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.

6 Responses to “Vegas tries to remain fight capitol during tough economic times”

  1. Machiel Van on June 21st, 2011 7:44 AM

    So if tickets are “comped” by hotels and casinos, wouldn’t those businesses still have to buy the tickets from Zuffa? Seems like that should count as paid attendance.

  2. Jose Mendoza on June 21st, 2011 11:50 AM

    Machiel Van:

    If the Fertittas give away UFC tickets to high rollers in their Station Casino’s, that’s a comp. That shouldn’t be paid attendance, should it? These tickets are usually ones that come out of the UFC pockets by giving them away, so paid attendance is then considered papered.

  3. Machiel Van on June 22nd, 2011 7:31 AM

    Thanks Jose. But what about the MGM Grand? Or Mandalay Bay? Do those companies buy tickets for their high rollers/hotel guests when they host events? Wouldn’t that count as paid attendance?

  4. Bill King on June 23rd, 2011 5:57 AM

    In fact, those tickets that the hotels buy from the promotion are counted as sold. Comps are those tickets that the promoter gives away, either to sponsors or promotional partners, or even to a military base in some cases of late. So the fact that the user was comped by a casino or hotel doesn’t make it a comp, in terms of the state filing. Thanks for the interest.

    Bill King
    SBJ

  5. Jose Mendoza on June 23rd, 2011 1:17 PM

    Thanks Bill for the clarification,

    I allways mix that up.

    Machiel, Yes (see above), here are the numbers from UFC 130 /via F4WOnline:

    “UFC 130 on 5/28 at the MGM Grand, headlined by Quinton Jackson vs. Matt Hamill, had 12,753 fans which was 7,470 paid, had 5,283 comps and 1,161 empty seats, for a $2,577,250 gate. Considering the lineup, that isn’t bad, although probably 2,000 or more of those paid were casino buys.”

  6. Dyno on July 9th, 2011 1:04 PM

    A comped ticket, say if the MGM Grand is hosting an event, they pay the UFC a site fee to host the show at their casino. In exchange for hosting the UFC and paying them to come to town, the hosting hotel gets X amount of comps, to be used as mentioned above.

    Those tickets are not included in the final “PAID” numbers, thats why you’ll see 2 numbers, a tickets paid number and the comped number.

    At the end of the day those “comped” tickets, the only money paid for them is the state taxes. ie. the host hotel may pay 47.24$ as a make believe number per ticket.

    If you have a concert ticket, or anything ticketmaster you’ll see on the ticket a TAX cost, that’s what the state takes for that comped ticket.

    When K-1 did Dynamite USA! when they littered the streets of L.A. with comped tickets to get 30k in the stadium, K-1 only had to pay the tax amount on the ticket they gave away for free back to the state.

    Hope that this makes sense.

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