Official: Mixed Martial Arts Comes to Massachusetts

November 30, 2009

The UFC has announced that Massachusetts has officially regulated mixed martial arts, and it could hold an event in the state as soon as Summer 2010

 The 42nd State to Regulate the Fastest Growing Sport in the World.

UFC® Will Now Hold Events in Massachusetts

 

(Boston) – Massachusetts has become the 42nd state in the country to bring regulated mixed martial arts (MMA) competitions, including Ultimate Fighting® Championship® (UFC®) events, to thousands of Bay State fans. The Massachusetts Legislature recently passed a bill that would allow the Department of Public Safety to oversee regulation of the popular sport in the state.

 

Zuffa, LLC, the parent company of the UFC®, does not conduct events in any state that does not properly regulate MMA. This legislation will now enable the company to hold events in Massachusetts. Specifically, the legislation mandates safety and medical requirements for every MMA fighter and event held in the state. The events will also bring an economic boost to local communities across Massachusetts that hosts them.

 

The UFC® has worked with members of the Massachusetts Legislature and the Department of Public Safety for over two years to pass legislation to regulate the sport so it could bring events to the state. The UFC® is the largest live pay-per-view event content provider in the world and the fastest growing mainstream sports organization in history. Its programming is distributed in 132 countries, territories and jurisdictions, reaching 430 million homes worldwide, in 20 different languages.

 

Kenny Florian, a Massachusetts native and one of the UFC®’s premier lightweight fighters, campaigned to get the legislation passed said, “The chance to fight in front of my hometown crowd has always been a dream of mine. Now it looks like my dream will finally come true”. The Boston College graduate testified before the Joint Committee on Public Safety and Homeland Security supporting regulation of mixed martial arts.

 

“Mixed martial arts events are enormously popular in Massachusetts and held in venues across the state every day. That is why passing legislation to regulate the sport was so important: We want it to be safe for everyone” said State Senator James Timilty, chairman of the Joint Committee on Public Safety and Homeland Security who led the effort to regulate MMA.

 

Dana White, the President of the UFC®, who grew up in Boston, expressed the reaction of many fans as well when the legislation passed, “I am so pumped that the UFC® is finally coming to Massachusetts. I guarantee that we will put on an incredible UFC® event for Boston in 2010” he said.

 

The first UFC® fight in Massachusetts could be held as early as Summer 2010.

Payout Perspective:

The Governor of Massachusetts signed the bill this morning.

Very good news for MMA, obviously.

That leaves New York and Ontario as the two major remaining obstacles. The last we heard on New York, the bill sponsoring MMA has to re-pass through the Tourism Committee in order to get back into the Assembly and Senate. However, it’s widely expected that New York will pass in 2010, and be open for business in 2011. Toronto is much less certain, unfortunately, as the UFC and other organizations are still lobbying at the Federal level to see a bill introduced that would amende the country’s Criminal Code (Section 83, in particular) to allow MMA competition.

M-1 Global/Strikeforce: Record Numbers for Worldwide "Fedor vs. Rogers"

November 30, 2009

M-1 Global and Strikeforce announced last week that the worldwide broadcast of Fedor vs. Rogers did record numbers:

AMSTERDAM, HOLLAND (November 24, 2009) – M-1 Global and Strikeforce announced today that the international audience reports from broadcasters all over the world revealed an unprecedented number of viewers for the November 7th “Fedor vs. Rogers” MMA event from Chicago, Illinois.

 

“We are extremely happy with the preliminary broadcast reports,” said M-1 Global CEO Joost Raimond. “The demographics of these numbers were very promising as our network broadcasting partners in the U.S., Russia, and Korea reach an enormous audience alone. Coupled with a dozen other countries and our successful internet stream in Japan and other territories, all early accounts and indications tell us that “Fedor vs. Rogers” delivered worldwide more than any other MMA show in the history of the sport,” concluded Raimond.

 

Scott Coker, founder and owner of Strikeforce and experienced MMA promoter responded “We are thrilled with the tremendous viewership figures that the Fedor vs Rogers event generated overseas. The results clearly demonstrate the appreciation that fans worldwide have for a number of M-1 Global and Strikeforce mixed martial arts superstars including the number one fighter on the planet – Fedor Emelianenko – and his opponent Brett Rogers.”

