CBS Exec: EliteXC Reaching New Advertisers

May 31, 2008

While the MMA and television communities await tonight’s EliteXC card and the ensuing release of ratings to judge the event a success or not, using some other metrics the event can be deemed to be a minor success already. One such area is in bringing new advertisers to the table for it’s corporate partner, CBS. Kelly Kahl, Executive Vice President of Program Planning & Scheduling for CBS, elaborated on this to AP:

“We’ve reached some advertisers we don’t typically speak to,” Kahl said, noting that ads for beer, fast food and video games would air during Saturday’s bouts. “Those are the kind of things that don’t really show up on CBS on Saturday night.”

EliteXC’s ability to bring a younger demographic and the advertisers that cater to them to Saturday nights bodes well for them if they don’t hit a home run right out of the box ratings-wise. With Saturday night being a virtual Dead Zone when it comes to Network television, bringing in strong 18-34 and 18-49 male demographics may be enough to ensure the continuation of EliteXC cards on CBS.

Cuban & Simon on CBS Debut and More

May 31, 2008

On the eve of MMA’s network television debut, MMAPayout.com reached to executives around the industry to find out how and where they would be watching tonight’s show and to get their impressions on a number of issues facing the sport.

Billionaire businessman Mark Cuban created HDNet Fights and has since made mixed martial arts programming a cornerstone of his high definition channel, HDNet. Andrew Simon was hired by Cuban as CEO of HDNet Fights last fall.

The following questions were submitted via email.

Andrew Falzon: Will you be watching the EliteXC event? If so, where? Live or taped/ “DVR”ed?
Mark Cuban: Yep, but DVR’ed on my 102 inch Panasonic!
Andrew Simon: Yes. On the road Saturday. So, will DVR and then use slingbox to watch it late Saturday night.

AF: What do you expect the response from the general public to be? Especially those seeing the sport for the first time?
MC: I honestly have no idea

AF: A lot of people are saying that the success or failure of the sport hinges on the EliteXC event, especially for organizations trying to grow a non-UFC audience. Do you agree? Why or why not?
MC: Thats ridiculous. MMA is a great sport that can and will stand on its own for a long, long time.
AS: No. The fastest growing sport in the U.S. doesn’t depend on any one entity. HDNet will have over 25 LIVE events this year in addition to nearly 50 episodes of Inside MMA on our network. We are seeing incredible demand for MMA action.

AF: We’re beginning to see grandstanding from some of the athletes involved in the sport, griping about their paychecks (Tito Oritz in the UFC and Ben Rothwell holding out on and then leaving the IFL). What do you think of this?
MC: Its part of any growing sport. Just ask Curt Flood. If anything, movement between promotions opens the doors for new and exciting matchups. We are seeing great fighters in Dream, StrikeForce, EliteXC, Affliction, Adrenaline, IFL, XFL, MFC and others. I think it ends up helping the sport.

AF: For athletes outside of the UFC, are big money contracts a realistic expectation?
MC: From the looks of the UFC 84 paydays, it looks like the biggest checks are outside the UFC. When Keith Jardine only makes 10k, thats ridiculous. When Sean Serk makes, what 35k fighting at the top of the card against BJ Penn, is that the best fighters making the most money? UFC 84 was a good card, and there was a fighter making $3-thousand. Three thousand dollars in UFC is not making big dollars in the UFC.

AF: Initial reports are that MMA has not been a profitable venture for you early on. Is this true?
MC: Thats nobody’s business but mine. I’m in this for the long run. Its a great sport and we are going to grow it via HDNet Fights and HDNet.

Objective/ Analysis: EliteXC and IFL Co-promotion?

May 30, 2008

OBJECTIVE:

Five Ounces of Pain’s Sam Caplan is reporting that Kimbo Slice’s next opponent could be the International Fight League’s heavyweight champion, Roy “Big Country Nelson.”

