HDNet’s Inside MMA Extensive Coverage of UFC-Strikeforce Purchase, Shamrock Comments on Sale

March 22, 2011

Inside MMA worked around the clock to provide extensive coverage regarding Zuffa’s purchase of Strikeforce, which was featured Friday night on HDNet. The coverage included interviews with Dana White, Scott Coker, and the perspective of various fighters affected by the transaction.

Here are a few clips HDNet has released from the coverage, though I would highly recommend viewing the full episode on HDNet to see the great work done.

 

Frank Shamrock also commented on the deal to MMAFighting’s Ariel Helwani, and had very good insight on the situation:

“I can’t say I saw it coming but I know the demands of Strikeforce were high and I knew the financial partners were strained and weren’t interested in the big risks,” Shamrock said. “I knew change was coming, I didn’t know we were going to change that much.”

According to Shamrock, Coker spent a lot of money to compete in the marketplace. For SVSE, Strikeforce became too much of a risk.

“They got tired of writing big checks and not seeing the big return,” he said. “For them [the older established sports model is] the kind of business they wanted to be in. They didn’t want to be in the visionary, high-risk startup kind of MMA business.”

 

Shamrock also commented on Coker’s feelings towards selling the promotion he built from the ground up for years:

Shamrock doesn’t think Coker wanted Strikeforce sold. Shamrock described Strikeforce as Coker’s “baby” and it was Coker’s dream to promote the biggest fights in the world and to turn Strikeforce into a billion dollar company.

“I think it was too early for Scott. I don’t think he wanted to get out this early,” Shamrock said. “Scott was in it for the long haul. He probably had another five years, but time and business is everything. This was the UFC’s time to make a move and they did.”

 

Payout Perspective:

Inside MMA did a great job covering the Strikeforce purchase, getting exclusive interviews with Dana White, Scott Coker, and several fighter who were affected by the move.  Here are some key notes from the interviews:

– Coker mentions that Silicon Valley Sports & Entertainment wanted to focus on bringing another sports franchise to San Jose, so he had to look for other business partners because he wanted to stay in MMA…  Payout Perspective: It is said that SVSE is bidding to bring an NBA team to San Jose and the HP Pavilion in addition to growing the San Jose Sharks NHL franchise.

– Coker believes that Zuffa will continue the Strikeforce brand because the brand is “worthy of continuing forward and growing”, believes it has value.

– Coker tells a story about bringing his 1 marketing person to a meeting with UFC’s marketing team of about 25.

– Coker addressed the issue of M-1 and Fedor, saying that Fedor was definitely an expensive item but added value to Strikeforce and the brand.  Expects Fedor to be back fighting for Strikeforce in late July or mid August.

– Believes that getting back on CBS is still a possibility and that he will do what he can to get the UFC in Japan with his connections and help bridge the gap.

– When asked about how Scott felt about the sale of Strikeforce, he said “It’s a reality that’s real.”

Jon Jones to appear on The Tonight Show Thursday

March 21, 2011

It was announced via Dana White’s twitter account that Jon Jones will be a guest on The Tonight Show with Jay Leno. It will mark the first time that a UFC star will appear on the show.

Although Rampage Jackson and Jacob Volkmann (H/t Mike Chiapetta) may have appeared on the show in the past, Jackson promoted The A-Team and Volkmann was mocked for his Obama comments. Jones will be the first to appear due to winning a UFC Championship. And perhaps he’ll talk about his crime fighting skills.

Payout Perspective:

If you didn’t think Jones could be a mainstream star, think again. This will be great PR for the UFC. Jones should do well and give viewers another perspective on people that fight in a cage. I assume he’ll be the third guest out so he won’t have too much time to impress. Here’s an interesting tidbit: Both Jones and Leno have main evented PPVs. In 1998, Leno tag-teamed with Diamond Dalas Page against Hulk Hogan and Eric Bischoff in a WCW PPV.

Should we look into the fact that Jones is going to fly across country to appear on NBC rather than make the short trip to New York City to appear on Letterman and CBS as a sign of a potential future partnership between NBC and the UFC. Possibly. Regardless, the appearance is a big step for the UFC to go mainstream.

Strikeforce San Diego: Diaz vs Daley Event Posters, Promotion & Card

March 21, 2011

After the shocking news of the Strikeforce purchase by Zuffa, business will continue as usual for San Jose based promotion, as they plan their next four events (April 1st Challengers in Stockton, April 9th in San Diego, May Challengers, & June 18 Heavyweight Grand Prix in Dallas) under new management.

