Showtime launches app to score boxing

June 23, 2012

Bad Left Hook reports on Showtime Sports launching a new mobile boxing scoring game which you can play on your iPhone or Droid.  The game was launched before tonight’s Ortiz-Lopez fight.

Via BLH:

Launched in advance of Saturday’s SHOWTIME CHAMPIONSHIP BOXING telecast-Ortiz vs. Lopez, play SPLIT DECISION to test your skills against all players and see how you stack up. Each player’s pre-fight predictions and live scoring will be judged against the official decision and the round-by-round scores. Earn points with correct predictions and scorecards that match that of the officials at ringside.

All players this weekend get entered into a random drawing to win a trip to a future SHOWTIME CHAMPIONSHIP BOXING event.

To play, log on to SD.SHO.COM (http://sd.sho.com) from your iPhone or Android, create your account in a few simple steps and make your predictions. Then, during the live fights (both SHO televised fights) score the fights round by round.
Shortly after the fights, check your score and see where you rank on the leaderboard.
Post your predictions on Facebook and follow the conversation on Twitter.

Payout Perspective:

A timely app considering the controversial Pacquiao-Bradley decision.  Tonight would have been a good night to be a judge up until Victor Ortiz quit (which is another story).  Yet, it’s another sign of boxing reaching out to fans through the use of social media.  Not only will the app make watching the fight more interactive, one can post their picks on Facebook or Twitter.

Fertitta Interactive launches poker site

June 22, 2012

The Las Vegas Review Journal reports that Fertitta Interactive LLC will launch its real-money and social gaming company, Ultimate Gaming with the launch of UltimatePoker.com on Friday.

Of no surprise, Ultimate Gaming is the UFC’s official online gaming sponsor.

Via Las Vegas Review Journal:

Fertitta Interactive is a division of Fertitta Entertainment LLC, which is also the parent company of Station Casinos LLC and the UFC. The company will control all of the content of its products, with games developed by CyberArts.

CyberArts was purchased by Fertitta Interactive LLC in October.

Fertitta Interactive hopes to capture a share of a multibillion dollar market. According to H2 Gaming, a London-based research firm, the U.S. online poker market will exceed $4.3 billion, assuming federal legislation is passed and every relevant state opts in.

Ultimate Poker.com was displayed on the ring mats and corner bumpers at UFC on FX 4 in conjunction with its release on Facebook on Friday.  It will launch real money poker in Nevada as soon as state gaming regulators approve pending manufacturer, service provider and operator licenses which should happen by the end of the year according to Tom Breitling, chairman of Fertitta Interactive.

Payout Perspective:

As most recall, this is reminiscent of the UFC’s last go round with online poker.  The strategy of leveraging the male-dominated UFC demo with online poker, another male-centric demo, should bring in many octagon fans to the poker site.  Of course, a lot of this is dependent on legislation allowing for real money poker sites.  But, for the Fertittas to position itself with the free version on Facebook to get poker fans hooked and ready to go live with a money site when (or if) legislation is passed, is a smart move.

Bellator 71 live on Gametrailers.com to promote “MMA Onslaught”

June 21, 2012

The Bellator Summer Series begins tomorrow and it will be streamed live without commercial interruption on video game web site Gametrailers.com to promote the new Bellator video game “MMA Onslaught.”

Via Bellator press release:

“We are taking this opportunity to dedicate an entire event to showcase our new video game, ‘MMA Onslaught’ and will substitute commercial inventory with a really cool first-look at the game,” said Bjorn Rebney, Bellator Chairman & CEO. “We are confident both fight fans and gamers will enjoy our first foray into the gaming world.”

Bellator will also be streaming the fight card on Ustream, Spike.com, and Bellator.com, along with various other MMA and video game websites to be announced later this week.

Payout Perspective:

The Gametrailers.com web site kicked me off as of Thursday night so hopefully this will be rectified so that this promotion will work for tomorrow.  The promotion makes sense considering Bellator is releasing the game this summer and it’s kicking off the summer season.  The video game will be a test balloon for Bellator to see what the market is like for the game and we may see a full blown game in the future.

Showtime Weekend in Baja

June 21, 2012

Anthony “Showtime” Pettis spent a weekend working for his sponsor Toyo Tires and we get a video as a result.  It appears as though “work” was pretty fun.

