With Pacquiao fight Saturday, ongoing question of whether PPVs are sustainable

November 22, 2014

With Manny Pacquiao returning to PPV Saturday night, the standard question of whether PPVs are worth it surfaced.

In a Newsday column published this week, there are quotes from both boxing and UFC executives which address the question of PPV as a viable platform. The conclusion appears to be that it takes a big event for people to purchase PPV.  This is something most of us already knew.  The column acknowledges that with the internet and social media, there are more ways to follow a PPV card without purchasing it.  Also, more people are content with highlights they may be able to obtain legally online.

UFC exec Marshall Zelaznik is quoted in the piece and stated that it’s up to the UFC to “figure out how to create and develop content that will make people not want to miss it.”  He went on to say that the UFC has to do “the right job to respect the consumer, to give them something that’s valuable and worth paying for.”

Dana White recently acknowledged this year’s PPV buy rates have been low and Floyd Mayweather’s PPV reputation has been affected with the underwhelming business done under the Showtime banner (except of course for The One).  Still, one big PPV event can mean a major windfall for the company.

On Saturday night, Manny Pacquiao is on PPV once again against an unknown in Chris Algieri.  Conspicuously, there has been little done in terms of promoting the fight.  Unless it has gone under the radar, there are no Tecate promotions and $25 rebates this time around.  The usual three rounds of HBO 24/7 has been limited to just one.  Even the replays of past Pacquiao fights have been limited on HBO and the Audience Network as Bradley-Pacquiao II is replayed.  Additionally, Algieri-Provodnikov has been replayed.

Payout Perspective:

There’s nothing new in the column related to the current state of PPV except the quotes from the execs.  It’s clear that the challenges of getting fans to buy PPVs are getting harder considering the amount of content out there, social media and the ability to see highlights that will satisfy one’s need to watch the event.  Are there too many PPVs?  Boxing has added several PPVs to the mix this year which may sway your mind about that question.  Certainly, many MMA fans have their opinion on the UFC PPVs.  As for Saturday’s event featuring Pacquiao, it will be interesting to see how many Pacquiao die hards will pay the $70 to watch.

Senator Reid denies parts of SOPA attached to NSA reform bill at request of UFC

November 22, 2014

Tech news web site Techdirt reported earlier this week that Nevada Senator Harry Reid is attempting to attach a portion of the Stop Online Piracy Act to the USA Freedom Act as a favor to the UFC.  Although the bill did  not pass, there has been some criticism of Reid for “coat-tailing.”

Essentially, Reid attempted to include portions of the SOPA bill which would lead to criminal consequences for copyright infringers.

The UFC were strong proponents of SOPA.  The bill allowed U.S. law enforcement to combat online copyright infringement.  Other companies including the WWE, were in favor of this bill.

The USA Freedom Act  essentially addressed surveillance of individual’s phone records as well as the bulk collection of Americans’ metadata.  The bill arose after Edward Snowden revealed that the NSA was collecting telephone metadata.  The bill fell in the Senate this week.

Senator Reid’s office responded to the Techdirt story indicating that the inference that the Nevada senator attempted a surreptitious amendment for his UFC constituents was not true.  Techdirt responded to the response saying Senator Reid’s office was incorrect.

Payout Perspective:

It is no secret that Senator Reid and the UFC are friendly.  The senator is also a fan of Manny Pacquiao and in the past, Pacquiao has supported his campaigns for reelection.  Politicians befriending companies/athletes seeking influence and vice versa is ingrained in American politics.  The addition to include portions of the SOPA bill is nothing out of the ordinary as well (even though it was likely out of context based on the rest of the legislation) and while the truth may be inclusion of these portions of SOPA was done at the request of the UFC (and maybe other companies that were proponents of the SOPA bill), there does not appear to be any real wrongdoing here despite the inference that there was (e.g.,  The Daily Beast).  As many who follow politics know, things of this nature occur with little fanfare.  The only part that is of note is that it was the UFC.

UFC and Fathom Events to show more PPVs in movie theaters

November 21, 2014

The UFC and Fathom Events are teaming up once again to show UFC’s PPVs in movie theaters.  A joint press release announced that UFC 181 will be the latest to be shown in theaters with additional PPV events in 2015 to be jointly shown via PPV and also in nearly 500 select movie theaters across the U.S.

UFC 182: Jones vs. Cormier, UFC 183: Silva vs. Diaz and UFC 184:  Weidman vs. Belfort will also appear in local theaters.  The latest PPVs to movie theaters were announced at the UFC’s #TheTimeisNow launch.

Promo poster at Bellevue, WA theater

Promo poster at Bellevue, WA theater

It appears that the move, which restarted with UFC 180, will be a constant throughout the first two months of 2015.

Payout Perspective:

Here, there are at least 6 movie theaters within the Seattle area that will be showing it. Tickets are $15.  The latest move appears to be a way for eyes to see its events and also an attempt to garner some additional revenue from sagging PPV buy rates.  Based on the latest S&P move to downgrade Zuffa’s outlook to negative, it looks like the UFC is trying to turn around its financial outlook any way it can in the first quarter of 2015 to avoid another credit downgrade.  It would seem that putting the PPVs in theaters siphons away potential PPV buyers.  Then again, with the downward trend in UFC PPVs, this is an option for fans on the fence of buying an event.

