11 for 11: No. 1 UFC-Fox television deal

December 31, 2011

The number one business story of the year was the UFC-Fox deal as mixed martial arts entered the mainstream with its 7 year, $90 million television rights deal.

The deal was an upgrade from its $35 million a year deal with Spike TV. The longtime relationship between the UFC-Spike relationship deteriorated this year with passive aggressive moves. Spike debuted UFC 132’s Countdown show during the middle of the day instead of its usual primetime placement. It also counterprogrammed UFC’s live Versus card in June with a marathon featuring main eventer (at the time) Nate Marquardt. And, of course, there is the issue of the UFC library rights.

 

Fox immediately marketed the UFC’s November 12th debut with promos during MLB and NFL games. It also ran its UFC Primetime show on an NFL Sunday to encouraging ratings.

The UFC on Fox Payout Perspective details the huge ratings Fox received for the 1 hour program which featured approximately 1 minute of actual fight action. It was the most watched UFC event ever.

FOX TV Rating Breakdown (Quarterly):

– UFC on FOX (9:00 pm-9:15 pm): 5.25 million viewers

-UFC on FOX (9:15 pm-9:30 pm): 5.48 million viewers

-UFC on FOX (9:30 pm-9:45 pm): 7.09 million viewers

-UFC on FOX (9:45 pm-10:00 pm): 4.88 million viewers

– Overall: Average of 5.7M viewers watched the fight live or via DVR playback within the same day. (Nielsen)

Via UFC press release:

The hour-long UFC on FOX premiere scored a 3.1/5 household rating/share, with 5.7 million viewers making it the most-watched UFC event ever and the most-watched professional fight of any kind on any network since 2003 when 7.0 million tuned in to watch Lewis-Klitschko on HBO.  Velasquez-dos Santo is also the highest-rated and most-watched professional fight of any kind on a broadcast network for OSCAR DE LA HOYA’S FIGHT NIGHT on FOX. (4.3/6, 5.9 million viewers) in 1998.

FOXSports.com, one of the world’s leading sports web sites with almost 30 million unique visitors monthly, also delivered substantial viewing for UFC-related video.  On Saturday, FOXSports.com tallied an impressive 257,000 total live streams for the nine undercard matches, while all UFC content during and around the event generated over 1 million streams.  Other than Super Bowl-related content, this was the biggest video event in FOXSports.com history.

The number of live streams on FOXSports.com is notable as its not usual that we see these numbers for the UFC Facebook streams. It shows the impressive numbers the UFC put up on multiple platforms.

In addition to Fox and online, Fuel TV and Fox Deportes had solid ratings for the UFC’s debut. Spike TV also put up huge numbers as it played past UFC fights of JDS and Cain opposite UFC on Fox.

We will see how the UFC-Fox relationship does in its first full year. UFC on Fox 2 is set for January 28th and Spike TV is set to counter as well. It will be interesting to see how the UFC will do on Fuel and FX. We’ve already seen a potential problem with Fuel TV as the UFC 141 Countdown show only garnered 15,000 viewers for its debut. Hopefully for Fuel TV, its January 1 UFC marathon will raise awareness that it is the new home for UFC programming.

MetroPCS becomes a UFC sponsor

December 30, 2011

The UFC announced that MetroPCS will be the exclusive wireless sponsor of the UFC. The deal makes the second sponsor the UFC has picked up this month.

Via UFC press release:

MetroPCS will be integrated within UFC’s digital media assets and will produce exclusive content that will be distributed across several MetroPCS channels, including metropcs.com, MetroVISION, MetroSTUDIO and the company’s social media channels. MetroPCS customers will also have exclusive access to wallpaper, ringtones and other mobile accessories featuring their favorite athletes of the Octagon®.

Additionally, MetroPCS will participate in the UFC’s widely popular Octagon Nation Tour, hosting the fully-customized, 18-wheeler UFC truck at store locations across the country. This will bring the excitement of the Octagon to consumers around the nation, with the chance to meet their favorite UFC athletes and take part in the UFC’s ultimate fan experience on wheels.

Payout Perspective:

MetroPCS partnered with TapouT earlier this year as what looks now to be a prelude to its sponsorship with the UFC. We will see what brand activation plans MetroPCS will have with the UFC. It was a prominent logo in the Octagon at UFC 141.

