Another Proelite.com Exec Gone, Sale Possible?

May 23, 2008

MMAPayout.com has learned that Jeremy Goecke, the number two man under previous ProElite.com President Kelly Perdew, has parted ways with Proelite. This comes quickly on the heels of the resignation of Perdew, who resigned on May 20, and leaves a void of experienced leadership at the online arm of ProElite, Inc.

MMAPayout.com has also heard rumors from highly placed sources that ProElite may be trying to sell the website. Such a sale wouldn’t bring much in the way of revenue but would help to get the significant losses off of ProElite, Inc.’s books. The company experienced a $3.2 million loss on website operations in 2007 and is on pace to post similar losses for 2008 based on first quarter results.

Strikeforce End Game for Television

May 23, 2008

With Strikeforce showing strong ratings gains, the company is now in a much better position to negotiate with NBC. With the show nearly tripling it’s audience since the premiere and showing strong numbers in the 18-35 demographic, Scott Coker can make a strong case to NBC execs to give them a chance in an earlier time slot. The current slot is essentially a foot in the door with NBC, a means to an end, rather than an end unto itself.

Strikeforce could angle for an occasional fill-in for SNL during it’s summer hiatus or a possible week-end afternoon slot. The improved slot could still be a time buy situation, as that seems to be the trend for some of the lesser sports when it comes network coverage. Some examples of this are the PBR (professional bullriders tour) using a time buy on Fox to boost their profile and leading to a paying deal with Versus, LiveNation’s Motocross tour, and some of the various IMG programming seen on the weekends.

Pro Elite Quarterly Report: First Quarter 08

May 22, 2008

View the complete quarterly financials here

Analysis: The company experienced a loss of $5.6 million during the first quarter of 08. The company continues to be plagued by high selling, general, and administrative expenses, much of that due to the sheer size of the company. The company did begin to see it’s first license fees from Showtime, totaling $1.2 million in the first quarter. These license fees will be a key to reaching profitability, in addition to PPV revenues. With increased exposure on CBS, the company should be able to better market their PPV efforts, which have accounted for minuscule amounts so far. Strong television feeding into PPV’s is the map for success in the MMA business, and PPV will have to be reintroduced as a revenue stream if the company is to reach profitability. If the CBS shows are successful I would expect PPV to resurface in the fourth quarter of 08, possibly in time for a Cung Le- Frank Shamrock re-match.

The company’s online component was once again a large drain on funds, with minimal revenues generated. After losing over $3 million on the site during 2007, the company posted revenues of roughly $26,000 against operation expenses of $725,000. Such losses may have been a harbinger of the recent resignation of Proelite.com President Kelly Perdew. The company has recently launched a Video on Demand service to better monetize their website, but the success of these efforts will depend greatly on the fight promotion portion of the company. Expending the vast sums they have on the website is a case of putting the cart before the horse, so to speak, as having a vibrant and prosperous fight promotion will be the driver of these other revenue streams.

Another significant cost was the expensing of options take by company executives. These items counted for almost $600,000 against revenue, which tend to distort the company’s performance. Factoring out these items, the company still generates a loss but some of their cost cutting measures, such as staff reductions, seem to be narrowing the deficits somewhat.

Notes:The company’s court battle with Wallid Ismail is ongoing and will go to trial in federal court on September 16th, 2008. This lawsuit stems from the start-up phase of Pro Elite, with Ismail claiming to have not been compensated for assisting during the initial raising of capital.

The company’s agreement with Mark Burnett concerning a reality show is reaching a critical phase, with their agreement becoming void if no license agreement is reached by June 15th. There is a two week window after the May 31st CBS debut to gauge the viability of this reality series, so expect to hear news soon in this area.

Objective/ Analysis: CBS's EliteXC Broadcast Team

May 22, 2008

PHOTO: (Left to Right) – David Dinkins, Jr., Executive Producer; Karyn Bryant, Cageside Reporter; Gus Johnson, Play-by-Play; Frank Shamrock, Color Commentator; Mauro Ranallo, Color Commentator

(Courtesy CBS)

OBJECTIVE:

Yesterday the CBS broadcast team that will be calling the EliteXC event on May 31st had a warm-up of sorts, fielding questions from fellow members of the media.

The team includes CBS sports broadcaster Gus Johnson doing play-by-play alongside EliteXC fighter Frank Shamrock and FIGHT Network broadcaster Mauro Ranallo, who will split color commentary duties. Showtime boxing broadcaster Karyn Bryant will be providing cageside interviews.

Like any product, the packaging matters, and how the three-man team presents the sport to first-time watchers is among the most important factors that will determine whether or not CBS will convert first time MMA viewers to fans.

Hardcore MMA fans will find Ranallo’s shift to analysis a bit of a surprise, since he was the play-by-play broadcaster for Showtime’s EliteXC shows and did play-by-play for Pride Fighting Championship’s pay-per-view broadcasts for three years.

