UFC 121: Payout Perspective

October 24, 2010

Welcome to another edition of Payout Perspective! This week we’re taking a look at UFC 121: Lesnar vs Velasquez which was held at the Honda Center in Anaheim, California on Saturday, October 23rd. The event featured a heavyweight title clash between Brock Lesnar and Cain Velasquez, but also featured the debut of Jake Shields in the Octagon as well as the return of Tito Ortiz.

Velasquez punishes Lesnar, vaults UFC into new territory

Cain Velasquez was able to negate Brock Lesnar’s tremendous size and athleticism with his combination of wrestling prowess and stand-up acumen. He then displayed a great deal of patience and poise in picking Lesnar a part on the ground to finish the fight. Velasquez is the real deal. He may not be the best pure wrestler or pure striker in the division, but he’s the most well-rounded. Perhaps even scarier is the fact that he’s only 28 and still got room to improve just about everything.

The business implications of this fight are several and involve a bit of a trade-off between the short and long term. Lesnar is the sport’s top draw and best mainstream enabler, but he’s likely to lose a bit of his appeal without the belt. Certainly the 1 million buy guarantee is probably gone unless he fights Mir in a rubber match or lands another title shot. However, it is my belief that we’ve witnessed the birth of the next big draw in the UFC in the form of Velasquez. He may not be the most stirring interview or imposing physical specimen, but he finishes fights and that is ultimately what the fans care about most.

Velasquez also happens to bring a new demographic to the table. Say what you want about the UFC’s marketing tactics for this fight, but it knew it had to hedge its bets when promoting this fight. Velasquez may not sell 1 million PPV buys every fight, but he will prove to be a solid draw for the company on the merit of his 89% stoppage rate and the fact that he gives them a somewhat credible entry point into the Hispanic market both North and South of the border.

I also like this new heavyweight reality from the perspective of asset management. Velasquez is likely to fight more often than Lesnar, which means a quicker turnaround for lucrative heavyweight title fights for the UFC. Lesnar is also now unquestionably the biggest non-title draw in the UFC and someone that can anchor a successful PPV card without title fight support. This single fight has just given Joe Silva a host of new options to play around with when booking fights over the next 6-12 months.

The Lesnar loss probably isn’t optimal from a short term perspective, but the combination of Velasquez as a dominant champion and Lesnar as versatile non-title draw will help the UFC cover the gap and even come out ahead in the long term.

Shields earns win, not fans

Jake Shields did what he does best on Saturday and that’s smother his opponent. It wasn’t an endearing performance and it seems reasonable to assume the UFC was looking for a little more from him last night. However, he did get the job done and remains the front runner to challenge the winner of GSP-Koscheck II, according to Dana White. The choice between Shields and Fitch – both of whom have similar styles – has likely come down to providing the welterweight division with a fresh-faced contender. Shields has been hyped for so long as the best welterweight outside the UFC that he’ll likely generate more interest than a guy like Fitch.

Note: Keep a close eye on the payouts this week. It’ll be interesting to see what kind of guaranteed money Shields received from the UFC to defect from Strikeforce.

Ortiz classy in defeat, but that may not help him

Tito Ortiz may have been all class on Saturday night, but I’m not sure that’s going to help him stay in the UFC. He’s now lost four of his last five bouts and is no longer a relevant player within his division – not even as a gate keeper. Furthermore he isn’t the PPV or live gate draw that he used to be which calls the nature of his sizable contract into question.

The new relationship between Ortiz and the UFC was founded upon mutual benefit, but I can’t see it lasting if Ortiz no longer brings something to the agreement. This is simply the nature of the business.

UFC 121 draws the smallest gate of Brock Lesnar’s career

The UFC drew 14,856 to the Honda Center on Saturday night for UFC 121, which generated $2.15 million at the gate. Here’s the paradox: UFC 121 has come in as the lowest gate of Brock Lesnar’s career but on an event that will likely become the second or third highest-grossing PPV card of his career.

It’s difficult to reconcile the above, but I think it’s largely reflective of ticket pricing. The range for this fight was $75, $125, $200, $300, $400 and $500. While the demand for this fight may have been there at lower ticket levels or on PPV, the $300+ tickets may have exceeded the Anaheim MMA area reservation price.

