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What Does It Take to Succeed in the Business of Martial Arts?

  • Mar 5
  • 11 min read

Updated: 3 days ago

EconBuff Podcast #57 with Ty Garrett

Professor Ty Garrett joins me to discuss martial arts as a business. We begin with an overview of the business model in martial arts. Mr. Garrett explains how the traditional model of martial arts falls short. We then turn to the model that he employs at his business, where he took inspiration from the Crossfit business model. He lays out how he learned from his first martial arts business and its failure and how that set him up to succeed. Mr. Garrett also discusses the challenges faced in trying to break the mold of the older business model, and how he had to go against conventional wisdom and the opposition of others in the industry. We explore his business model, and how he eventually expanded into being a minority owner in two additional locations across the state. Mr. Garrett provides his perspective on a better way to approach expanding without becoming a minority owner in new locations. We discuss the role of mentors in his development as a martial artist and businessman, and we compare and contrast his experience in college with his experiences with his mentors. Finally, we consider how start power, achievements, and personality is an asset in the martial arts industry.


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Condensed Transcript

Introduction

Lee: Hello and welcome to the Econ Buff Podcast. I'm your host, Lee Stitzel. With me today is Professor Ty Garrett. Ty is the owner and operator of Extreme Martial Arts in Amarillo, Texas — the biggest gym in the area. Our topic today is the business aspect of martial arts. Ty is a fourth-degree black belt in jiu-jitsu under Carlos Machado — I lead with that because I'm a jiu-jitsu guy — and a fifth-degree black belt in kickboxing under Troy Dorsey. He's the reigning World Kickboxing Organization champion and current best male fighter of the year, and I understand that's three years running.

Ty: Three years in a row, yes sir.

Lee: Not just three titles — three in a row. Welcome to the podcast.

Ty: My pleasure. I look forward to it.

Broken Business Models in Martial Arts

Lee: Our topic today is the business aspect of martial arts. There's this sport, this art, this hobby that people think about — and then there's the reality of running it as a business. How do we make it survive day to day? How does someone with a black belt, or multiple black belts like you, actually sustain that as a career?

Ty: One of the core problems a lot of gym owners have is that we're copying broken business models. My very first teacher was a great martial artist, but his main job was being a landlord and running a liquor store. He taught martial arts in the evening. Another one of my great instructors — fantastic kickboxer, great man, he was the best man at my wedding — was a full-time police officer who taught kickboxing on the side as a hustle. Most gym owners are like that. Martial arts might be their passion, but it's not their career, so they don't know how to run a business. That was generation one of gym owners in the U.S. — guys who had hobbies that maybe made a little money, but not profitable businesses. Now guys like me in generation two or three are trying to copy a model that was already broken to begin with.

Ty: Another model people try to copy involves world-famous instructors. I have a couple of coaches who get recognized everywhere and asked for selfies. They're profitable, but their success is based on celebrity — they're the celebrity, and they teach all the classes. Their business model only works because of who they are. Guys like me who actually want to run a sustainable business had to go back and build a new model from scratch.

Refining the Focus: Kickboxing and Jiu-Jitsu

Ty: I always liked the college model. My original idea was a martial arts university — this person gets a black belt in karate, that person in taekwondo, someone else in judo, jiu-jitsu, wrestling, Krav Maga. Just like at Texas Tech, where you and I both went but got different degrees, I wanted a place where people pursued different arts under one roof. But I quickly realized how many coaches, how much space, how many mats that would require — and what you'd have to charge. So I stepped back and asked: what are my two favorites?

Ty: Kickboxing covers all the striking arts — boxing, Muay Thai, Sanda, karate, taekwondo. All the effective kicks, punches, knees, elbows, and blocks fall under that umbrella. Jiu-jitsu covers all the grappling arts — clinch work, takedowns, pins, escapes, submissions. So we got rid of the separate karate, wrestling, and self-defense classes and focused on those two. Once we did, I realized they actually serve two different markets. Most students are either kickboxers or jiu-jitsu practitioners — very few do both. And the two cultures inside the gym weren't always compatible.

Ty: Once we started focusing on gym culture rather than just the business model — what we charge, how we structure classes — something really interesting happened. Students started staying for years instead of months. When someone trains with you for two, three, five, ten years, the business model gets a lot easier. You're not cycling through six-week fitness challenges where someone loses five pounds, quits, gains it back, and their life is no better. You're actually changing people's lives.

Timeline and the Rise of MMA

Lee: Can you give us a rough timeline of when you made this shift?