According to Caplan, IFL CEO Jay Larkin has said that informal talks have begun. Pending the outcome of Slice’s fight this weekend, more formal talks could begin as early as Monday.
Larkin and EliteXC President Gary Shaw were 20-year colleagues at ShoTime, where the two worked together on boxing promotions and helped create ShoBox.

ANALYSIS:
From an industry stand-point, this would be a much needed co-promotional event and would benefit both organizations as they look to find new opponents for their top stars.
Slice and Nelson are question marks in the MMA world. Hardcore fans say they are waiting for Slice to fight a major opponent, and many underestimate Nelson because of his less than athletic physique.
IFL Vice President of Fighter Operations Bas Rutten knows these men rather well, as he has seen the majority of Nelson’s fights while color commentating for the IFL, and is training Slice.
Earlier today, Bas Rutten told MMAPayout that it would make for a great matchup.
“Nelson is a great all around, hits hard, great wrestling, submissions and ground and pound,” said Rutten. And despite Nelson’s shape and size Rutten says, “he is well conditioned and in great shape.”
While Slice’s meteoric rise has attracted the scorn of others in the business, Rutten says he’s a monster in the making.
“I think his hands are better than 80 % of the MMA guys out there, his take down defense is good and on the ground he’s getting better and better. People saying he’s not good on the ground is absolutely nuts, how on earth do they know this?”
Slice’s next test comes against James “The Colussus” Thompson this Saturday night on EliteXC’s CBS debut, but most fight analysts are saying that “test” isn’ the right word and expect a dominant performance, if not first round KO, from Slice. Nelson has himself proved to be quite the KO artist and is coming off of an impressive first round TKO (strikes) victory over Ultimate Fighter finalist Brad Imes.

MMA fans who consider a “boxing-style slugfest with the occasional takedown attempt” to be their favorite style of fight, would enjoy a Nelson/ Slice throwndown.
The IFL website has also linked to the Caplan article and says this would be the “first-ever co-promotional event in the history of American Mixed Martial Arts.” While I am purely speculating, since the article says first co-promotional “event” instead of “fight” it leads me to believe that we may be looking at a full card of EliteXC and IFL fights, because the IFL has already held a co-promotional fight when Tim Kennedy fought Jason “Mayhem” Miller on HDNet Fights.

UFC Roster Moves Could Make Dollars and Sense [Part 2 of 2]

May 30, 2008

CONTINUED FROM: UFC Roster Moves Could Make Dollars and Sense – Part 1

Signing prospects to initial fight contracts is only part of the prospect strategy; development and promotion are the other two intangibles at work here. In order to make the most of the talent they sign, the UFC will also need to develop these fighters through intelligent match-making and steadily increasing levels of exposure. Josh Koscheck, a former NCAA Division 1 wrestling champion and TUF alumnus, is a textbook example of how to properly develop a prospect with serious upside.

Koscheck’s Fight Record since 2005:

  • TUF Finale (April 2005) – Chris Sanford (Win)
  • Ultimate Fight Night (August 2005) – Pete Spratt (Win)
  • Ultimate Fight Night 2 (November 2005) – Drew Fickett (Loss)
  • Ultimate Fight Night 4 (April 2006) – Ansar Chalangov (Win)
  • Ultimate Fight Night 5 (June 2006) – Dave Menne (Win)
  • Ultimate Fight Night 6 (August 2006) – Jonathon Goulet (Win)
  • Ultimate Fight Night 7 (December 2006) – Jeff Joslin (Win)
  • UFC 69: Shootout (April 2007)- Diego Sanchez (Win)
  • UFC 74: Respect (August 2007)- George St. Pierre (Loss)
  • UFC 82: Pride of a Champion (March 2008) – Dustin Hazelett (Win)

The key to developing a fighter is not to protect him, nor is it to throw him to the wolves. Rather, it means wisely matching him against opponents to push his level of development while not significantly overmatching him in any one particular aspect. If you look to recent UFC cards, including 84, you’ll see that many of the rookies faced solid challenges, but none were in over their heads. Brock Lesnar, of course, may be the only exception to the recent string of great debuts and match-ups.

