Franklin replaces Belfort at UFC 147

May 31, 2012

The UFC announced yesterday that Rich Franklin will replace Vitor Belfort at UFC 147.  He will now headline the Brazilian card against Wanderlei Silva.

The fight will take place at a catchweight of 190 pounds.  It will be Franklin’s first fight in over a year.

Payout Perspective:

Franklin will bring some interest to a non-descript UFC PPV.  As one may recall, this PPV was to be held in a stadium and feature Anderson Silva versus Chael Sonnen with Belfort-Silva as the co-main event.  With the fact that most of North America will not see the complete season of UFC Brazil by June 23rd, UFC 147 may have one of the lowest PPV buy rates to date.  The fact that UFC on FX is being held the night before may impact the viewership for 147 as well.  Still, it’s good to see Franklin back as he has tried hard to get back in the octagon.

Bellator 70: 119,000 viewers

May 30, 2012

MMA Junkie reports that Bellator 70 received a meager 119,000 viewer average as it ended its sixth season.  The average for 70 is 90,000 viewers less than the week before.

Bellator 69: 209,000 viewers
Bellator 68:  169,000 viewers
Bellator 67:  165,000 viewers
Bellator 66:  109,000 viewers
Bellator 65: 163,000 viewers
Bellator 64: 175,00 viewers
Bellator 63:  140,000 viewers
Bellator 62:  175,000 viewers
Bellator 61:  108,000 viewers
Bellator 60:  169,000 viewers

The sixth season final average was 155,000 viewers.

Payout Perspective:

We may attribute Memorial Day weekend for the low numbers.  It’s too bad considering it was the Lightweight and Heavyweight finals.  Unfortunately, the numbers didn’t end up on a positive note as Bellator had hoped.  The sixth season continued with the fluctuations in viewership which may concern Bellator execs but as we all know its building its audience in preparation for its move to Spike TV.

Inc. Magazine features Blue Grace Logistics UFC sponsorship

May 30, 2012

Inc. magazine’s June issue featured UFC sponsor BlueGrace Logistics and its marketing in the UFC.  The article interviews CEO Bobby Harris and UFC agent Malki Kawa about the marketing.

Via Inc. Magazine:

Of all the peculiar places businesses advertise, a man’s backside may top the list.  But in the world of mixed martial arts, it’s the most visible space on a fighter’s shorts.  For sponsors, that makes it the money sport, and, according to Bobby Harris, founder and CEO of BlueGrace Logistics, it’s worth every penny.

BlueGrace, a shipping, transportation and logistics company has sponsored more than 20 fighters including current lightweight champ Benson Henderson.  Similar to MusclePharm, its logo is readily identifiable.

Harris had a chance meeting with Jon Jones in the lobby of a Las Vegas hotel.  Impressed with Jones, Harris considered a sponsorship deal with the UFC.

Some other takeaways from the article:

-  It can cost “as little” as $10,000 to sponsor a fighter for one night and an annual contract is in the “low six figures.” According to the article, its a fraction of the cost if a company wanted to get into NASCAR.

-  The “newness” of the sport allows personal relationships between fighter and sponsor.  The BlueGrace-sponsored fighters promotes and interacts with fancs for the brand on Twitter and Facebook.

-  Thiago Alves, a fighter with an annual contract, appeared on its holiday card and made a personal appearance at a BlueGrace career fair.

The article also comes up with some sport comparisons when it comes to marketing:

Equestrian – $15,000 an event
Surfing – $25,000 an event
Bowling – $20,000 an event.  The article noted that this sport has a much lower cost of entry than other televised sports.
Women’s Golf – $50,000 an event

UPDATE:  Credit Larry Rothstein from Source Communications with the above estimates.

Payout Perspective:

It’s an informative writeup on how a company with no real ties to MMA got into sponsorship. The comparables also show why a smaller company still may find value in sponsorship opportunities with the UFC. The article did not address the UFC sponsorship fee so its not clear whether the cost of sponsoring includes the fee or not.

