Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal

March 12, 2011

This news will shakeup the MMA landscape as we know it and is the biggest acquisition for Zuffa since the takeover of the Japanese promotion PRIDE in 2007.  Josh Gross of ESPN broke the news about the deal earlier today.

Zuffa LLC, owner and operator of the Ultimate Fighting Championship, has agreed in principle to purchase Strikeforce, essentially its lone remaining competitor in the mixed martial arts market, multiple sources with knowledge of the deal confirmed to ESPN.com.

An announcement could come as soon as Monday.

MMAFighting’s Ariel Helwani has the scoop from the source himself:


Payout Perspective:

MMAPayout learned about the possibility a few weeks back when we heard from sources of the possible deal, though we were unable to independently confirm it. It was said that Zuffa was trying to raise capital for something big behind the scenes, though the reason was not made clear.  It appears that they were speaking to Flash Entertainment (partners from Abu Dhabi) about raising capital for the funding.

MMAPayout has also learned that the official announcement was supposed to be made Monday, and that more details will be released then, but as for now, everyone at Strikeforce is being told that business will stay as usual.  Expect extra promotion and advertisement from the UFC regarding upcoming Strikeforce events.

 

UPDATE:

1) From Meltzer: “There were two entities interest in purchasing Strikeforce but UFC made the stronger money offer.  The impression I was given is that UFC was aware of the first deal in place and in either late November or early December decided they were going to get it.  Negotiations have gone on since that time.”

2) From MMAJunkie: “ProElite Inc., the once-mighty fight-promotion company purchased for pennies on the dollar in February 2010 by Stratus Media Group Inc., had been in active negotiations with the recently acquired Strikeforce and had met face to face with CEO Scott Coker, sources close to the negotiations today told MMAjunkie.com (www.mmajunkie.com).”

3) From Josh Gross of ESPN: “Among those potential investors was ProElite, Inc., which was told it could buy out Coker’s Silicon Valley partners for $20 million and another $20 million investment in capital, a source involved in the negotiations said. ProElite is a publicly traded company that promoted MMA on Showtime under the EliteXC banner until it sold its assets to Strikeforce and its partner Silicon Valley in February 2009. That 2009 sale created the opportunity for Strikeforce to strike a deal with Showtime.

Sources confirmed Coker, the current Strikeforce CEO, attempted to wrest control of the brand, but in the end was unsuccessful. Instead, an agreement to sell Strikeforce’s licensing rights, fighter contracts and video library closed with the UFC on Thursday or Friday.”

4) From Josh Gross of ESPN: “Hearing Zuffa lawyers will be in San Jose on Monday…[Strikeforce/Showtime TV deal] I’m told it’s done Feb/March 2012…From several sources: SF was running a debt. Silicon & Coker butted heads over direction. Coker wanted to build. SVSE didn’t…UFC is the only PPV game in town. UFC’s interest in SF perked up when talk of doing PPV started. PPV is UFC biz model.”

5) From Loretta Hunt of LA Times: “According to my source, Zuffa made multiple offers beginning around December, so this lasted a few months… According to a strong source, UFC purchased Strikeforce for about $40 million, which included some debt repayment”

34 Responses to “Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal”

  1. jv on March 12th, 2011 3:22 PM

    I can’t afford a sport that is only on PPV. SHO won’t put any effort into this any more, the UFC will be poaching the best talent that comes available and letting what is left of SF whither until they can kill it. Then Zuffa will have to go through another mass cull of fighters.

    With a massive glut of fighters on the market it will be easier for the smaller guys to find fighters but with out any major organizations left out side of Zuffa I can’t see how you put a big enough ecosystem together to support an organization out side of Zuffa who’s goal will be any thing other than give up any talent that is worth going to see to Zuffa.

    If I can only afford to watch the occasional really shity UFC card with no name fighters that the UFC deems to put on a non PPV card then I will likely just loose interest in MMA and go back to watching movies instead. Sure Zuffa managed to dry up another outlet to quality affordable MMA but that didn’t make them any more money from me. I’ll say it again no sport is going mainstream on PPV.

    Good luck to the fighters who will be the ones that will really take the brunt of the hit from this.

  2. jv on March 12th, 2011 3:33 PM

    Clinch Gear is now F’d, Rockstar will have to find a new sport for their sponsorship money. Might I suggest “It’s Showtime” to both.

