Top 10 of 2012: No. 2 The end of Strikeforce

December 31, 2012

MMA Payout’s No. 2 business story of 2012 is the demise of Strikeforce.  January 12th will be the end of the organization after 27 years of existence and 7 as an MMA promotion.

The purchase of Strikeforce by Zuffa was for a reported $40 million and repayment of debt.  Dana White has denied Zuffa trying to dissolve the company once it was acquired but the acquisition saw fighters moving over to the UFC.  With the purchase, management changed (although Scott Coker was still in “charge,” White oversaw the operations) and with that change it included an end to Strikeforce Challengers.  With two canceled events in September and November and the UFC signing of Ronda Rousey, the writing was on the wall.

250px-StrikeforceLogo

When White eliminated himself from talks with Showtime to extend the Strikeforc e contract due to the adverse relationship he had with its execs, it was apparent that this would be a detriment to the existence of the company.   And then the last straw may have been Showtime nixing changes White wanted for Strikeforce: Columbus.

According to MMA Junkie, Showtime and Zuffa each have rights to the Strikeforce library.  White was vague as to the duration of Showtime’s rights.  Showtime may gain some ratings with reruns of Ronda Rousey and Alistair Overeem fights but we will have to wait and see as to what Showtime will do with the library rights.

It was unlikely that Strikeforce could compete in the long run with the UFC prior to the purchase.   The concept that Strikeforce could operate as a separate entity but still owned by Zuffa was not likely either.  The best that could have happened was that it be a minor league to the UFC.  But, with the number of UFC events increasing, the Strikeforce niche became smaller and smaller.  It also became a losing proposition.  For Zuffa, it was a smart business decision to close the promotion and move over fighters it thought talented enough to bring to the UFC.

Top 10 of 2012: No. 3 Ronda Rousey signs with the UFC

December 31, 2012

MMA Payout’s No. 3 business story of 2012 is the Ronda Rousey phenomenon.  Dana White made Rousey the first woman to sign with the UFC.

2012 has been a big year for Rousey.  She is appealing with the mainstream media as she has a unique backstory, is open, honest and is a talented mixed martial artist.  Although White had sworn off women’s MMA in the UFC, he has changed his mind and now has Rousey headlining a PPV in February.   The attention Rousey has received and the UFC’s stagnant PPV numbers appear to be reasons for the UFC to embrace women’s MMA (or should we say Ronda Rousey).

MMA Fighting.com named her the Fighter of the Year.   Not only is she unstoppable in her arm bar mastery of all her opponents with finishes occurring within seconds of the opening bell, MMA Fighting points out the mainstream appeal of Rousey.

Via MMA Fighting:

Away from the cage, Rousey exhibited the same unstoppable force. She was the subject of a lengthy Sports Illustrated profile. She co-hosted TMZ. She was on the cover of Oxygen and ESPN The Magazine. She was a guest on Conan.

She is also in the January 2013 issue of Esquire.   When she signed, the UFC made a huge ad buy by plastering the back page of the Sports Business Journal welcoming Rousey to the UFC.  With her crossover appeal, Rousey could attract blue chip sponsors for herself and for the company.

Certainly, Rousey’s beauty has a lot to do with her mainstream appeal.  It also helps that she sprinkles talk of sex (see Jim Rome show) in her interviews.   But, she has received more mainstream appeal than Gina Carano.  Arguably, Carano was a gifted fighter and she did star in the movie “Haywire.”  But, Carano’s peak occurred at a time when Strikeforce was competing with the UFC.  Also, a loss to Cyborg Santos and subsequent injuries kept her away from fighting for 2 years and it’s unlikely she will return.

It will be interesting to see what Rousey’s base salary will be in the UFC.  In her last Strikeforce fight in August, Rousey had a $20K base with a $20K win bonus.  I would expect that the base should be higher.  Another interesting question would be if Rousey would get a percent of the PPV buys.  This is something done for main eventers although I’m not sure how much negotiating leverage Rousey’s representation had when she signed.

Rousey’s signing has brought up the debate of women’s MMA.  The sport is gaining some acceptance but one need only look at the mat after the Joe Lauzon-Jim Miller fighter to realize that this can be a bloodsport.  Could people stomach a women getting busted open like Lauzon?  For some, that’s a silly question.  For others, its a real issue.

