Despite ratings White still hopeful with TUF Live

March 26, 2012

MMA Junkie reports that despite good reviews, The Ultimate Fighter Live ratings are not reflective of the praise.  Still, Dana White believes that the show is positioned well on FX.

The debut of TUF Live on FX scored an average of 1.28 million viewers yet saw a decline in the ratings over the course of the show. The second episode last week were down with a 1.1 million viewer average. We may discount last week’s ratings decrease since it went up against the NCAA Tournament.

Via MMA Junkie:

“There’s so many things that are involved in those numbers,” White said. “I didn’t expect to jump on FX and do 3.5 million viewers right out of the gate. But here’s the thing: The format is awesome. It’s perfect. We’ve got a great season, and we’re going to build this thing.

“Believe me, the way that FX deals with their programming and how they handle it, they’re so analytical. These guys are like [expletive] rocket scientists how they break this stuff down and look at it. Trust me, everything is positive over there.”

One thing that has peaked White’s interest is that Vegas sportsbooks are taking action on the TUF Live fights.  White also addressed the fact that the ratings are due in part to the NCAA tourney.

“March Madness” will wrap soon, casual viewers will eventually figure out the show is now on FX, and hardcore fans may very well become again interested in the show thanks to the new format.

Payout Perspective:

We may discount last week and this week due to the tournament but we shall see if viewers will gravitate to FX.  We will see if the ratings will increase over the season as White predicts (or hopes).  The UFC has tinkered with the show to keep the show different and the jury is still out on whether the live fights will attract more viewers.  Of course, there was White’s initial expectations about the viewership doubling on FX.  Perhaps we were not to take this literally or expect the ratings to double in the first season on FX but there are definite expectations on how TUF Live will perform.

WWE airs Rock-Cena special

March 25, 2012

With Wrestlemania one week away, the WWE is pulling out all the stops in ensuring that the biggest event of its year gets the full promotional treatment. The WWE is airing a one hour “Once in a Lifetime – Rock vs. Cena” special utilizing NBC Universal’s television power.

The first ever WWE behind-the-scenes-style look at the two main eventers will also air on Syfy, Bravo, E!, Oxygen, G4, Style, NBC Sports Network, mun2, CLOO and Universal HD.

Via WWE press release:

This lifestyle special is a candid and compelling look at two of the biggest icons in sports entertainment history as they prepare for their Once in a Lifetime main event match. From touring and training on the road to Hollywood movie sets to the 54th Annual Daytona 500, this in-depth look with exclusive footage gives viewers unprecedented access and a glimpse into the personal lives of these men.

The special will premiere on the USA Network one hour before Raw this Monday night.

Payout Perspective:

Putting aside your personal thoughts about pro wrestling, this is an interesting look at how the WWE has been influenced by the UFC. The WWE has had behind-the-scenes looks at wrestlers. Most of these happen when they are doing charity work or are visiting the US Troops in the Middle East. It will be interesting to see how the WWE will produce this special as it’s being billed as a “countdown” style look at Rock and Cena. The television special also shows the advantage of the WWE’s partnership with the NBC Network as it can play its special over multiple network partners. Sound familiar? The UFC has taken advantage of the network synergy in promoting its events. Of course, having the Rock as one of its key characters in the special will help with ratings.  Is this a new level of promotion for the WWE or is the WWE concerned with how the PPV will do next week?

Evans meets No. 1 in the World

March 23, 2012

The UFC and Women’s Tennis Association teamed up today for a grab and grin opportunity. The WTA’s Victoria Azerenka and Rashad Evans met and exchanged jabs and serves.

Azerenka is playing in the Sony Ericsson Open in Miami and is doing pretty well. Evans is training for his showdown with Jon Jones in April.