Diaz vs Daley Poster:

 

Melendez vs Kawajiri Poster:

SHOWTIME BOUTS:
– Nick Diaz (24-7) vs. Paul “Semtex” Daley (27-9) **WW Title Bout**
– Gilbert Melendez (19-2) vs. Tatsuya “Crusher” Kawajiri (27-6) **LW Title Bout**
– Gegard Mousasi (30-3) vs. Mike Kyle (18-8)
– Shinya Aoki (26-5) vs. Lyle Beerbohm (16-1)

UNDERCARD PRELIMS:
– Hiroyuki Takaya (15-8) vs. Robert Peralta (13-3)
– Saad Awad (8-3) vs. Joe Duarte (5-2)
– Casey Ryan (1-0) vs. Paul Song (2-0)
– Edgar Cardenas (3-0) vs. Rolando Perez (5-4)

RUMORED PRELIM PARTICIPANTS:
– Virgil Zwicker (9-2)
– A.J. Matthews (4-0)
– Herman Terrado (5-2)
– Brett Albee (3-0)

 

Strikeforce Diaz vs Daley Promotion on UFC 128 PPV:

Strikeforce Diaz vs Daley Showtime Promo:

 

Payout Perspective:

Although, “business as usual” has been stressed since the purchase was made, MMAPayout has learned that Zuffa will be making some changes behind the scenes in the upcoming events including security, credentials, and promotion.  The Strikeforce April 9th event from San Diego headlined by Nick Diaz and Paul Daley was advertised during the “upcoming events” portion of UFC 128, with UFC announcer Mike Goldberg telling UFC fans to buy tickets for the event at Ticketmaster while displaying Showtime as the broadcast partner for the event. Oddly enough, it seems that the UFC will ignore Strikeforce Challenger events since there was no mention of the April 1st event taking place in Stockton in just a few days.

It will be interesting to see what type of impact the recent promotion by the UFC will have on the event. In terms of promotion by Strikeforce,  I really like the look and feel of their posters of the event, which have garnered some very positive feedback by MMA fans.  Showcasing Diaz vs Daley on one poster and Melendez vs Kawajiri on another playing up the nation vs nation theme is a nice change from the typical Strikeforce poster which typically only focuses on the guys that move the needle.

Other changes that have occurred since the purchase include Strikeforce now following the Unified Rules and allowing elbows to a grounded opponent, as well as eliminating the use of amateur fighters on the prelims.

GSP-Shields featured in “Primetime” series

March 20, 2011

MMA Weekly reports that the UFC will run a GSP-Jake Shields “Primetime” series in leading up to their main event at UFC 129 in Toronto.

Via MMA Weekly:

“Yeah we’re going to do a Primetime on those two,” White confirmed to MMAWeekly.com.   “So everything you didn’t know about Georges St-Pierre from the other 7 Primetimes, you’ll learn in this one.”

 

The other possibility that may happen during the Primetime series are Shields past fights from organizations like Elite XC and Strikeforce.  See with the recent purchase of the San Jose based promotion, the UFC now retains their entire catalog of videos as well, which includes some of Shields biggest wins including victories over Dan Henderson, Jason “Mayhem” Miller, and Paul Daley.

Payout Perspective:

With the Primetime series its unlikely that we’d see an “In the Moment: Jake Shields” pre-event preview like Jon Jones. The fact that GSP is favored to win the fight is another reason an ITM preview would not be produced. It will be interesting to see what angle the series can play that has not been seen with GSP in this series. The series was expected as the UFC is bringing out all the bells and whistles for this huge event.

UFC all over NYC pre-UFC 128

March 19, 2011

The UFC is taking advantage of UFC 128 by doing a lot of hype for the event in NYC.

Here are several examples:

Chuck Liddell joining NYC firefighters to march in the St. Patrick Day’s Parade. Liddell even dyed his beard green for the event.  (H/t Cagewriter)

Brandon Vera and Dominick Cruz talking to school kids on Friday. The school kids seemed excited to see them.  A NY Assemblyman was there to talk about legalizing MMA in NY (a little odd as pointed out by Ariel Helwani). Interesting that Vera is back in the good graces of the UFC after being let go earlier this year.

Dana White and Lorenzo Fertitta appeared on NY1 Online’s “Inside City Hall” program to discuss legalizing MMA in NY.

Of course, Jon Jones appeared on local NY tv to do the obligatory choke out. The interview shows why everyone wants Jones to be a face for the UFC. Smooth, articulate and he was able to get out all talking points without straining. When you watch the video, there is a guy that playfully throws a chair at Jones. If somehow, Jones would be injured by it, there would have been hell to pay.