Realistically, the hopes of women’s MMA in the UFC hinges on Rousey winning in February.  The marketing and promotion for the fight should be high considering how much the UFC has already backed her.  A loss (or an injury) could undo everything.

JDS ($400K) tops salaries for UFC 155

December 31, 2012

MMA Junkie reports the salaries as provided by the Nevada State Athletic Commission.  Cain Velasquez made $200K while the former champ, Junior dos Santos made $400K.

Via MMA Junkie:

Champ Cain Velasquez: $200,000 (includes $100,000 win bonus)
def. Junior Dos Santos: $400,000

Jim Miller: $82,000 (includes $41,000 win bonus)
def. Joe Lauzon: $27,000

Constantinos Philippou: $36,000 (includes $18,000 win bonus)
def. Tim Boetsch: $37,000

Yushin Okami: $84,000 (includes $42,000 win bonus)
def. Alan Belcher: $37,000

Derek Brunson: $30,000 (includes $17,000 win bonus)
def. Chris Leben: $51,000

Eddie Wineland: $30,000 (includes $15,000 win bonus)
def. Brad Pickett: $17,000

Erik Perez: $20,000 (includes $10,000 win bonus)
def. Bryon Bloodworth $6,000

Jamie Varner: $24,000 (includes $12,000 win bonus)
def. Melvin Guillard: $42,000

Myles Jury: $16,000 (includes $8,000 win bonus)
def. Michael Johnson $14,000

Todd Duffee: $16,000 ($8,000 win bonus)
def. Phil De Fries: $14,000

Max Holloway: $24,000 (includes $12,000 win bonus)
def. Leonard Garcia: $20,000

John Moraga: $22,000 (includes $11,000 win bonus)
def. Chris Cariaso: $12,000

As always, the reported salaries do not include any locker room or sponsor bonuses.

Payout Perspective:

Jim Miller was the only other fighter outside of the main event that hit six figures on Saturday night with his fight of the night bonus to earn a reported $147,000.  Joe Lauzon made $92,000.  As expected, the top of the card made the most with JDS earning three times (excluding Cain’s win bonus) more than Cain.  According to MMA Junkie, the reported total payroll was $1.261 million.

 

Top 10 of 2012: No. 4 Bellator moves to Spike TV

December 30, 2012

MMA Payout’s No. 4 business story of 2012 is Bellator’s announcement that it is moving from MTV2 to Spike TV starting in January 2013.

The move to Spike TV was the worst kept secret as Bellator prelim events have been streaming on Spike.com.  Also, Viacom’s investment in Bellator made it likely that it would be moved to a network with more viewers.  Spike TV, a Viacom property, seemed like the suitable candidate considering the UFC’s run on the network.  It did take advantage of its access to the UFC library to run counterprogramming of UFC fights during live events on FX or Fuel.  Recently, it had been running UFC reruns with a Bellator logo in the bottom corner.

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Another unique aspect of the Spike-Bellator partnership is that it is granting King Mo Lawal the opportunity to participate in both Bellator and TNA Wrestling.

Ratings for Bellator events on MTV2 have been consistently inconsistent.  There have been wild fluctuations from week to week and it’s the hope that a move to Spike TV will bring steady ratings.

There’s great expectations for Bellator in 2013.  It is moving off of Fridays to Thursdays where TNA Wrestling will be its lead in.  Its revamping its rules to allow for potential championship rematches instead of having fighters go through a tournament.  The challenge will be to market its fighters and determining whether it should differentiate itself from the UFC.  We will see how it does with it available to more households.

UFC 155: Payout Perspective

December 30, 2012

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 155 at the MGM Grand Garden Arena in Vegas where Junior dos Santos-Cain Velasquez II took place.

Cain dominates JDS for UFC Heavyweight title

Total domination.  Cain Velasquez controlled Junior dos Santos for almost 5 rounds and regained the UFC Heavyweight title.  While it looked like Cain was going to stop JDS in the first round, the champ showed some heart and a second wind in at least mounting some offense.  But it was too little to overcome the mauling Cain put on JDS.

