over the alleged theft of proprietary information.

There is yet another ongoing suit that alleges the brothers surreptitiously gained control of an energy drink company - it was founded by a convicted money launderer and later had a sponsorship deal with UFC - forced it into bankruptcy, and bought back the assets on the cheap using a Toronto-based company as a front.

Zuffa has sought to quash the allegations and continues to market the energy drink, one of many growth areas.

"The No. 1 thing they have done brilliantly is to control their content, whether it's the fights themselves, distribution, licensing, or managing their brand," said David Carter, who heads the Sports Business Institute at the University of Southern California.

At a time where other sports are girding for labour disruptions, the Fertittas are operating with no salary cap, revenue sharing or free agency.

Fighter compensation can be something of a sore point among former competitors and within the robust online community that follows and analyzes UFC's every murmur.

White has said 18 of the UFC's roughly 230 athletes make upward of a million dollars a year. Still, the lesser lights in Saturday's UFC 124 in Montreal - which will set an attendance record - can expect to make between $6,000 and $10,000, double if they win.

Meanwhile, the UFC generates as much as $30-million in pay-per-view and gate receipts for a major card; there are plans to hold 30 or 31 events next year, half on pay-per-view.

Large dollars inevitably attract rapacious characters, so the Fertittas protect themselves and their businesses accordingly.

But sometimes they also find themselves named as defendants.

In January, Greenspun got a call from just-fired Green Valley executive Timothy Wright, who began making allegations about a long-running scheme to lure high-rollers away from the casino to Station properties - the enticements allegedly included UFC tickets.

The alleged plot even involved providing inferior cuts of meat for a Green Valley restaurant called Hank's Steakhouse

"No detail was too small," court filings claimed.

Greenspun sued for breach of contract. The Fertittas hit back hard. They immediately put Green Valley into bankruptcy protection, effectively freezing the lawsuit.

They also shot back at Wright in a court filing that alleged "deeply troubling personal and professional misconduct."

The suit was settled - as most of Zuffa's legal matters eventually are - and both sides agreed to continue working together.

But the damage to Green Valley may be done. Court filings show the casino has $850-million in debt.

Debt is a recurring theme in the brothers' businesses.

According to the main U.S.-based credit rating agencies Zuffa is carrying roughly $470-million in debt and credit facilities.

Moody's upgraded its outlook on the company earlier this month from stable to positive, citing "continued strong revenue" and "improving credit metrics."

But Moody's view isn't all rosy: "Though the majority owners have significant financial resources, they have a history of being high financial-risk tolerant entrepreneurs, which constrains upward movement in the rating."

Translation: The Fertittas have a penchant for making risky financial bets, and the fight game and casinos aren't exactly Canadian chartered bank stock.

Though it insists debt isn't a problem, Zuffa is sensitive to things such as 'pay-per-view fatigue' - which seems to be denting the revenues at World Wrestling Entertainment.

"We think 15 [each year]is a good number. We could easily do 50, but we don't. It's about managing supply," said Tom Wright, a former CFL commissioner who is now Zuffa's man in Canada.

The Fertittas' "significant financial resources" stem from Station, founded in 1976 by their late father, Frank Fertitta, Jr., a former Tropicana bellman made good.

The Fertittas took the company private in 2007 - but quickly found themselves swept up in the 2008 downturn and with $6-billion in debt.

The brothers managed to hang on to the business through a bruising Chapter 11 filing; some creditors complained the Fertittas manipulated the process to preserve control while shedding much of the debt.

Station Casinos is shortly expected to emerge from court protection with $2-billion in debt, a collection of more than a dozen casinos and challenging prospects.

The Fertittas have long maintained Zuffa is insulated and separate from Station, and UFC is intent on expanding its strongest markets, Canada among them.

But the greater promise lies further afield.

In January, Zuffa announced it had sold a 10-per-cent stake to Abu Dhabi's royal family. Four months later, UFC held a gala fight card in the emirate.

Zuffa's international ambitions - it is notably eyeing China and India - are borne both out of design and necessity.

Cash flow is key given UFC's debt picture and the scale of its plans, so there are new markets to tap into, branded gyms to flog, reality TV shows, clothing, video games, and possibly a standalone television network.

"We truly believe that in the next 10 years ... we'll be the biggest sport in the world. Once again people kind of look at us like we're crazy and laugh at us," Lorenzo Fertitta said. "But if you think about the potential of what we're doing here, we truly have what we believe is the only global sport."