Bar owner sued by UFC for PPV piracy

June 23, 2011

The Lincoln (Nebraska) Journal Star reports that a local bar owner is being sued by the UFC for allegedly pirating UFC 128 in March. The UFC is seeking damages of $260K plus attorney fees.

Via the Journal Star:

“It is logical to conclude that (the bar) either used an illegal satellite receiver, misrepresented their business establishment as a residence or removed an authorized receiver from one location to a different business location in order to intercept Plaintiff’s broadcast,” the complaint filed in U.S. District Court in Lincoln says.

(H/t: MMA Mania)

Payout Perspective:

There is a reason the UFC puts up a blackscreen warning with a stern voice reading it before each PPV. The UFC has been agressively enforcing its rights against PPV pirates and this lawsuit is another example. While this may seem like a case of picking on a small business owner, the bar was making money from alcohol sales from patrons coming in to watch the fight. Thus, the UFC was indirectly (or directly) helping the bar owner make money. While there is the opposing argument that the UFC’s money could be better spent in other areas rather than go after every bar with an illegal feed, the lawsuit is protecting the UFC’s business and making a  statement to others out there thinking of stealing its PPV. This will serve as a deterrent to others thinking of hosting a UFC PPV without paying the fee.

Friday Night Fights to air on ESPN 3D

June 23, 2011

The Sports Business Daily reports that ESPN 3D is adding boxing as live content for its 3D channel. “Friday Night Fights” will have 5 editions on ESPN 3D this summer.

The article points out that not only will a successful run of  Friday Night Fights this summer help the 3D network, it will help with the revitalization of boxing.

ESPN had a test run of boxing in 3D in February and decided to go forth with more this summer. The telecasts are produced as a single telecast in 2D and 3D with one set of announcers. The article points out that the sport of boxing allows for this production since there are less frequent switching of camera angles.

If the summer run is successful, ESPN could look into more boxing in 3D. The 3D Friday Night Fights will begin June 24th and end August 12th.

Payout Perspective:

This is good for the sport of boxing as it seems to have experienced a resurgence in good fights this year.   I think the one drawback with 3D is the need to purchase a special television (with 3D capabilities) and glasses for all viewers. This is not cheap. While I am not yet on board with the 3D concept, I have not seen boxing in 3D. It may be the wave of the future and could be good for boxing in drawing more positive attention to the sport. It will be interesting to see the viewership of Friday Night Fights in 3D and see if it picks up over the summer.

You may recall that the UFC aired its last Versus show in 3D. I am not sure whether the UFC will bring it back in the near future, but if it does it will likely happen after it signs a new television deal.

Spike TV to counterprogram UFC on Versus this Sunday

June 22, 2011

MMA Junkie reports that Spike TV will air a marathon of UFC programming featuring Nate Marquardt. The shows will run opposite the live UFC on Versus 4 event featuring Marquardt in the main event.

Via MMA Junkie:

The UFC and Spike TV are in the homestretch of a multi-year contract, but UFC officials have made no secret that they’re talking to numerous suitors. That means – after a six-year run – the UFC could permanently leave the Spike TV lineup for the first time

Payout Perspective:

A parting shot by Spike TV in what is likely a split with the UFC at the end of the year? The UFC will look for more money than Spike TV is willing to pay. With the continued ascent of media rights fees, the UFC is giving all impressions of the free agent athlete wanting to “explore all options.” That said, the counterprogramming by Spike TV will run during the UFC’s Facebook live stream, the pre-fight show on Versus and the event from Pittsburgh. While it may not take away a ton of viewers from the live event, its a sign that Spike TV will not be in the running for UFC programming in the future.

Stratus Media Group & New ProElite CEO Paul Feller Interview

June 21, 2011

After Stratus Media Group announced that they had acquired ninety-five percent of ProElite, CEO Paul Feller gives MiddleEasy.com a great interview on what we can expect from the resurging MMA group.

Here are some excerpts from the interview conducted by MiddleEasy’s Elena Lopez.  When asked about why Stratus Media made the deal to acquire a large stake in ProElite, Feller stated the following:

We have a well-established name worldwide, they have a wonderful library of previous events and we’re looking to take that branding and that history, and rebuild the brand as a major player and we’re looking to fill the number two spot that Strikeforce once held.”