 

In total, over 25 million MMA fans all around the world were treated to a vintage performance from the world’s greatest MMA fighter, Fedor Emelianenko. The main event of Fedor vs Rogers reached an impressive 5.46 million viewers in the United States on the CBS Network. The fight was also broadcast in Fedor’s native Russia by “Channel 1,” Russia’s largest television network, and reached 16 million viewers in Fedor’s home country. In addition, “Fedor vs. Rogers” was broadcast to millions of viewers in Korea on SBS, one of the 3 major national South Korean networks, as well as television networks in China, Latin America, United Kingdom, New Zealand, Ukraine, Finland, Africa, Turkey, Israel, Indonesia, Bulgaria, Romania, and Malta. Live internet streams of the “Fedor vs. Rogers” bout generated ground-breaking viewer numbers in Japan and all over the world and these numbers continue to grow through Video on Demand.

 

‘”CBS was proud to be the U.S. broadcaster in a fight seen by millions domestically and by millions more around the world,” commented CBS Senior Executive Vice President Kelly Kahl. “Strikeforce and M-1 Global put together a great card, showcasing some of the best fighters in the world. Our ad sales for the fight were strong, especially for advertisers that target young men — a group with a growing appetite for MMA.”

Payout Perspective:

The numbers certainly are impressive, but be careful to note the clever bit of PR spin: Fedor vs. Rogers is not the most watched fight in MMA history, but in terms of global viewership from so many countries it set a “worldwide” record. There is some question as to how reliable the figures really are, but it’s still a good result for the co-promotion.

Expect a rebuttle of sorts from the UFC – knowing them to be the competitive individuals that they are – regarding their international viewership. Lorenzo Fertitta has stated previously that UFC programming reaches an estimated 400 million people worldwide, and that figure is growing as they continue to lock-up distribution deals. Yet, they’ve never really commented on how well their fights are doing on a worldwide level.

First UFC Gym Opens in California

November 30, 2009

The San Francisco Chronicle has the details surrounding the official opening of the first UFC Gym in Concord, California.

(Credit Bloodyelbow.com for the find)

Payout Perspective:

MMAPayout.com has been pretty vocal about the improper use of brand extensions in the past, but the UFC Gym certainly isn’t one of them. The UFC is making use of its core competency – fighting – to educate people about its sport, and promote their own brand in the process. They’re sticking to what they know and what they’re good at.

Judging by the way martial arts fitness has taken off in the past, it’s quite possible that the UFC could leverage their growing position in sports pop culture, and the fitness dimensions of an MMA lifestyle, to really grow these gyms into a prominent revenue stream and marketing tool.

CSAC States Position on Medical Marijuana

November 30, 2009

The California State Athletic Commission has released its latest positional ruling with regard to how it intends to deal with the use of medical marijuana amongst its licensed fighters:

The California State Athletic Commission’s position is that Marijuana is a banned substance pursuant to Rule 303 and that any positive drug test may result in discipline.

 

The California Supreme Court has weighed in on “Medical Marijuana” in the employment context and has found that an employer may discipline an employee for off-duty medical marijuana use. The court found that the Compassionate Use Act did not legalize marijuana use per se, but merely provided a defense to criminal charges under particular circumstances. The Court acknowledged that marijuana still had a potential for abuse and that employers continued to have a legitimate interest in whether an employee uses the drug. The Court declined to extend the protections of the Compassionate Use Act any further than the plain language of the Act and into the employer-employee relationship.

 

Although the question springs from professional licensing rather than employment, much of the Court’s rationale applies. Because the Compassionate Use Act only provides a defense to criminal charges, any argument that the Act would allow an athlete to use the drug without consequences to his or her license must fail. If the Court were to take up a similar challenge to discipline of a licensee, it would likely find that the Commission has a legitimate interest in whether or not an athlete uses the drug because marijuana could slow a fighter’s reflexes and endanger his or her health and safety in the ring or the cage.

 

Therefore, given the limited reach of the Compassionate Use Act and the rationale of the Supreme Court in Ross v. RagingWire Telcomm, the Commission may safely discipline an athlete without running afoul of any law or court decision.