Via UFC press release:

Former Ultimate Fighting Championship® light heavyweight champion and current No. 1 contender, “Suga” Rashad Evans took time from training for UFC®145: JONES vs. EVANS to meet Women’s Tennis Association (WTA) World No. 1 superstar Victoria Azarenka. The top athletes visited the MMA Masters facility in Miami and traded tennis and UFC gifts and expertise. Evans showed Azarenka some moves in the cage while Azarenka shared a few tennis tips with Evans. The Belarusian beauty is currently in Miami playing in the Sony Ericsson Open tennis tournament.

A video of their meeting is here.

Payout Perspective:

A nice crossover event for both Evans and Azerenka. I think the photo op helps both sports as the UFC hopes to breakthrough to more of a mainstream audience. Moreover, attract mainstream sponsors. It also allows someone else in women’s tennis besides the Williams sisters and Maria Sharapova get some publicity. Did you know who was the number 1 women’s tennis player in the world? So, this opportunity for Azarenka helped attract some of the male dominated UFC demo.

Justin.tv scores win against Zuffa

March 23, 2012

Eric Goldman and Techdirt first reported Justin.tv’s victory in prevailing in its Motion to Dismiss certain claims from Zuffa’s Complaint filed in Nevada.  While the case remains, the court ruling March 8th did damage to Zuffa’s case.

The lawsuit stems from Justin.tv allowing visitors to its website to view, illegally, UFC 121 which featured Cain Velasquez defeat Brock Lesnar for the UFC Heavyweight title.

Justin.tv brought a Motion to Dismiss (filed in Sept 2011) to dismiss portions of Zuffa’s Complaint.  The Court ruled March 8th in dismissing the following causes of action:

– Trademark:  Zuffa unsuccessfully claimed that Justin.tv infringed on its copyright as its logos were shown without consent during the illegal streaming of UFC 121 on Justin.tv.  While the court did not agree with Justin.tv’s argument, it sided with Justin.tv in finding no infringement.  The court held that Zuffa’s claims would allow Zuffa to hold copyright claims after it were to expire.

– The “Stealing Cable” Statute:  Section 230 of the Communications Act is nicknamed “stealing cable” as most claims under the statute arise out of this.

According to the court’s order, the law has been frequently used to limit suit against websites for alleged defamatory comments or reviews created by their users.  The statute has been applied in other instances but the court does not get into the actual claim. In dismissing Zuffa’s claim under section 230, the court acknowledges in a footnote the policy reason for dismissal.  The Court hypothesizes a scenario in which the floodgates of litigation would open up due in cloud computing.

Via court order:

Footnote 6

Zuffa argues that Justin.tv’s mere receipt of its users’ UFC video streams creates liability under the Communications Act. Logically, if the Court were to allow claims such as these, it would have to allow similar Communications Act claims against scores of “cloud computing” service providers such as Microsoft, Apple, Google, Amazon.com, Dropbox, Box.net, and others because Jusint.tv’s particular streaming service would be irrelevant. As an example, say a person took a snippet (or longer) of video of a UFC match being broadcast on their television with their iPhone, WindowsPhone, etc. The iPhone then automatically uploads that video to one of dozens of cloud storage systems such asApple’s iCloud. The Court refuses to find that Apple (or Microsoft, etc.) would be liable under theCommunications Act for merely receiving and storing this data under the Communications Act. Yet, Zuffa arguesfor exactly this result when it argues that Justin.tv’s mere receipt of this video stream makes Justin.tv liable. In passing the Communications Act, Congress did not intend such a result, and this Court will not broaden the effectof the statute in this manner

In addition to the court’s ruling, Zuffa stipulated to dismiss its cause of action for Deceptive Trade Practices under Nevada law.  No discussion was needed.

Zuffa v Justin Motion to Dismiss Order


Payout Perspective:

The court ruling is a blow to Zuffa’s legal strategy.  While Zuffa still has causes of action against Justin.tv, its novel approach to combating online piracy was diffused by the court.  Zuffa could still prevail against Justin.tv but the court’s ruling damages future intellectual property claims it may have against illegal streaming sites.