Payout Perspective:

A nice video capturing Pettis as brand ambassador for Toyo Tires offroading with his sponsor’s tires.  Pettis is a fighter that could make the leap from fighter to mainstream spokesperson if his career continues to ascend.  His backstory has been featured on MTV and a lot of us remember the Showtime Kick which propelled him to ESPN highlights.  He’s been floating under the radar since coming over to the UFC but hopefully he will be making some noise later this year.  It seems like his sponsorship deal with Toyo Tires is the kind of deal every fighter would want.  It allows Pettis to work outside the Octagon with the sponsor, doing something he enjoys as well as promoting the brand.

Payout Exclusive: One FC’s Victor Cui

June 20, 2012

MMA Payout had the opportunity to speak with Victor Cui, the CEO of ONE Fighting Championship.  Cui talked about the growth potential for Asian MMA, growth opportunities and sponsorships.

Since officially launching the company in 2011, it has become the #1 MMA sports organization in Asia.  It recently conducted a summit meeting of major players in eastern MMA with the hopes of setting forth a network of fight partnerships that will bring MMA to Asia.


“On a personal level, I have been preparing to do this my entire life,” Cui said.  The CEO of One FC is Chinese Filipino and was born in Canada, but raised in Africa.  “I am lucky to do what I love,” Cui added, “I love MMA, I love the sports industry and I love Asia.”

“My whole career background I have been involved in entrepreneurial initiatives and the last 6 and a half years have been in the sports media.” Before launching the company, Cui conducted research on MMA in Asia.  “The sport [MMA] exploded all over the world but it is in its infancy in Asia.”

Cui worked for a regional sports company across Asia before establishing One FC.  This experience gave him the opportunity to look at all types of sports.  “I looked at tennis to golf to table tennis.”  He also helped in bringing the X-Games to China.

“There are 3.9 billion people in Asia,” stated Cui.  Although there are different socio-economic issues with each country which may prevent the people from following sports, Cui believes that every country has a connection with martial arts.  “Every single country at its core has martial arts in its history.”

Based on the martial arts connection, asking people to follow MMA is easy to do.  “The cultural leap is easy to follow.”  Cui indicated that the media in Asia is embracing MMA.

One FC will have 8 events this year with the prospect of having 18 in 2013.  As far as which countries it will go in Asia, Cui stated, “There’s a lot of plotting in place.  You have to line up your ducks in a row before getting into each country. One FC is looking at Asia as a whole.”  According to Cui, live attendance at OneFC events have been “phenomenal.”  After its event Saturday in Kuala Lumpur, it will head to the Philippines and Singapore later this year.

“One FC has regional properties but global fans.  We’ve got fans all over.”  As for fighters, “International names with international following are helpful for shows.”  However, Cui is also looking into developing Asian MMA stars.

One of the ideas coming out of its summit was the One FC Network.  “It brought together every single promoter and MMA gym owner (in Asia).”  The belief is that the Network would pull together the best fighter from an organization and put them on a One FC card.  This would bring better quality fights and a better experience for fans.

“We now have access to every top fighter in every country (in Asia),” Cui explained,”The One FC Network is a fighter network and as fighters develop, they get an opportunity to compete on a One FC card.”

Cui stated that MMA is “still growing at an explosive rate.” Based on the popularity, MMA gyms are continuing to expand.  Cui brought up the example of Malaysia where a particular gym has opened up 6 more franchises in the country.  “Grassroots growth is very high.”  Yet, MMA skills are still behind that in North America.  “Outside Japan and Korea the level of skill is nowhere near that of the U.S.”  Cui cites wrestling as an attribute that North Americans have that Asian MMA must still cultivate.

Additional questions from the Cui interview:

MP:  Does the UFC’s expansion into India and Asia help or hurt your own plans for your company?

Cui:  “The UFC is a fantastic organization.  I think its great (regarding UFC’s expansion).  Its always good when there’s more people contributing to the growth of the sport.”

MP: What is the biggest challenge for your organization?

Cui:  “The challenge is the rapid pace of growth (of One FC).”

Cui cited an example that occurred last week in which One FC held a small media event for some of the editors in Malaysia to talk about One FC.  Cui indicated that the small event turned into a huge turnout as major tv stations and senior editors from different organizations came out. The media event was on the front page of one of the largely distributed papers in Malaysia.

MP:  Are companies willing to sponsor the organization’s product?  If so, what companies?

