UFC Prime Time Episode 3 Ratings

January 29, 2009

MMAPayout.com has learned that the third episode of UFC Primetime (10-10:30P) delivered a 0.6 household rating — a .64 among Men 18-49, a .44 among People 18-49, a .60 among Men 18-34 and had an average audience of 662,000 viewers.

The overall average for the three week run for UFC Prime Time was 789,000 viewers.

The three week run for Prime Time has to be judged a success. The usual one week lead in to a PPV often seems a bit abrupt, and wanting at times. The multi-week format gives a sustained, staggered build that should pay off at the PPV box office. This isn’t a concept that the UFC and Spike should drag out for every PPV but hopefully the format will return to periodically to hype their bigger cards. An ideal candidate for the next card to get the Prime Time treatment would probably be the Mir vs Lesnar 2 card that is tentatively being planned for May.

Wallfighters: Fun for Fans, Finances The Fighters

January 28, 2009

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As the popularity of MMA continues to show rapid growth, new and exciting opportunities are opening up for fighters all the time to expand their financial and business empires. One of the newest avenues for this is the wall decal company Wallfighters.

Wallfighters is launched as a division of Wowsportz, which specializes in personalized sports-related merchandise. The main focus up until now has been specialized items for teams on the club and local level but the company was looking to make a larger play. Enter Greg DeLong. Delong had prior experience in the MMA field, as host of his own MMA-related radio show Insidethecagetalk.com, and explained to the higher-ups at Wowsportz what a growth field MMA is the opportunities to be had. Delong did market research into the wall mounted vinyl decals, widely popularized by Fathead. DeLong saw an opportunity there for Wowsportz, as Fathead had expressed no interest in expanding beyond their core stick and ball sports. MMA was selected as Wowsportz’s first mass market play and the merchandise was dubbed Wallfighters, (http://www.wallfighters.com/).

Wallfighters has assembled a stable of fighters quickly with Urijah Faber, Scott Smith, Mark Munoz, Chad Mendes, Joseph Benavidez, James Irvin, Chael Sonnen, Brandon Vera, Diego Sanchez, and Tara LaRosa among those that have signed deals with the fledgling company. The main selling point of the company has been the ability “to make money while you are sitting at home”, which is enticing for those in such a grueling profession as MMA. Another reason fighters have been signing on has been the generous endorsement fee the fighter receives from the sale of each of his Wallfighter decals. DeLong stated, “We want to make money with the fighter, not off the fighter.” The Wallfighter deal along with similar deals like those of figurine maker Round 5 that provide an equitable sharing of profits is enticing to the fighter who is willing to take control of his own merchandising destiny.

Wallfighters has a good size stable of endorsers, but is still in the stage of bringing in athletes to endorse. The main strategy thus far has been to work with agents/managers to bring in the athletes. Clients of NCFC and MMA Fighter Management Inc (Urijah Faber’s Mgmt Team) have made up the bulk of the signees so far but talks with a wide range of camps are taking place as we speak and the roster of Wallfighters looks to be growing often.

Wallfighters will have two main vehicles of distribution initially. They will be sold through the company website, at Wallfighters.com, and also through the fighter’s and/or management company’s website store. Wallfighters’ branding efforts and the popularity of the fighter will both help to drive sales.

You can purchase your own Wallfighter by visiting their website

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If you are a fighter/manager and would like more information on Wallfighters, or a member of the media and would like to do a piece on Wallfighters, please contact:

Greg DeLong
Director Of Marketing
WOW Sportz Wall Fighters
www.wallfighters.com

greg@wowsportz.com
775-232-7731

1/25 WEC Rating

January 28, 2009

While the match-up lost a little of the original luster, the Faber vs Pulver match-up from the most recent WEC card looks to have anchored a solid performance in the ratings, according to the Wrestling Observer Newsletter:

The show did a 0.65 rating and 700,000 viewers, which, while only half of what their first match on 6/1 did, was still the second highest amount of viewers in the history of the promotion.

