Payout Analysis: The Strikeforce Death Knell?
October 12, 2011
Zuffa created a subsidiary called Forza LLC to control Strikeforce who was taken over from Silicon Valley Sports and Entertainment in March of this year. Since then, there’s been much debate as too whether Zuffa/Forza will continue to operate the promotion or just kill it off.
Strikeforces’ television contract with Showtime expires mid-February 2012 and both sides have been relatively quiet as to the future the promotions programming on the network. However, UFC President Dana White recently commented on the Strikeforce/Showtime situation at the UFC 135 pre-fight press conference:
“Who knows what’s going to happen? The way this thing works is, it depends on Showtime. The ball’s in their court. They need to decide whether they want to keep Strikeforce around or not”
Showtime has yet to comment on their plans moving forward. They do have an option to extend the deal through 2014, however, the ball that’s been left in their court doesn’t have much of a bounce left.
Over the past 5 months Strikeforce had their top draws cherry-picked by the UFC, an impressive list that includes former Strikeforce heavyweight champ Alistair Overeem, former welterweight champ Nick Diaz and Strikeforce light heavyweight champ Dan Henderson. It’s almost certain the Strikeforce lightweight champ Gilbert Melendez will join them. By hollowing out the promotions champions, Zuffa’s actions speak louder then words and Showtime should be getting the message now loud and clear.
So is there even a business case left for keeping Stikeforce around in 2012? Using the publicly available data we took a closer look at the performance of the two Strikeforce ownership groups, Silicon Valley, and Zuffa/Forza. We sampled data from the last 9 events under Silicon Valley ownership, between October 9 2010 to March 25 2011 that included 5 major tier 1 events and 4 smaller tier 2 Challengers events. We compared the average TV Ratings, Attendance, Gate and Payroll to the first 9 events under Zuffa ownership, between April 1 2011 and September 23 2011 that included 4 major tier 1 events and 5 tier 2 events.
In the midst of losing their top talent, the rough estimation is that Strikeforce has seen TV ratings dip 5%, attendance drop 32%, live gate profits down 11% and an increase of 26% in fighters payroll since Zuffa took control in March 2011.
From Showtimes point of view, the ratings are stagnant and Zuffa is (or has) impeded the ability for Strikeforce to improve upon their ratings. Showtime is drawing approximately 2.5 times more viewers with boxing programming then with Strikeforce. M-1 Global, who also broadcasts MMA events on Showtime will air their next to last event on October 14th. With no word on a Showtime/M-1 contract renewal, perhaps Showtimes focus will shift solely back to boxing leaving the MMA programming by the wayside.
For Zuffa, they’re in a position where they have just signed a huge network television contract for the UFC with FOX, which includes distribution on the cable channels FX and Fuel TV. Plus, Spike TV appears set to continue broadcasting UFC content, counter-programming or not, throughout 2012. So for Zuffa’s primary brand there’s no shortages on the television front. There has been zero push for Strikeforce since the ownership change and none look to be in sight. The numbers aren’t terribly good and there is no momentum, I see little benefit for Zuffa to continue their support for Strikeforce. It’s plausible they would continue to broadcast Strikeforce on Showtime in an attempt to help limit potential competition but I think if Showtime is to continue with MMA programming, it won’t be under the Zuffa/Forza/Strikeforce banner.