Cui:  “We are close with a lot of companies.”  Cui noted SONY, Carl’s Jr., Energizer, Schick Razor and Chevrolet (in Malaysia) are all sponsors of One FC.

“We only look for long term deals and sponsors,” said Cui.  “We are not interested in “one-offs.”

In addition, the sponsors have collaborated with One FC in brand activation.  This includes a Sony promotion in which it gave away $4,000 to the best ring entrance at a One FC event.  Also,  Carl’s Jr. has One FC promotional material in many of its franchises in Asia.

Payout Perspective:

We normally do not take a look at MMA outside of the UFC (or outside of North America) however Cui’s One FC Network is an interesting organization that has grown substantially in just a year’s time.  Its 10 year contract with ESPN Star Sports delivers its fights to over 500 million fight fans throughout Asia.  The television deal is astounding as well as the blue chip sponsors it has in its stable.  The One FC Network is a unique idea that has brought together multiple organizations in Asia and we will see how the relationship will continue.  Its good insight on the global growth of the sport and how MMA is gaining worldwide acceptance.

ONE FC is holding an online PPV this Saturday, June 23rd.  It is available on its web site at OneFC.com.  The first four fights will be free and the rest of the card will be $9.99.  The card starts 5:00am PDT and 8:00am EDT.

Mayweather-Pacquiao top Forbes list

June 19, 2012

Forbes Magazine released its annual top 100 highest-paid athletes.  Notably, Floyd Mayweather, Jr. and Manny Pacquiao top the list at 1 and 2.  No MMA athletes made the list.

Mayweather made $85 million according to Forbes from June 2011 to June 2012.  During this time, Mayweather fought twice (Victor Ortiz and Miguel Cotto).  Pacquiao made a reported $62 million total with $56 from salary and $6 million in endorsements.  The listed endorsements for Pacquiao include Nike, Hennessy, Hewlett-Packard and Monster Energy.  Not listed was State Street Produce.

Tiger Woods, LeBron James and Roger Federer round out the top 5.  Boxers Wladimir Klitschko (No. 24 – $24 million) and Miguel Cotto (No. 75 – $19 million) also made the list.

Payout Perspective:

Mayweather topping this list may not be a surprise considering the different revenue streams he receives from one of his fights.  It is interesting that Mayweather has no sponsor deals.  I had believed that Reebok was a sponsor based on the gear worn during the 24/7 series.  Pacquiao’s earnings stem from the immense popularity of the fighter rather than the business acumen.  When you look at the earnings these two make, it makes sense that boxing should have these two fight as it could possibly be the biggest payday in the history of sports.  Of course, there is the boxing business that gets in the way of the two fighting.

International Fight Week coming pre-UFC 148

June 18, 2012

The UFC sent out a press release on Monday announcing International Fight Week taking place July 3rd through July 7th.  The week is in partnership with the Las Vegas Convention and Visitors Authority and will include the UFC Fan Expo.

Via UFC press release:

International Fight Week will be the ultimate week-long experience for UFC fans. The inaugural week long celebration of the UFC will feature the largest ever gathering of fighters and unprecedented access to UFC stars, the biggest UFC Fan Expo yet, open workouts with UFC 148 fighters, pool parties and pub crawls hosted by fighters and Octagon Girls, a concert and, of course, the week will cumulate with one of the biggest sporting events of the year: UFC 148: SILVA vs SONNEN II.

Some of the biggest properties in Las Vegas will be hosting UFC themed events during International Fight Week, including the MGM Grand, Mandalay Bay, the Palazzo, the Wynn, the Palms, the EA Sports Lounge at the Cosmopolitan, a Fremont Street experience at the D, Golden Nugget, Golden Gate and El Cortez plus much more

The confirmed timetable thus far for International Fight Week is attached, and highlights include:

·         Final UFC 148 press conference, free and open to public, at Lagasse Stadium at the Palazzo, Tuesday July 3
·         Octagon Nation Truck, with fighter appearances and interactive features, will be at the world-famous Fremont Street from July 4 until fight night
·         A free 4th July concert at Fremont Street featuring 3 Doors Down
·         FUEL TV will be reporting live from Fremont Street on July 4 and 5
·         UFC 148 Open Workouts at XS at Wynn
·         Pool Parties at the Mandalay Bay and Palms
·         July 5 Pub Crawl in downtown Las Vegas hosted by
·         UFC Fan Expo, July 6 and 7, at Mandalay Bay
·         Rock concert with special guests
·         UFC 148 viewing parties throughout the town
·         UFC 148 Official After-Party at Tryst Nightclub at Wynn