Payout Perspective:

The Nick Diaz vs. Takanori Gomi fight is probably the case that comes to mind of most when thinking about the issue of marijuana use in MMA. Diaz had his gogoplata victory over Gomi ruled a no contest as the result of his positive test for marijuana and was suspended for six months. He claimed he only used marijuana for medical purposes.

Diaz would later go on to boast that he could beat any drug test with 8 days notice, but was conspicuously absent from his required drug tests for what was supposed to be a welterweight championship fight in Strikeforce in August.

Valuing Sponsorships in MMA

November 29, 2009

MMAPayout.com has talked a lot about sponsorships in the past few months, but a great deal of that discussion has avoided fighter sponsorship in favour of those surrounding corporate sports properties. The Bud Light and Harley-Davidson deals within the industry naturally draw a lot of attention. However, in the long run, they are no more important than the sponsorships or endorsements that the fighters are receiving (e.g., GSP-Under Armour).

So, today we’re going to take a slightly more in-depth look at valuing sponsorships from the perspective of a fighter, and the kinds of implications those valuations have on their related corporate sports properties.

The Count Method

The count method is a simple tool used to value sponsorships that involves tracking the number of sustained appearances – or impressions – that a brand logo makes on television. Those impressions are then compared to the typical number of impressions obtained through an average commercial spot during that program. The cost of an average commercial spot is then used to value the sponsorship. 

The method is well-suited for MMA, because of the nature of fight gear sponsorship in relation to television visibility. However, a few adjustments need to be made in order to make the count method a viable valuation tool in MMA; chief among them is discounting the compared value of counted logo impressions to commercial spot prices. No logo impression, in aggregrate, is worth as much as the sustained number and quality of impressions that a commercial spot can generate. Therefore, it’s necessary to discount that compartive figure by as much as 95%.

Let me give you an example:

1. Fighter A is a main card fighter whose bouts have averaged approximately 9 minutes in length over the course of his 12 fight career. He wears board shorts to the ring/cage in which the main buttock sponsorship placement is typically impressionable for 3 minutes, on aggregate, each fight. His next scheduled bout will be televised on a card where the 30-second commercial spots are averaging $120,000.

  • 3 minutes = 180 seconds
  • 180/30 = the equivalent of six commercial spots
  • $120,000 x 6 = $720,000
  • $720,000 * (1-.95) = $36,000

This method provides a ballpark range as to how much the sponsorship is worth.

Other factors

As I alluded to earlier, there are other intangibles that must be accounted for (and which could possibly impact the discount rate):

1.) The definition of “impression” must be strict. An impression must only be counted if the brand logo is visible for a sustained period of time such that the consumer has the opportunity to identify it – i.e., the logo must have the opportunity to leave an impression.

Similar to the discussion we’ve entertained previously regarding assessing sponsorship ROI from a corporate standpoint, the clutter in MMA sponsorship really detracts from the ability of a logo to make a clear impression. Fighters and their management may have to begin making the difficult choices in cutting a few sponsors in favour of maximizing the potential return of their biggest clients (and in turn maximizing the price value they receive from those clients).

2.) The popularity of a fighter and his opponent will influence value. The discount rate should be adjusted to reflect dramatic differences amongst the popularity of fighters and their opponents. For example, GSP is always going to draw in more sponsorship money than most, not just because he’s currently the champion, but also because he has many levels of appeal that reach beyond MMA. Likewise, consider how the value of Houston Alexander’s sponsorships should change in fighting Kimbo Slice relative to the likes of James Irvin.

3.) The position of a fighter’s bout on the card will influence value. The size of program viewership grows from the beginning of a program until it peaks near the very end (or last match of the night). Thus, the deeper a fighter is set to compete on a card, the greater value his sponsorships ought to be worth.

4.) The live audience is also a consideration. It’s more of a bargaining chip than anything else, because while the sometimes 20,000 in attendance are watching, the logos are often far too small to make any sort of material impression count.

Endorsement Territory

There’s a distinction to be made between sponsorship and endorsement in MMA. Generally, a sponsorship agreement stipulates the exchange of payment in return for fight gear and banner representation for the client. However, often times an agreement goes further – especially for higher profile fighters – whereby they are asked to wear sponsored clothing to weigh-ins, press conferences, media events, or even appear in promotional material related to the product. 