Ty: I opened my first school in 2003 while I was at Texas Tech. I was literally learning entrepreneurship while taking business management classes — except those classes were about stock splits and evaluating Fortune 500 companies. How to buy a Super Bowl ad. None of it applied to running a small martial arts gym. In 2006, I graduated, moved back to Amarillo, and opened a new gym. I knew the college model alone wasn't going to get me there, so I started hiring mentors.

Lee: Your timeline overlaps with the broader rise of mixed martial arts and the UFC. Jiu-jitsu and kickboxing are probably two of the disciplines that benefited most from that wave. Did that factor into your focus on those two arts?

Ty: Not directly — I didn't pick them because the UFC made them popular. But I'm a product of my age. I was about ten or eleven when the UFC came out, and like everyone in my demographic, I realized that as a karate student, I didn't understand half the game. I wasn't getting full striking training either — great with kicks, not so much with punches. So I started training kickboxing and realized I needed to learn how to box, how to get conditioned like an athlete, how to stop takedowns. Kickboxing and jiu-jitsu just happened to be what I was most passionate about.

Ty: Honestly, I think the person who did more to bring kickboxing into mainstream fitness than anyone else wasn't even a real fighter — it was Billy Blanks. Tae Bo got the first generation of Americans genuinely training in martial arts for fitness. I actually got to meet him recently at a tournament. He came out of retirement at seventy, and I walked up to him and said: 'I just wanted to shake your hand and thank you for creating my job.' That DVD and VHS workout was the gateway that got people interested, and then many of them enrolled in real academies.

The Value of Mentorship

Ty: What I was looking for in mentors were guys who were better than me on the mat — better at kickboxing or jiu-jitsu — but who also understood business. I didn't want to learn from a McDojo operator just in it for the money. But I also didn't want to keep copying great martial artists who were broke. I wanted to find that sweet spot: an excellent, reputable martial artist with a genuinely successful business, who wasn't a celebrity I couldn't replicate. So I would literally ask those people if I could buy private lessons — half martial arts, half business.

Ty: It was expensive. I remember sitting in my mom's basement, couldn't afford rent, about to get married, and paying $1,500 a month for mentoring. My mom found out and said, 'You can't pay rent, you're getting married, but you can afford this?' I told her it was an investment — college for martial artists. In hindsight, it worked out. Statistically, she was probably right to be concerned, but the mentorship literally saved ten years off my learning curve. Taking me from barely profitable to profitable was huge. Going from the top thirty percent of the market to the top ten, then top five, top two — that mattered enormously.

Lee: Paying thousands of dollars for that mentorship over several years was almost certainly cheaper than starting a second business, failing it, and having to start a third.

Ty: Not even close. And you also have to factor in opportunity cost — the years you're not profitable, the years you're wasting money on the wrong things. The school of hard knocks is often the most expensive education there is.

Martial Arts as Fitness

Lee: How closely do you view the link between martial arts and fitness? You could position yourself as training fighters, but that's not the primary part of what you do. Still, there's nothing quite like combat sports conditioning — the intensity, the cardio, the strength demands.

Ty: One of my pet peeves is black belts my age who can't fit into their black belt anymore — what we call the bow-tie black belts, because it ties like a bow instead of hanging to mid-thigh. If you're in your twenties, thirties, or forties, you should be a product of your gym. I trained with Bill Wallace this weekend. He's eighty years old, one hundred sixty-six pounds — same weight he fought at. Still moving. I trained with Troy Dorsey — he did a three-hour class straight without a break, and he's in his sixties. Both of them are products of what they sell. If martial arts teaches fitness, your coaches need to be fit.

Ty: For my average student, we start every class with ten minutes of strength and conditioning — usually kettlebells. My strength and conditioning coach used to work with Brett Favre. He built a customized kettlebell program focused on injury prevention for martial artists: shoulders, lower backs, and knees. So if all you do is train with me, you don't need to do cardio somewhere else or strength train somewhere else. We take care of it. We have about six hundred students total. About twenty of them fight full contact. The rest train the lifestyle — same real techniques as the competition team, just taught in a way where you can show up to work the next day without a black eye.

Culture as a Business Strategy

Lee: I've noticed that being in your gym, there's a lot I'm getting that I probably wouldn't get elsewhere — things I might describe in economics as bundling. Training my son alongside me, seminars with world-class athletes, the friendships, the culture. Is that intentional?

Ty: It's definitely intentional now, though it wasn't originally. When I did karate as a kid, my best memories aren't about the techniques. They're about being in the back of a minivan driving to a tournament, the sleepovers, the shared suffering — doing the same hundred push-ups, the same five-mile jog, dealing with the same bad referee together. It was the activities surrounding martial arts that built my closest friendships.