UFC Fighter Jon ‘Bones’ Jones: MyFoxNY.com

Speaking of the Rear Naked Choke, Frankie Edgar was choked out by a local news reporter as a lead-in for its UFC story. (H/t Cage Potato via Dana Whites vlog)

We will have more UFC happenings in Payout Perspective after the event. Enjoy the Fights!

Jones’ “In the Moment” scores 555,000 viewers

March 18, 2011

MMA Junkie reports that Jon Jones’ pre-UFC 128 special, “In the Moment” garnered 555,000 viewers. Jones’ half-hour feature outscored the regular countdown show which drew 406,000 viewers.

The success of the special may mean that “In the Moment” specials may return for future events.

Payout Perspective:

The strong ratings show the popularity of Jones. Even more impressive than receiving better ratings than the Countdown show was the fact that the show ran opposite the tail end of NCAA tournament basketball games. Similar to the UFC Primetime series, the show went behind-the-scenes of Jones’ training camp. The one difference was that it gave Jones’ point of view. Although there is speculation about doing future specials like this, you’d have to find a fighter as articulate and personable as Jones to feature.

Zuffa v. Bellator/Pavia Litigation: Bellator Asserts Claim For Defamation

March 18, 2011

Zuffa v. Bellator/Pavia Litigation: Bellator Asserts Claim Against Julian Gregorio for Defamation & Some Theory of Misappropriation Based on Alleged Leak to Zuffa

Following up on my coverage of Zuffa’s lawsuit against Bellator and Pavia — — a post with earlier links is here and here is my most recent post on the Court’s denial of Bellator’s motion to dismiss for lack of personal jurisdiction — on March 17, 2011, Bellator filed its answer to Zuffa’s complaint and asserted a third-party claim, i.e. a claim against a non-party, against Julian Gregorio who is allegedly a citizen of the State of California and allegedly may have been a former employee of MMA Associates, of which Ken Pavia is the alleged “Principal.”

At the outset, in its third-party complaint Bellator describes why its CEO, Bjorn Rebney, “requested from Pavia certain documents used by the UFC in connection with fighters.”

Specifically, Bellator alleges as follows:

In the summer of 2010 Bjorn Rebney determined to review the sufficiency of documents used by Bellator.  As part of that process he requested from Pavia certain documents used by the UFC in connection with fighters. At no time did Rebney request any document anticipated to contain trade secrets or information proprietary to Zuffa, LLC. Mr. Pavia requested confidentiality due to, as he put it, fear of retaliation by Zuffa for cooperating with Bellator. In any case, communications between the parties would be presumptively confidential.  Zuffa has a reputation for ruthlessly attempting to block competitors in the MMA field.

(emphasis added).

Bellator next alleges that Pavia did send the documents but that it never used the documents:

Pavia did, on a confidential basis, send certain documents to Bellator. However, those documents were not confidential and contained no proprietary information belonging to Zuffa.  The documents in question were sent on a confidential basis but were not confidential documents.  The format of the documents in question was changed from a PDF format to a Word format, but no Bellator representative substantively reviewed those documents as of the time of filing of the Complaint to which this Third Party Complaint is directed.  The documents supplied by MMA Associates were never utilized by Bellator in any way and in fact were not substantively reviewed by Bellator’s staff or by Mr. Rebney.

With respect to Mr. Gregorio, Bellator alleges (upon information and belief) that he was an employee of MMA Associates and that he allegedly “took privileged communications between the CEO of Bellator and the President of MMA Associates and, with the knowledge that he was not entitled to do so, transmitted same to representatives of Zuffa, LLC.”

Further, Bellator alleges upon information and belief that:

Gregorio informed representatives of Zuffa that Pavia and Bellator were conspiring to misappropriate Zuffa’s confidential information when this was untrue. This information was given either with knowing falsity or with reckless disregard of the truth.  Gregorio informed representatives of Zuffa that Bellator misappropriated trade secrets of Zuffa. This information was false and was either known to be false by Gregorio or was given in reckless disregard of the truth.

Bellator asserts claims against Gregorio for defamation and some theory of alleged violation of Bellator’s right to privacy and confidentiality.

Quite frankly, I don’t understand the second claim — perhaps it is something specific to California or Nevada (or maybe Bellator is asserting a claim for misappropriation), but it is not really spelled out.