Valuation of this kind is obviously more difficult, because it must factor in the number and intensity of different communication mediums used to generate awareness and brand image enhancement. Hence, at this stage it’s much less about logo impression as it is a fee for using the fighter’s likeness to boost said brand. 

Implications of Fighter Sponsorship Valuation

Much has been made about the UFC’s “sponsorship tax,” but the valuation above underscores the organizations point to a degree: small sponsors are getting very similar impressions to that of larger sponsors – with, what some would argue, better activation – but for much less cost. The idea of a tax is defensible, because it raises the price of admission for smaller sponsors that were getting way too good of a deal, and it protects the big time sponsors that the UFC depends on.

Where the sponsorship tax raises an issue is the seeming conflict between the traditional code of MMA and the current trajectory of MMA business. MMA has long operated within a small, community-oriented environment, but the growth of the sport is set to challenge that; taking care of the little guy, in some cases, may not be compatible with running a billion dollar business.

ESPN Should Be UFC's First Choice

November 28, 2009

John Ourand of the Sports Business Journal explains why Monday Night Football has been so successful on ESPN:

Howard Katz, the NFL’s senior vice president of broadcasting and media operations, is the executive tasked with creating the broadcasters’ schedules. He said the best “Monday Night Football” games on ESPN are the ones that allow the network to advance story lines across its TV, broadband and mobile platforms. ESPN executives have long said that they view “Monday Night Football” as much more than a three-hour window, and it’s clear that the NFL agrees.

 

“We look for opportunities for ESPN to tell stories,” Katz said. “They do that so well and can support ‘Monday Night Football’ with other programming.”

 

The difference this year is that ESPN has been telling those stories during its 90-minute pregame show and its shoulder programming on Monday afternoons rather than during the telecast. As an example, Williamson pointed to the Oct. 26 Eagles-Redskins game, which occurred just days after the Redskins stripped coach Jim Zorn of his play-calling duties. The team had Sherman Lewis call the offensive plays even though weeks before he had been calling bingo games while in quasi-retirement.

 

One of ESPN’s features involved interviews with people who played bingo with Lewis. The network decided to run it during its pregame show.

 

“Sometimes in the past, maybe we felt compelled to force that into the game. I think you learn from that over time,” Williamson said.

Payout Perspective:

The popularity of all sports, including MMA, feeds off of two things: 1.) the quality of the product, and 2.) the element of human interest that allows fans to better associate with the product. ESPN has been so successful, because of its ability to take great sporting events and tell stories about those events in a way that captivates an audience.

That’s why, if the UFC is going to move into network television, ESPN needs to be at the top of its list. Not only does the network have a knack for telling stories, but it also possesses a vast array of consumer touchpoints that allow it to spread a message across the sporting world:

  • ESPN’s viewership reach of approximately 99 million
  • ABC’s viewership reach of 115 million (ESPN and ABC share a close relationship as they’re both owned by Disney)
  • Various regional-based networks around the globe (ESPN UK, ESPN Australia, ESPN Asia, etc.)
  • Multiple internet touch points
  • Mobile phone applications
  • Multiple radio stations

The article really emphasizes the importance of what MMAPayout.com’s Andrew Falzon dubbed corollary programming: a parallel form of content that pushes consumers to another, higher form of content (e.g., cable to PPV). The UFC uses corollary programming all the time with its Spike content – Ultimate Fight Night, The Ultimate Fighter, UFC Unleashed, etc. – and the impact of this content would only be amplified by a network combination of ESPN and ABC.

Moreover, the article also does well enough to imply that the future of media is one of ubiquitous consumer touchpoints. The idea of broadband content, which MMAPayout.com touched on a few weeks ago, will most certainly need to be supported by numerous non-internet touchpoints in order to effectively build an audience for an online event.

However, the article should also imply somewhat of a cautionary tale that MMA must heed: ESPN made some early mistakes with MNF by not emphasizing the product as much as it should have. Ultimately, the actual product content needs to be about the product itself; without the product, the stories are far less interesting.