Varner vs Cerrone was the nominal headliner, but the real headliner would seem to be the Faber fight. The dip in ratings from the monster number for the first match-up is understandable. The first fight had the benefit of a large marketing blitz by Versus to help spike viewership, with magazine and billboard buys to increase visibility. No such buys this time, but card did seem to retain some of the residual buzz from that initial spending and good word of mouth on the fight of the year candidate they put on back in June.

Golden Boy CEO: Affliction DOR PPV Numbers Promising

January 28, 2009

Loretta Hunt of Sherdog.com spoke with Richard Schaefer, CEO of Golden Boy Promotions, and he was optimistic on the PPV sales based on the early numbers:

Schaefer also said preliminary pay-per-view buy numbers look promising.

“When I saw them, I was very, very positively surprised. And so that looks very good,” he said. “So, I think at the end of the day, Affliction is going to be able to recuperate most of their expenses.”

Schaefer said himself and Binkow met Tuesday to begin initial plans for another event. Affliction Vice-President Tom Atencio said Saturday that the next show could take place in May or June.

In our report on the gate last night, we indicated that the buzz on the day of the event was that there were strong pre-sale numbers for the PPV and that using those numbers to project final PPV sales indicated a stronger than expected performance, one that would put Affliction in the ballpark of their break even point. Schaefer’s comments add some credence to that notion, if the numbers come in like they expect. Such an increase would be unexpected.

One possible theory for the bump may be increased efforts by Golden Boy to market Affliction towards a backlog of past Golden Boy PPV purchasers, but that is speculation. Such an effort would look to capitalize on the customer goodwill that Golden Boy has built to this point. Such a database would be in the 2 million range, and past purchasing information would be accessible through the cable and satellite companies. With HBO looking to cut back on their number of PPV’s in 2009, cable and satellite face an inventory problem and would have incentive to step up marketing efforts in the MMA/UFC genre that has been one of the few bright spots for the industry.

Envelope Math: Affliction DOR Downside

January 28, 2009

The one good thing to come out of Larry Merchant’s bitter, dishonest attack on Affliction’s Day of Reckoning is that it forced Affliction and Golden Boy to bring some much needed clarity to their relationship and in turn provided the MMA industry with a glimpse at the true economics of the event.

Today in an interview with Sherdog.com’s Loretta Hunt, Golden Boy CEO Richard Schaefer clarified the genisus of Merchant’s claim that Oscar De La Hoya skipped Saturday night’s HBO Boxing event due to a $5 million payoff from Affliction:

“Larry had asked me at the weigh-ins why Oscar was not coming [to the boxing event], and I told him, ‘Look our partners at Affliction made an over $5 million commitment to the event and it wouldn’t be right if Oscar just dumped it.’ I think he took that and put the Merchant twist on it and it came out the way it came out.”

Assuming this is accurate, or at least in the ballpark, we can engage in a little bit of envelope math to put a potential downside on Day of Reckoning.

The event reportedly drew a gate of $1.5 million. According to the Wrestling Observer Newsletter the company’s first event Banned drew 90,000 buys on pay-per-view. Assuming that this event at least equals that total, with a 45% split and a $45 price tag it would generate an additional $1.8 million (minus whatever Showtime’s cut is). That would be $3.3 million in revenue not including any sponsorship or television licensing fees.

If the event cost roughly $5 million to put together as Schaefer indicated, that would put Affliction’s downside at around $1.7 million. Even assuming the event cost more than to put together, which I believe it likely did when including the marketing budget and undisclosed payroll expenses, we’re still probably talking about a maximum downside of somewhere around $3 million, a far cry from the $5-6 million losses many were/are claiming/predicting.

