Pride was was better than the UFC. that is why the UFC bought them out. And didn't some of the Pride fighters fight in the UFC and became champs. There are many other organizations but they are small and not a threat to the UFC. Once an organization gets to big and popular and poses a threat to the UFC. The UFC simply buys them out in order to stay at the top. If an individual fighter like Fedor goes after a sponsor who also sponsors the UFC well the UFC threatens to revoke all support for that sponsor. So of course the sponsor will go with the UFC. Alot like what the IFBB does.
If what you say is true, I don't quite get why this would be considered "wrong" or poor business sense.
Happens all the time in other businesses as well.
If you have a business that is on top and profitable, you usually do what it takes to keep growing, and stay on top. Many times, buying the competition is part of business.