I’d be very interested to learn whether the UFC is experimenting with any sort of ticket pricing sensitivity models, because from what we’ve seen over the last few years it appears as though the company is leaving money on the table with some of these inflated prices. Sure, the UFC comps a couple thousand tickets every night and that’s great from an exposure perspective, but at some point you want to maximize ticket revenue. I’d also argue that there are benefits to making the consumer purchase a product that go well beyond short-term revenue: the consumer is far more engaged with a product when they’ve had to sacrifice something to get it and it’s certainly difficult to get someone to pay for something after they’ve been consuming it for free.

Sponsorship watch

UFC 121 marked the official debut of Boost Mobile as an official UFC sponsor. They had a host of cage and mat signage, cut graphics through the telecast, and a presence on the UFC promotional material in the weeks leading up to the fight. It’ll be interesting to see what they drum up in terms of activation. The company has already initiated a nationwide sweepstakes entitled Your Town, Our Fighter, which offers a UFC viewing party with the fighter of your choice. Interestingly, the promotional partner for this activation is Samsung. I’ve said for a while now that the consumer electronics industry ought to seriously look at a partnership with the UFC, and Samsung might be able to use this promotion with Boost as a way to test the waters.

15 Responses to “UFC 121: Payout Perspective”

  1. Jose Mendoza on October 24th, 2010 7:18 PM

    Kelsey:

    Shields was pretty much guaranteed a six figure salary from Strikeforce, as a champion and it was rumored that he was getting less in the UFC (did not have much leverage since SF wasn’t too interested in keeping him for a higher price tag. UFC 121 just proved SF made the right choice.

    Also, interesting that TapouT and Affliction were not on the Octogon?

  2. Kelsey Philpott on October 24th, 2010 7:20 PM

    I don’t want to read too much into the Tapout/Affliction thing just yet, because Tapout still had their submission of the night activation at the end of the evening and they were the presenting sponsors of 118. Affliction had cage signage last week at 120 and Joe Rogan has seemingly found an endorsement with them as he wears an Affliction shirt every night.

  3. Brain Smasher on October 25th, 2010 12:59 AM

    Jose, do you not think all the SF 185/170 fighters would look like crap by comparison to their SF fights? I already know your answer. However, Jake is the same fighter SF crowned their champ. He was just never a physical gifted fighter, well rounded fighter, or what i would call world class ground game. He feasted on sub par talent and never looked good doing so. I actually felt he lost last night but it was close so im not going to bitch much about it. BTW, Shields left SF due to piss poor management. They mismanaged, mispromoted, and mistreated him. That said it was smart of SF not to try to hard to get him. They were in a no win situation where the UFC was going to force them to over pay while not even knowing if the UFC had any real interest or offers.

    Someone in Jakes position with his small level of interest would normally make 150K. IMO anything more than that is influence from playing games with SF.

    Kelsey,

    Is it possible the UFC used lower ticket prices to appeal to the hispanics? After all there was a lot of Cain fans and im sure most were new. Would they have still given MMA a chance at the normal Brock ticket prices? I think it was a good idea to get the hispanics in the door and they will leave with a positive experience and spread it to other hispanics. Which will lead to higher gate and PPVs later.

  4. Brain Smasher on October 25th, 2010 1:09 AM

    I want to clearify. I think these ticket prices are in line with the lower end tickets the UFC has in smaller cities. 50-400 is about as low as it gets. On Brock events and during the Couture Chuck days ticketswere 100-750 and sometimes 1000. So these seems cheap. I guess it really comes down to how many of the $75 tickets were availible. These ussually “Magically” disappear for most UFCs forcing people to buy expensive seats.

    Also with such a high attendance and low gate. It would be interesting to see “Comps”. Also be nice to see who got these comps. Wonder if the UFC made it a point to paper the crowd with Hispanics to cultivate them as fans afterward. Also to add to the Hispanic buzz in the crowd so it would translate over to the PPV making Cain look like an even bigger Hispanic star.

  5. Jose Mendoza on October 25th, 2010 4:48 AM

    Brain,

    You already knew that I was going to say it depends on the fighter? =) Paul Daley was said to have no ground game (as proved when Shields and others defeated him after putting him on his back) yet did well in the UFC beating Kampmann and Hazelett (only losing to Kos). It’s really impossible to make a blanket statement and it depends on the fighter.