SEC Files Order Against ProElite

March 22, 2012

On March 20th, the Security and Exchange Commission (SEC) issued an administrative release stating that ProElite was delinquent in its periodic filings with the Commission, having filed some but not all of the required periodic reports.

The release can be read below:

SEC PE Filing

The order states the following:

” ProElite, Inc. (“PELE”) (CIK No. 1015789) is a New Jersey corporation located  in Los Angeles, California with a class of securities registered with the Commission pursuant to  Exchange Act Section 12(g).  PELE is delinquent in its periodic filings with the Commission,  having filed some but not all of the required periodic reports.  The most recent filings were a Form 10-Q for the period ended September 30, 2008 and a Form 10-K for the period ended December 30, 2008, both filed November 21, 2011.  The Form 10-K reported a net loss of $55,567,437 for the prior twelve months.  The last report previously filed was for the period ended June 30, 2008, which was filed on August 19, 2008.  As of March 16, 2012, the common  stock of PELE was quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets  Group, Inc. (“OTC Link”), had ten market makers, and was eligible for the “piggyback”  exception of Exchange Act Rule 15c2-11(f)(3)”

Payout Perspective:

The SEC has requested for ProElite to file a response within 10 days from the day the order was issued.  If PE fails to file an answer within the period granted, they could be deemed in default and the proceedings will determine the allegations against it to be true.  The Administrative Law Judge will issue an initial decision no later than 120 days (around July/August of this year) regarding the allegations stated above.

In terms of ProElite and the SEC filing, Stratus Media Group (parent group of ProElite) CEO Paul Feller told MMAPayout that this “does not impact the daily operations of ProElite”, as it is a “total separate matter carried over from the old Pro Elite group.” He went on to state that “We’re doing all the necessary paperwork required to comply with the SEC and to lift the temporary hold placed on ProElite.” Feller expects a resolution to the matter in a “very short time frame”.

In terms of running the operation on a day-to-day basis, it is “business as usual” according ProElite Head of Fight Operations T.Jay Thompson. “We are thrilled to be where we are. We have a wonderful TV partner in HDNet and expect to continue that partnership and to grow with them under the new AXS TV brand,  as they will further expand their reach into millions of homes.” ProElite is currently “re-fueling” and targeting a Summer date for their next event rumored to be held in California around June.

More from Shanks and Fertitta at the World Congress of Sport

March 21, 2012

The Sports Business Daily/Journal had another short report from Fox Exec Eric Shanks and UFC head Lorenzo Fertitta at the 2012 World Congress of Sports.  The two spoke today at the conference during a panel discussion entitled, “How the UFC/Fox deal could be a game changer.”

For those wondering, here’s the synopsis of the talk from the brochure:

In 2011, Ultimate Fighting Championship expanded into South America and Asia, and continued its surge in popularity, particularly among the 18-34 year-old male demo. But it was the mixed martial arts organization’s seven-year agreement with Fox — to show UFC programming on the Fox broadcast network and cable TV channels FX and FUEL TV — that made the biggest splash. As part of the deal, dozens of live fights will be airing on Fox networks and, this spring, “The Ultimate Fighter” reality show will feature a new format that includes live fights, rather than prerecorded events. This session will take an inside look at the UFC/Fox agreement and its role in the growth of mixed martial arts. You will hear from Lorenzo Fertitta, Chairman & CEO, Zuffa (Ultimate Fighting Championship); and Eric Shanks, President & COO, Fox Sports.

Shanks and Fertitta spoke about the UFC-Fox deal and the issue of control being a huge factor in Zuffa’s decision to go with Fox.

Here are some additional highlights:

–  Shanks said that the 64 second JDS KO of Cain at UFC on Fox 1 wasn’t ideal but “it was exciting,” he added, “It was a knockout. It was a style of a knockout people were used to seeing. It could have gone a lot of other different directions.” As a result, it learned that fans want more action and less fluff (i.e., talking and promoting).