  3. aubievegas on March 12th, 2011 4:10 PM

    Well this explains the lack of counter programming from Zuffa lately.

  4. Ron Rio on March 12th, 2011 5:21 PM

    JV you are absolutely right. This will make shows like the MFC , Chicago Cagefighting Championships and Titan a lot more appealing to the quality MMA fighters that are now going to have a tougher time getting to the big show. I think personally those events are great for the fans and without those like the minor leagues in other sports their wouldnt be a source that the UFC to see potential stars to bring into their organization. If Rockstar is looking for something to sponsor I would suggest the Chicago cagefighting promotion who had SRO in their March 5th event.

  5. Matt C. on March 12th, 2011 5:22 PM

    You mad jv? Don’t be this is a great day for MMA.

  6. John S. on March 12th, 2011 6:34 PM

    Any inkling on how much Zuffa paid? And I knew Silicon Valley Sports and Entertainment wanted to sell, but has Coker been looking to cash out for awhile as well? Was Strikeforce losing money, had too great of debt load, or did they want to get out for other reasons?

    So many questions.

  7. Jason Cruz on March 12th, 2011 6:51 PM

    Excellent write up Jose. I had to check the calendar to make sure today wasn’t April 1st. Its been interesting watching this story evolve. I just don’t think it can be business as usual. There has to be acrimony between the two organizations.

    Some interesting questions remain:
    -Will the HW GP go forward?
    -Sounded like Barnett is gone after his existing contract is done. Will this be the same for Dailey and others not in favor with Dana?
    -What happens to the SF front office? I just don’t think they can stay on long-term.
    -Is this good for Bellator, and other smaller organizations?
    -Does this remind anyone else of WWE buying WCW?

    MMA Fighting has now broken the UFC-WEC merger and the UFC-SF purchase. Where would the UFC be if the Sporting News folded it (slight sarcasm)

  8. Brain Smasher on March 12th, 2011 7:09 PM

    A great day for MMA. A house divided can not stand. I have been in favor of one major promotion since the beginning. It is the only way the sport can grow. The UFC is already at the max of events. SF fighters will only add to the quality of fighters on each card. Much better for the fan. But now the sport isnt held back with inside fighting between promotions. MMA promotions were to bust cutting each other down. Now the focus is taking the sport to the next level without the worry of piggybacking orgs trying to sneek up behind and steal some profits. The sport just couldnt grow with multiple large promotions throwing out different rules, different champs, while discrediting the other promotion and fighters.

    Now cant wait to see where Fedor hides, and the reaction of Barnett and Daley when once again they are faced with the consequence of their actions.

  9. juan on March 12th, 2011 7:55 PM

    Smart move by Coker. The HW tournament will probably be the high water mark for SF. He cashed out at the peak.

    In a couple years after SF gets folded into UFC, I’m sure another promoter will try the same tactic. If you get a good stable of heavyweights the fans will follow. Fans love the big boys.

  10. Jose Mendoza on March 13th, 2011 2:29 AM

    Jason:

    What no one realizes here is that Showtime has a lot of big decisions to make very soon. It could impact a lot of what goes on in the near future. They could terminate the Strikeforce deal and start another promotion ASAP while keeping a few fighters, or they can be happy with the UFC and start showing more content, and potentially the UFC on Sho/CBS (although both parties are not very fond of each other)?

    A good amount of scenarios right now, though some seem more likely than others.

  11. goper on March 13th, 2011 6:18 AM

    one sport,one owner…thats really a shame…MMA is dead!!

  12. jv on March 13th, 2011 7:32 AM

    To me it would seem bizarre for SHO to just jump into bed with another promoter. That plan has blown up in their face twice and is almost certain to happen again unless SHO has a controlling interest. What we are hearing from Arum and King is that SHO and HBO are trying to muscle the promoters out of boxing. If that is the case I don’t know why they wouldn’t take the same approach to MMA.

    Of course the burning question is whether SHO wants to stay in the business of MMA. They have their hands full with boxing right now. But that could change very quickly.

  13. Matt C. on March 13th, 2011 7:45 AM

    Does this move increase the speculation of a UFC Channel coming to fruition in the next 2 years?

    Even if the UFC doesn’t add more events per year over the next 2 years they will be running 30 to 32 events. Strikeforce will be running around 20. That adds up to right at 50 to 52 events. So the UFC will be able to schedule a show every week of the year.