The second critical element involved with helping a fighter achieve his potential is exposure. The last scenario the UFC ever wants to encounter again is a talented fighter like Nate Marquardt thrust into title contention with little to no mainstream exposure. Although, if UFC 84’s eight televised fights are any indication, Dana White might be having a change of heart in regards to the number of fights that PPV fans deserve to see.

Additionally, the trimming of the UFC roster means the organization has fewer obligations and fight commitments than it did before, which increases the likelihood of seeing young prospects on Fight Night cards or PPV undercards. As MMAPayout.com reported in April, a network TV deal is also expected to come within the next 6-moths, giving the organization an even bigger stage to expose its stars.

With all of that said, the UFC’s roster strategy isn’t without its question marks and potential problems. First and foremost, there is the lingering question that always must be raised in regards to the psyche of the North American sports fan: will they support a non-American superstar the same way they would a Chuck or Tito? Current evidence seems to indicate that non-American fighters do not have the same support and following as Americans. The world’s best pound-for-pound fighter Anderson Silva draws nearly half the PPV buys of Chuck Liddell or Tito Ortiz when headlining a fight card.

The UFC is currently trying to hedge itself against this xenophobia with plans to continue its expansion into the UK and Canada, while also seriously considering Mexico and Brazil among others. It’s necessary to caution on a diversified strategy, however, because while diversity is a good bet in any business, you cannot spread yourself too thin. S&P’s last report indicated that the company was faced with decreasing margins in 2007 due to the increasing costs largely due to holding events oversees.

Perhaps, then, the UFC’s greatest challenge in the future will not be signing, matching-up, or even finding airtime for its fighters, but rather finding the right kinds of exposure for them. Not every person has the mainstream appeal of a Tito Ortiz, or intimidating, must-see edge of a Chuck Liddell. The UFC will have to work around those inabilities with fighters; especially the ones with little to no English or the personality of vanilla ice cream.

What does this all mean? The UFC is going to have to think outside the box, and possibly undergo a shift in its higher-level positioning strategies. For years, the organization has maintained a brand building strategy: organization first. Although it has served the company well – MMA and the UFC have largely become synonymous in North America – the strategy is probably outdated.

If you look at the rest of the professional sports making headlines with the major publications you’ll notice that they’re all driven by the individuals. Nobody is in love with the NFL or NBA or Major League Baseball and certainly not the NHL. The fans are in love with the teams, players, and personalities associated with the league: the Brett Favre’s, Lebron James’, Derek Jeter’s, and Sidney Crosby’s of the sports world. Thus the next step towards true mainstream acceptance lies within creating the bigger, badder, and ultimately better Chuck Liddell’s and Tito Ortiz’s of the future.

The ducks are essentially in a row for the UFC at this point in their life cycle: they’ve got the right roster building strategy and are beginning to develop some great fighters. The question is whether or not they’re truly going to push the fighters and allow them to bring the sport into the mainstream. That type of complete roster building strategy could truly make dollars and sense for the organization.

Mailbag: UFC Credential Follow Up

May 29, 2008

In response to this post on the UFC’s credentialing process, MMAPayout.com received the following response:

“I love your articles… I particularly appreciate how you strive to keep your personal opinion out of most topics. In this case I would love to read how YOU feel about this topic.

You closed your article with what it took to receive credentials from other organizations, which along with the signature, made it clear to me that the UFC was being ridiculous in what they were asking from Abowitz.

Here’s what I’m getting at. It seems like you’re more than qualified to call “BS” on this situation, or agree with it, and I would like to hear your thoughts explained further.

Keep up the good work.

James Weber

RESPONSE:

James,

First off thanks for writing. We love feedback and read each one we receive.

While I have done lots of work with media credentials, I’m not sure that I’m “qualified” to call the UFC out on this one. You basically have to look at it from both sides, the UFC’s side and the Abowitz’s/ journalists side.

