More Details Behind Zuffa-Strikeforce Purchase

April 25, 2011

Dave Meltzer over at F4WOnline.com is reporting some interesting details behind the Zuffa-Strikeforce purchase, which details why the UFC broke the news that Saturday morning and some info behind the bidders and the acquisition timetable.

On F4WOnline’s latest newsletter (subscription), some more notes regarding the deal between Sports Valley Sports and Entertainment and Zuffa were released:

– SVSE was looking for a strategic business partner who would help fund Strikeforce in order to expand and become a PPV revenue company.

– The key members during the negotiations were Lorenzo Fertitta and Lawrence Epstein from the UFC, Dana White was not involved.

– Talks began in December and terms and money had been agreed on by January.

– The story behind the Saturday announcement is summarized best from the quote below, taken from the write-up.

The plan was to make the public announcement on 3/14, however a media outlet found out and was going to go with a story on 3/12. That’s when UFC contacted Ariel Helwani as they wanted to get the word out first and get their version of the story out immediately.

–  MMAPayout was aware of the story 2 weeks before it broke that Saturday but could not confirm it before the story broke.  A few MMA outlets were on to the story already by that weekend, and it is said that Ariel Helwani was already flown in to tape the interview with Dana White by the end of the week to release it with the official announcement.  When the UFC realized that another MMA outlet was going to break the story first, they decided to release the tape and break the news on Saturday morning instead of Monday to get their version of the story out there first. Josh Gross of ESPN reported the news shortly after it broke that Saturday, followed by MMAJunkie and the other outlets that evening.

– Multiple legit offers were made for Strikeforce, including some from the boxing world.  UFC had the best deal and wanted to make it because it would eliminate their main competitor, gain marketable athletes, and would be able to run more shows and expand. One note here is Pro Elite’s alleged 40 million offer, which apparently was mostly a paper offer, was never considered a legit offer.

***

Links to MMAPayout coverage regarding the Zuffa-Strikeforce purchase can be found here:

Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal

Mystery Strikeforce Third Bidder, Early Signs Of Sale, & UFC Purchase Notes

Exploring Why SVSE Walked Away from Strikeforce & MMA

13 Responses to “More Details Behind Zuffa-Strikeforce Purchase”

  1. REPORT: UFC flew out Ariel Helwani to break Strikeforce buyout before Josh Gross - Page 10 - Sherdog Mixed Martial Arts Forums on April 25th, 2011 6:36 PM

    […] More Details Behind Zuffa-Strikeforce Purchase : MMAPayout.com: The Business of MMA __________________ Bunch of slack-jawed f*ggots around here. […]

  2. BJ on April 25th, 2011 8:48 PM

    ***Removed***

    Whoever was making a bid from the boxing side of things is most likely still going to jump into the MMA business once the time is right.
    If their interested and have money that interest isn’t just gonna go away.
    Wish there were more details as to who it was coming from.

    Whoever is it good. The more competition for the Zuffa boys the better.
    All the better for the fighters, fans, sponsors, media you name it.

  3. John S. on April 25th, 2011 9:44 PM

    Jose,

    I still have a lot of questions which hopefully can eventually be answered:

    1. Any reliable estimates on what the amount is that Zuffa paid? Interesting to note that a price was set on January before the big numbers came back from the Diaz vs Cyborg and Fedor vs Silva cards.

    2. Any reliable info on how much money Strikeforce was losing or how much debt were they carrying?

    3. Any word on what the other offers were and how they compared to Zuffa’s final offer?

    4. Any more details on the aborted Japanese show and Strikeforce’s reasoning for putting so much energy into it?

    5. Any info on how Strikeforce has been performing on Showtime? Have they seen a sizable increase in subscribers?

    Great job continuing to follow this.

  4. Jose Mendoza on April 26th, 2011 10:03 AM

    John,

    1) Nope, same as before. Nothing new here.

    2) It wasn’t a considerable amount.

    3) No actual numbers but Zuffa’s was by far the best offer.

