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Great analysis. Totally agree with regard to the Guida and Stevenson fights. I was pumped to see what Diego could do down ant lightweight, really thought he was finding his groove again after stopping Fioravanti. While not a contender by any means Diego had issues taking him down but managed to put together a stoppage anyhow so I was optimistic about his ability to mix his striking with his grappling. Then he dropped down and I was underwhelmed. Despite Rogan basically giving Diego a blowjob on commentary the fight was far from a domination, and in fact towards the end it started to look like Joe probably could have won if he had used his wrestling the whole 3 rounds. And the Guida fight, while spectacular really highlighted Sanchez’s weakness against stronger grapplers while highlighting the fact that his power (while not substantial at welterweight) hadn’t followed him down a class. What’s more, his ability to weaponize pace and pressure actually seemed to be more limited at 155 through a combination of him tiring more easily and his opponents having a bigger gas tank than he was used to. Glad to see someone else look past those names and on a page and the highlight reel first round he had against Clay and see that for what it was. Only area where I disagree is the part with Penn, basically just because I don’t see how their matchmaking staff could plausibly think Sánchez was likely to beat BJ. I remember seeing a couple threads on here at the time about how Diego would be able to outwork Penn and thinking that he’d need to smuggle a gun into the cage to come out on top because he didn’t have a snowballs chance in hell lolA lot of people were not watching back then and it shows.
1) They trained at the same gym (off and on for GSP). They didn't often train directly together but it was definitely a conflict and GSP joining the gym full time basically pushed Diego out and this could have EASILY been a grudge fight if Diego had remained a contender at 170 pounds but the timing did not work out. There was definitely heat between the two; Diego was Jackson's Golden Boy for a good while.
2) Diego was absolutely a legitimate contender at 170 but the Kos loss prevented a likely title shot. Note that this fight was the co-main event of UFC 69 where GSP lost to Matt Serra. The above mentioned grudge fight could have easily been next for GSP but he lost as did Diego preventing it from happening.
Diego had already beaten Kos on TUF, he was one of the biggest names at the time, and he was undefeated... criticize him in modern day all you like but he was absolutely expected to win this fight and go on to be a title contender at 170.
3) The Fitch fight was made to get Diego a big win and it backfired. UFC 76 was a DISASTER for the company as their big 3 squash fights all ended in upsets. Jardine beat Chuck, Forrest beat the incredibly hyped Shogun, and Jon Fitch beat Diego. The card also produced no knockouts and was extremely lackluster.
Dana White has ALWAYS hated Fitch's fighting style (and later personally hated him) so it's no surprise that this fighter deemed so lackluster that it took him 6 straight wins to get any form of publicity is suddenly hyped to the moon after being matched up with a popular fan favorite coming off of a loss. The UFC expected Diego to smash Fitch but in typical Fitch style, the fight ended up being a lackluster/controversial decision which handed Diego a 2nd straight loss.
Fitch, who finally got a title shot after 8 straight wins, never got a title fight again despite going 5-0 post GSP and being 21-1-1 over an 8 YEAR stretch. Talk about salty.
4) Diego never looked the same post Kos loss... but that didn't stop the UFC from gifting him a title shot at 155. Neither Stevenson or Guida were ranked at the time of Diego's fights with them (and he put on pretty shabby performances against them besides the famous 1st round of the Guida fight) but Diego still got his long awaited title shot... except at 155.
Penn had been a difficult person for the UFC in the past (and was still fresh off of the crybaby Grease-Gate bs) so I definitely think the UFC hoped Diego could take him to the deep waters and gas him out. This was one of the rare fights where Penn actually displayed any level of cardio and he ended up throttling Diego effectively ending his run as a "contender" and reducing him to "fan favorite gatekeeper" status for the rest of his career. I do wish Diego had stopped Ellenberger in the 3rd round of their fight and somehow got an unlikely shot at GSP in 2012.... but it was not meant to be.
TL/DR: They trained together and then when they stopped, GSP was pre-occupied dropping/regaining the belt while Diego ended up losing his way down a weight class. Timing was the main issue.