Payout Perspective:

The last couple of cards on FX promoted this International Fight Week via ring bumpers.  The UFC is taking advantage of the long holiday week in which many visitors will be coming to Las Vegas with this week-long (5 day) promotion culminating in the big rematch between Silva and Sonnen.  In addition to the event, another widely popular UFC Expo will take place July 6 and 7 which should bring in many vendors and fans to see all of the UFC stars in attendance.  This is a good promotional idea to center around the holiday week as well as one of the bigger cards of the year.

Zuffa Maintains “BB” Credit Rating After $50M Add-On

June 18, 2012

Standard and Poor’s February report states that it has maintained Zuffa’s credit rating at “BB” following a $50 million add-on proposed to it’s senior secured term loan, which now has a sum of $525 million.

The issue-level rating on the term loan in ‘BB’, which is the same as the corporate credit rating, with a ‘4’ recovery rating (in case of a payment default).  The $50M add-on brings the total size of the senior secured credit facility, which includes a $50M revolving credit facility, to $525M. The intent of the additional debt is for Zuffa to use the proceeds in order to repay the outstanding balance on its revolving credit facility.

As always, the ‘BB’ credit rating from Standard & Poor’s reflects the assessment of Zuffa’s business risk profile (‘fair’) and the company’s financial risk profile (“aggressive”).

The following S&P concerns kept Zuffa’s credit rating from being upgraded:

  • Risk of revenue and EBITDA volatility given the company’s primarily event-driven business model
  • Vulnerability to changing consumer preferences and susceptibility to variability in discretionary spending
  • Management’s aggressive financial policy (high level of distributions in recent years & high debt leverage)
  • Although the UFC has a strong fan-base, in order to maintain their advantage, they need to continue to develop fighters that appeal to the 18-34 demographic.
  • Preserve current regulatory acceptance of the sport. Fatal injury or change to the rules and regulations governing the sport and legal status could have meaningful impact to the company’s business model and long-term viability.

The concerns stated above are mostly offset by S&P’s belief that Zuffa’s strong EBITDA margin and healthy cash flow conversion rate are sustainable over the near to intermediate term.

 

Report Summary

  • Revenue and EBITDA decreased in full-year 2011 compared with 2010, as key fighter injuries likely contributed to lower PPV buys along with weakness in merchandise sales.
  • Despite Zuffa’s weaker performance in 2011 compared to 2010, S&P is expecting Zuffa’s 2012 EBITDA to rebound back to a similar level seen in 2010, which will be driven by increased PPV & event revenues, as well as by it’s recent television contract with FOX Sports Media Group.
  • The FOX television deal is expected to yield more favorable economics for the Zuffa, as it replaces it’s previous Spike TV and Versus TV deals, over the term of the agreement as it reduces the risk on the more volatile event based revenue.  The belief is also that Zuffa should be able to deliver more content and be able to expand it’s audience due to FOX’s distribution capabilities.
  • S&P believes that Zuffa’s total debt to EBITDA and EBITDA interest coverage looks to remain in line with the rating over the intermediate term.
  • S&P will be expecting the owners to to continue pursuing moderate distributions over time as Zuffa continues to grow, which will most likely preclude any meaningful sustained improvement to the financial risk profile.
  • S&P is approximating 55% of total revenue is event-based (majority which depends on PPV buys and ticket sales).  The remaining 45% of total revenue is estimated to be sourced from live and taped TV broadcasts, sponsorship, merchandising, licensing, and content distribution agreements.
  • The expectation is that over the life of the new FOX TV deal, TV broadcasting may become a larger source of revenue, which is a positive considering the volatility of event based revenue.
  • The report points out that Zuffa has successfully expanded the sponsorship and merchandising portion of the business in recent periods, which also improves the stability of the revenue and strengthens the business model.
  • Zuffa’s plan of international expansion is seen as a positive due to growing the diversification of it’s ban base and broadening the acceptance of the sport worldwide.
  • Zuffa is now taking a more measured approach in expanding into new markets, where the acceptance of the sport and profitability are ensured.  The UK expansion was noted as a market which  resulted in extremely volatile EBITDA  margins.
  • The report once again points out that Zuffa could face increased labor costs in the future if fighters organize (union) and seek a higher share of revenue, which is the case for most major sports in the U.S.
  • The acquisition of Strikeforce (along with the WEC) is believed to have strengthened the UFCs already dominant market position, as it continues to increase the number of fighters and title fights under the promotion.