TUF Live Ep. 12: 875,000 viewers

May 29, 2012

MMA Junkie reports that episode 12 of TUF Live on FX scored an average of 875,000 viewers.  The rating is higher than last week’s all-time low.

TUF Live Episode 1: 1.28 million viewers
TUF Live Episode 2: 1.1 million viewers
TUF Live Episode 3: 1.2 million viewers
TUF Live Episode 4:  1.1 million viewers
TUF Live Episode 5:  947,000 viewers
TUF Live Episode 6:  1 million viewers
TUF Live Episode 7:  1 million viewers
TUF Live Episode 8: 929,000 viewers
TUF Live Episode 9:  954,000 viewers
TUF Live Episode 10: 948,000 viewers
TUF Live Episode 11:  821,000 viewers

Payout Perspective:

And the season ends with a slight rebound.  Unfortunately for Zuffa, TUF Live didn’t catch on this season as it had hoped.  Unlike Bellator, there was no positive trend to end its season.  In fact, TUF Live hit an all-time low twice this season.  We will see what Zuffa has in store with TUF Live for the future.

Celeste arrested before UFC 146

May 28, 2012

UFC ring girl Arianny Celeste was arrested Saturday morning on charges of battery allegedly stemming from a domestic violence issue.  The arrest is the second this month involving a widely known UFC persona as Jon Jones was arrested on suspicion of a DUI.

While she was absent from a portion of UFC 146, she was present during the last half of the card according to Cagewriter.

Dana White told Yahoo! Sports, “Arianny is our baby. She has been with us for over five years. She is a good girl and an amazing ambassador for the UFC. I don’t know all the details of what happened but we have her back and support her 100 percent.”

According to MMA Weekly, Celeste will be in court May 30th.

Payout Perspective:

This is a sensitive issue, and like the Jones case, the facts will eventually come out.  In a more of paternalistic turn, White’s comments were appropriate and necessary to address her absence.  It shows that you don’t have to be combative or over the top in addressing an issue.  As the UFC becomes more of a mainstream entity, it’s likely that we will see more issues outside of the octagon which the UFC will have to play a part in addressing.

UFC 146: Payout Perspective

May 27, 2012

Welcome to another edition of Payout Perspective!  This time we look at UFC 146 at the Mandalay Bay Events Center (if you are Frank Mir), if you are everyone else it was at the MGM Grand in Las Vegas, Nevada.

JDS KOs Frank Mir

Just one takedown attempt stuffed by JDS, did the trick and Mir was forced into a standup fight wtih the Heavyweight champion.  Bad idea as JDS dominated the fight and almost took out Mir a couple times prior to the actual finish.

JDS solidified his place as the dominant heavyweight in the division.  We should see JDS-Cain II sometime this fall.

Cain dominates Bigfoot

If you wanted a definition of a mauling, you need only look to what Cain Velasquez did to Bigfoot Silva.  It had looked like Silva bladed based on the amount of blood Silva lost from a Cain elbow.  While Silva had the size advantage, Cain was focused, dominant and vicious.

As we stated above, Cain should get the next shot to reclaim the heavyweight title.

Pee Wee no match for Big Country

Roy Nelson needed less than a minute to finish David Herman.  An overhand 2 that made Herman almost turnaround and sit on the canvas spelled the end of the night for second fill-in for Nelson.  Despite what we think about Nelson’s physique, he still packs a huge punch.


Attendance and Gate

MMA Junkie reports that UFC 146’s attendance was an attendance of 14,592 for a gate of $3.4 million.  Notably, it had a higher attendance and gate than UFC 141 featuring Overeem-Lesnar.

Bonuses

Each fighter earned $70,000 each (via MMA Junkie).  There was no FOTN but KO and Sub had 2 each.

KO of the Night:  Dan Hardy and Roy Nelson
Submission of the Night: Stefan Struve and Paul Sass

Countdown/Primetime Shows

The Primetime shows on FX did a respectable 542K and 544K viewer average for the first two episodes.  We will update this post when we receive the ratings for the third episode.