–  As indicated at the end of last year, the UFC and Fox are concentrating on expanding its advertising partners. In addition to sponsors RYU and MetroPCS signing on recently it has secured Dr. Pepper.  Its had success with the auto category but is still looking for sponsors in the financial services, insurance and other areas.

–  Shanks stated that there is still room to grow to procure blue chip advertisers but emphasized its strong 18-34 male demo.

–  Fertitta believes that more advertisers will sign on citing, as Shanks did, that it will take time for advertisers to understand the UFC audience.  He also cited the fact that the UFC has an “affluent fanbase” as the average income for fans is $80,000 a year and the average UFC ticket is the highest in sports at $275.

–  Fertitta also touched on the New York legalization issue stating that the brand will be elevated if (and when) MMA is legalized in the state.

Payout Perspective:

Nothing earth shattering from Shanks and Fertitta so don’t feel bad you weren’t in Dana Point, CA (the site of the World Congress of Sport) this morning unless you are a leader in sports business – in that case where were you?  Nonetheless, I find the average income of the UFC fan really high.  Of course, it’s not clear if Fertitta is referring to household income or that of an individual. Also, $275 for an average ticket is really steep and it’s ironic since we hear so much of the tons of comps that are given out at various UFC Vegas events.

It will be interesting to see what sponsors get onboard with the UFC this year.  It was expected for there to be some time for advertisers to get comfortable with the UFC product which Shanks and Fertitta acknowledge.  But, how long will it take?

Control a big issue in UFC-Fox deal

March 21, 2012

The Sports Business Daily/Journal had a brief article on the UFC-Fox deal in which both sides indicated that control and opportunity were big issues in the monumental deal for Zuffa.

The article states that control was a big part of Zuffa choosing Fox. Zuffa still controls production of its shows although it takes suggestions from Fox.  Overall, Fox was fine with allowing Zuffa to continue with producing its shows.

Via SBJ/SBD:

Fox was OK with letting UFC control production, Eric Shanks, president and COO of Fox Sports.  “You wouldn’t have given up control if you don’t trust the guys,” Shanks said. “You want the authenticity that made the sport what it is. Part of what made it authentic was the production.

Still, Zuffa has worked with Fox in addressing some of its concerns.  We’ve seen the elimination of weapon sponsors, cleaning blood off of the mat, toning down some of the content and shortening fighter entrances with the UFC’s switch to Fox.

In addition, Zuffa was interested in the fact that Fox had so many platforms to promote the UFC.  This factor outweighed other opportunities with HBO or purchasing and rebranding the G4 network.

Payout Perspective:

It’s obvious that control is a big factor for Zuffa.  You need only look to the company’s dealings with Showtime to recognize that Zuffa is very protective of its brand and the way it does things.  You may recall that Showtime execs didn’t agree to some of the suggested changes Dana White had for Strikeforce: Rousey vs. Tate, which angered White to the extent that he’s hands off of Strikeforce.

As for the changes so far, the blood on the mat and weapon brand ban are things that relate to Fox’s overall standards and practices.  The issue with the blood has to do with the perception of the sport and the fact that it is still introducing it to the masses.  As Shanks was quoted, ““I don’t want it to look like someone just sacrificed a goat before Fox comes on the air.”

An interesting takeaway from the article is how shortening up the fighter entrances might indirectly hurt sponsors and the sponsorship of fighters.  With shorter appearances on the camera, it may hurt the sponsorship value of a patch, t-shirt or hat of sponsor.  It will make sponsors and agents think of other ways to get its brands on camera.

Bellator 61: 108,000 viewers

March 20, 2012

MMA Junkie reports that Bellator 61 ratings for this past Friday almost hit a record low with an average of just 108,000 viewers.  The ratings reflect the impact of March Madness added to the jammed MMA lineup on Fridays.

The 108,000 viewership average is the second lowest for Bellator on MTV2.  Bellator 53 in October 2011 received just 103,000 viewers.