UFC 155

Lauzon-Miller put on Fight of the Year

Lauzon wore the crimson mask most of the fight but made every effort to submit Jim Miller  including a flying leg lock in the 3rd round.  Miller rushed Lauzon in the first with strong strikes which caused the cut on Lauzon.  It was a great match and with only 2 days left in 2012, could be the fight of the year.

Attendance and Gate

MMA Junkie reports that UFC 155’s attendance was 12,423 for a $3.286 million gate.  The figures outdid last year’s UFC 141 (which was held on a Friday) which did a gate of $3.1 million although attendance was higher at 13,793.  

Bonuses

MMA Junkie reports the bonuses which were announced at the post-fight press conference.  Notably, two of the three bonuses occurred during the Facebook fights.  Each fighter earned $65,000.

FOTN:  Jim Miller v. Joe Lauzon
Submission of the night:  John Moraga
KO of the night:  Todd Duffee

Sponsorships

The big news is that the newest sponsor for the UFC is Right Guard.  It appeared on the Octagon mat and was prevalent throughout the PPV.  Notably absent was the U.S. Marines which did not renew its sponsorship deal at the end of November.

The spoof movie, “Movie 43,” Harley Davidson, RYU, MetroPCS, TapouT, Right Guard and Bud Light were all in the octagon.  

Harley Davidson offered the winner of the JDS-Cain match a Harley Davidson in honor of its 110th anniversary.  The move created a little controversy considering that Jose Aldo’s motorcycle accident altered UFC fighter contracts to include a clause prohibiting its fighters from participating in dangerous activities outside of the Octagon.  So that nixes bull-riding and presumably motorcycle riding but for the fact that Harley Davidson is a major sponsor.  As a concession to his sponsor, Dana White stated that he was fine with the bike so long as it was not their primary source of transportation.

Junior dos Santos became the third UFC fighter to be sponsored by Nike.  He had an aesthetically pleasing fight banner with just the swoosh as his main sponsor.  Also, it was the lone sponsor on the back of his shorts.  We will see how the loss affects his sponsorship.

Virtustream, a cloud computing company, sponsored Joe Lauzon.  Bee Bald, a “hair care” products company focusing on the follicly-challenged, also sponsored Lauzon.  

Post-UFC 155 Headline

Who’s next for Cain?

Not Daniel Cormier if you ask either one of them as each nixed that idea during the UFC post-fight show on Fuel.  More likely, it will be the Alistair Overeem-Bigfoot Silva winner with JDS likely out for a while due to the pounding he took from Cain.

Cormier sounded like he would be willing to cut weight to fight at 205 and challenge Jon Jones.  We’ll see how that plays out considering Alexsander Gustafsson occupies the top slot to challenge Jones.

Odds and Ends

Deadspin.com published an interesting piece on the marketing of Cain Velasquez.  The main point of the article was questioning the UFC on marketing the Mexican America Cain as the champion of brown people in marketing to the demo.  The theory appears to be that although Cain is proud of his background, is marketing him as a champion to Mexicans plausible.  Its an interesting question.  You may have noticed last night that during his post-fight interview in the cage, he did not attempt to speak Spanish as he did when he won the title from Brock Lesnar.  With his championship reign, we shall see how much the UFC attempts to market Cain to the Mexican and Mexican American Community. One need only look at Cain’s “Brown Pride” tattoo to know that he is proud of his heritage (something Dana White defended this past week).  But, the Deadspin article questions whether this is valid marketing.

Erik Perez was cleared to wear a Lucha Libre mask to weigh-ins and he also donned the mask in his post-fight interview (along with his corner).  The mask had to be cleared by Dana White.  The UFC quickly took advantage of the idea by selling lucha libre masks at the event.

Nice to see Todd Duffee back in the UFC.  Hopefully he can add to the depth of the heavyweight division.

If you watched the Countdown show to UFC 155, it featured Joe Lauzon and how he has invested his bonus money into his MMA gym.  Lauzon said he spent 20K on mats for his gym.  This is one of the many examples of fighters investing their money in their craft.

Not sure if this has been happening more, but I noticed an inordinate amount of talk of gambling odds for fights.  Notably, Joe Rogan asking Jon Anik who was the favorite in the Miller-Lauzon fight during the fight.  