    4) Nope, but they did have a 2 fight contract with Aoki, which is now done. Kawajiri was a new contract under the DREAM partnership, same with Takaya. The event was supposed to take place in Japan but didn’t happen, so event changed to SD, but contracts were already in place.

    5) Showtime is very happy with the value that Strikeforce, or more specifically, MMA has added to the network.

  5. Robert Joyner on April 26th, 2011 11:15 AM

    Interesting that just as the deal was being closed for the Zuffa purchase of Strikeforce, word of Vince McMahon wanting to expand to other live event properties hit the presses…kinda think this was a bit of a missed opportunity for VKM…

  6. Diego on April 26th, 2011 12:22 PM

    If I’m reading this right, it seems that SVSE was looking for a partner to help fund expansion but in the end wound up selling their share. That could mean that Zuffa had to pay a considerable premium to get SVSE out of the business – it’s usually expensive to buy something that someone isn’t looking to sell.

    I’d love to see the numbers.

  7. Steve on April 26th, 2011 1:03 PM

    “kinda think this was a bit of a missed opportunity for VKM”

    I don’t think Vince has ever had any interest in MMA. The interest was coming from Shane, and he is no longer with the company. Vince should have listened to his son.

  8. Jose Mendoza on April 26th, 2011 1:09 PM

    Diego, John:

    I think the bottom line in MMA is that investors get in looking at PPV revenue, else they wouldn’t get into the game. The problem is that no one in MMA has been able to consistently sell and profit off of PPV’s like the UFC. Remember, every single action the UFC does is to eventually get consumers to purchase PPV’s. That’s what the company’s goal is. Whether they can maintain that long-term will remain to be seen… just having GSP and Lesnar retire next year heavily impacts their bottom line.

  9. @Jose Mendoza on April 26th, 2011 1:35 PM

    GSP and Lesnar are retiring next year?

  10. Jose Mendoza on April 26th, 2011 4:32 PM

    Nope, purely hypothetical situation of how much big draws in MMA can impact PPV buys.

  11. John S. on April 26th, 2011 4:57 PM

    Jose,

    Am I reading this correctly that SVSE wasn’t originally looking to exit but instead was looking for a strategic partner and only sold when Zuffa made a large bid? I thought SVSE was looking for an sell to focus on getting an NBA team to the pavillon? Or is this supposed to read “Strikeforce was looking for a strategic partner” and not SVSE?

  12. Albert Bernestine III on April 26th, 2011 5:32 PM

    The down time between the ink being dry on the Strikeforce deal and the actual planned announcement is interesting. Why risk another media outlet breaking the story before the parties involved in the deal. Also, the long term strategy of securing PPV buys is tricky with the current economic landscape. I would think a broader revenue model would make more sense.

  13. Jose Mendoza on April 26th, 2011 6:21 PM

    John:

    From Meltzer:

    “The deal was that Silicon Valley Sports was at first looking for a strategic business partner who would help fund an expansion to try and build the company up to where they could do regular PPVs. While looking, Zuffa in early December came in with a strong offer.”

    From Scott Coker:

    “Silicon Valley Sports and us were great partners,” Coker said. “They wanted to get back to their core business, the hockey business and expansion of their other sports businesses. We had a long conversation and started taking different offers and then we started talking to Lorenzo. They had a really good time in this business, but they wanted to get back to their core business. I wanted to stay in this business and this is how we hooked up.”

    It’s tough to tell since its always a different variation of the story, but it seems that Strikeforce had put feelers out there for funding to expand (not sure if this was done before or after SVSE made it known that they wanted to get out, but I am assuming after, around September/October). Charlie Faas, the Exec VP and CFO of SVSE was the person negotiating the sale on SVSE’s end. SVSE seems to have had most of the say, and took the best deal, which was Zuffas, which helped pay whatever small amount of debt that Strikeforce was accumulating. On Scott’s end, he got a long term contract with Zuffa, got to keep running Strikeforce, and made money on his share of the promotion.

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