TUF Rating – Week 9

November 30, 2007

Dave Meltzer reports that the 11/14 episode of the Ultimate Fighter did a 1.07 rating with 1.4 million viewers. The show did a 1.77 in Males 18-34 and a 1.05 in Males 35-49.

UFC 78 Business Notes

November 30, 2007

  • The show drew 14,071 paid for a gate of $2.14 million.
  • The arena was reportedly at about 90% capacity with all the tickets under $200 sold out (which happened immediately) and the $300 and up tickets moving slower.
  • Prior to UFC 78, the company increased the bonuses for best fight, best submission, and best knockout from $40,000 to $55,000 each in an effort to ensure entertaining fights and provide a strong incentive to finish fights. The company was then left frustrated with the results which saw three of the main card fights go to decisions despite the increased financial incentive. As a result there wasn’t time to air the fight of night, Thiago Avles TKO victory over Chris Lytle. The lesson learned was that bigger bonuses, large enough to now pay significantly more than contracted payouts to all but the top fighters, failed to change the fighters’ mentality of playing it cautious to win.

SOURCE: The Wrestling Observer Newsletter

ProElite Partners with IMG Media

November 30, 2007

Yesterday ProElite announced a partnership with IMG Media. Under terms of the agreement, IMG Media is now the exclusive distributor of ProElite’s program library (which thanks to this year’s acquisitions clocks in at 800 plus hours) as well as future event programming. IMG will also serve as a media consultant to ProElite for “branding as well as for packaging, positioning, and marketing events and programming.” Additional services include securing international sponsorship and partnering with ProElite “to develop certain MMA-related content.”

IMG is one of the premier sports, entertainment, and media companies in the world. It also worth noting, as Zach Arnold does at FightOpinion.com, that ousted HBO head Chris Albrecht is involved in the deal as President of IMG Global Media. During his tenure at HBO Albrecht was the network’s leading advocate of MMA. At the time, his departure was widely viewed as a negative to the UFC’s prolonged negotiations with HBO.

Inside the Collapse of Pride

November 29, 2007

Sam Caplan of FiveOuncesOfPain.com has a great interview at CBS Sportsline with former Pride executive Turi Altavilla. The picture of the Pride that emerges from the interview is that of a dysfunctional organization.

In light of some renewed gnashing of teeth about Zuffa’s acquisition of Pride this week at BloodyElbow.com, it may be worth revisiting The Final Word (?) on Zuffa’s Acquisition of Pride. Sam Caplan also has new details on the acquisition.

Mayweather Could Set PPV Record Against Hatton

November 29, 2007

Kevin Iole of Yahoo! Sports has a great piece on the business and buildup of December 8th’s Mayweather-Hatton fight. Key notes:

  • The fight sold out in roughly thirty minutes for a total gate in excess of $10 million. Additionally, 18,000 closed circuit tickets have already been sold in Las Vegas.
  • All other revenue streams are running at about 60% of the business Mayweather-De La Hoya did in May. You may remember that fight as the most successful ever.
  • Golden Boy expects the show do to roughly 1.5 million pay-per-view buys. Iole reports “that would make Mayweather Jr. the first non-heavyweight ever to sell more than 1 million pay-per-views in back-to-back fights, as well as the first man to 4 million in one calendar year.”
  • Mayweather has the chance to generate more than $200 million in pay-per-view revenue for 2007. As Iole said, “the kid who was dogged for an inability to sell out a small arena in his hometown might all of a sudden have become the most valuable property in the sport. He’s learned fabulously well how to sell a pay-per-view show.”

The whole piece is well worth reading if for no other reason than the Roger Mayweather quotes.

Prime Time: Details on MMA's Looming Network TV Debut & What It Says About the State of the Industry

November 29, 2007

At this point it appears that MMA on network television may be a matter of when not if. Dave Meltzer provided an update on CBS and NBC’s ongoing talks about entering the MMA space in the November 26th issue of the Wrestling Observer Newsletter. The most significant news is that CBS’s discussions with the UFC began prior to the writer’s strike and the deal is not dependent on the outcome of the strike. NBC’s interest is directly attributable to and contingent upon the strike.

