Business Journal: Strikeforce Makes Millions On Mixed Martial Arts

February 8, 2011

Silicon Valley / San Jose Business Journal recently wrote a “Small Busines Spotlight” feature on Strikeforce and Strikeforce CEO Scott Coker that revealed some insight into how much the promotion has grown since they started promoting MMA back in 2006.

Although this article is premium content and needs a pay subscription to read the entire piece, it is probably one of the most insightful write-ups which focus on the business side of Strikeforce. The article can be summed up nicely by this quote:

Scott Coker and San Jose Sharks owner Silicon Valley Sports & Entertainment are on pace to rake in up to $30 million this year from Strikeforce fights at HP Pavilion and other venues.


Payout Perspective:

Here are other random interesting notes that caught my attention in the article and other input from us.

– Strikeforce is on pace to post up to $30 million in revenue for this fiscal year (June 2011), compared to 4 million in 2006, which was their first year of operations.

– There are current plans to release DVD’s from older events and also launch an online catalog within the upcoming quarters, which would add another great revenue stream which they have not fully utilized yet.

– Strikeforce was founded in 1992, back when they used to promote kickboxing events. Amazingly, they only employ 13 workers. Their philosophy has always been to never over extend and exercise great fiscal responsibility, something that has plagued other promotions who were not able to last in the MMA market alongside the UFC.

– Main source of income are ticket sales, sponsorships, and most importantly, television licensing.  Back in 2009, Strikeforce signed a TV deal with Showtime, which MMA insiders said the promotion would make $25 million in licensing fees over the course of the three-year deal, which runs into 2012.  The deal was made after Strikeforce purchased assets from Showtime’s previous MMA partner, ProElite for $3 million, which included roughly 42 fighter contracts and a video library of 20 live events, just to name a few.

– Scott Coker, a black belt in TKD, promoted his fight combat sports event, kickboxing, back in 1985 at the age of 21. His first MMA promoted event took place in March, 2006 in California, just a few months after the sport was legalized in the state.

– The Strikeforce: Shamrock vs Gracie event held in March of 2006 in San Jose had no sponsors and no TV, drew 18,300 fans, which set the North American paid attendance record (which it still holds for the US) and produced about a $1 million dollar gate for the event. They were expecting about 7,500 fans for the event.

– Explosion Entertainment LLC was formed in May of 2008 consiting of SVSE personnel and Scott Coker, which was the first major move which led to many TV, licensing, and sponsorship deals in the following months.

– Strikeforce currently boasts a roster of 125 fighters under contract. Back in 2008, they had 10 fighters under contract.

– Strikeforce main sponsors include Full Tilt Poker, Rockstar Energy Drinks, GoDaddy and EA Sports.

– After signing a deal with Collective Licensing International on April 12, 2010. Since then, Strikeforce has gone through some changes, including a new logo, new merchandising, and a new store website to bring the brand up to date.

19 Responses to “Business Journal: Strikeforce Makes Millions On Mixed Martial Arts”

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  2. Strikeforce is on pace to make $30 MILLION from June 2011 to June 2012 - Sherdog Mixed Martial Arts Forums on February 8th, 2011 5:57 AM

    […] Strikeforce makes millions on mixed martial arts | Silicon Valley / San Jose Business Journal Business Journal: Strikeforce Makes Millions On Mixed Martial Arts : MMAPayout.com: The Business of … […]

  3. Diego on February 8th, 2011 6:21 AM

    Jose,

    Thanks for the info. That’s very interesting and it reiterates a lot of what we’ve been discussing on this site. Namely that SF has it’s fair share of problems in terms of execution, but it’s a company that runs lean and is growing.

    I don’t suppose the article gave any hints about SF’s profit margin? With $30M in revenues and 13 people on staff I can’t imagine that they’re losing money but I’ve learned not to take such things for granted.

    It’s early yet in 2011, but SF’s last two shows have done well in ratings, and they have some good shows on tap for this year. If all goes well they could be in a good place to negotiate a re-up with Showtime in 2012 more along the lines of what boxing promoters like Golden Boy and Top Rank are getting from HBO and Showtime for similar ratings.