Conclusion

The last two PPV heavyweight main events have hit over 500K PPV buys: Lesnar/Overeem (535K) and dos Santos/Mir (560K).  The buzz for this event seemed a little compressed due to the Christmas holiday last week.  The rest of the card would not appeal to the casual viewer.  The PPV did go up against HBO’s Best of Boxing 2012 including reruns of Rios/Alvardo and Pacquiao/Marquez IV.  Its unlikely that the boxing reruns dented too much of the buy rate.  The allure of a heavyweight bout likely gets it to 500K PPV buys.

Top 10 of 12: No. 5 GSP returns

December 29, 2012

MMA Payout’s No. 5 story of 2012 is the return of Georges St. Pierre.  After an 18 month absence, GSP returned to the UFC and defeated Carlos Condit to unify the UFC welterweight title.

After receiving news of the PPV buys, Dana White indicated at the UFC on Fox 5 press conference that GSP “delivered” and that “the king of PPV” was back.

GSP broke a string of sub-500K buy PPVs in 2012.  The much-anticipated Silva-Sonnen II was the only card that had more PPV buys (925K) this year.

Below is a list of GSP PPVs since 2010.

UFC 111 vs. Dan Hardy – 770K PPV Buys
UFC 124 vs. Josh Koscheck – 800K
UFC 129 vs. Jake Shields – 800K
UFC 154 vs. Condit – 680K

GSP draws consistent buys averaging over 750K buys.  With him on the shelf for 18 months, it left the UFC without a known main eventer guaranteed to hit 750,000 PPV buys at least twice a year.

Despite a lower gate and attendance for UFC 154 than 124 (UFC 124 was in the same venue in Montreal) the PPV buys were in line with his usual buy rate.  In 2013, GSP’s average is likely to increase considering a spring date to defend his title against Nick Diaz and the possibility of Anderson Silva later in the year.

Its also worth noting that GSP’s brand has been very successful despite the injury layoff.  With the assistance of his marketing agents, he’s secured blue chip sponsors including Google, Coca Cola and Bacardi.

Top 10 of 2012: No 6 Nike sponsors Silva, Jones and dos Santos

December 29, 2012

MMA Payout’s No. 6 business story of 2012 is the Nike sponsorship of UFC fighters.  Anderson Silva, Jon Jones and Junior dos Santos are all sponsored by the sportswear company.

Jon Jones received a global sponsorship with the company which may include a signature clothing line.  Jones wore a “Bones Knows” t-shirt wherever he went in leading up to his fight at UFC 152 with Vitor Belfort.  Prior to that, Jones was sponsored by the UFC when he faced Rashad Evans in April.  The Nike deal showed that it was interested in Jones and his DUI did not alter Nike’s plans with Jones.

The Anderson Silva sponsorship with Nike is limited to Brazil although Silva made a visit to the Beaverton, Oregon campus.

Junior dos Santos is the third and most recent Nike signing from the UFC.  JDS has been wearing a shirt with his last name and swoosh in promoting UFC 155.  The deal is officially with Nike Brasil.

The deals show that Nike is interested in MMA and has decided to sponsor fighters to get its brand out to MMA fans.  There could be a market for its “Nike Combat” gear and other athletic workout wear.  It will be interesting to see how sales will go for a Jones or Silva line of clothing.  Although the deal could be seen as opening the door for other MMA fighters, Nike’s strategy is focusing on UFC champions.   So, the investment in a fighter is relatively low risk considering Silva, Jones and dos Santos are guaranteed to headline the event they appear.  Thus, the visibility of the Swoosh would be at a maximum.  Still, the sponsorships are key in the move for blue chip sponsors in the sport.

Top 10 of 2012: No. 7 the UFC-Fox relationship

December 28, 2012

MMA Payout’s No. 7 business story of 2012 is the first full year of the UFC-Fox relationship.  In late 2011, the UFC signed a 7 year deal with Fox leaving longtime network Spike TV.

While there was great anticipation for the UFC on Fox networks, the ratings have been less than anticipated.