In terms of making ProElite a success, feller stated that they will use their experience and already-existing relationships and leverage those into all properties they manage.

We have multiple events, not just in the MMA space, but music festivals, concerts, film festivals, autoracing, autosports — and we’re going to extrapolate the benefits of media and sponsorship from all of our different properties and cross-pollinate them across all of our brands and all of our events including ProElite. That means leveraging our television relationships, our sponsorships and our merchandising partners. We have considerable resources to go into this and better the chances and the odds to make ProElite a large success.

 

Payout Perspective:

Here is  a summary of other topics the extensive interview touched on:

– Feller attributes the video library, intellectual property value, fighter relationships, and equity in brand-awareness as reasons they invested in the defunct company.

– Feller admits that they were in “significant discussions to acquire a large portion of Strikeforce” but the deal did not materialize.

– Regarding the future of the promotion, Feller states that a bulk of what could happen in the future is dependent on what happens with the future of Strikeforce and UFC. In terms of acquiring fighter, Feller states that they are “already  in major communications” to get a number of fighters and free agents.

Toronto reaps financial benefits of UFC

June 21, 2011

The Toronto Star reports on the financial success of UFC 129 in April. The UFC is finalizing an economic impact report on UFC 129 but the UFC believes its estimated $40 million impact is a conservative estimate.

The article points to the fact that the UFC attracted a much needed demographic to the city.

Via The Toronto Sun:

So far Toronto has been good at drawing in families but not so when it comes to younger tourists, says (Alan) Middleton (a local marketing professor), adding that this event was important in that it brought in mostly an under-30 audience.

The under 30 demographic is a valued as “the future of tourism.”

According to a credit agency, the numbers show an increase in spending in Toronto on the night of UFC 129. These numbers do not include consumers using cash.

Restaurants enjoyed a 19.2 per cent jump in dollars spent compared week-over-week. Similarly, bars and pubs experienced a 15.7 per cent increase — confirming that in addition to the 55,724 fans at the Rogers Centre, many more watched the popular event outside their home. (Toronto Sun)

Additionally, hotel occupancy rates were in the high 90s and showed a 20.3 percent increase in spending at hotels.

(H/t:  robnashville)

Payout Perspective:

Its unfortunate UFC 129 did not occur last year. That way, New York could use this example as the type of economic impact the UFC has on a city. Based on this information, the event was a success for the UFC and the tourist industry in Toronto. The article does a good job in outlining the “ripple” effect a big event has for the city.

MMA in New York Not Happening in 2011

June 21, 2011

As predicted (and as in past years), the MMA bill has again stalled in the New York State Assembly after passing the New York Senate and overwhelmingly passing the two committees where it was debated in the Assembly–Tourism, Parks, Arts and Sports Development and Codes.

Unfortunately, the next committee in the process, Ways & Means, has issued its Agenda on this last day of the legislative session and it does not include the bill that would legalize MMA in New York.

While the legislative session could go a few days longer — until Wednesday or Thursday perhaps — the bill would still need to pass through W&M and Rules before going to the floor for a vote.  This is not going to happen as Herman Farrell, Chair of Ways & Means, has voiced his distaste for MMA:

The Ways and Means chairman said that he’s “looking at” the bill, but said he’s far from a mixed-martial arts fan.  “I don’t think very much of the sport,” Farrell said. “Next we’ll give them clubs with spikes on the end; that will be good.”

Moreover, Sheldon Silver, Chair of Rules and Speaker of the Assembly, has stated that he is not “enamored” with the sport.

Despite the setback, there is some room for optimism this year.  Indeed, there was more mainstream media attention to the issue, which I believe and have previously written will be critical if we are going to get this done.  Moreover, the votes (when votes occurred) were more favorable to MMA than past years.

The fight resumes in 2012.

Fight Lawyer

Justin Klein is an attorney at 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.

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Stratus Media Group Secures 95% Ownership of ProElite

June 21, 2011

Stratus Media Group, which is a live entertainment company, announced today that it has finalized its acquisition of ProElite, assuming a ninety-five percent stake in the MMA promotion.