—–

While it’s easy to say that ESPN should be the UFC’s first choice, there are a host of factors that play into the decision:

1.) Does ESPN want the UFC?

There’s a great deal of internal discussion going on within ESPN right now as to whether the UFC (MMA in general) is a good fit for the ESPN brand. In other words, might the image of a Disney-owned network be impaired by UFC content, and might the network lose more customers than it gains with the addition of the UFC?

2.) From the UFC’s side, there is concern about rights fees, production control, and program scheduling. The organization wants to be paid for its content right off the bat – which may or may not be short-sighted – but they also want control of how and when their product is viewed. The latter is absolutely fair given the way CBS’s production crew hampered their first Strikeforce event earlier this month.

Rumour: Don Quijote to Buy FEG's MMA Division

November 27, 2009

Zeus Tipado of MiddleEasy.com discusses the plans for a Japanese discount store to purchase FEG’s MMA division, which includes Dynamite!! and Dream.

Now it’s being reported that the president of Don Quijote, Yasuda, set up a meeting between FEG to enable this Sengoku vs. Dream co-promotion as an attempt to strengthen Japanese MMA. Initially, Sadaharu Tanikawa planned on letting Sengoku fail and then scooping up as many fighter contracts as possible (including Ishida). However now it looks like FEG’s MMA division may be in trouble.

FieLDS, Dynamite!!’s primary sponsor, will not renew their contract next year. Today on NHBNews Pro, it was announced that Don Quijote not only wants to replace FieLDS as Dynamite!!’s primary sponsor…but they want to purchase the entire FEG MMA division (which would include Dynamite!! and Dream). This would mean a chain of discount super-stores will own all of Japanese MMA

Payout Perspective:

There’s a lot of concern right now that MMA in Japan could be in serious trouble, so the emergence of Don Quijote is welcome news (whether they purchase FEG or just sponsor future events).

However, aside from the Japanese MMA point of view, it’s also interesting to look at this entire situation from the perspective of Strikeforce. Scott Coker signed a fighter sharing and promotional partnership with FEG’s Dream last summer; and, via this proposed Dream-Sengoku merger, the value of that partnership is likely to grow. Not only does Dream become more financially stable, but the size of the fighter sharing pool increases.

In fact, regardless of the outcome in Japan, Strikeforce is well-positioned to capitalize. Even if the merger fails, Strikeforce already has well-established ties with the most prized fighting assets in Japanese MMA. They’d likely be first in line to scoop up talents such as Shinya Aoki, Marius Zaromskis, and Melvin Manhoef, etc.

Station Casinos Bankruptcy Saga Continues

November 27, 2009

Steven Church of Bloomberg reports on the latest developments regarding the Station Casinos bankruptcy process, which has been unfolding over the last several months.

Station Casinos Inc. doesn’t need an examiner to investigate how the company is handling its bankruptcy, the judge overseeing the case said, rejecting part of the takeover strategy pursued by Boyd Gaming Corp.

U.S. Bankruptcy Judge Gregg Zive said at a hearing in Reno, Nevada, that Boyd and other advocates of an examiner appeared to really want a trustee to take control of the company’s bankruptcy case, especially with regard to any potential sale. Zive delayed until Dec. 11 a decision on a related request to end the exclusive right of Station managers to propose a plan to reorganize the Las Vegas-based gambling company.

Payout Perspective:

Station Casinos, owned and founded by the Fertitta family, has been working with creditors since February to restructure nearly $6.5 billion in debt. But in July the corporation filed for bankruptcy.

Now, the Fertittas are fighting to retain exclusive control over the company, and prevent third parties – like Boyd Gaming or other creditors – from establishing competing reorganization bids. We’ll know in the coming weeks whether they’re successful.

There have been rumours in recent months that if things continue to go south at Station, Frank Fertitta III could follow in Lorenzo’s footsteps and join Zuffa in some capacity.

Happy Thanksgiving from MMAPayout.com

November 26, 2009

On Thanksgiving Americans gather with their friends and families to put aside our troubles and remember our many blessings. As Melody Beattie observed:

Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend. Gratitude makes sense of our past, brings peace for today and creates a vision for tomorrow.