UFC 141 salaries disclosed

December 30, 2011

MMA Junkie reports the salaries for tonight’s event. Brock Lesnar leads the list of fighters with $400,000 with no win bonus. The salaries were disclosed by the Nevada State Athletic Commission today.Alistair Overeem is second on the wage list with $264,285.71 to show and $121,428.57 win bonus.

The remainder of the card is as follows (via MMA Junkie):

  • Donald Cerrone: $30,000/$30,000
  • Nate Diaz: $37,000/$37,000
  • Jon Fitch: $60,000/$60,000
  • Johny Hendricks: $26,000/$26,000
  • Alexander Gustafsson: $16,000/$16,000
  • Vladimir Matyushenko: $40,000/$40,000
  • Jim Hettes: $8,000/$8,000
  • Nam Phan: $8,000/$8,000
  • Junior Assuncao: $8,000/$8,000
  • Ross Pearson: $20,000/$20,000
  • Danny Castillo: $19,000/$19,000
  • Anthony Njokuani: $12,000/$12,000
  • Dong Hyun Kim: $41,000/$41,000
  • Sean Pierson: $8,000/$8,000
  • Efrain Escudero: $10,000/$10,000
  • Jacob Volkmann: $16,000/$16,000
  • Luis Ramos: $6,000/$6,000
  • Matt Riddle: $15,000/$15,000
  • Manny Gamburyan: $18,000/$18,000
  • Diego Nunes: $12,000/$12,000

Payout Perspective:

Usually the salaries are not disclosed until after the card but it appears that the salaries were released as a result of Golden Glory’s legal team obtaining an order to garnish the wages of Overeem due to the ongoing litigation between Overeem and his former management team.

Via MMA Junkie:

The judgement applies to 30 percent of Overeem’s show and win purses, any performance bonuses he may receive, and any proceeds he may receive from the pay-per-view event per his UFC contract.

The $400,000 is Lesnar’s standard salary for every UFC fight (100, 121, 116) since UFC 91 when he received $450K (but that included a $200K win bonus). He was paid $250K per show prior to his raise to $400K at UFC 100.

11 for 11: No. 2 Zuffa buys Strikeforce

December 30, 2011

The second biggest business story of the year shook the state of MMA. In March, Zuffa purchased its biggest rival, Strikeforce.

It was reported that the purchase price was $40 million which included some debt repayment by Zuffa for Strikeforce. The deal occurred as Silicon Valley Sports and Entertainment, main financial backer of Strikeforce, wanted to refocus its business on its NHL, the San Jose Sharks and other business. It is also believed that it may be trying to acquire an NBA team to San Jose.

Excellent coverage of the purchase is here and here is the text of the official Zuffa press release. Prior to Zuffa’s purchase, MMAPayout learned that there were other bidders for Strikeforce but Zuffa came up with the biggest monetary deal.

Prior to the purchase, Strikeforce was in the midst of its Heavyweight Grand Prix which was supposed to create interest in what was arguably the best divsion in the sport. Surely, Strikeforce execs were hoping for a Fedor-Overeem Final. Fedor’s upset loss to Bigfoot Silva made the GP less appealing. And, a futile effort to hold a card in Japan for its HW Grand Prix caused a delay in the tournament.

From the start, Zuffa stated that UFC and Strikeforce would operate separately although Zuffa execs (you know who) would provide input on its show starting with its April 9th show. The constant talking point was “Business as usual.”

But, that’s not the case as we’ve seen numerous Strikeforce fighters move over to the UFC. Notably, Strikeforce welterweight champ Nick Diaz. Other fighters such as UFC 141’s main eventer Alistair Overeem came over to the UFC after time fighting in Strikeforce. In addition, some Strikeforce staff were let go and replaced by Zuffa employees. Finally, Scott Coker has lost a lot of power in the new regime as it appears from interviews that he no longer has any say with the direction of Strikeforce.

Recently, Strikeforce and Showtime agreed to renew its television contract which was somewhat of a surprise considering the fact that many believed that Strikeforce would be consumed by the UFC.

It will be interesting to see the Strikeforce product in 2012. How will it compete, or complement the UFC product? Who is the face of Strikeforce? Certainly, a Gilbert Melendez and Mo Lawal would have fit in nicely with the UFC creating interesting fights. But, it appears that they will be in Strikeforce for at least the next year.

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

11 for 11: No. 3 Zuffa offers its fighters insurance

December 28, 2011

This year Zuffa offered its 400 fighters in the UFC and Strikeforce health insurance beginning this past June. Zuffa is paying the premiums for all of its fighters under contract.