    Is that enough to venture into having their own UFC Channel and showing all fights on there or will it still make more sense to find a partners that pay for their programming?

  14. Andy on March 13th, 2011 8:28 AM

    This is the end of mma…

  15. jv on March 13th, 2011 9:13 AM

    The thing about a channel is that you need to be generating new content on a large scale. Buying up every library around only carries you for so long before you are running it for the 7,000,000th time.

    Now that we have seen in the Gross article that SHO could have bought SVSE’s share of SF for $20M and a $20M cash infusion I have to think that if SHO was going to stay in the business of MMA they would have opened the wallet. Even if they bought the SVSE share only temporarily before they sold it to some one else in order to ensure that SF would remain a viable partner. To SHO that is chump change. Coker wanted to hang onto SF and despite all the shite and abuse he takes from some quarters he is still one of the best promoters and has worked in the TV business. He would be the guy SHO would want to work with.

    I can’t see Coker wanting to be a lap dog over at Zuffa like Harris but who knows what kind of non-compete he had to sign in order for the deal to close. But then again it sounds like he didn’t want it to close so maybe he didn’t sign one.

  16. jv on March 13th, 2011 9:43 AM

    SHO was desperately pushing to get SF doing PPV. If they have to start from scratch that goal is a very, very long ways off with Zuffa controlling all of the top fighters now. At least with SF they stood a fighting chance.

  17. Asyouwere on March 13th, 2011 11:51 AM

    This appears to be a very defensive acquisition by Zuffa, more about maintaining existing US earnings than top line growth. The UFC does not need any more fighters (a quick review of anybody’s top 10 for each weight division attests to that) and having two brands in the same market didn’t work as demonstrated by WEC.

    I have always thought the greatest threat to Zuffa’s model is someone supplying a similar product that is non PPV and Strikeforce was getting closer to achieving that. As Strikeforce developed fans would have increasingly questioned why they needed to spend $50 on an UFC PPV when Strikeforce, through Showtime, was offering something similar but much cheaper and occasionally more innovative (HW tournament, women’s MMA, co-promotion etc). I also do not believe the acquisition will allow the UFC to have materially more shows without cannibalising existing PPV sales (unless they do more international ones which could happen independent of buying Strikeforce) given the current time the UFC takes to promote its major shows. I guess it really depends how much growth there is left in the US MMA market.

  18. Bill Hardiek on March 13th, 2011 1:17 PM

    I had a few questions. Will Strikeforce start using elbows on the ground? Could this point to a Fedor vs Randy bout? Will Strikeforce fighters still be able to fight outside of Strikeforce? Does this point to Coker working for Zuffa long term?

  19. Diego on March 13th, 2011 1:25 PM

    This will be bad for fighters in the long run, and that means bad for the sport. The fall of Pride did not help the sport despite what some people say, and now the end of Strikeforce (or soon to be end depending on the terms of the deal) is basically the same thing all over again.

    No matter what SF haters say, Strikeforce is not a place where fighters like Barnett and Fedor went to “hide”. It was a place where fighters who didn’t want to kiss Dana’s ass went to fight. Where fighters who didn’t feel they were geting a good deal from Zuffa went to get more money (Werdum). And where fighters who did not want their entire lives controlled and had aspirations outside of MMA (Overeem) went to pursue careers on their own terms. Now there are no options except the UFC. You can expect fighter salaries to drop, sponsorships to become less lucrative (as the UFC takes a bigger cut) and likeness agreements (like the one John Fitch tried so hard to avoid) to become more restrictive. Shame.

    But I guess it proves that Coker was doing something right – again despite what SF haters say. The UFC would not be doing this is they did not sense a real threat. I hope Coker got a good deal. He deserves all the credit for Strikeforce’s success – just like he got all the blame for their failures.

    I give SF two years – until the end of the Showtime agreement – before the brand is folded into the UFC WEC-style.

    Dana White is to MMA what Carlos Slim is to Telecoms in Mexico. To the detriment of the industry and the betterment of Zuffa’s bottom line. Can fighter-lockouts be far away?

  20. Diego on March 13th, 2011 1:26 PM

    “A house divided can not stand. ”

    It’s not a house divided, it’s a competitive industry. A completely different thing. If you don’t believe me go to Mexico and make a phone call.