    I also wouldn’t judge Jake from this one fight, which was a terrible performance on his part (though it is pretty much what you can expect out of him minus the gassing). He had a rough camp with a rough cut at the end. He bulked up and put on lots of muscle when he was fighting at 185 for SF and then had to drop it all for this fight, lost 20 lbs or so just to make weight on the day of the weigh-ins. Many said he looked terrible physically.

    Also, for how terrible Jake performed, no other WW has better wins than he does who hasn’t already lost to GSP. Shields now has wins over Kampmann, Daley, Pyle, Condit, Okami, Sakurai, Lawler, Mayhem, and Henderson.

    Also, you feel that Strikeforce did a terrible job mismanaging him and mispromoting him? Well, after his terrible performance where most think he lost except for the judges, hes getting the next title shot against the GSP vs Kos winner. =)

    As for my reply, read my report. I was there live at UFC 121.

    http://mmapayout.com/2010/10/mmapayout-report-from-ufc-121-lesnar-vs-velasquez/

    BTW, the UFC averages about 3-4K comps, or 30% of their attendance on average when they host a show in Southern California, so I would expect a number around that ballpark.

  6. mmaguru on October 25th, 2010 9:58 AM

    Jose, you make some great points. I’m surprised people still think that losing Jake was some kind of loss for Strikeforce. Rest assured, after last night Coker probably feels like posting a smiley face on his Twitter account (if he has one).

    Let’s be clear, SF has many top guys. Look no further than their HW & LW divisions. They lack depth, not quality fighters. Depth will come in time. UFC was not built in a day, nor will SF.

  7. Diego on October 25th, 2010 4:20 PM

    I think Shields is a great fighter and one that any organization would love to have on their roster. With that said, everything has a price and I think SF just wasn’t willing to match what Shields wanted. I don’t know if the UFC signed him for more or less than what SF was willing to pay, I would guess that it’s more since they have deeper pockets and are desperate to find challengers for both their 185 and 170 champions. But I can also see that Shields may have taken a pay cut in order to try to gain more exposure in the UFC.

    Bottom line – Jake is a much better fighter than he showed on Saturday. That’s the first time in his career that I’ve seen him so fatigued. If he hadn’t been so tired he would have mopped the floor with Kampmann. As it is, he managed to mount him repeatedly and control him on the ground (albeit without doing any damage whatsoever). Impressive for a guy who looked like he was about to pass out from exhaustion.

    If he can manage the weight cut (and he should start working on that right now) he’ll be the same Jake Shields of old – horrendous on the feet, peerless on the ground. GSPs much more rounded skill set combined with his unstoppable take downs should win him the fight, but it will be more interesting than watching him turn Fitch into a human punching bag or out-wrestle Koscheck for a second time.

    Brain,

    Hendo is not sub-par talent and other than running into that right hand in the 1st round, Shields looked great against him.

  8. BrainSmasher on October 25th, 2010 4:28 PM

    Jose

    You seem to be saying two different things. You are now saying “It’s really impossible to make a blanket statement and it depends on the fighter.” With that i agree. But i didnt agree when you some took the other nights fight as proof SF made the right choice by not signing Jake since it proves he was no good. Which one is it? I never felt Jake was any good and his win over Daley was meaningless. I have very little respect for Kampman and Hazelette is a good fighter who has always had a suspect chin. Even when i trained with him back in the day. If i remember correctly he was even KOed in one of his amatuer fights. Daley never did anything significant in the UFC. He benefited as well as Dan Hardy from the UFC being a victim of its own success. THe UFC has the best fighters at 170 bar none. GSP is #1 and Fitch and Kos are number two and have been that way for a very long time. The UFC cnt keep letting Kos and Fitch have title shots because noone wants to see it. So they are forced to manufacture contenders for the belt to get new blood. Thats why Hardy beats journeyman and they hype it up to be more than it really is(Markham come on now!) Once they get a new title fight they then test him vs Condit and he dont pass. They tried to do the same thing with Daley but he didnt work out. I actually expected him to beat Kos. Style waise it was a good fight for him. He was faster on the feet, low to the ground to make it hard to shoot on him and a natural striker which Kos isnt. Now the UFC is priming Condit for the title. In short the 170 division is really weak dispite the big names. After the top 3 there is a big drop off. So its not suprising Jake gets a shot no more than it was when the others got a shot without having to beat any of the top 3.