  4. Paradoxx on February 8th, 2011 6:30 AM

    Huge Load of Crap.

    List the expenses AND M-1’s cut.

  5. mmaguru on February 8th, 2011 7:18 AM

    Good point Diego. There is a lot of upside if they can keep ratings solid and from time to time have peaks that challenge their potential. I’d suspect they make a bit of profit. Based on looking at the business of the events they have held and comparing gate with salaries, I’ve only seen one event that probably lost money. I know there are additional costs associated with the event, but those should be easily covered by TV revenue and other sources of income. Is it true they only have 13 people working for them? Even at 100K per employee, that’s only 1.3 million in salaries.

  6. Machiel Van on February 8th, 2011 8:01 AM

    Well, since Showtime handles the production, it’s possible they only need 13 people. Of course, they are expanding their number of events each year, so that number will eventually have to increase.

  7. mmaguru on February 8th, 2011 8:06 AM

    Thanks Machiel, that makes a lot of sense.

    Anther thing we should note is venue cost. When they do fight in San Jose and since they are part owned by Silicon Valley Sports & Entertainment I’m sure they get an excellent rates.

  8. Matt C. on February 8th, 2011 8:21 AM

    Great news for Strikeforce. I hope they can keep the same growth rate. Not sure how possible that is on Showtime though. However I must admit I saw something last night that surprised me from Showtime. At least I’m guessing Showtime paid for the commercial I saw last night. Was flipping channels last night and caught a little bit of Kimmel and to my surprise a commercial advertising the Strikeforce fights this weekend came on. It totally caught me off guard and I had to hit info to see what channel I was on. It was ABC. It’s the first time I have ever seen a Strikeforce commercial on a different channel besides Showtime or CBS. I hope to see more surprises like that in the future from Showtime.

    One more thing. I have a hard time buying the 125 fighters under contract. Or if they do have 125 fighters under contract they can’t be doing a very good job of keeping those fighters busy with fights. I mean the numbers just don’t add up to me. They are supposed to hold 20 events this year counting Challengers cards. However knowing that on most cards they fill the bottom half with local fighters that are not under contract that only leaves about 5 fights per card or 10 slots per card for a fighter under contract. 10 slots per card x 20 events = 200 slots per year. With 125 fighters under contract that would average out to less than 2 fights per year for their contracted fighters. That doesn’t sound good to me.

  9. Simco on February 8th, 2011 8:37 AM

    Matt, I assume the 125 number includes non-exclusives.

  10. jv on February 8th, 2011 8:51 AM

    When they did the Fedor v Rogers fight they lost money and Coker said at the time that it was the second show that SF had lost money on. In the Helwani end year interview Coker said that last year was close to their most profitable.

    In late fall last year Coker said they had 10 employees. I know they hired two around Xmas, one for ticket sales and the other an intern for the web site. Coker also spoke last year of driving his people into the ground. So staff is growing but slowly. Of course there is also the question of of what they might be out sourcing. Esther Lin does work for them and would I am guessing be a contractor rather than staff. I could be wrong.

    The link to the teaser part of the story is here.
    http://www.bizjournals.com/sanjose/print-edition/2011/01/28/strikeforce-makes-millions-on-MMA.html

    They describe the headquarters for SF as a converted barn with an Martial Arts Studio in the front. If sounds like low buck office space. That is opposed to Affliction that was described in terms reserved for the Taj Mahal.

    The first DVD came out at the end of last year. They should find a way to advertise it during th tournament as many foreign eyes will be tuning in that may not have seen the fights.

    By the way that people talk about the SF merchandise this year compared to last year it has the feel that it is doing better than before the re-branding. But until we have numbers it is hard to say for sure. If any one has been attending multiple SF shows over the years do they look like they are doing more merchandising business on the concourse level?

  11. Diego on February 8th, 2011 8:54 AM

    Good point on the number of fighters Matt. I’m wondering if that number is inflated with a rotating roster of fighters that they bring in for just one fight.