Bellator 60: 169,000 viewers
Bellator 61: 108,000

Payout Perspective:

Obviously the first weekend of the NCAA tournament did damage to the ratings of all MMA programming Friday night as this past week/weekend is one of the most watched sporting events of the year.  One would have to hope that Bellator should bounce back after the tournament ends.

One positive Bellator can takeaway from Friday night’s show was the highlight flying knee from Brian Rogers.  The YouTube clip of it has garnered 312,302 views as of this writing which engulfs the number of actual viewers of the card.  This bodes well for Rogers and for Bellator to promote him in his next fight.

Via MMA Weekly

Hitman-TapouT lawsuit heating up

March 19, 2012

A lawsuit involving the former owner of Hitman Fight Gear and TapouT/Authentic Brands Group is heating up. MMA Payout has obtained the lawsuit which was filed in Orange County Superior Court in California.

Earlier this month, the lawsuit, filed in 2011, was leaked to the MMA blogosphere.  The lawsuit, filed by Daniel Diaz, is a salacious look at the purported inner dealings behind the TapouT brand and its eventual purchase by Authentic Brands Group (ABG)

The Lawsuit

According to the lawsuit, filed on March 29, 2011, Daniel Diaz, founder of MMA clothing brand Hitman Fight Gear is suing TapouT, ABG and other related entities as a result of claimed promises and a business deal which did not go Diaz’s way.  Diaz is also suing as a member of Fight Industries, LLC (F1) (known as a derivative lawsuit where a shareholder can bring suit on behalf of the company).

Diaz’s lawsuit alleges 12 causes of action (including 4 on behalf of F1) which includes: Breach of Fiduciary Duty, Conversion, Aiding and Abetting Breaches of Fiduciary Duty for Fiduciary Gain, Fraudulent Conveyance, Breach of Employment Contract – Wrongful Termination, Unpaid Wages, Unfair Business Practices for Personal Gain and Fraud in the Inducement.

The Alleged Facts

According to the lawsuit, Diaz and his brother established “Hitman Fight Gear” in 2001. In addition, Diaz did freelance design for other brands including TapouT.  In 2005, Diaz entered into a contract with Russell Lin on behalf of a brand named Roxwell.  Diaz would receive a 10% commission “on anything Roxwell made for TapouT” according to the lawsuit.  Diaz’s lawsuit alleges that his designs under Roxwell for TapouT were a success and his income was “steadily increasing.”

The lawsuit indicates that Marc Kreiner’s role with TapouT affected Diaz’s commissions under the Roxwell contract.  According to Diaz, Kreiner attempted to undercut the Roxwell contract by attempting to lower, by 10% the cost of goods on the TapouT-Roxwell contract.

According to the complaint in 2007, Punkass and Kreiner met with Diaz regarding “Hitman Fight Gear” in an attempt to purchase the company.  A limited liability corporation, F1, would be set up to purchase Hitman on behalf of TapouT.  Diaz agreed to a sale of his company in exchange for 1,125,000 Class B shares of F1 and an employment contract with the company.  In addition, Diaz would give up his contract with Roxwell. Diaz claims that he was led to believe that the Hitman brand would be given the backing to become as big as the TapouT brand.

However, Diaz claims that the F1 company was used for the personal benefit of Kreiner.  One of the allegations claimed in the lawsuit was that Kreiner was “accepting (indeed, demanding) bribes from vendors of both TapouT and F1.”  (page 9 of the lawsuit) The lawsuit alleges a “kickback” scheme which vendors would receive as high as “one dollar per t-shirt which – over the life of the contract – might pay the vendor hundreds of thousands of dollars as a “kickback” to the vendor for providing Kreiner with demanded gifts.” (page 9-10 of the lawsuit).

In addition to this claimed scheme, Diaz alleges the misappropriation of TapouT and F1 funds for Kreiner’s personal use.

Diaz claims that he was not reimbursed for business expenses, which were included in his employment contract, due to the fact that F1 purportedly lacked the money to pay him.