With respect to confidentiality, the apparent (to me at least) alleged basis for some kind of confidentiality or privilege is that “Bjorn Rebney, the CEO of Bellator, is an attorney-at-law[,] Ken Pavia, the principal of MMA Associates, is a law school graduate and, at the time of the matter complained of, was believed in good faith by Rebney to be an attorney-at-law[,] and MMA Agents has on its staff at least one attorney-at-law.”There is, of course, an attorney client privilege, but I don’t see how it attaches under these alleged facts.  Certainly no explanation is provided.

Even so, I don’t understand why any communication between Rebney and Pavia would be privileged just because both went to law school.

While I know nothing about the third-party defendant, if he is in fact a resident of California (as alleged) my prediction is that we may see another jurisdictional motion.

Fight Lawyer

***

Justin Klein is a partner of the law firm Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry. He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website. He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training. Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

406,000 watch debut of Countdown to UFC 128

March 17, 2011

MMA Junkie reports that 406,000 viewers tuned in to watch “Countdown to UFC 128” on SpikeTV this past Tuesday.

The show focused on the main event featuring Mauricio “Shogun” Rua versus Jon Jones. Not to be forgotten, Urijah Faber makes his UFC debut Saturday night versus Eddie Wineland.

Payout Perspective:

In case you did not get enough of Jon Jones, he was featured in his own pre-event preview on Thursday. In addition to the Countdown show, we should be ready for the beginning of the Jones era Saturday night. However, if Rua connects with one of his leg kicks, Jones could be in trouble. With all of the main event hype, one might forget that the face of the WEC, Urijah Faber, makes his debut. Although overshadowed on this card, the UFC will be able to market Faber and we can expect him to be one of the only fighters in the lighter divisions that can main event a card.

Bellator 36 ratings up from MTV2 debut

March 16, 2011

MMA Junkie reports that Bellator 36 on MTV2 had 230,000 viewers this past Saturday with the immediate replay receiving more viewers at 241,000.

Via MMA Junkie:

The live airing earned a 16 percent increase from this season’s debut episode, and the immediate replay earned an astounding 90 percent increase over the previous week’s replay broadcast.

Compared to the previous week’s live airing and immediate replay, Bellator 36 scored a 56 percent ratings increase among men ages 18 to 34, a staggering 119 increase with men ages 25 to 34, and an impressive 45 percent increase in total average audience.

Payout Perspective:

We would be remiss without mentioning the strong ratings for Bellator in its second showing on MTV2. It went unopposed last Saturday and MMA fans tuned in. This is a good sign for the company and its partnership with MTV2. It will be interesting to see how the second biggest MMA organization will do against UFC-Strikeforce. The numbers are promising although this week will likely drop due to a combination of UFC 128 and the NCAA Tournament.

The higher ratings for the immediate replay may be in large part due to the west coast viewers.

MMA Investors Searching for Viable Competitor, Is It Worth the Risk?

March 16, 2011

This weekend’s Zuffa-Strikeforce purchase announcement shook up the MMA landscape in such a way, that many fans, fighters, and sponsors were left in limbo as to what the future will hold for the sport and business of MMA.  The announcement also created a huge void for a number 2 promotion in the market, an opportunity which some MMA investors are already analyzing and moving some money around.

 

Why would investors be interested in MMA at this point after Strikeforce was just purchased by Zuffa? Well, lets take a look at the events that lead to Strikeforce’s sale to understand why.

Showtime, which was a part owner of ProElite, spent a good amount of resources and budget to build up and kick-off MMA on the network. They were fairly successful in making stars within the promotion, such as Kimbo Slice, Gina Carano, Robbie Lawler and Nick Diaz, though they spent way too much money and accumulated debt of around $55 million, which lead the company to to almost file for bankruptcy, but instead chose to sell off it’s assets to recuperate some of the losses for Showtime.

Strikeforce and CEO Scott Coker were in the kickboxing promotion business all the way up to 2006, when they promoted their first MMA event in California, which was hugely successful and still holds the U.S. paid attendance record for MMA.  Before their first MMA event, they had a strong regional fanbase and following in San Jose.  SVSE along with Scott Coker struck a deal and created a partnership which slowly built up the company to the point where they were well positioned enough that when the Showtime was looking for a new MMA promoter, they were able to strike a deal with Showtime and Pro Elite to acquire their assets. Sherdog had the details back in February 12, 2009.

Strikeforce parent company Explosion Entertainment LLC purchased selected assets of Pro Elite Inc. for $3 million, according to a United States Securities and Exchange Commission report released Wednesday.