“This acquisition provides the resources and abilities ProElite needs in order to focus on strengthening and repositioning its world class MMA fighting platform in addition to the brand itself”

“This acquisition provides the resources and abilities ProElite needs in order to focus on strengthening and repositioning its world class MMA fighting platform in addition to the brand itself,” stated Paul Feller, President and CEO of Stratus. “Under the new SMDI Action Sports Vertical, ProElite is launching a series of MMA events that will bring a new vitality to the business of MMA and reestablish ProElite as a leading international MMA organization.”

Founded in 2006, and running its first show in February 2007, ProElite quickly became one of the most visible brands in mixed martial arts globally. ProElite holds the record for highest ratings of an MMA event on a network telecast. The company maintains its ownership stakes in South Korean-based Spirit MC and British based Cage Rage. ProElite’s event strategy will continue its focus in both domestic and international markets, welcoming fighters across all weight classes to prove themselves in the cage. Details of ProElite’s upcoming events schedule, fight card, and management team will soon be announced.

 

Payout Perspective:

Last we heard of ProElite, they were brought up as a potential (though not serious) bidder in acquiring Strikeforce.  They also benefited from the Zuffa/Strikeforce purchase by being basically the only group left with relevant MMA footage that Zuffa does not yet own, for example some of Anderson Silva’s Cage Rage fights. They have had plans to start running MMA events again for about a year now, but nothing has materialized up to now.

It seems that ProElite could become another beneficiary after the Strikeforce/Zuffa purchase (see Bellator), as was predicted since the market is now luring investors to create viable options for MMA fans. In the latest rumor, MiddleEasy.com states that ProElite is preparing to jump back into the MMA market fairly soon, and possibly with a familiar MMA investor:

We will be talking to the new CEO of ProElite tomorrow, however it’s rumored that the primary investor of the now-defunct ‘Impact FC’ will financially team-up with ProElite and they have every intention to compete with the UFC once again.

Vegas tries to remain fight capitol during tough economic times

June 20, 2011

The Sports Business Journal (subscription required) reports on how Las Vegas has tried to remain the center of the fight game despite a down economy.

Vegas has experienced the economic downturn more than any other city and as an example, the big fights in Vegas are no longer guaranteed cash cows.

The article points to lower hotel room rates and a decline in the amount of money each visitor spends to gamble as indicators of the slide. Since 2007, Casino gaming fell almost $40 per visitor ($277 to $238). While there was a slight increase in hotel rates and occupancy this spring, gambling revenue remained flat.

A Zuffa-commissioned study performed in 2009 found that the UFC drew $86.2 million in nongaming revenue for six events in Las Vegas.

Via the Las Vegas Business Journal:

The UFC generated $86.2 million in nongaming revenue for six events between Feb. 2, 2008, and Jan. 31 (2009). Only the NASCAR UAW-DaimerChrysler 400, which generated $134.3 million on March 2, 2008, ranked higher.

The UFC events attracted 80,087 people, with 56,435 of them coming to Las Vegas for the event, numbers provided by Zuffa show.

Notably, the study found that UFC fans coming into Vegas for the event gambled twice as much and spent twice as much on hotels, food and beverages.

The UFC has held four PPV events a year in Vegas since 2006 when it held six. The most recent Vegas UFC event, UFC 130, had an official gate of $2.58 million with 12, 753 in attendance. Via MMA Junkie, of the 12,573, 41% or 5,283 of the fans were comped. Another 1,161 tickets were not used. The number of comps is similar to UFC 125 (Edgar-Maynard II) held at the same venue when almost half of the fans were comped.

Lorenzo Fertitta was interviewed for the SBJ article and he points to the two Pacquiao fights (Clottey and Margarito) that were held at Cowboys Stadium as a “wake up call” for Vegas that there was competition for the megafights. While there were circumstances that led to the fights being held in Dallas, the point is that Vegas is not the default center for big fights.