No word on the Countdown show rating but we will update once we receive it.  The one cool takeaway from the show was Dave Herman training with “Trampoline Cageball.”  Not sure if it’s related to Slamball, but Spike TV should have it as a lead in to TNA and Bellator Thursday nights.

Salaries

Salaries for the main event fighters were revealed prior to UFC 146.  JDS and Mir both earned a flat $200K.  Although not officially reported, JDS received a portion of the PPV which made his post-fight thank you “to those purchasing the PPV” seem like a personal thanks for making him money.  We will update the rest of the card salaries once it is released by the NSAC.

Sponsorships

- It was a good night for RYU.  Not only was it its first time on the mat during a PPV, its 2 sponsored fighters:  Jamie Varner and Darren Elkins had good wins.  RYU also was this month’s Sponsorship Spotlight feature.

-  Cain Velasquez was featured in the latest MetroPCS commercial.  Good timing for the company as Velasquez looks like he will be back in a title match soon.  Velasquez was also sponsored by UFC sponsor Bony Acai.

-  JDS had multiple sponsors from Brazil and Latin America including Locaweb, a cloud computing and web hosting company.  It was good placement for Locaweb as it was the only other logo on the front of JDS’ Pretorian shirt during the walkout.

-  Frank Mir and his team came out to UFC sponsored “UFC 93” shirts and hats.  Mir did wear other sponsors on his fight shorts.

-  In addition to RYU, Varner had convenience store operator Mr. Gas as a sponsor.  Its logo was placed on his backside which may or may not be good placement.

-  Another interesting story out of the night was that of 9 year old friend of JDS, Breno Ferreira.  His story was told during the Primetime shows and he flew to Las Vegas to be at ringside with JDS.  There were rumors that the idea of flying Ferreira to Vegas was utilized for extra press for JDS and UFC 146.  JDS immediately wanted Ferreira to come to the octagon to be with him after the win but was stopped by security.  He finally made it to the octagon wearing a UFC hat and dos Santos shirt with JDS sponsor,CERS, clearly visible.  Whether or not this was an organic story or a PR stunt, nobody was really harmed and the kid got a trip he would probably never have in his life.

Post-UFC 146 Headlines

- Cain-JDS II: Both had impressive victories and they should be on a collision course to a second title matchup.  This time you could expect this to be on PPV.

-  Varner and Hardy comebacks:  Both Jamie Varner and Dan Hardy had good wins in trying to staying in the mix in their respective divisions in the UFC.

-  Glover Texeira is finally in the UFC and was very impressive against fanny pack wearer Kyle Kingsbury.  Texeira should be one to watch in the 205 division.

Odds and ends

-  The fact that each of the 5 fights on the main card ended early (4 of them via KO) must be a record.

-  Anyone else notice the new camera angles the UFC used during matches.  A nice, subtle addition.

-  I do not know whose weigh-in attire was worse?  Mayhem Miller or Kyle Kingsbury.

-  Great return by Jamie Varner especially when Barbosa was on a winning streak.

-  Glover Texeira has a great debut the same day that New York Yankees first baseman Mark Texeira hits 2 home runs….coincidence?

-  Rogan couldn’t help himself during the del Rosario-Miocic when one of the corners asked for the “Pacquiao” Rogan quipped, “What, is he going to say something about gay marriage?”

- And now…Brock Lesnar was at ringside and that gave way to the rumors that he might return.  If there is anyone that is a jack of all trades (UFC, WWE and NFL training camp), he seems to be a master of none. It would be nice to see the UFC and WWE do some sort of arrangement where Lesnar could switch back and forth (maybe a Mo Lawal-type deal).  But, I think a UFC-WWE agreement would be some sort of unholy alliance.  It’s not going to happen.