  21. TheRage on March 13th, 2011 1:27 PM

    The UFC and Showtime, despite their previous acrimony, have incentive to build a more long term relationship than the existing Strikeforce deal. Showtime has been given a taste of the potential of MMA with the ratings number pulled by Fedor-Silva. With the UFC’s promotional pull behind events, those numbers would only grow. The UFC meanwhile, wants to expand its international events while also showing those events on UFC television. The problem is that it is not economically viable to hold big events overseas then put them on basic cable. PPVs, on the other hand, see their buy-rates suffer when promotion has to focus on an overseas event. Premium cable provide a viable middle ground–a smaller barrier to entry for consumers versus PPV, but more value generated from each viewer than regular cable. Also, it makes little sense for the UFC to buy SF, then leave Showtime, allowing another SF level promotion to spring up on that network.

    The big issue is control of production–both companies want near total control. The remainder of the SF deal gives the two sides an opportunity to experiment with a method of production suitable to both parties. With stable cable deals elsewhere, the UFC may be more willing to cede production control to Showtime for a small number of events. If the UFC/Showtime can find a model that works, than the possibilities are opened up for network television. CBS would have more incentive to pay for MMA than other networks in order to prop up Showtime content, and they would also use whatever production model Showtime had worked out. This solves the big issues preventing the UFC from getting on network television–control of production and money.

    Hopefully, the UFC sees this opportunity for what it is and make the most of it. It is also a great time to dip their toes in WMMA. More champions, male or female, means more headliners/co-headliners.

  22. Diego on March 13th, 2011 1:57 PM

    Correction, I give SF one year – I thought the Showtime deal was longer.

  23. Jose Mendoza on March 13th, 2011 2:18 PM

    For those asking, the Strikeforce Showtime deal ends Feb/March 2012, so depending on Showtime, there might be only a handful of shows left. Will they even finish the HW GP?

    Another key point, M-1 has a TV contract with Showtime, also, Fedor and M-1’s deal is also with Showtime.

    More on ProElite (Stratus Media):
    http://mmapayout.com/2010/02/stratus-media-assumes-control-of-proelite-board/

    PS: I posted some other great updates! Let us know what you think as this unfolds. We will do our best to keep this updated as news breaks.

  24. mmaguru on March 13th, 2011 3:19 PM

    Initially when I read the news I did not view this as much of a shock as when the Zuffa purchased PrideFC and I also viewed it as a positive for MMA. Now that I have had a day to absorb the news and read a few articles regarding the transaction I can’t help but feel for the fighters. Although StrikeForce was a distant second to the UFC, their existing allowed the fighters to have some leverage for negotiating with the UFC. Now that there are no real alternatives, I see that leverage gone for a long time.

    The key to this deal in my opinion was the acquisition of the fight library. This move has all but guaranteed that Zuffa “owns” MMA. They tried to purchase EliteXC and one of the reasons was for the library as well, now they have that too.

  25. Machiel Van on March 13th, 2011 5:26 PM

    It makes sense to me. I’ve always thought that SVSE was more interested in Strikeforce when they were a regional promotion running most of their shows at the HP Pavilion, as that made SVSE more money than Coker’s vision of a national promotion. That said, this news was quite a shock. You’ve got to feel bad for Coker here, as he did not have majority control of the company, despite putting the real man hours into developing the brand and achieving success. I’m sure this deal was not a part of his vision for Strikeforce.

    At this point, I’m sure we all know that the brand will inevitably be scrapped, the only question is when. It would make sense to continue the brand as a feeder league under separate management, but Zuffa seems very committed to developing the UFC brand and that brand only. This is probably the only option that meshes with Zuffa’s business strategy, and it’s probably the best thing in the end.

    The only thing missing from this story now is a pat on the back to Coker, who in my opinion had the appropriate vision and sense to start and run a successful MMA promotion that was not the UFC. Sure he had some gaffs along the way, but he never went down the path of ProElite (and let’s not forget he also brought MMA to the Playboy Mansion!). Despite my feelings about CBS/Showtime’s vision for MMA, I’ve also got to hand it to them for taking a chance on MMA. Without Strikeforce in the limelight on the premium station (and also on CBS), there would’ve been a lot less free MMA and prominent MMA news coverage for me to enjoy the past few years. Thanks guys and good luck!

  26. Machiel Van on March 13th, 2011 5:30 PM

    Hopefully we can look forward to seeing ALL of the best MMA fighters in the world challenge each other with regularity now, without the hindrance of promotional borders. While it is unfortunate to lose a great source of free(ish) MMA, and while it is unclear as to how this will effect some of our favorite fighters, as MMA fans this is an exciting prospect for all of us.