Ty: So at our gym, we go out of our way to create what I call the 'third place.' You have work, you have home — what's your third place? I want the gym to be that. It can't exclusively be about the moves. Whether it's John Wick Night — where we all dress in suits and do kickboxing and grappling until the suits are shredded — or a pancake breakfast fundraiser to send our competitors to Europe, those activities beyond the training are where you really get to know people. Once you make a gym someone's third place, it's very hard to quit. You can walk away from a gym membership. You don't walk away from your social group.

Belt Standards: Balancing Rigor and Accessibility

Lee: The martial arts industry has a wide range of seriousness. There are gyms where you show up, attend a set number of classes, and receive a belt regardless of skill. On the other end, you have instructors who make it nearly impossible. How do you find the balance?

Ty: I've seen both extremes. One extreme: a belt for every forty classes, regardless of quality. Nobody learns anything, nobody even shows up. The other extreme: a guy I know who ran an academy for forty years and only produced three black belts because he made it so impossibly hard. When I asked him how many black belts he'd promoted, he said three. That's not a badge of honor — that's a failure. If after decades of teaching you've only elevated three people, you're running the academy for your own ego.

Ty: One of my mentors, Mark Stury, said it perfectly: your black belt should be your personal gold medal in life. Not meaning you beat somebody to get it — meaning it was the hardest thing you ever accomplished. And that's going to look different for everyone. My job is to create a path that's hard enough that elite athletes can't coast through, but achievable enough that a committed person reaches something they're genuinely proud of.

Ty: Here's how it works in practice: every six weeks, we focus on a theme — six weeks of boxing, then Muay Thai, then Dutch kickboxing, and so on. If you learn the techniques, combos, and strategies for that module, you earn a stripe. If you don't, you don't. We fail people on stripe tests often — sometimes an eighty percent fail rate if the class isn't ready. But the belt test itself is like a graduation: once you've earned enough stripes, you come to a ceremony, you run through a final intense session, and everyone who qualified passes. You fail the individual tests that earn you the right to graduate — not the graduation itself.

Ty: At a certain belt level we add a sparring component — a 'battle stripe.' You've learned all the moves on dry land; now we throw you in the pool. Can you actually apply them in real time? Can you parry, slip, check a low kick? That's the real test.

Lee: I've never passed a jiu-jitsu stripe test on the first try.

Ty: And that's important. It's a piece of electrical tape that costs me less than two cents per person. I'm not failing people to save money. When someone fails and then comes back three weeks later and passes, there's a real level-up. Every stripe tells a story. Each one represents something you had to overcome.

Grading Across Different Types of Students

Lee: In your gym you have guys in their mid-thirties with jobs and families, literal grandmothers on the mat, and twenty-two-year-old competitive fighters — all in the same session. How do you maintain quality control across that range?

Ty: There's no cookie-cutter answer. The techniques and strategies are the same. I might be teaching a jab, cross, liver hook — the liver punch drops the opponent's guard, opening up a head kick. My sixty-year-old student isn't throwing that head kick. She might throw the same strategic sequence — jab, cross, liver punch, left hook to the face — a different tool, same principle. We also adjust for body type. A six-foot-five fighter might not make sense punching to the body — he might knee or kick it instead. Same strategic concept, different expression. I can teach the principle, and then we adapt the tool to fit the athlete.

Leveraging World-Class Talent

Lee: You've mentioned working with a number of accomplished people — truly famous names in martial arts. How do you leverage that as an asset unique to this business?

Ty: If I owned a basketball gym, I could never afford Michael Jordan or Shaq. In martial arts, you can actually train with those caliber of athletes at a reasonable cost. Just this weekend I had Troy Dorsey and Bill 'Superfoot' Wallace — two of the best American kickboxers ever. Bill Wallace was there when they were still figuring out the rules, still wearing karate gloves instead of boxing gloves. He's the Michael Jordan of kicking in our sport. I had both of them at my house.

Ty: I also regularly bring in Carlos Machado, who is essentially the godfather of jiu-jitsu in Texas. Chuck Norris literally moved Carlos Machado to Texas to be his personal instructor — that sounds like fiction, but it's true. These are legends. And if I charge my students fifty or sixty dollars to train with them for three hours, sometimes the seminar fees are covered entirely by student ticket sales. I end up training with Superfoot for free. There's nothing like that in other sports. In martial arts, you can train alongside someone you'd normally just ask for a selfie.

Closing

Lee: My guest today has been Professor Ty Garrett. Ty, thanks so much for joining us on the Econ Buff.

Ty: My pleasure. Thank you.


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