LIQUIDITY:

  • Zuffa has an “adequate” liquidity profile to cover its needs over the next 12 to 18 months. Sources of liquidity are expected to exceed uses by at least 1.2x and remain positive, even if EBITDA declines by 20%.  Sources include cash flow generated from strong operations,  and it’s revolving credit. This assessment is despite  Zuffa only having $1M of availability under it’s $50M revolving credit facility as of Sept. 30, 2011.
  • Borrowing under the revolving credit facility are subject to compliance with a max 5X senior secured leverage ratio covenant. There was a meaningful cushion at the end of Sept. 2011 quarter. Zuffa’s revolver expires in 2012, however the report expects it will successfully extend the revolver maturity to early 2015 based on the terms of it’s recently proposed amendment, followed by the term loan maturity in mid-2015.
  • Zuffa’s payments for taxes are primarily distributed directly to the owners and additional dividend payments are limited by a restricted payment basket under the credit facilities.
  • Expectations are that the owners will continue to pursue max distributions allowable under the credit agreement.

Zuffa Credit History

November 2007 – S&P Cuts Zuffa Rating, BB to BB-
July 2008 – Zuffa Rating Goes Negative to Stable
July 2009 – Cuban Now a Zuffa Bond Holder
October 2009 – S&P Re-Affirm BB-, Slide Recovery Rating Down
December 2010 – S&P Raises Zuffa Rating, BB- to BB
August 2011 – Zuffa Maintains “BB” Credit Rating
February 2012 – Zuffa Maintains “BB” Credit Rating After $50M Add-On

 

Payout Perspective

Typically, a rating of “BB” implies that Zuffa is less vulnerable in the near term, although it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which can result in failure to meet its financial commitments. On the other hand, it’s a credit rating of “stable”, which is not a bad place to be for a company who’s core business model is volatile and can be affected by many market variables. The rating holds with the belief that Zuffa’s ability to successfully market UFC events will continue to drive strong revenue and cash flow.  Due to the business model being so volatile, a negative rating by S&P is always a possibility due to declining PPV sales (economic weakness and/or declining consumer interest) and the result of weaker profitability due to expansion efforts. Another interesting note is that, just as before, it mentions that given Zuffa’s aggressive posture towards dividends, tarting upside potential is limited over the intermediate term, despite potential improving measures in 2012 based on expectations for revenue and EBITDA growth.

A focal point of the report should be S&P’s assessment that Zuffa’s total revenue now has a 55-45 split. This is notable considering that previous assessments have placed Zuffa in a 75-25 split, where 75% of total revenue was expected to be event based (PPV buys and ticket sales).  An expected 55-45 split would be great for Zuffa, as it shows a more diversified and stable business model. The international expansion efforts and the seven-year $100 million FOX TV deal help tremendously in bringing more stability to the UFC. The hope with the new FOX TV deal at the time was that more mainstream exposure would come to the brand by creating more PPV draws, and opening the door for more stable revenue opportunities which can help offset the volatile nature of having a PPV based core business model.  At this time, the TV deal expectations haven’t fully matured yet and the numbers don’t quite show it either, so it will be interesting to find out if this new assessed 55-45 split ratio has to do with the expectations of what the FOX TV deal is supposed to do for Zuffa, rather than what it has actually done in terms of performance over the last 7 months. We get into more details regarding the TV deal’s performance a little later.

The report points out that revenue and EBITDA for 2011 is down compared to 2010. The main reason given for the decline was injuries to UFC stars. The problem with solely blaming injuries and correlating it to revenue is that you hope next year won’t be as bad but as we are starting to see on a year-to-year basis, injuries are part of the sport.We made this assessment last time around, and since then, two of the UFC’s biggest draws, have either left the UFC (Brock Lesnar) or sidelines for meaningful amount of time (Georges St. Pierre has only fought once since 2010 and is not expected back until the end of 2012).  Injuries is an unknown that cannot be controlled or correctly estimated beforehand, so injuries will always be a hot topic again in 2012, as it has been for the past 2 years.  As example, the upcoming UFC 149 event in Calgary has had every main event match-up changed since the official lineup was announced due to injuries.  Fans pay a premium up front to see a UFC event, but may get a completely different card by the time the actual event takes place. Another factor we will keep our eyes on is fighter suspensions by the State Athletic Commissions due to failed drug and banned substance tests.  A failed test can draw a fighter suspension of around 1 year on average, so in addition to injuries, the combination of both really impacts the UFC’s bottom line due the volatile nature  of fighter availability in combat sports.