Despite a huge rating for UFC on Fox 1, the next several UFC events on the big network failed to gain traction.  UFC on Fox 5 did rebound with stellar numbers with a 4.4 million viewer average and the main event spiking at 5.7 million viewers.  However, the numbers for UFC on Fox 2-4 showed a drop in viewership.  This could be due to lack of stars in its main event.  Certainly, UFC on Fox 5 was stacked with known fighters such (BJ Penn and Shogun Rua) and up an coming talent it could market for the future (Rory MacDonald, Alexander Gustaffson and Benson Henderson).

UFC on Fox 2 – 4.66M average, peak 6M

UFC on Fox 3 – 2.25M average, peak 2.9M

UFC on Fox 4 – 2.44M average, peak 3.3M

UFC on Fox 5 – 4.4M average, peak 5.7M

Fuel TV has been the benefactor of UFC programming as its audience has grown steadily since the UFC came on board with a UFC marathon last New Year’s Day.  The UFC has had live events on the networks as well as Prelims for FX and Fox events.  FX has had Prelims on its network prior to PPVs as well.

We have already chronicled the issues the TUF franchise has had in its transition to Fridays on FX.

Fox has worked in promoting the UFC with its other sports properties: NASCAR and the NFL.  Notably, Dana White played a homeless person in a skit on an NFL pregame show.  Also, Fox ran shoulder programming promoting the UFC’s network shows on NFL Sundays.

It will be interesting to see where the UFC-Fox partnership goes in 2013.  It appears that Fox will establish a new sports channel in which the Speed channel will be a part.  It’s likely that Fuel TV could be integrated into the new channel as well. This would definitely solidify the UFC-Fox relationship for years to come as the UFC would be a great source of content for the network.

Top 10 of 2012: No. 8 Zuffa continues international expansion

December 27, 2012

The number 8 business story of 2012 is the continued international expansion of the UFC.  This year saw the launch of international TUFs, an Indian television deal and its first event in China.

The first international TUF was in Brazil and involved Vitor Belfort and Wanderlei Silva as coaches.  The show ran on Globo television in Brazil and on Fuel TV in America.  It was also streamed on TUF.tv.  Although the show did not air on Fuel TV until the season was halfway through its Brazilian television run, it was very popular in Brazil.  The show drew an impressive 8 million viewers for the debut episode on Globo TV. The number  was later adjusted to 12 million .  Regardless of 8 or 12 million, the show was a hit.  The UFC stated that over 100,000 viewers watched the show online.

In addition, the UFC introduced an Australian version of  The Ultimate Fighter subtitled “The Smashes” which featured Australian and British fighters.  The series which debuted in September was aired on FX Australia and ESPN UK.

The UFC made inroads into the Chinese market as it held its first event in China.  Off the mainland of China to be exact on the island of Macau.  It used Bruce Lee images in its marketing for the event to entice the locals.

The UFC also signed a television deal in India where it plans a TUF series in the near future.

It announced on Thursday that it will be going to Mexico in 2013 and Puerto Rico in 2014.

Events outside of North America this year included Brazil twice, England, Australia, Sweden, Japan and Macau.

“Showtime Boxing on CBS” a success in boxing’s return to network

December 26, 2012

ESPN Dan Rafael reports that boxing’s big return to network television on CBS scored a 1.3 rating.  The televised event, “Showtime Boxing on CBS,” on December 15th, aired between 1:45p.m. PT/4:45p.m ET to 3:00p.m. PT/6:00p.m. ET.

The rating equates to roughly 1.5 million viewers although the actual numbers have not been released.  The event featured a bantamweight title fight between Leo Santa Cruz and Alberto Guevara.

The event was delayed due to the Indiana-Butler NCAA College Basketball game in which Butler upset the No. 1 ranked team in America in overtime.  As Rafael points out, the delay in start time may have helped “Showtime Boxing” as viewers likely stayed until the end of the basketball game.

The network event was a part of Amir Khan’s return to the ring later on that night.  The fight was aired on Showtime.

Payout Perspective:

The ratings were good enough that CBS is likely to air more boxing in 2013.  As we stated, the event was part of the Showtime event held later on that night.  The network fights were entertaining and the lead-in probably helped the numbers too.  This past Saturday, NBC aired a 2 hour block of boxing.  That event on NBC was entertaining and we should see more boxing on NBC in 2013 as well.

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