I'm sure if you look deeply into any contact sport, there's some homer eroticism involved. Greek wrestling... MMA is such a huge field. Muay Thai competitions are now lumped into MMA depending on the rules. I still like watching old K1 and Pride Fighting championships replays on YouTube. But yeah, grappling bits can sometimes end up as a snoozefest.
This is just of many videos to be found if you do a quick google search. Wish some of the ones at my gym had been recorded, a couple guys full of creatine getting destroyed because they thought they were just going to come in and wreck with their size. Needless to say, they never came back. Here is one from a bjj dude back in the day against a bodybuilder street fighter at the time who was actually pretty decent fighter. Even trained dudes get wrecked at times. Of course, if what you really want is the other type of "wrecking", @Jontro is your man.
A bit of an exaggeration on my part that nobody has, but generally speaking anyone who has trained or fought, they ain't thinking about how erotic it is while fighting. If they know what they are doing you are basically trying to survive within the training rules set. Then again, I can't account for people who truly may find it erotic. They are probably masochists if they've actually fought someone before and find it arousing because full force sparring/fighting can get so ugly, and that's within the rule set. Street fighting is even worse with concrete all around you and no rules whatsoever (multiple opponents, weapons, etc.).
Gay stuff does happen in training to be honest, mostly in a joking manner, but definitely gay. Not as likely to happen in more traditional settings with a gi on, but wrestling/mma? Yeap. The instructor makes a big difference on being the type to either encourage, allow, or discourage that behavior.
As a coach of college age and young adults I’m frequently training very attractive women. While I was in college was training with some very attractive women. For myself and most of my male students and teammates you learn to control yourself and behave like a gentleman. I’ve been around men, and in some cases women who, couldn’t control themselves and behaved inappropriately. Depending on how bad they were we either wouldn’t let them work out with women or kick them out of the gym. A couple of months ago one of the schools I train at we kicked out a BJJ black belt who was behaving inappropriately with a 17 year old female student. With minors there is a zero tolerance policy but even with adults we take a pretty hard line with inappropriate behavior.
In previous years hazing often involving sexual or pseudosexual behavior was a big problem in many sports. As noted in the above post we (coaches) have been cracking down on that.