Conclusion

An all Heavyweight main card did not disappoint. It was a good idea and I hope its done again in the future. While I don’t expect blockbuster numbers for this event, it solidifies Junior dos Santos and Cain Velasquez as top Heavyweights.  This should help with their drawing power for JDS-Cain II.

UFC 146 main event salaries

May 26, 2012

MMA Junkie reports the release of main event fighter salaries for tonight’s UFC 146.  JDS and Frank Mir will earn $200,000 each with no win bonus.

Also revealed by NSAC head Keith Kizer, Cain Velasquez will earn $100,000 with the potential of a $100,000 win bonus and Bigfoot Silva will earn a flat $70,000.

Payout Perspective:

For JDS, he may will earn less (based on straight salary earnings) than he did at UFC on Fox 1 as his salary was $110K plus $110K for the win ($220K total).  However, I’m sure he is fine with the bump to a $200K base.  Velasquez earns the same from his fight with JDS.  The rest of the salaries will be released after UFC 146.  Based on the top of the card, this may be one of the bigger payrolls for a UFC card to date this year.

The pro wrestling post: TNA sues WWE, Lesnar PPV buys and Wrestler v. Wrestler

May 25, 2012

Welcome to another edition of the pro wrestling post.  This week we look at TNA sues WWE, Brock Lesnar’s return to PPV with the WWE and wrestler sues wrestler.

TNA sues WWE

TNA Wrestling has filed a lawsuit against the World Wrestling Entertainment and a former employee of TNA and the WWE for what amounts to misappropriation of trade secrets (a desriptiion , interference with existing contracts and other breach of contractual claims.  Essentially, Brian Wittenstein, a former employee of TNA Wrestling left the company to work for the WWE.  Wittenstein allegedly took information regarding TNA and other matters while he worked for TNA in the talent relations and live events department and gave it to the WWE as he was hired by the company after his time with TNA.

According to Cageside Seats (via PWInsider.com), the WWE fired Wittenstein after he presented WWE officials with the information.  However, a couple weeks had passed before the WWE let TNA know of the information.  TNA is claiming that the WWE is trying to poach TNA wrestlers utilizing the information it knows from the TNA information.

Payout Take:  You may recall a similar event occurring with Bellator suing local Arizona promotion Desert Rage. In that case, it was claimed that an individual working on behalf of Bellator utilized information he knew about Bellator contracts to find fighters for a Desert Rage event.  There, the Bellator event and the Desert Rage event were held on the same night in the same vicinity.  An injunction has been filed by TNA in which the court has ordered the WWE and Wittenstein to hand over the confidential information Wittenstein obtained while he was with TNA.  MMA Payout will try to track down the lawsuit and provide further comment.

Lesnar’s WWE return on PPV

The Wrestling Observer reported the PPV buys for WWE’s Extreme Rules at 251,000 buys broken down as 144,000 in North America and 107,000 overseas.  Lesnar was in the main event against John Cena.  A match which Lesnar lost.  The buy rate was an increase of 35,000 buys from 2011’s Extreme Rules.

Payout Take:  Is the increase a disappointment?  Did we expect more with Lesnar at the top of the card?  Did the WWE mishandle Lesnar?  In the UFC, Lesnar was the PPV draw as he drew over 1 million buys 4 times when he was on a UFC card.  Extreme Rules is not Wrestlemania, so maybe we discount the magnitude of the event.  Still, Lesnar came back to the WWE with much fanfare.  Perhaps the re-emergence of Paul Heyman in the WWE is a sign that Lesnar needs a mouthpiece to get over with the crowd in terms of promoting his matches.

Wrestler sues wrestler

An amusing lawsuit (not for the injured person) with some insight on what we all know about pro wrestling (its not real but you can still get hurt).  The USA Today reports that a wrestler on the independent circuit has sued another wrestler for failing to follow the script.  As a result, the wrestler lost a testicle.

John Levi Miller is suing the wrestler and the wrestling promoter for “unspecified compensation for medical expenses and for possible consequences from the injury, which he says could include erectile dysfunction, loss of testosterone, loss of sex drive and osteoporosis.”