The accident-insurance coverage covers up to $50,000 (annually) of medical costs for each fighter. Its an unprecedented move to cover fighters and its a sign that the organization is moving in the right direction if it wanted to be thought of as a major league sport.

So far, fighters have taken advantage of the health insurance without any issues. Cub Swanson became the first fighter to utilize the health insurance one day after it went into effect.

While insurance may not be the most exciting business story of the year, it is one of the more important ones for the fighters covered.  A fighter’s health is very important from the business side of things as we know from this year’s constant reshuffling of main events. Insurance may alleviate some of the concern for the mid to low tier fighter that is concerned about what happens if they are hurt while training for a fight. While the $50K may not cover a serious surgery or procedure, it still helps with the  financial burden placed on fighters that likely fought without insurance prior to Zuffa’s coverage.  In a related story, this week, Combat Sports Insurance announced an accident-related insurance policy that would allow any pro MMA fighter to receive insurance for just “a little over $20  month.”

Countdown to UFC 141: 15,000 viewers

December 27, 2011

MMA Junkie reports that UFC 141 Countdown garnered just 15,000 viewers on FUEL TV. A replay of the show the same night at 1am ET/10pm PT garnered a dismal 1,000 viewers.

The 15,000 viewers received a 0.03 household rating rating among men 18-49 and a 0.0 among men 18-34.

UFC 141 aired the week of Christmas and one week before the event. It primarily focused on Alistair Overeem, Brock Lesnar, Nate Diaz and Donald Cerrone.

The disparity in the number of homes that receives Fuel may be an ongoing issue as Spike, Countdown’s old home, is in 100 million homes while Fuel is in only 36 million.

Payout Perspective:

Dismal ratings for a pretty good Countdown show which did a good job in introducing the casual viewer to Alistair Overeem. However, the holidays, the early showing of the show and its new spot on Fuel Television may have contributed to such low ratings. We’ll see in 2012 how the UFC and Fox deal with this issue if the low ratings persist.

11 for 11: No. 4 Injuries plague PPVs; Buy rates down

December 27, 2011

Injuries have plagued 2011 as many of the UFC’s top stars have had to postpone or delay fights this year.

GSP, Brock Lesnar, Jon Jones, Frankie Edgar, Gray Maynard and Rashad Evans are just a sample of the fighters that were scratched from PPV cards due to injury. This does not even touch upon the number of fighters on the undercards that have been shuffled due to injury.

Lorenzo Fertitta acknowledged this fact in a recent LA Times interview.

Via the LA Times:

…but our biggest issue lately has been 11 of our last 14 main events have fallen out and required replacement fighters. It’s like there’s been a hex over us. So it’s been a challenge to run the business how we’ve planned to.

Fetitta indicated that if the UFC gets a run of of good health (and is able to book the fighters and fights it can), then the business will take off.

Injuries haven’t helped with the PPV buys for the UFC. This year we saw a decrease in PPV numbers and only two shows (UFC 126 and UFC 129) reached 500K PPV buys. In 2010, 11 PPVs scored 500K or better.

If the Brock Lesnar factor holds true, UFC 141 would be the only UFC PPV this year to go over 1 million PPV buys.

At the beginning of the year, Dave Metzler believed that 2011 would be a rebuilding year for PPVs. But, he cited the need to build up the bantamweight and featherweight divisions and building new stars as reasons for smaller PPV numbers. Jon Jones is a new star that the UFC hopes to build into a PPV attraction. However, the PPV numbers do not reflect the bantamweight, featherweight or lightweights gaining traction as main eventers. As an example, the third fight between Frankie Edgar and Gray Maynard at UFC 136 received only 225K PPV buys.

It will be interesting to see how 2012 will fare on the injury front. We already know Anderson Silva will not be available until mid-2012. This will delay a guaranteed PPV draw, a potential rematch with Chael Sonnen. Also, GSP will be out until late 2012 and the division will have an interim champion in the meantime.

We will see if the UFC tries to push Jon Jones to the forefront as a PPV draw. Also, how will the UFC utilize the flyweight division. And, will the lighter weight divisions draw. We shall see at UFC 142 as Jose Aldo fights Chad Mendes in the main event.