    But that does nto mean SF made a good decision. Jake was the same fighter the other night as he has always been. And that is better than anything else SF has. We both know the UFC can take anyone and make them look bad or make them look good. Its the nature of the sport. Styles make fights. SF was smart not to get into a bidding war but they are not better off without him. The biggest part of competing with the UFC is perception. Having Jake who beat Dan was big because most fans are not experienced enough to judge skill and talent and take everything at face value. Jake on paper had some leverage over UFC fighters. Which would have been passed to other SF fighters. They dont have that now.

  9. BrainSmasher on October 25th, 2010 4:57 PM

    Diego

    Hendo may not be sub par but he is an aging fighter who is not that good anymore. He has always been one of my favorite fighters. But he has never used his wrestling like he should and it has never looked as good as his caliber of wrestling should have been. He is very wild and sloppy and makes up for it with a chin and heavy hands. But he has lost a lot of his skills and speed with age. In also believe he has bad knees. Either way his decline was evident when Jake put on a wrestling clinic vs him. Jake isnt a very good wrestler at all. But Dan sure isnt no where close to the Olympic level wrestling he had in his prime. The long lay off for TUF had an even bigger effect on him due to his age than it does others.

  10. Diego on October 25th, 2010 7:04 PM

    I’m not sure Hendo is a shot fighter. He definitely had an off night against Shields, which he does from time to time. Still, he was dominated for 20+ minutes, and he’s a guy who Quinton Jackson couldn’t dominate at 205. That to me says Shields is the real deal on the ground. That’s why a fight between Jake and GSP is interesting. Hell, I would like to see him fight A. Silva as well.

    I don’t agree with you when you say Shields is not a good wrestler at all. I think he’s an amazing wrestler, he showed it against Hendo and against Kampmann and numerous other times in his career.

    Shields v. Jacare would have been an awesome fight as well.

  11. Jose Mendoza on October 25th, 2010 7:45 PM

    Brain,

    I think you misunderstood. I never said he wasn’t any good as a fighter. I said it was a good decision by Strikeforce to not try to outbid the UFC or spend a ton of their limited resources in trying to keep him around.

    Also, I think Jake is very good at what he does, he just gets put down a lot because he is not a “well rounded MMA fighter”. I talk more about Jake in my write-up, but Diego pretty much summed it up nicely.

  12. BrainSmasher on October 25th, 2010 11:11 PM

    If i misunderstood i apologize. The part where you said:

    “UFC 121 just proved SF made the right choice.”

    Through me off. I don’t feel His UFC fight had anything to do with SF making the right decision. He fought how i expected him to fight. Even if he ran through Kampman would it really mean he is better or worse than anyone thought? Regardless of what he did at 121 it was smart for SF not to be pulled in a bidding war with a fighter who wasn’t happy with them and not even know if the UFC even wanted Jake or was making any offers. There was talk of Dana playing up the interest in Jake on camera to trick SF into bidding against themselves. With this situation and unknowns its best to throw out a take it or leave it offer and let the chips fall where they may.

  13. BrainSmasher on October 25th, 2010 11:26 PM

    Diego

    Hendo is and has always been a tough guy with power. Thats why he give QJ so much trouble. They are basically the same fighter. But what made Dan successful was his hands which was powerful and fast. The last few years he has found it very hard to land his strikes like he used to. He did land on Bisping but keep in mind how many times Bisping has been hurt by big punches everyone knew was coming. Akiyama hurt him his last fight. Wandy hurt him in their fight. Hell even Ross Pointon rocked him a little at the start of their fight on TUF. He has always been hit by big punchers. But people tend to forget how many strikes hes missed before actually catching Bisping. He dont have the speed he used to which is why he gets takedown now. He dont react fast enough to sprawl or defend the TD.

  14. krr on October 26th, 2010 12:35 AM

    with velazquez win…poor old whitie hahaha

  15. mmaguru on October 27th, 2010 6:35 PM

    Anyway you slice it, Jake is a boring fighter to watch. If we learned anything from his fights on CBS, we learned that Jake is a poor rating draw even to the point of losing viewers. I can understand UFC’s desire to add the top fighters to their roster to build future contenders, and Jake fulfills that roll, however, he will not be a star in any sense of the word. I will stand by what I posted earlier, Coker is sleeping a lot easier after what he witnessed on Saturday night. Sometimes it just makes better business sense to have more exciting fighters on your roster than someone like Jake.

    With respect to Hendo, I have to agree. His best days are behind him.

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