From the UFC’s point of view, in the age of information overload, where everyone is a personal printing press (with dual-core processor and a 300 gigabyte hard drive), it can be hard to discern who is a legitimate journalist or blogger.

Part of the problem with credentialing MMA events in particular is that the majority of its current core fan base has evolved from loyalists who packed online forums long before the sport became pallet table to the mainstream media. All you had to do in the early days, was start a blog, fill out a form and you were in. Only a few months ago when I attended EliteXC’s ShoXC event in Atlantic City, the majority of folks I was sitting with weren’t writing for the NY Times or USA Today. It was mostly dot-com writers and bloggers.

Futhermore, media credentials are pretty powerful pieces of plastic (that usually come with a snazzy free lanyard). They let you into places that most people can only dream. For UFC events, it usually means a cageside seat (which for UFC 85 would cost about $600 each). And instead of debating the finer points of say, Wanderlei Silva KOing Keith Jardine with your friends at the bar, you can ask the “Axe Murderer” himself how sweet it felt to get the KO coming off a loss to Chuck Liddell.

So I hope you understand my point that folks at the UFC need to weed out the legit journalists and bloggers from folks who might be looking for a freebie. (And I am not trying to imply that Abowitz was looking for a free ride, just giving you a hypothetical as to why the UFC needs to be stringent.)

From my own experience in applying for credentials, there are varying levels of scrutiny. As I previously mentioned, for MLB and NHL games, a request on company letterhead sufficed. However, when I covered the Democratic National Convention, I was asked about everything short of my shoe size. In preparation News12’s coverage of the Pope’s recent visit to New York City and Westchester, I had to submit a passport style headshot and my social security number.

Asking for a signature isn’t the end of the world either, if it’s for some simple clause like: “The holder of the credential agrees to abide by the rules set forth…” Also, many media organizations will print the guidelines for using a credential on the back. Typical clauses include:

  • No autographs
  • No giving your credential to someone else
  • Media/ broadcast release (in other words, you might be seen on-camera or in a photo and waive any right to compensation)

However Abowitz’s allegation that the credential form dictated, as he put it, “controlling where and when I was allowed to write about the event forever more,” is a major issue for journalists.

I’ve never been asked to sign anything regarding how or when I covered a story. Asking any journalist to do so tramples on the basic principles of objectivity and unbiased coverage that are taught in high school journalism classes.

I have not actually looked at the credential application that Abowitz filled out. However, if what he alleges is true, the UFC pushed too far. The UFC does have a right to control it’s brand, but typically, acceptable sports journalism practices do not involve telling a journalist how to cover an event.

This begins to touch on the UFC’s media strategies, which I hope to blog about at some point in the future.

Thanks for your email, James!

–Andrew Falzon

Updated 5/31 EliteXC Advance

May 29, 2008

Adam Morgan with Five Ounces of Pain gave a quick update to the advance sales for EliteXC’s 5/31 show in New Jersey:

Gary Shaw also estimated that “roughly” 7,000 tickets have been sold for Saturday’s EliteXC: Primetime event on CBS.

Sales seem to have been solid but not overly strong since our last update on the advance figures, which were around 5,000 as of 5/16. Elite will need a strong walk-up and possibly some papering of the crowd if they are looking to fill-up the scaled to 12,000 seat capacity.

Money Being Left On The Table?

May 29, 2008

While the UFC is certainly flush with cash at this point in their growth, reading this interview Dana had with Sergio Non, I couldn’t help but be left with the impression that, due to a poverty of imagination, some potential marketing opportunities were being left untapped. This particular passage struck me the most….

Dana White: Are you kidding me? It’s like me saying I’m going to go out tomorrow and start a T-shirt company and compete with Affliction. The f*** do I know about selling T-shirts?

SN: Actually, you sell quite a few of them, don’t you?

Dana White: Yeah, well, that’s different. Selling my T-shirts at my big event is one thing. Me going out and trying to talk to Nordstrom and Dillard’s and trying to come up with a name to compete with Affliction – seriously, it’s really crazy that people even ask me that.