Rebuttal to Recession Piece

January 27, 2009

After reading our piece from yesterday on the recession’s effects on Gen Y, a prominent manager agent spoke with MMAPayout.com to give another viewpoint, with a boots on the ground perspective on how it is hurting fighters seeking sponsors. We have stripped out the names of those mentioned in the correspondence but the point holds, the downturn has affected fighters in a very real way:

While in a lot of ways I agree with the quote today on Gen Y. BUT, the affects are still hitting the athletes. A lot of clothing companies were started using home equity and 401K’s to get in on the phenomenon that is MMA only to find out it is a UFC world. This is where the effect is coming from the heloc (home equity lines of credit) lines are used up, 401Ks drawn down. (An MMA Apparel company owner) told me an event he is only sponsoring (Fighter X) because they gave him terms, another clothing company sent me an email about sponsoring one of my fighters and said “my tax refund will be back by that fight so I think I can swing it”. (Apparel owner) told us he hopes he can sell enough shirts from the exposure that night to pay the fighter. The fact is a lot of the money is drying up. Guys are finding less and less “non-fight gear” companies and more and more restrictions from fight gear companies. Most of the MMA apparel companies will tell you they have a hard tome measuring the ROI and the fact that fighters switch to one brand and then to another is desensitizing them to the branding anyways.

Affliction Day of Reckoning Gate

January 27, 2009

Kevin Iole over at Yahoo/MMAJunkie has the numbers on the gate for Affliction Day of Reckoning. The paid attendance was 8,946 for a gate of $1,512,750. Rear Naked News contrasts Banned with Day of Reckoning:

Of the 13,228 who attended “Day of Reckoning”, only 8,946 paid (4,282 free seats). This means 32% of the audience did not pay. While it is typical to give away tickets, 32% is a huge number. At Affliction “Banned” in July, they sold 11,242 tickets and only gave away 24%(3,590). Adding to their problems, the live gate made $1.5 million. “Banned” made $2.1 million.

Any chance that the card reaches solvency will be based on their PPV performance. MMAPayout.com has been made aware of rumors/reports from those within Affliction of strong pre-buy numbers that project a higher than generally expected final number, but all figures are way too preliminary at this point have any validity.

UFC 91 REPLAY ON SPIKE TV PEAKS AT 3.3 MILLION VIEWERS

January 27, 2009

UFC 91 REPLAY ON SPIKE TV PEAKS AT 3.3 MILLION VIEWERS FOR BROCK LESNAR vs. RANDY COUTURE

UFC heavyweight champ Brock Lesnar can now add television ratings champion to his resume. Spike TV’s replay of UFC 91 (originally airing on Pay Per View on November 15) featuring UFC legend Randy Couture vs. Lesnar was the highest rated show among Men 18-34 in all of television (broadcast or cable) in its timeslot on Saturday, January 24 (9:00-11:30pm ET/PT). UFC 91 peaked at 3.3 million viewers at 11:15pm for the Lesnar victory ending in a second round TKO. The entire fight card, which included exciting victories for lightweight contender Kenny Florian and heavyweight hopeful Gabriel Gonzaga, averaged 2.3 million viewers for the 2.5 hour telecast, easily making UFC 91 the most-watched taped UFC event in network history.

Overall, UFC 91 on Spike TV drew a 1.7 household rating and a 1.8 among M18-49 (991,000), a 1.8 among M18-34 (508,000) and had an average audience of 2.3 million viewers.

Affliction's Day of Reckoning May Be Further Away Than Anticipated

January 27, 2009

Despite a solid card that produced several spectacular finishes and cemented the emerging legend that is Fedor Emelianenko, the MMA community’s focus when it comes to Affliction remains on one thing: its finances. It’s a narrative that has dogged the company’s entertainment brand since it launched last year with payrolls at levels previously unseen. While it’s fair, even accurate, to say that it is unlikely, if not impossible, for Affliction to recoup its costs through traditional live event revenue streams (i.e. pay-per-view, gate, sponsorships, licensing fees, etc.), that doesn’t tell the whole story.

Affliction is after all a t-shirt company at the end of day, as Dana White loves to remind everyone, and ultimately any money they make on these MMA events is icing on the cake to the brand building they are accomplishing. As a private company we don’t have much evidence as to how briskly sales are moving, but a recent BusinessWeek feature provides some insight.