Of course another factor in addressing the PPV buys is PPV fatigue. There will be 16 PPVs this year with a PPV almost a bimonthly happening. Its hard for a fan to pay over $100 bucks a month in PPVs in addition to their normal cable/satellite bill. Couple the economic factor with the injuries to main events, and its a combination which likely led to the lower numbers.

Photo via LA Times

11 for 11: No. 5 Culinary workers versus Zuffa

December 26, 2011

The Culinary Workers Union Local 226 became one of the biggest opponents of the UFC in 2011. It has helped opposed the legalization of professional MMA in New York state and has requested that the Federal Trade Commission investigate Zuffa for possible antitrust investigations.

In late August, the union sent a letter to the FTC requesting that it look into Zuffa’s acquisition of several of its competitors:

The letter goes on to point out that since 2001, Zuffa has acquired four of its key rivals (Pride Fighting Championship, World Extreme Cagefighting, the World Fighting Alliance, and most recently Strikeforce earlier this year.  They also state that through some independent research performed in 2008, Zuffa controls 80-90% of the mixed martial arts market.

Specifically, the letter points out that Zuffa has preserved and strengthened its dominance in the market through their unwillingness to co-promote events as well as anti-competitive contractual restraints placed on their contracted fighters.

As most know, the union’s beef with Zuffa stems from the Fertittas ownership of its Stations Casino. A failed attempt to unionize the workers at the Stations Casinos is the reason why there is staunch opposition to the legalization of MMA in New York. Lobbying efforts by the Culinary Workers have stifled efforts for passage of legislation allowing the UFC in New York.

USA Today reported in October that the union contacted Anheuser-Busch to boycott the UFC for “a history of tolerating homophobic conduct.” In addition, the Union has done the following to get its message across:

• Backing anti-MMA legislators in New York.

• Calling on the Federal Trade Commission to investigate UFC parent company Zuffa, which the union accuses of using monopolistic tactics to thwart competition from other promoters of mixed martial arts.

• Launching a website designed to highlight White’s use of vulgar language.

It will be interesting to see how much more the Culinary Workers will go to lobby against the UFC. The recent Zuffa lawsuit is a way around the union and lobbyists opposing MMA. So far, nothing is being reported about an FTC investigation of Zuffa and we will see if 2012 gives us any findings from the FTC about Zuffa and the claimed anti-competitive practices.

11 for 11: No 6 Viacom purchases Bellator

December 25, 2011

Viacom purchased a majority stake in Bellator this fall and announced that it would move its newest purchase to Spike TV in 2013.

With the UFC looking for a new network dance partner most of 2011, many believed that Bellator would make the move to Spike. The purchase of Bellator confirmed the speculation.


Spike TV has the rights to the UFC library through 2012 and it was thought that Zuffa would purchase the library from Spike but that notion has died down. Spike.com began airing the preliminary fights of Bellator events this year as well.

Ironically, Dana White embraced the Viacom move as the UFC believed that the purchase would ease an FTC investigation and any notion of Zuffa monopolizing the MMA industry. Instead, White described the UFC as a “mom and pop” in comparison to Viacom.

With the Viacom acquisition, it will be interesting to see how much of an investment it puts into Bellator on Spike. Talent acquisitions, production for Bellator programming and marketing should be at the top of the list for improvement for the organization.

GSP picked one of the most overhyped for 2011

December 24, 2011

Perry Lefko of Rogers Sportsnet penned an article in which he picked Georges St. Pierre as one of the “Most Overhyped” athletes of 2011. Danica Patrick, LeBron James and Floyd Mayweather, Jr. also were on the list.

Kris Humphries (Mr. Kardashian), Tiger Woods/Steve Williams, Tim Tebow, Yu Darvish, Alexander Ovechkin and Andrew Luck round out the list.

GSP was picked for his inability to finish fights.

Via Rogers Sportsnet:

He grabbed the international spotlight in April for headlining the first UFC card in Toronto, producing GSP mania. A record UFC crowd of more than 55,000 packed the Rogers Centre to finally see the conquering Canadian hero and he went the full five rounds with Jake Shields in what was more of a clinic on how not to lose a fight than actually win it.

Payout Perspective:

Despite being on this list, GSP is still a draw that the UFC will miss due to his injury. While Matt Serra may have changed GSP’s style forever, he is still a fan draw and is one of the few UFC stars that can carry a PPV card. The last two big PPV buys for the UFC had GSP at the top of the card. It will be interesting to see how GSP comes back from his knee injury and how the division will look like when he is due back in late 2012.

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