As part of the multi-million dollar purchase announced last week, Strikeforce acquired valuable fighter contracts, media assets that include the ProElite fight library and inventories that include all EliteXC-related DVDs. Various promotional and marketing materials were also part of the deal.

The asset purchase also lead Strikeforce to signing a TV deal with Showtime/CBS, a deal which was estimated to pay Strikeforce $25 million dollars in license fees over the course of the three-year deal.

In October of 2009, the Stratus Media Group acquired a 95% stake in ProElite for $2 million after the companyalmost filed for bankruptcy earlier in the year.  Although they sold most of their valuable assets to Strikeforce, they still maintained rights to the brand name ProElite (ProElite.com), Cage Rage, Spirit MC, and most importantly the EliteXC brand. The ProElite group, who put a bid for Strikeforce back in December of 2010, was composed of some original ProElite members such as Doug De Luca, William Kelly, Glenn Golenberg, along witch newly appointed Chairman of the board Paul Feller from the Stratus Media group.  It was said they raised enough capital to place a bid for $40 million dollars, though it wasn’t enough and was eventually outbid by Zuffa.

The other bidder for Strikeforce was from a group headed by Shelly Finkel, who is Mike Tyson’s manager and has been one of the most powerful managers in boxing for the past 30-plus years.  Finkel officially announced that he was leaving the sport of boxing back in June of 2010, citing politics of the sport as the reason he was driven away to where he got his start, music promotion under Empire Sports and Entertainment.  Although Finkel left boxing, he continued to act as an advisor to heavyweight champions Wladimir Klitschko and Vitali Klitschko, with whom he has worked for several years.  Empire Sports and Entertainment’s mission was said to become a leading media and entertainment company known for promoting the best events in concerts, music festivals, pay-per-view specials and sporting events around the world.

If we look back at some of those figures, it took an investment of $3 million dollars from SVSE and Explosion entertainment back in February of 2009 to cash out on March of 2011, span of 2 years, to be bought by Zuffa for above $40 million dollars. Being the #2 promotion or the “next competitor to the UFC” paid off for Strikeforce, and I think many other promotion are looking at their model to try and accomplish the same.

On Monday, just a couple of days after the Zuffa-Strikeforce purchase was announced, ProElite stock (one of the bidders for Strikeforce) opened at less than $0.01/share and closed at a 52 week high of $0.06 /share with a volume of just under 1 million. The average volume over the past 3 months had been around 14,000.  On Tuesday (the following day March 15, 2011), ProElite stock closed at $0.19 /share and had a day high of $0.24 /share.  What the numbers are saying is that investors and MMA fans have already started looking for a viable competitor for the UFC in the MMA market, and as Strikeforce proved in the span of 2 years, money can still be made in the market without being the #1 promotion as long as you have a platform for your product (Showtime) and a unique selling point you offer to fans.

If Zuffa ends up deciding that they do not want female MMA in the UFC, another promotion could build a solid stable of female fighters and scoop whatever talent is left out there not under the UFC umbrella (see Bellator) to start the process all over again.  FX, Fuel TV, G4, FSN, and other networks have shown recent interest in MMA programming, and all it takes is the right deal to present itself to a promotion for a shot at the #2 spot.  With that being said, the risk in the market has grown exponentially high this time around, as UFC has taken a dominant share of the market and has the majority of the top fighters in MMA.

Strikeforce is said to have roughly 140 fighters under contract in addition to UFC’s current 260 fighters, which is a whopping 400 fighters under the Zuffa banner at the moment.  It is expected that a good portion of those fighters will be cut and out of the UFC by 2012, since Zuffa has said before that they feel comfortable with a roster of around 200-220 fighters.  The UFC will also have to sign many foreign fighters as they keep reaching new international markets (trying to find the GSP of each country they visit), which only guarantees that many domestic fighters will be getting cut in the next 12 months.  This bodes well for the promotions such as Bellator, MFC, Shark Fights, Titan FC, & Tachi Palace Fights in the States,  BAMMA, Cage Wars, & Cage Warriors in the UK, and KSW in Poland to name a few. It also bodes well for a station like HDNet who has TV contracts with MFC, Shark Fights, and Titan FC. These promotions have shown a great deal of potential in the last couple of years and the talent pool quality of MMA fighters should be increasing in the next year.  One of those could make the next step up or it could be an investment group, like the ones behind ProElite to assume the #2 spot in the market. It will definitely be a risk for any investor to jump into the current state of the market, but fans and investors seem eager to give it another go.

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