If injuries and suspensions are the main component of declining PPV buys, then that brings up another issue. It means that fans are only willing to pay to see fighters that they deem worthy of their hard-earned money. It also shifts the drawing power to the fighters instead of the UFC brand and product they offer. It means MMA may not be enough anymore to get anyone outside of the MMA hardcore fanbase to tune in, and I’m sure that’s something the UFC hopes to address with the exposure the FOX TV deal brings along with its vast distribution platforms.

There has also been a lot of talk this year about the UFC or MMA peaking or plateauing, and pointing out declining PPV buys and TV ratings as a quick and easy measuring stick. So far, looking at the UFC/FOX TV Deal performance in Q1 2012, the numbers in general are trending down from what they were doing in Spike TV and Versus.  In fact, one of the biggest selling points of the TV deal was that the UFC would attract mainstream sponsors (which has not been the case so far) and that TUF would be featured on FX by switching to a LIVE format on Friday nights.  UFC President Dana White even went on record and was quoted as predicting 3 million viewers on average tuning in to catch the show, which is a main staple in developing talent and future stars.  The TUF Live debut on FX resulted in being the lowest rated season in TUF history (averaged less than 1 million for the season), and it was recently announced that the show will now switch back to being taped.  In terms of PPV’s, the FOX deal appears to have increased the popularity of a few featured fighters such as Cain Velasquez and Junior Dos Santos, but overall the effect appears to be minimal at this point.  FOX is a great platform for the product, but with only four contracted events on Primetime, the product does not have enough frequency to make a meaningful impact up to now and in fact, each event has produced less viewership since it’s debut (UFC on FOX 1: 5.7M, UFC on FOX 2: 4.7M, UFC on FOX 3: 2.4M).  FX has placed UFC content on Friday nights, which is one of the lowest rated nights in TV for the M18-34 demo.  The real winner has been Fuel TV, who has increased their ratings and households since the deal was announced, but is still one of the lowest rated ad supported networks in cable TV and is only in 36.2M homes.

In terms of competitors, Zuffa owns the MMA market domestically and worldwide if they chose to go to that market.  The key factor we will be observing and analyzing in 2013 is what type of effect Spike TV and Bellator will have on the market space.  Spike TV has been itching to get back to televising live MMA fights since UFC left the network and signed with FOX.  Spike has shown signs that they will be heavily investing in MMA (Bellator) and Pro Wrestling (TNA) starting in late 2012 as they prepare for a big 2013. Mentioned plans include cross promotion and fighter tie ins with both brands, as they have done before with Bellator champions on TNA events and Spike TV exclusive programming such as the Video Game Awards, and reality TV.

Media groups believe MMA still has potential, but at this point, it makes more sense for these media groups to either own or sign a very intimate contract with a promotion rather than having a licensing fee agreement for MMA programming such as networks have done in the past. Is more mainstream MMA content what we need for ratings and PPV buys to kick back up again or will it just add to the ever-growing free MMA content readily accessible from various TV and media channels? Will an adverse effect shift UFC’s business core to be more TV dependent in the next few years? Can you really sustain a PPV core model in the long run? These questions will continue to be asked as the FOX and Spike TV deals run their course.

It’s not realistic to expect that the UFC will outdo itself year-after-year, but it will be interesting to see how it can push itself off a potential stagnant stage and onto that next level as they have shown in the past with the Spike TV deal (TUF), the acquisition of PRIDE/WFA/WEC, and now signing the major FOX TV deal.  Focusing on stable revenue streams such as the FOX TV deal and international expansion (Brazil, Australia, South Africa, Asia, and India) are great ways to alleviate a stagnant domestic market and a great way to diversify your product’s fanbase.

MMAPAYOUT THOUGHTS:

– Zuffa has significantly drained their revolver, which makes you wonder what kind of burn rate/overhead they have.