“I’ve been a play-by-play guy for 22 years… but the opportunity afforded me by ProElite and CBS is one you do not turn down. And knowing the passion I have for the sport and the anecdotal information I can provide, I truly am comfortable,” said Ranallo.

In preparation for the broadcast, Johnson has decided to get some first-hand MMA experience. Renzo Gracie’s jiu-jitsu academy in New York City has served as his school of hard knocks. Despite his prior studies in boxing and kung-fu, the veteran broadcaster admits he’s on a learning curve.

“It is a new sport for me… but I’m a quick study and I like this sport… It’s a refreshing sport for me… But I have a man like Mauro sitting next to me and Frank on the other side, and I don’t think it’s going to take long for me to get up to speed on mixed martial arts.”

The sport is anything but new to journeyman Frank Shamrock, who was the UFC’s first middleweight champion (which later became the light heavyweight championship). For Shamrock and Ranallo, the sport taking center stage has been a long time coming and provides a serious challenge to the UFC’s market dominance.

Ranallo remembers, “Bas Rutten and I spent many a night in hotel rooms (in Japan after Pride Fighting events) pondering (whether MMA could make it in the US). I did envision it. I am just glad that CBS and ProElite are going to promote the sport of ‘Mixed Martial Arts.’ That’s the name of the sport, it’s Mixed Martial Arts, not Ultimate Fighting.”

“(This broadcast) challenges the UFC to tell the truth,” says Shamrock. “When you have a network and primetime show and tell is going to tell the truth and present the sport exactly as the sport is for what it is, I think it’s going to open up continued growth and open up the industry.”

The UFC’s desire to control the market has been seen time after time with their attempt to make ESPN’s new MMA Live webcast exclusively about the UFC. It is also widely believed that the organization’s desire to uses its own broadcasters led to a breakdown in negotiations with HBO. The company’s handling of Randy Couture’s departure is a prime example of the
difference between an in house and independent broadcast team.

Johnson says he has been not been approached by anyone, at EliteXC or CBS, about ground rules for the broadcast, or making it an “EliteXC-only” show.

“We’re not going to pretend that the UFC doesn’t exist. The UFC has some of the best fighters in the world. We’re going to sell what we have to sell, but we’re not going to the cheat the fans and pretend like that fighters in another company don’t exist. Eventually we want to get to a situation where the best fighters fight the best fighters.”

ANALYSIS:

The three-man team will be one of the strengths of the broadcast. Though it’s disappointing that Ranallo will not be in his usual play-by-play role, it will make his contributions to the broadcast that much more noticeable and he is certainly full of anecdotes from his wealth of MMA experience.

In addition to being a star fighter, Frank Shamrock is a keen businessman who is fully aware of just how important this broadcast is in leveling the playing field in the sport.

In a best case scenario, Johnson proves to be competent at calling all aspects of the sport, especially basic submission techniques, which baffle so many with boxing experience. His study of BJJ with Renzo Gracie show just how serious he is about the sport. Combine that with his natural talent of doing what he does best – exciting the fans – and it should provide a solid foundation on which Ranallo can provide anecdotes and Shamrock can explain the intricacies of stand-up technique and ground fighting.

Holding themselves to a higher journalistic standard and talking about fighters outside of the EliteXC universe is a serious departure from the UFC’s pro-wrestling style broadcasts and will boost the stock, not only of those fighters, but the sport as a whole.

Perhaps the greatest obstacle with boxing fans and first time watchers will be explaining intricacies of the ground-game. When asked if the broadcast will be tailored toward first time MMA viewers, Johnson said he thinks there are some features already prepared to illustrated basic submission techniques. He says he also plans to further discuss the topic with the show’s Executive Producer, David Dinkins, Jr.

The bottom line is that so long as the trio can narrate the true spirit of competition in MMA, the professionalism and sportsmanship of the athletes, and cater to the forum-junkies and the channel surfers drawn in by the strange site of a cage on their screen, these three will help blow the doors wide open in the competition among MMA promotions.

EDITOR’S NOTE: This piece is Andrew Falzon’s first contribution to MMAPayout.com. Andrew is an experienced broadcaster and writer. He is a ringside reporter for the IFL and has covered MMA for ESPN.com and FIGHT! Magazine among others. I’m excited to have him on board as a part of MMAPayout.com.

IFL Quarterly Report: First Quarter 08

May 21, 2008

View the Entire Quarterly report Here.

Analysis: It was a bit hard to judge how they did 07 vs 08, since they only put on one event in the first quarter of 08 vs four in 07. The company recorded a loss of $2.3 million for the Qtr, which would seem to be an improvement over 07 but the lack of events helped keep the losses lower. Live event costs have been a main driver of deficits for the company. Running a full slate of events would have generated a loss somewhere in the neighborhood of about $5 million in my estimation. Over the past year they have been able to pare down live event costs (some 300k to 400k on a per show basis) to some degree but the generally anemic box office receipt numbers don’t come anywhere close to making the company solvent in this respect.