An item from the January 26th edition titled “Youth Will Be Served” focused on the success of youth-oriented retailer Buckle. The company posted a 13.5% year-over-year gain in same store sales for the month of December’s, a stunning success in the current environment. For some perspective retail heavyweights Macy’s, Gap, American Eagle, and Abercrombie & Fitch posted declines of 4%, 14%, 17%, and 24% respectively in the same month.

Buckle is one of Affliction’s closest retail partners and was previously featured on the canvas at Affliction’s first MMA event. The article credits Affliction Clothing and MEK Denim as two of the hottest brands that have made the store successful. In 2008 overall sales for Buckle rose 26% to $780 million. While all of that is not Affliction, the point is: they’re selling a lot of t-shirts. More importantly, the company believes that these events help sell those shirts. Large sales spikes have been reported around both of its events.

Based on previously reported statements, Affliction Clothing does an estimated $125 million in annual sales with its MMA brand accounting for 20-25% of that or roughly $25-35 million in annual revenue. Using what I think would be a conservative profit margin of 40%, that would be profits on MMA apparrel alone at somewhere between $10 and $14 million annually.

Those numbers help put into perspective potential multi-million dollar “losses” on the MMA events themselves. These events really amount to an aggressive marketing/advertising campaign for Affliction’s core clothing business at worst. At best, if the company finds its footing as a live event promoter, it will have opened up a new revenue stream and diversified its business.

This isn’t exactly a groundbreaking approach. Red Bull has taken a similar path in NASCAR. After spending several years as a sponsor of events, the company chose to make the leap into team ownership. In the expensive world of Sprint Cup Racing it is very unlikely that the team turns a profit, but Red Bull doesn’t sit around wringing its hands about its multi-million dollar “losses.” Instead it watches its energy drink sales rise and is satisfied knowing that ownership of the racing team gives it a potential upside and possibility of recouping its investment that other traditional advertising and marketing expenditures simply don’t offer.

It’s essentially the difference between renting and owning your own home. Both accomplish the goal of having a roof over your head, but ownership allows you to simultaneously build equity.

So while Affliction may ultimately decide that its money is better spent outside of live event promotion, that decision will likely not rest entirely on the financial bottom line of the events themselves, but rather their contribution to the company’s overall finances, i.e. its clothing line.

Without understanding this essential difference between the company’s financial calculus and that of its chief competition (Zuffa) it is impossible to accurately and fairly evaluate the success or failure of the company’s promotional efforts.

At the end of the day Affliction really is a t-shirt company and that fact makes all the difference in evaluating its fate.

UFC Gets Into The Gym Business

January 27, 2009

In what can be seen as extending out their brand (or going outside their core competence) the UFC announced today that they will be entering the health club business:

UFC Gym officials said they are close to breaking ground on the first of five health clubs planned in California, and plan to build more such gyms across the country and in Canada.

“We’re going to force all these other gyms to take it up to another level,” UFC President Dana White told The Associated Press on Monday. “Just like we have in the fight business, and everyone’s trying to compete with us now, same thing’s going to happen in the fitness industry.”

White said most gyms and health clubs haven’t changed in years, giving the mixed martial arts league an opportunity to attract new fitness customers or others wanting to get different kinds of workouts under the same roof. The gyms aren’t intended for professional or amateur fighters.

The move shouldn’t be a big surprise. The UFC have felt that various parts of the gym/training business have been reaping the benefits of the mixed martial arts explosion that the UFC claims credit for. Joe Silva spoke with Florida Todayand commented on the Zuffa mindset of others capitalizing off Zuffa’s rise to prominence:

“What’s the new hook that we can get people into the dojos with?” Silva said of an attitude that has disgusted him in the past. “Now you have Tae Kwon Do schools and they (say), ‘Yeah, we have grappling.’ ” They’re looking to appeal to the consumer, and the consumer is watching UFC on TV, on Spike TV and on pay-per-view.”

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