Payout Perspective:

While Vegas is still home base for the UFC, it is not as dependent on the city as boxing. However, looking at the Zuffa study, Vegas may be dependent on the UFC. Looking at its growth, and the excitement it brings to new markets, the UFC’s expansion has helped it stay fresh and new to fans that get to see it live. UFC 134’s sellout in 74 minutes and UFC 129’s record attendance are examples of the UFC’s enormous fan base. It will be interesting to see whether Zuffa will bring future Strikeforce events to Vegas in lieu of UFC events. With Strikeforce Challengers slated for a Vegas debut this summer, we will see how it will do.

Another interesting note is the number of comps given out for fights. We indicated the high number of comps given to UFC 125 and 130. Much of this is a practice by hotels and casinos that use fight tickets (boxing and UFC) to attract its high stakes gamblers. Its an effective tool used by these operators to draw its best players in on big fight weekends. Not only do gamblers get to see a free fight, casinos get a chance to increase its revenues.

UFC 134 in Brazil sells out in 74 minutes

June 19, 2011

MMA Junkie reports that UFC 134 in Brazil sold out in 74 minutes. The August 27th event is headlined by local star Anderson Silva facing Yushin Okami.

Via Bloody Elbow:

Dana (White) stated earlier in the week at the UFC 134 press conference that 16,752 tickets would be available for the event, with prices ranging from R275 (170 USD) to R1600 (1000 USD). So it looks like Zuffa will make a pretty penny on the Rio gate.

Payout Perspective:

The sell out shows the impact the UFC has when it comes to new markets. But more specific to Brazil, it capitalizes on the deep tradition it has in the martial arts, especially jiu jitsu. The many popular Brazilian fighters on the card made it a guaranteed sell out. With the World Cup and Olympics coming to the country in the near future, its a market that is ripe for the UFC.

Strikeforce imposes sponsor fee

June 18, 2011

Prior to Saturday night’s Strikeforce event, it was announced that fighters’ sponsors would have to pay a sponsorship “fee”. Similar to the UFC fee imposed on its fighters’ sponsors, Strikeforce sponsors would have to pay a fee effective immediately.

The Underground reported the fee and stated that unconfirmed reports had the fee at $35,000. The fee, not the amount, was confirmed on the forum by MMA manager Alex Davis.

Via Fighters Only:

Unofficial sources peg the new Strikeforce ‘sponsor tax’ at around $35,000 but there is no verification for this at present. When the UFC introdued the measure in 2009, company president Dana White admitted one company was being charged $100,000 but said there was a sliding scale in place to reflect the different economic capabilities of potential sponsors.

Middle Easy spoke to Strikeforce fighter Conor Heun about the sponsor issue:

The only problem right now is that I have had a couple of guys sponsoring me since I was on the small shows, now they can’t sponsor me when wanted to return the favor and give them the time in the bright lights they deserve. They invested in me when I want doing much and now that i am on the big stage I want to support them like they supported me when there wasn’t much return. I do understand what Zuffa is doing and I think it will be better for the fighters in the long run. I mean, I would be taking these small clothing company sponsorships and I would be getting $500 and the reason I would be doing that is because it’s the same $500 they would give me when I was on a local show. That’s all they can afford and I want to show loyalty, I’m a loyal person and loyalty is very important to me.

(H/t robnashville)

Payout Perspective:

The Strikeforce sponsor tax was inevitable since Zuffa purchased the UFC. Heun’s sentiments are probably mirrored by most Strikeforce fighters. While they appreciate the sponsors that have been with them since they started, the realities of the Zuffa business model will leave small sponsors out. For Zuffa, its about the UFC, and now Strikeforce brand. Zuffa is looking to attract the Bud Light, Edge Shaving Gel and Tapout companies and that likely means smaller startup companies will not be able to compete unless it can pay to play.

There is nothing wrong with imposing a fee for sponsoring a fighter, the only issue I would have with it is the timing. It would have been prudent for Zuffa (and Strikeforce) to notify sponsors of this fee. While news of the fee came out this week, it would be interesting to know whether sponsors knew this was coming. If not, that would not be fair for a smaller company to have to come up with presumably $35,000 to sponsor its fighter. If it was known earlier, at least notice was given. Of course, this probably depended on when Zuffa knew each fighters’ sponsor. The late notice is a burden on fighters that lose the sponsorship money and their agents that were likely scrambling trying to find replacement sponsors.

For more thoughts on the sponsorship fee, look here and here.

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