    It’s also true that one of the criticisms of SF by fighters it that they are not kept busy enough. Cormier has had to travel the world to get enough fights, and when is the last time you saw Christiane Cyborg or Gegard Moussasi (in SF)? Jay Hieron didn’t get the fights he wanted and left and until recently Robbie Lawler was vocal about how he wasn’t getting enough opportunities to fight. Add people like Gina Carano and Overeem who are on contract and have not been busy in the organization and I think that number starts to make sense.

    Certainly SF needs to do a better job of getting their guys in there regularly. Just one of the many things I’m sure they are working on.

  12. Strikeforce On Pace To Make $30 Million In Revenue In Current Fiscal Year on February 8th, 2011 12:21 PM

    […] In the current fiscal year ending this June, the Silicon Valley / San Jose Business Journal (via MMA Payout) reports Strikeforce is on track to earn $30 million. Scott Coker and San Jose Sharks owner Silicon […]

  13. bigfan on February 8th, 2011 12:49 PM

    it looks like they are doing better in the merchandise.they had really crappy things in the beginning.

  14. Jose Mendoza on February 8th, 2011 12:55 PM

    Diego:
    No, as is typical, not profit margins were shared for the private company.

    Matt C.:
    Thanks for sharing. Like I said, Showtime will be fully supporting this event.

    “At least I’m guessing Showtime paid for the commercial I saw last night. Was flipping channels last night and caught a little bit of Kimmel and to my surprise a commercial advertising the Strikeforce fights this weekend came on. It totally caught me off guard and I had to hit info to see what channel I was on. It was ABC. It’s the first time I have ever seen a Strikeforce commercial on a different channel besides Showtime or CBS. I hope to see more surprises like that in the future from Showtime.”

    jv:
    SVSE employers were not included in the 13 mentioned, but they are not Strikeforce employees, just management groups, etc. I know they have interns as well, who are not counted.

    On merchandising, I can tell you that I have seen a good amount of online and at event sales after the re-branding occurred. I will try and see if I can get any type of actual numbers soon so I can hopefully paint a better picture for you guys.

    Diego, Matt:
    Yes, the roster is an obvious issue, as is for the UFC. After the WEC merger, UFC has to cut it down to 200 from 275, and Strikeforce likes to keep theirs around 80-100, though you are right, I am not sure how exact that 125 is since a lot of their contracts are 1 fight contracts and non-exclusive, so they can continue to fight somewhere else until SF needs them.

  15. Jose Mendoza on February 8th, 2011 2:32 PM

    For those asking about profit vs revenue, here is Jonathan Snowden’s take over at SBNation:

    “They are making money. I ran down some of their expenses last year. They are profiting with pretty much every event.”

  16. BrainSmasher on February 8th, 2011 3:39 PM

    “”””- The Strikeforce: Shamrock vs Gracie event held in March of 2006 in San Jose had no sponsors and no TV, drew 18,300 fans, which set the North American paid attendance record (which it still holds for the US) and produced about a $1 million dollar gate for the event. They were expecting about 7,500 fans for the event.””””

    Are you saying SF comped ZERO tickets to this event? I dont buy it. UFC 68 beat this event in total attendance and paid attendance.

  17. Jose Mendoza on February 8th, 2011 4:16 PM

    BrainSmasher:

    Nope, UFC 68 did not beat it in paid attendance, only attendance. They still hold the paid attendance record. They were just beaten in all of NA by the Canada shows.

    UFC 68 had 19,049 in attendance but only 17,358 in paid. Strikeforce Shamrock vs Gracie drew roughly 18,265 fans and paid attendance of 17,465 per Dave Meltzer.

  18. Machiel Van on February 9th, 2011 8:24 AM

    Funny how an MMAPayout.com article lists the Shamrock vs Gracie gate at $308,000 (http://mmapayout.com/blue-book/live-gate-attendance/). No wonder it had the highest paid attendance record, that’s only $17.64 average ticket price! I believe UFC 68 did something to the tune of $2,741,820 (or $157.96 average ticket price). Really shows you the significance of these attendance “records.” 9 times more expensive tickets with only 107 less tickets sold.

  19. Jose Mendoza on February 9th, 2011 11:16 AM

    MV:

    Blue Book already updated with latest numbers, will be posted up ASAP. Yes, that 308k figure was incorrect.

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