UFC 80 on 1/19 as a taped prime time special is apparently the targeted CBS premier. Talks between CBS and the UFC originally stalled because of the UFC’s insistence on certain details. We can only speculate if these were the same demands about production control that ultimately sunk the HBO deal. CBS then approached a couple of other groups, including EliteXC, about a live special. That presumably pressured the UFC back to the table and last week the two entities were reportedly close to deal.

NBC’s interest in the space originated with Rick Dinmore, an executive at NBC, who originally suggested MMA to NBC President Ben Silverman. Silverman then commissioned a full study of the space. Advertisers were approached and responded positively to being involved with the sport. The company then approached the UFC, but quickly moved on after hearing that they were involved in negotiations with CBS.

NBC is specifically interested in MMA as a replacement in the Saturday night 11:30PM time slot that will be vacated by Saturday Night Live if the writer’s strike continues, although prime time specials are also a possibility. Meltzer confirmed that the network had meetings with M-1 and EliteXC. Based on Jay Larkin’s recent comments to Eddie Goldman, it also appears to be a safe bet that the IFL has at least had preliminary discussion with NBC and/or CBS.

NBC is reportedly unwilling to pay rights fees, instead offering half the advertising inventory and the prestige and exposure of NBC in return. When the subject came up in an interview with Eddie Goldman, IFL CEO Jay Larkin said:

“The writer’s strike has caused a scramble for non-scripted material in television. Unfortunately, people have been giving away this MMA product for so long that it’s very difficult to put on the brakes and say it’s no longer free, we have to get some of these costs covered. From the IFL’s perspective, there’s an song that goes if I can’t sell it, I’ll keep sitting on it before I give it away. Going forward we have to stop giving this product away. It has enormous value, its an enormous asset, the library is an enormous asset. We have to start getting an appropriate license fee arrangement with whoever uses this show.”

Of course the reality of the situation is that in a crowed market place, if NBC insists on offering advertising inventory only, some promotion will accept the deal with visions of national exposure leading to a breakthrough dancing in their heads. “There’s always somebody out there willing to say, well they’re not going to be on your network for free, but I’ll be ok your network for free, and that devalues the entire industry,” said Larkin. However, without rights fees and the staff to aggressively market the ad space, signing a deal with NBC will likely be a money loser in the short term.

The hope would be that the exposure would pay off down the road, which is probably a worthwhile gamble but is far from a certainty. Some inside the industry question whether anyone outside of the UFC, perhaps even including the UFC, can draw the kind of ratings necessary to satisfy the major networks. As Meltzer points out, while a 2.0 rating is outstanding on Spike, it would be considered disappointing on CBS even on Saturday night which is traditionally the lowest rated night of the week.

While the UFC’s potential deal with CBS is not dependent on the strike it will obviously still play a large role in the negotiations. The longer the strike continues, the greater the UFC’s bargaining power. The quicker the strike settles, the more leverage CBS has.

It is also interesting to consider what effect the UFC’s year to date business might have on the negotiations. With the declining ratings of the Ultimate Fighter and the company’s core pay-per-view business down “meaningfully” according to this week’s S&P report, the UFC’s position isn’t as strong as it was even two months ago. At that time profit margins were down, but that could be attributed to aggressive international expansion and largely overlooked because of the company’s growing domestic pay-per-view business (up 35% from 2006 in the first two quarters).

Since then the company has faced a series of high profile setbacks including the collapse of negotiations with HBO, Randy Couture’s resignation, and a string of weak pay-per-view shows, combined with a run of bad luck with injuries and upsets that have conspired to rob the company of some of the momentum it had coming into the year. The result is that the company could use a public victory in the worse way, especially in the form of a deal with CBS which would represent the kind of major mainstream breakthrough the company both craves and needs to continues to grow its business.

Furthermore, the UFC’s explosive growth can’t be underestimated as a key growth driver. Momentum is self-perpetuating and the company has benefited tremendously from the mainstream media exposure that has resulted from its perceived momentum. That puts the UFC in a potentially delicate situation. If the media stopped seeing the sport as the next big thing it could become a self-fulfilling prophecy.