As is the case with many pro wrestlers on the indy circuit, Miller has no insurance and has incurred $20,000 in medical bills.  Miller contends that Clinton Woosley did not want to work on their match prior to performing and Woosley kicked Miller in the groin in an effort to win the match.  However, it was predetermined that Miller would win according to Miller.

(H/t:  Sports Law Prof)

Payout Take:  The story seems like a fact pattern for an exam in law school.  Did Woosley have a duty to work with Miller prior to the match?   Was there an assumption of the risk by Miller?  How is the promoter liable?  Did the promoter have insurance?  The lawsuit is unique as things like this on the independent circuit never get to the courtroom.  But, the lack of health insurance, unpaid medical bills and injuries are realities of pro wrestling and MMA in small promotions.

Sponsorship Spotlight: RYU

May 24, 2012

Welcome to another edition of Sponsorship Spotlight.  This time we are featuring MMA apparel company and UFC® sponsor RYU.  MMA Payout had the opportunity get in touch with RYU CEO Christopher Martens for a quick Q&A regarding its recent involvement as a UFC® sponsor.

You will likely see a lot of RYU this weekend during UFC 146 as RYU will have its largest presence to date on-site and during the PPV.

MP:  When was the company founded? How did you come up with the name?

RYU:   The company was founded in the fall of 2008 and we recently launched our debut line of premium men’s performance apparel in February 2012.

RYU is an acronym for Respect Your Universe, but it’s also a term that is the embodiment of the principles and philosophy held by the company.

MP:  Where are the headquarters? It appears that design and development is in Portland, whereas HQ is in Vegas. What’s the reason for the dual offices?

RYU:  We were incorporated in Las Vegas and we have the Sports Marketing piece of the brand located there, but Portland is one of the centers in the country – or even the world – for outdoor and athletic apparel, as well as footwear creation, so the resources for us to create innovative products are all located here in Portland.

MP: What influences does the company have from Nike?

RYU:  RYU has the influence of experience.

We have four executives who came from Nike, and our executive team as a whole comes from leadership positions at multiple major sports apparel brands.

MP:  How is the company structured?

RYU:  As typical of most consumer product companies, we are structured with a marketing arm, product creation arm and sales arm, as well as operations and finance, though a lot of our positions are virtual, contracting out elements that make sense.

MP:  What is your target demographic? What do you do to reach out to this demographic?

RYU:  Our target demographic is a person that athletics are important to their life on a daily basis, and we reach out to them in a variety of communication channels – digitally, through our partnership with the UFC®, Sports Marketing, or, on a grassroots level, through the RYU Ambassador Program.

MP:  When did you decide to be a UFC® sponsor? What was the process for sponsorship (i.e. did you have any input on where, when and how the RYU brand would be utilized during UFC® broadcasts?)

RYU:  Working with and sponsoring the UFC® has always been a part of our plan, as the brand was founded on insights from fighters to create great product.

We work in partnership with them to maximize the placement of the brand to best connect with our consumers.

MP:  How many UFC® athletes does RYU sponsor? Does RYU sponsor any other athletes?

RYU:  We actively sponsor UFC® welterweight Jon Fitch, and have had worked with several talented athletes in the UFC, such as TJ Dillashaw, John Hathaway, Mike Massenzio, Danny Castillo, Marcus LeVesseur and Alex Soto.

We’re also excited to be represented by Jamie Varner and Darren Elkins at UFC 146 on May 26th.

Outside of the UFC®, we actively sponsor 2011 Mr. Olympia Phil Heath, Boston Red Sox Outfielder Darnell McDonald, and endurance athlete Christian Isakson and have worked with Strikeforce fighter Josh Thomson, Bellator Fighting Championship Welterweight Champion Ben Askren and Bellator Middleweight Champion Hector Lombard, who recently signed with the UFC®.

MP:  How does RYU use Jon Fitch as an ambassador for the brand?