With the marketing muscle and overall branding acumen of the Zuffa folks, I have to ask – Why isn’t the UFC trying to leverage it’s brand into other areas – like expanded merchandising of things like t-shirts? Affliction are able to sell t-shirts that retail between $40-$60 not because the quality of their product (I’m not impugning their product) but because of the brand awareness and value that they have generated over time. The UFC would easily be able to use these same attributes to open up what is currently a minor revenue stream. Why aren’t they trying to talk to Nordstrom and Dillard’s, getting their UFC branded items into major retail?

Another area that would have been an avenue to pursue would have been a publishing deal. During the first half of 2008, we have seen the publication of books by Matt Hughes, Chuck Liddell, and Tito Ortiz. Setting up an imprint with a publishing house and using the power of the UFC marketing machine to hype up the books would have been a boon for all involved – $$$ for the UFC and higher book sales for the authors. Again, this seems to be a missed opportunity owing to a lack of vision in extending the UFC brand.

UFC Roster Moves Could Make Dollars and Sense [Part 1 of 2]

May 29, 2008

Lost among all the headlining stories from UFC 84 were the impressive debuts of some very talented prospects. Shane Carwin, who knocked out Christian Wellisch, and Rousimar Palhares, who won submission of the night for his armbar victory over Ivan Salaverry, lead an impressive group of rookies that all put an early stamp on the organization.

The debuts also marked the continuation of a growing trend in the UFC: a plethora of new talent to match the mass exodus of UFC veterans. In the last three months alone the UFC has seen impressive fighters like Cain Velasquez, Mac Danzig, Demian Maia, Brock Lesnar, and Tim Boetsch join the UFC ranks. Concurrently, the organization has also seen the likes of Tim Sylvia, Randy Couture, as well as potentially Andrei Arlovski and Tito Ortiz jump ship in search of greener pastures.

At this point in time the UFC finds itself in a state of transition, whereby the initial torch bearers are gone, going, or nearly over-the-hill. Couture and Ortiz are both possibly finished, even if they return, how much longer will either of them remain relevant? Furthermore, Liddell, Hughes, and Franklin all appear to be fringe players within their respective title scenes.

Despite being the big dog of MMA, the financial reality of the organization in 2008 doesn’t support a free agent signing frenzy. As MMAPayout.com reported in late April, the UFC recently underwent a large staffing layoff in Las Vegas, and over the past few months it has also trimmed its active roster significantly. Last fall, Standard & Poor’s debt rating agency downgraded Zuffa’s credit rating to a BB- , signalling a slight concern on behalf of creditors that the UFC may have a more difficult time in repaying its debt. Add to all of this a downturn in the economy and reduced consumer spending, and it’s easy to see why the financial outlook has changed a little bit.

Perhaps what is most remarkable, however, is just how much the current roster situation resembles the plights that many professional sports franchises have experienced in the modern salary cap era. In order to produce superstars and maintain a competitive roster, the UFC is employing a “building through the draft” strategy of its own. Not too dissimilar from the New England Patriots or Detroit Red Wings, the UFC is doing its utmost to find and sign the best prospects in the world before they hit other, large organizations. Then, to complement the roster even further they’ll look to make select free agent additions when and if the price is right.

The obvious advantages to this strategy are two-fold: the UFC gets its hands on the best fighters before they blow up and is also able to keep these fighters out of the hands of its competitors. Getting a fighter before he hits the mainstream is quite similar to getting a rookie hockey or basketball player on an entry-level contract – it’s cheaper. Additionally, it gives the UFC full control over the prospects development and marketing. Keeping a fighter away from the competition is almost as important as having him in your own. While many people believe Ortiz is no longer relevant to the UFC’s light heavyweight division, an Ortiz to the EliteXC light heavyweight division gives them instant credibility.