This is not to understate the company’s position. Despite a lot of things going wrong, many of which were completely out of the company’s control, Zuffa’s business is still only flat to slightly down compared to it’s monster 2006. On the whole it looks like they’ve done a good job of largely consolidating last year’s gains, but 2008 will be an important year. For a fledgling industry like MMA, a bad year could wipe out a significant part of the gains of the last six years.

It is clear that MMA/UFC, and at this point its clear that the terms are virtually interchangeable since no one else has any significant traction in the industry, has cooled off this year, especially late. This isn’t surprising since the entertainment sector as a whole would be expected to slow as the economy on the whole slows down in addition to the previously noted factors. In the long term I don’t think the UFC has anything to worry about, but its the kind of period that carries the risk of setting back the company’s ultimate breakthrough a couple of years if things spiral which is a real risk in such an unpredictable business.

2008 continues to shape up as a very important year for the MMA industry. I continue to believe that the UFC will face continued growing pains next year (here and here for more), but it will also be interesting, and important in evaluating the long term prospects of the industry, to see if a legitimate competitor is able to emerge from the pack currently chasing the UFC.

Michael Eisner Interviews Dana White on CNBC Tonight

November 28, 2007

UFC President Dana White will be a guest on Conversations with Michael Eisner tonight at 9PM eastern on CNBC (replay at 12AM). From CNBC.com:

It was once called “barbaric” but today mixed martial arts – a combination of judo, wrestling and boxing – is racking up big television deals and product endorsements. Dana White is the business brains behind the sports biggest brand – the UFC. Join Michael Eisner as he takes to the ring for an exciting inside look at one of the fastest growing entertainment attractions in the U.S.

This new series features 60 minutes of freewheeling and probing dialogue conducted by one of the most dynamic and accomplished leaders in business. Unlike any other interiew program on television, “Conversations with Michael Eisner” re-creates the experience of being at a power lunch with the giants of their industries. The interviews will focus on the importance of creativity and innovation in all pursuits, from business to politics to entertainment.

UFC.com plugged White’s appearance and noted that the show will feature an exclusive first look at the company’s new fine art book Octagon.

UPDATECNBC.com has posted a preview clip from the interview. In the clip White discusses contract negotiations and going public.

UPDATE: S&P Cuts Zuffa's Credit Rating, Issues Negative Outlook

November 28, 2007

I have full details on S&P’s most recent report on Zuffa at Sherdog.com. The lead:

Standard & Poor’s, a leading financial services company, cut Zuffa’s credit rating in a report issued Tuesday. The downgrade from “BB” to “BB-” was the result of the company’s weaker than expected performance in the third quarter of 2007. This marked “the second consecutive quarter of operating performance that was meaningfully below [S&P’s] expectations.”

FULL STORY: S&P Cuts Zuffa’s Credit Rating, Issues Negative Outlook

S&P Cuts Zuffa's Credit Rating, Issues Negative Outlook

November 27, 2007

Today S&P issued a report that downgraded Zuffa’s credit rating from BB to BB-. The cut was the result of weaker than expected performance in the third quarter, marking the second consecutive disappointing quarter.

Full details and analysis on Sherdog.com later today.

Franklin Set to Star in Movie

November 27, 2007

Rich Franklin is on location in Canada starring opposite Tiffani Thiessen (Saved by the Bell and Beverley Hills 90210) in “Weapon.”

In “Weapon,” a lonely U.S. border patrol agent (Thiessen) apprehends a genetically engineered super-soldier (Franklin) and experiences the ride of her life when the soldier’s creator (Greenwood) relentlessly hunts them down. The film is being produced by Joshua Gray and directed by John Stead, and is based on a screenplay by John Flock and Christopher Warre Smets. Executive producers are Jacqueline Kelly, Barbara Sacks, Kate Harrison and Lewin Webb. “Weapon” is currently filming in Hamilton, Ontario.

Franklin is the latest in a growing number of fighters to try his hand at acting. I recently finished a feature story for Fight! Magazine called “MMA Goes Hollywood.” The piece documents the growing presence of MMA in Hollywood, including interviews with Randy Couture, Dana White, and Matt Walker, Brett Norensberg, and Margaret O’Connor of the Gersh Agency (Couture’s respective sports, acting, and literary agents). The story will hit newsstands on January 20.

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