-The other interesting tidbit is Zuffa’s dividend distribution policy. On one hand, some people think its smart/prudent to protect your gains/investment. On the other hand, some people say if you really believe in this company long term and its a business your going to keep, why would you cash out all the money instead of putting it back into the company.

TUF Live going to back to tape

June 17, 2012

Kevin Iole of Yahoo! Sports reported last week that TUF would no longer be live.  The decision comes in part due to time overruns,  the inability to develop storylines and ratings

The live format was supposed to attract viewers with live fights.  However, the ratings revealed the lowest ratings of the series. White was quoted in the Yahoo! article that if the ratings are not better on the Friday, 10pm slot, he was promised by Fox execs that it would move the series to Tuesday or Wednesday nights.

Via Yahoo! Sports:

According to FX spokesman Dominic Pagone, TUF was the second-most watched series on basic cable on Friday nights among men 18-34 and 18-49, which is the UFC’s key demographic, trailing only “WWE SmackDown!” on Syfy. Adding women, TUF was the third-most watched series in that slot on basic cable among adults 18-34 and 18-49.

Still, White believes that the series would move if it runs into another season of poor ratings.  “FX wants to try it again on Friday nights,” White said to Kevin Iole of Yahoo! Sports, “But if it’s not up to the standards I’m expecting, I’m pretty sure they’ll give me what I want. But this season was a smash hit home run for them.”

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
TUF Live Episode 12:  875,000 viewers.

Payout Perspective:

Going back to taping the show should help in developing some storylines (e.g., rivalries, confrontations, etc.) within the house.  It’s ironic since TUF is supposed to be a “reality” show.  But, either the UFC or Fox or both overestimated how well TUF Live would be received.  A combination of time slot, day and unknown fighters equated to poor ratings.  The interesting part of the article is the expectation that White believes that Fox will move the show to Tuesday or Wednesday if TUF does not perform this fall.  What happens if Fox decides to keep TUF on Fridays despite its ratings?  We will see what the UFC will try to do to keep the American version of TUF fresh.  Certainly picking the right coaches would help.  But, a lot of pressure will be put on the fighters to be good fighters and have a personality that people will want to watch.

The Wrestling Post: WWE Twitter partnership and a new strategy for its studios

June 16, 2012

In this week’s wrestling post we take a look at WWE Studios and its partnership with Twitter to deliver expanded tweets.

WWE becomes Twitter partner

Earlier this week it was announced that the WWE and Twitter have entered into a partnership in which it would enable the WWE  to embed content previews, view images, play videos and more straight from its tweets.  The Wall Street Journal, Breaking News and TIME are also partners with Twitter in this initiative. (h/t CageSide Seats)

Payout Take:  The WWE is the sports entertainment leader in social media as it has taken advantage of the platform by directing its fans to its YouTube channel, Facebook and individual performer’s twitter accounts.  In addition, if you watch RAW on Monday nights, the show promotes Twitter or Facebook at every turn. It appears that the WWE’s channel on YouTube is doing well and it looks like it is attempting to garner the same success with its Twitter partnership.  This gives the WWE another monetary stream to promote its product.

WWE film division revamps itself

The SBJ Fight Issue covered the restructuring of the WWE Studios division.  As has been reported with each earnings call for the publicly traded WWE, the film division lags behind as a money loser for the company.  As a result, the WWE is reducing its financial exposure and risk through partnership with other film studios including 20th Century Fox, Anchor Bay and Lionsgate.  The move has been made in part to reach beyond the WWE’s core audience.

The story had been covered in the past.  Via the NY Times from March 2012:

To reach the nonfan WWE Studios is moving more heavily into co-production, other partnerships and acquisitions. Working with partners and a budget of $15 million to $25 million, it is producing six to eight projects in 2012 for later release.

In addition, it is purchasing scripts and co-branding the films under WWE Studios and working with existing distributors to help circulate its movies worldwide.  Also, another new part of the WWE Studios strategy is focusing on more PG-13 and R rated movies.

Payout Take:  
No word on whether this strategy will turn the WWE Studios division around but this more conservative approach of working with others in the industry makes sense.  Not only can it learn from these partnerships it reduces its risk. An underlying theme here is that the WWE cannot make everyone The Rock (e.g. making its wrestlers mainstream box office hits).  We will see with each earnings call how much of a turnaround the studio does.

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