However, from a business perspective there is another, not-so-obvious, benefit to using a prospect strategy when building a fight roster and that is the creation of negotiating leverage. EliteXC, Dream, and Affliction are all promotions which have the ability to pay six figure fight salaries and that means for the UFC leverage is quite hard to come by these days. In constantly topping up its division with the best prospects in the world, the UFC is bettering its bargaining position when it sits down to negotiate or renegotiate with fighters.

One of the keys to negotiation is understanding your position from the perspective of alternatives; if a deal cannot be reached, what is your best alternative? In this case, the UFC’s alternatives become numerous. It was likely a combination of Tim Sylvia and Andrei Arlovski’s recent lacklustre performances and the addition of heavyweight prospects like Cain Velasquez, Shane Carwin, Neil Wain, and Brock Lesnar that enabled Dana White and the UFC to feel comfortable walking away from the two former heavyweight champions.

Furthermore, the UFC also improves its bargaining position with an appeal to competition, which in effect reduces the negotiating leverage of other organizations. In other words, it tempts a fighter to sign and fight where the competition is, prove himself, and then look for a big pay day.

CONTINUED: UFC Roster Moves Could Make Dollars and Sense (Part 2 of 2)

EDITOR’S NOTE: This is Kelsey Phillpott’s first contribution to MMAPayout.com. Kelsey is a fourth year student at the I.H. Asper School of Business at the University of Manitoba. It is my pleasure to have him as a contributor to the website. You may contact him at: kelseyphilpott@hotmail.com.

UFC Media Credentialing Practices Questioned

May 29, 2008

Perhaps the only thing hotter than a cageside ticket for a UFC event is a media credential. The UFC’s credentialing policy, and its media strategy generally, has been a source of controversy among journalists for sometime. Los Angles Times blogger Richard Abowitz went public with his complaints about the company’s credentialing policy after being denied access to UFC 84.

Abowitz believes that his poking and prodding at UFC President Dana White for an interview about on-going spats with Tito Ortiz, led to his receiving “a credential application with all sorts of stipulations required for a press pass,” including “the trivial, forbidding my wearing certain clothes, to the ridiculous, controlling where and when I was allowed to write about the event forever more.”

Abowitz says he corresponded with UFC events manager Diann Brizzolara who told him:

“We have the right to protect our brand and how coverage taken from our events is disseminated. Other sports leagues, such as the NFL, have similar regulations printed on the back of their press passes.”

The difference according to Abowitz was the fact that his credential application required a signature, which essentially made it “contract.” Whereas regulations printed on the back of a credential by other organizations essentially amounted to a wish list.

Based on my experience this practice is indeed rare in other professional sports. When I was a radio reporter in college at Hofstra’s WRHU, I was routinely given access to MLB and NHL games, without having to even fill out an application. Typically, a request on company letterhead sufficed.

Mickey's Teams With BJ Penn

May 29, 2008

Miller Brewing Company’s Mickey’s brand recently announced a new partnership With UFC Lightweight Champion BJ Penn. Penn is the second MMA star to sign on as a promotional partner with Mickey’s. Former UFC Light Heavyweight Champion Tito Ortiz signed a similar agreement with the brewing company in April.

Mickey’s was the official malt liquor of the UFC until recently being replaced by Anheuser Busch’s Bud Light brand. Mickey’s seems to be engaged in an end around of sorts; with the UFC Brand no longer available to them they are choosing to go directly to the athlete in developing promotions, events and packaging with a MMA-centric twist. This is a much more advantageous situation for the athlete, as they will see larger proceeds from a direct sponsorship as opposed to mainly appearance fees under the UFC deal. The athletes also will have input into all phases of the marketing process in the new relationship as opposed to little control in the UFC-Mickey’s deal (due to the surrendering of their ancillary rights per their UFC contract).

With Miller and Coors/Molson planning to finalize their joint venture for US operations sometime in 2008, it will be interesting to see if the new mega-brewer will make further moves in the MMA market. They could continue the pattern set by Mickeys in signing individual fighters or possibly make a larger play, teaming with some other MMA promotion to act as a counterweight to the UFC/Anheuser Busch pairing.

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