  27. Strikeforce purchased EliteXC for $3 mil in Feb. 2009 - Page 2 - Sherdog Mixed Martial Arts Forums on March 13th, 2011 5:43 PM

    […] Posted by frdl Source? Retard. Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal : MMAPayout.com: The Business of MMA Basically, ESPN and the LA Times have said that SF was in debt and that SVSE and Coker got into an […]

  28. Machiel Van on March 13th, 2011 9:44 PM

    And please don’t throw any details of the current “deal” at me. This will be a gradual process.

    http://insidefights.com/2011/03/13/full-ufc-strikeforce-merger-is-inevitable/

    Thank you MMAPayout staff for letting us post links like this.

  29. Jose Mendoza on March 13th, 2011 11:07 PM

    Interesting tidbits from MiddleEasy Rumor Mill, they have plenty more, so a good recommended read:

    http://middleeasy.com/index.php?option=com_content&view=article&id=4062:the-sunday-morning-rumor-mill&catid=34:organizations

    1) It’s rumored that Dana White wanted to ensure that the NFL player’s lockout was official before announcing the UFC purchasing Strikeforce. Dana’s plan is to literally undercut the NFL fanbase by providing UFC/Strikeforce in a time slot that would be endemic to NFL fans. Now that the 2011 NFL season is essentially displaced, it’s heavily rumored that Dana will work with CBS to host weekly fights that will air on Sunday morning/evening.

    2) The ZUFFA bumper will be shown at the beginning of Strikeforce broadcasts, starting with the April 1st Strikeforce Challengers show.

    3) Elbows will still not be allowed on the ground in Strikeforce.

    4) As of right now, Sumner Redstone is the most powerful man in MMA. He’s the majority owner of CBS Corporation, Viacom, and MTV Networks — essentially the guy owns MMA. It will be interesting to see what, if any, plans he has for mixed martial arts.

    5) It’s rumored that Scott Coker made an estimated $15,000,000 – $20,000,000 on the Strikeforce buyout.

  30. Machiel Van on March 14th, 2011 9:11 AM

    Good to hear that the UFC might really take advantage of the possible absence of an NFL season this year. They’ll definitely have to do something radically different with their schedule of events to capitalize on the displaced fans, and the rumors put forth by Jose are exactly the kind of proposals necessary.

  31. Jason Cruz on March 14th, 2011 11:48 AM

    I’m skeptical that NFL fans would immediately jump to MMA as an alternative to its sports fix. I would think that College Football would be elevated in viewership. Even the NHL could step in as an alternative. Although I think a lot of NFL players and fans are huge MMA fans, it is not an immediate alternative. How many NFL fans will enjoy it the first time someone gets busted open (a la Diego Sanchez)? Will people be able to stomach the blood?

    But, it would be interesting if the UFC-SF does weekly shows on Sundays to take advantage. Would this be the next step in mainstream acceptance? Secondly, what does that mean for New York? If UFC goes mainstream on Sunday afternoons in the fall and NY can’t host any events. Of course, these are hypotheticals that are unlikely to come to fruition (simply b/c I think the NFL will resolve the lockout b/f next fall). However, there is the NBA lockout to think about…

  32. Light23 on March 14th, 2011 5:59 PM

    I don’t think anybody would have problems with blood. Maybe I’m unique in that I was used to seeing pro wrestlers bleed like stuck pigs before I ever watched MMA.

    When you see Terry Funk’s bicep get ripped open by barbed wire, Diego Sanchez pales in comparison.

    I think your typical NFL fan is going to enjoy violence.

  33. jv on March 14th, 2011 7:28 PM

    All the hockey sponsors are rioting over the violence in hockey right now. Who is going to pay for the air time to put MMA on network?

  34. Stop Whining About Zuffa's Strikeforce Purchase. Pro Elite Would Have Bought Them!!! - Page 2 - Sherdog Mixed Martial Arts Forums on March 15th, 2011 6:16 PM

    […] Payout touches on a lot of these points if you're curious where I'm gathering this from: Source: Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal : MMAPayout.com: The Business of MMA Why do you think Strikeforce was losing money? I mean from your sources it seems like they were. […]

Got something to say?

You must be logged in to post a comment.