RYU:  Jon is an Ambassador on multiple levels. We utilize him for product feedback through his training, in social media, digital and ad campaigns, as well as at the grassroots gym level.

He wears and talks about the product with other fighters and with trainers.

MP:  How is RYU using social media to reach out to its target demographics? How does RYU measure social media success?

RYU:  It’s important to us to be able to interact with and get to know our consumers, so we have a very active presence on both Facebook (www.facebook.com/RYUapparel) and Twitter (@RYUapparel).

As far as measuring our social media success, at this point, we are building brand awareness and relationships with consumers within the mixed martial arts and athletic apparel communities and markets – so every time someone sends us a tweet about our product, or posts a photo in RYU product, that is a small victory and success for the brand.

MP:  What are the long-range goals for the company?

RYU:  Our long-range goals are to continue to bring innovative product to the marketplace, as well as to continually grow as a premium performance brand within the space of Mixed Martial Arts and beyond it into a global athletic brand.

MP:  We understand that the company is publicly traded. What are some of the challenges of having a publicly traded company? What do investors/shareholders think of the sport of Mixed Martial Arts and the business plan for RYU?

RYU:  The cost. There are a lot of costs associated with being a publicly traded company, specifically as far as reporting and auditing. Also, aligning – making sure that the short term goals of all involved are in-line with the long term vision of the company.

We have a team of investors, shareholders and board members who are very supportive of both the sport and RYU’s goals.

A lot of the investors are either fans or participants in martial arts or mixed martial arts and they see the opportunity there and how that opportunity aligns with RYU’s long-term business plan.

Follow up on the Oklahoma PPV tax

May 23, 2012

Last week, the Oklahoma Attorney General decided that the state’s tax on pay per views was unconstitutional.  MMA Payout takes a brief look at the potential legalities behind this question.

As those who have been following know, the UFC threatened to sue the state of Oklahoma for its 4% tax on pay per views.  As a result, there was a possibility that the state would have to shut down the regulation of MMA events within the state.  Since the initial issues, the state Attorney General reviewed the PPV tax and determined it could not defend the constitutionality of the law.

So we postulate on what the AG could have looked at to determine why it could not support the law.

State regulations and state taxes that burden interstate commerce can be challenged under the dormant commerce clause of the US Constitution if they place an undue burden on interstate commerce.  Essentially, even if Congress has not acted with respect to a state/local law affecting interstate commerce, it would fall under the purview of federal law. Under the Dormant Commerce Clause, there is a strong presumption against state discrimination against out-of-staters. Any tax related to this would be struck down. The US Supreme Court has made it clear that states cannot use their tax systems to help in-state businesses at the expense of out-of-state businesses.

In general, taxes specific to out of state commerce are never allowed while nondiscriminatory taxes are much more likely to be permitted.

In Complete Auto Transit, Inc. v. Brady, the issue was whether a tax was unconstitutional because it was applied to an activity that was a part of interstate commerce.  A tax was placed on Complete Auto as it hauled General Motors vehicles from out of state to in state car dealers. The US Supreme Court upheld the law and applied a four part test in concluding that a state tax does not violate the commerce clause.  The four part test ask if:

1) It is applied to an activity with a substantial nexus to the taxing state;
2) It is fairly apportioned so as to tax only the activities connected to the taxing state;
3) It does not discriminate against out-of-staters; and
4) It is fairly related to services provided by the state.

Without going through an exhaustive analysis of the test (since the issue has been decided), arguably the state PPV tax could fall within the Complete Auto test if the tax was similarly applied to in-staters (#3, the nondiscrimination element).  However, as explained in this article, most of the OK State Athletic Commission’s revenue came from out of state PPVs. The AG probably looked at the likelihood of successfully arguing in favor of the PPV tax and determined that the law could not be successfully defended.

Obviously, there were other legal issues it factored into its analysis but this was one of the likely hurdles the state decided it could not overcome.

DISCLAIMER

The information in this post is opinion only. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the article, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site to send me e-mail containing confidential or sensitive information.

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