Television: The 10-Q did shed some light on the new television agreement the IFL has with HDNet and the renegotiated contract with FSN. The deal with HDNet calls for the TV company to air three events in exchange for covering “some production costs.” No explicit figure is mentioned, but it seems the IFL is able to deflect some of these costs and gets finished product it can then repackage and sell to FSN and internationally. HDNet is seemingly shouldering a sizable portion of the cost of televising the event, mainly due to the cost of broadcasting in High Definition and specialized equipment needed to do so. This would be a much better TV situation for the IFL, whose production costs for the MyNetworkTv shows out-stripped their license fee. The FSN deal has been amended and 9 one hour shows were added for which they will receive $20,000 per show.

Future Capital requirements: “Based upon management’s current forecast of future revenues and expenses, we believe our cash resources will likely be sufficient to fund operations into the third quarter of 2008.” At that time they will need to have successfully partnered with another company or they would need to seek another round of funding.

Early Gate Numbers for Affliction

May 21, 2008

Sergio Non reports that Affliction’s box office is off to an encouraging start:

Within 30 minutes after ticket sales opened Tuesday, more than $250,000 of tickets were sold, Honda Center officials said.

While certainly not the instantaneous sell out of UFC 83 in Montreal, these are strong early numbers for the Affliction group. Non also reported that a portion of the undercard will be televised on FSN.

Marketing as Matchmaker

May 20, 2008

Cagepotato.com recently interviewed HDNet Fights announcer and fighter Frank Trigg. In one interesting passage Trigg discussed how his eye towards marketing affects what fights we see and don’t see:

Cagepotato.com:You told MMAJunkie that doing that tournament wouldn’t benefit your brand. What exactly did you mean by that?

Frank Trigg: That’s really what all of us are trying to do……..all of us are trying to brand ourselves to a big enough name that we can make money outside of the fight world, and I have to make choices on what’s going to help me accomplish that. Doing commentating for TNA Wrestling helps me as a brand — it pushes me forward, it gets me in front of a different demographic and increases the size of my network. And when you’re with an organization that’s not going to do that for you, whatever level you’re at, it doesn’t help.

DREAM was waiting and screwing around, and I was trying to figure out whether or not the tournament was going to be shown in America on HDNet. They finally agreed to a deal like three days before the event, and I thought “that’s just stupid, they should have had this stuff done a long time ago.” The way that they’re running the organization, it just wasn’t going to be any good for me in trying to get my brand out there.

Frank is in a bit of a double whammy situation in that he is a veteran fighter who must be judicious in what fights he accepts and also a fighter outside the Zuffa universe who must work that much harder to get his brand -Frank Trigg- to break through the dissonance. Participating in a Dream GP that isn’t available Stateside may be good from a pure sporting point of view, but Trigg is very forward-thinking in seeing the business side effects of that decision.

Monte Cox: I Want To Be Strikeforce

May 20, 2008

Monte Cox recently sat down with Bob Carson and discussed at length Adrenaline MMA and his business plan for the promotion. His main goals were crystallized in this quote:

I want to be Strikeforce. That is a show I can aspire to be. I’d like to be able to have one big fight like a Cung Le and Shamrock and a solid undercard. I want a little bit from TV and a good gate to make it.

Monte is nothing if not a good business man and he sees the folly in a direct challenge of the UFC’s supremacy. While the UFC is facing opposition on a national level from the likes of EliteXC, there are opportunities at the super-regional level for other promotions to become profitable niche players. Strikeforce in Northern California, Matt Lindland’s Sportfight promotion in the Northwest, and Monte Cox’s Adrenaline with his Midwest (Chicago and Quad-Cities)connections are prime examples as well as the IFL increasingly becoming an East Coast, and Northeastern in particular, promotion.

The interview also gave some insight into the salary structure of Adrenaline MMA and, indirectly, Affliction. Monte spoke at length about Ben Rothwell’s contracts with the IFL, Adrenaline and Affliction. Rothwell received $30,000 for his last few fights in the IFL. Monte then signed him to an Adrenaline contract at $200,000 per fight. Affliction acquired Ben’s services and, though he didn’t give a figure, he stated Ben was doing even better with Affliction, (presumably in the $250,000 to $300,000 range.)

IFL Makes Executive Cuts

May 19, 2008

According to Carson’s Corner, it was announced at the 5/16 IFL Mohegan Sun show that Keith Evans, IFL VP of Operations, and Lisa Faircloth, IFL Director of Events, have been let go by the company. Evans and Faircloth had been with the IFL since it’s inception. Evans and Faircloth were both former Zuffa employees, with Evans being at the center of a lawsuit between Zuffa and the IFL. Zuffa claimed Evans took trade secrets with him when joining the IFL. Evans and Faircloth were head-quartered out of the IFL Las Vegas office, which will probably also be eliminated by virtue of the IFL’s seeming decision to no longer work the Las Vegas area as a market.

EDITOR’S NOTE: This is Robert Joyner’s first contribution to MMAPayout.com. Robert has an MBA from East Carolina and is a devoted MMA fan. It is my pleasure to have him as a contributor to the website. You may contact him at: robnashville@gmail.com.

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