TapouT-ABG transaction

The lawsuit claims that after TapouT and F1 were depleted, the companies were purchased by ABG for the following:

1) the payment of some of the debt Kreiner and Caldwell managed to accumulate through their alleged scheme of skimming cash and other assets out of the company;
2) future cash payments to Kreiner and Caldwell, only, the amounts of which, were to be withheld from Kreiner and Caldwell pending the resolution of remaining creditor claims against those assets

The purported transaction would leave the companies with little or no assets to pay its creditors.

Diaz claims that ABG discovered the conduct claimed by Diaz when ABG conducted its “due diligence” prior to purchasing TapouT and F1.  Diaz claims that ABG used this information against TapouT and F1 (and to Diaz’s detriment due to his interest in F1) as leverage in negotiations by driving down the purchase price.  In addition, Diaz states that ABG attempted to buy his “silence” through an employment contract with the new ABG TapouT entity. When Diaz refused, he believed that ABG went around Diaz.  This led to, as Diaz alleges in the lawsuit, the diminution in value of F1 rendering his shares in the company worthless.

The Underground post

Earlier this month TapouT and ABG went into court seeking the return of stolen documents and disqualifying Diaz’s attorneys. The reason for this was due to an internet posting on MMA.tv (also known to most as The Underground) in which an article was posted which detailed the lawsuit.  A link to the article has been taken down. This was about the same time that details of the original lawsuit hit the twittershpere.  The internet post was discovered by an attorney for TapouT/ABG and a request to cease and desist was made to Diaz’s attorneys.

Prior to the posting, the parties agreed to a protective order during the discovery process which essentially means that the documents produced to each side would remain confidential.  Among the documents produced included information related to the purchase of TapouT.  Lawyers for TapouT claim that Diaz published information that were deemed confidential. In addition, TapouT lawyers state that the comments section after the article included information provided by Diaz which only would have been known by those privy to the documents under the protective order.

Some of the information has been released by others via twitter and/or other web sites.  Essentially, the inflammatory information Diaz provides relates to the claimed indebtedness of TapouT prior to its sale to ABG.  Also, some of the comments include information already identified in the Complaint related to the claims of a “kickback” scheme.

Despite the post and comments section, the court decided against immediate punishment for Diaz.  The Minute Order provided by the court stated the order sought by TapouT was denied.  The order did not include an explanation.

Payout Perspective:

The lawsuit appears to be heating up and there is a trial date set for this September.  The lawsuit is obviously personal for Diaz and the posting on The Underground reflects this.  The allegations against TapouT and ABG are serious and there may be more coming out of this lawsuit which may reveal a lot about one of the biggest brands in MMA.

UFC 129 earns SBJ nomination for “Sports Event of the Year”

March 19, 2012

The Sports Business Journal has named UFC 129 in Toronto as one of the nominees for Event of the Year in its annual sports awards.  The awards will be handed out May 23rd in New York.

As you know, UFC 129 was the biggest show in UFC’s history.  It was the first stadium show for the company and received the biggest gate and attendance for an MMA event.

UFC 129 will compete in the “Event of the Year” category with the 2011 Carrier Classic (November’s men’s college basketball game held on an aircraft carrier between North Carolina and Michigan State), 2011 Humana Challenge, 2011 NBA Finals, and Super Bowl XLVI.

As MMA Junkie points out, it missed out on nominations for “Sports Executive of the Year” and “Best in Sports Event and Experiential Marketing.”  Notably, Fox Executive, David Hill, who worked with Dana White with the UFC-Fox deal was nominated for exec of the year.

Payout Perspective:

While the awards are not an indication of the success of the UFC, its a recognition of its accomplishments in the sports industry.  UFC 129 may have a shot at winning its category although the 2011 Carrier Classic may be the front runner for that award simply due to the uniqueness of the event.  As Junkie points out, its interesting that Dana White was not nominated for Sports Executive of the Year although Hill was named.  Obviously, Hill did other things for Fox this past year but the UFC deal was one of the bigger acquisitions.

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