MMAPayout.com and myself have much to be thankful for this year.  Thanks to our loyal readers for their support and contributions to our burgeoning community. A special thanks to Robert Joyner, David Wolf, Steve Curtis, and Todd Martin for their contributions to the site over the past year. Last, but certainly not least, a very special thank you to Kelsey Philpott whose passion, dedication, and insight define MMAPayout.com.

Happy Thanksgiving to you and yours,

God Bless,

Adam Swift

Psalm 100:4-5

Dream vs. Sengoku on NYE

November 25, 2009

It was officially announced earlier today that Dream and Sengoku will come together on December 31st to promote a mega show in Japan underneath the Dynamite!! banner.

Sherdog’s Tony Loiseleur with the latest:

World Victory Road’s Sengoku Raiden Championships will contribute fighters to Fighting and Entertainment Group’s Dynamite event on New Years Eve at the Super Saitama Arena. FEG president Sadaharu Tanigawa and World Victory Road representative Sumio Inamura confirmed the cooperative effort at a joint press conference on Wednesday at the ANA Intercontinental Hotel.

 

Beyond planning for five to seven bouts dedicated to the Dream-Sengoku crossover theme on Dynamite’s 19-fight bill, no concrete details have been hashed out yet, said FEG’s Tanigawa and Dream event producer Keiichi Sasahara. Fighters participating in the collaboration, as well as rules and weight classes the fights will follow are currently under negotiation between the two promotions.

 

Perhaps most importantly for the Japanese audience, one of those bouts will likely pair Beijing Olympics gold medalist Satoshi Ishii’s MMA debut against Barcelona Olympics judo gold medalist Hidehiko Yoshida, in what would have been Sengoku’s headliner for their apparently now-canceled New Year’s Eve effort.

Nightmare of the Battle has more:

FEG’s Tanigawa said that he himself proposed this union event. They started discussing since the end of October. He also said that he doesn’t know what will happen with the FieLDS sponsorship next year.

 

The WVR GM said that the current plan for the next SRC event is March. The fighters participating will be the fighters who have fought there until now.

 

Sasahara said that there will be 18-19 fights on NYE, and there will also be fights between DREAM fighters so it’s not only SENGOKU vs. DREAM on the MMA side. Kawajiri and KID couldn’t attend the press conference because they were out on other business.

 

About SENGOKU only fights (besides Ishii vs. Yoshida) the WVR GM said that it’s yet to be decided if there will be any.

 

Misaki’s participation is also yet to be decided. There will be a meeting about if his suspension will be lifted or not. Misaki himself said: “I want to obey the instruction of the SENGOKU side.”

 

There will be foreign fighters competing as well, but the Japanese fighters will be the focus.

 

Tanigawa wants to match the champions with each other. The rules might depend on the fight.

 

About a future merger, Tanigawa said that Dynamite!! is mainly TBS’s event so there’s nothing like that.

 

The plan is for a double main event but Masato’s fight will probably be last since they’ll have a retirement ceremony after the fight. The event will start at 3 PM.

Payout Perspective

There are currently many doubts as to whether Sengoku will continue to operate as a separate entity in the New Year. It likely depends upon a number of things, but chiefly: how well the NYE event goes and how well the two organizations are able to work together. If they find a great deal of success, they’ll likely continue to run joint-events.

And, really, it’s quite a shame to see the current state of Japanese MMA in such disarray. However, out of turmoil comes opportunity, and these two organizations now have the chance to start a new. They can use the publicity from this announcement to generate some real interest in the event to come. Keep a close eye on the forthcoming announcements, because the fights obviously play a key role in bringing two organizations together like this – if you’re going to have a mega show, you need mega fights.

I’ll also throw in another angle here, and that’s from the perspective of the UFC. They’ve once again established a television deal in Japan, and they’ve made no secret about their intent to hold another card in that market. Dwindling competition may present an opportunity for the UFC to move into the Japanese MMA market a little faster than expected.

Yet, it’s necessary to mention the caveat, here: if MMA continues to struggle in Japan, might its lack of visibility hurt the entrance – or at least make it much more difficult – for a foreign competitor like the UFC? Likewise, if Japanese companies are currently hurting, what about the UFC product is going to make it that much more successful? It’s an interesting angle.

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