TUF 20 Episode 9: 381,000 viewers

November 20, 2014

MMA Payout has learned via a Nielsen source that Wednesday night’s 9th episode of TUF 20 drew a rating of 381,000 viewers. The rating represents the lowest-rated episode of the season.

In the fight of the episode, Randa Markos defeated Felice Herrig via armbar.

TUF 20 Episode 9

Last season’s TUF 19 had two episodes below 400Kviewers.  Wednesday night’s episode represents a new low.

UPDATED:  According to Nielsen source, the late night replay airing 10pm/1am drew an additional 122,000 viewers for the episode.

Payout Perspective:

The actual show started 8 or so minutes late as there was overrun from college basketball (Oklahoma-Creighton).  It was the coach’s challenge episode which usually is very entertaining.  This time around was not as good since the UFC decided to hold off on a physical challenge due to Anthony Pettis’ knee injury.  The episode was the lowest of the season and brought down the season average to 509,000 viewers.

Bellator 131 Live + 3 viewership boosts overall telecast to 1.4M, peak over 2.2M

November 20, 2014

MMA Payout has learned from a Nielsen source that the Live + 3 day viewership of Saturday’s Bellator 131 peaked with 2,246,000 viewers and was over 2 million viewers for more than half of the Ortiz-Bonnar main event.  The overall event adjusted viewership came up to 1.4 million.

In addition, the Ortiz-Bonnar fight drew an average of 2.0 million viewers with the adjusted viewership numbers and was over 2 million for 17 of 26 minutes during the fight.  It scored 1.8 million viewers in the M18-49 demo and 1.7 million in the M18-34 demo.

131 an obvious boost for Season 11

131 an obvious boost for Season 11

Payout Perspective:

The additional DVR numbers propels Bellator 131 further and reflects the fact it resoundingly beat the UFC on Saturday night.  The numbers show that viewers are still drawn to the spectacle of a well-promoted fight and/or Tito Ortiz.  Good news for Bellator in the short term.  We shall see how they continue with the promotion of events when Ortiz is not in the main event.

Standard & Poor’s revises Zuffa outlook to negative

November 20, 2014

The Standard & Poor’s Ratings Service has revised Zuffa, LLC’s financial outlook to negative from stable on weaker operating performance.  It has indicated that it anticipates a 40% decline in EBITDA in 2014 and credit measures will weaken due to the decline.

In a press release disseminated by S&P, it stated that the negative rating reflects its “belief that Zuffa’s operating performance will deteriorate significantly in 2014, resulting in very weak leverage in the high-5x area.”

In addition to the change to the negative outlook it is affirming its “BB-“corporate credit rating.  The “BB-“ credit rating was assessed last month.  The concern for Zuffa is that a negative outlook may mean that S&P may lower Zuffa’s “BB-“ rating.

More from the press release:

“The negative outlook revision reflects our updated forecast for 2014 EBITDA to decline approximately 40% (compared to a decline of 30% previously), primarily due to a change to a marquee fight card in the fourth quarter of 2014 as a result of another fighter injury causing anticipated pay per view (PPV)  buys and event ticket prices to decline further, as well as higher remarketing expenses for the event, and additional costs related to the company’s international expansion,” said Standard & Poor’s credit analyst Stephen Pagano.

S&P now expects Zuffa’s cash flow/debt leverage to increase to the “high-5x area at the end of 2014.”  In its October 2014 report, it had predicted Zuffa to be in the 3 range.  The cash flow/leverage is based on a scale of 1-6 with 1 being minimally leveraged to 6 being highly leveraged.  Zuffa is now pegged as 5 whereas S&P had forecasted it being a 3.

Payout Perspective:

Obvious bad news for Zuffa as the change in outlook is based on Cain Velasquez’s injury forcing him to drop out of UFC 180.  It ties in directly to the assumption that the PPV buy rate will be low once again – an issue that Dana White recently acknowledged.  What the change in outlook to negative means is that it will increase the cost of borrowing by Zuffa.  As the company falls deeper into debt, its ability to obtain credit will get harder.  The forecast painted by S&P reflects the fact that it no longer believes that the company will be able to turn it around this year or next to address its debt obligations.

With the new lower, negative outlook on its debt, Zuffa will have a lot of pressure to forge new television pacts overseas and push the profitability of Fight Pass.  We may also see initiatives like a formal drug testing policy put off if costs are too high.  We will also see if Zuffa attempts to address the issue of fighter injuries which causes the instability and uncertainty of events.

MMA Payout will keep you posted.

TUF 20 Episode 8 numbers up to 840,000 viewers

November 19, 2014

MMA Payout has learned from a Nielsen source that last week’s TUF 20 episode 8 drew an additional 262,00 viewers in Live +3 ratings.  Episode 8 total viewership including adjusted average is now at 840,000 viewers.

TUF 20 Episode 8 DVR

Payout Perspective:

The average viewership after the adjusted ratings is at 812,000 viewers. After the 8th episode, the average boost in viewers from the Live rating to the DVR rating is down slightly at 287,000.

WSOF 15: 161,000 viewers

November 19, 2014

MMA Payout has learned from a Nielsen source that the World Series of Fighting 15 Saturday night on drew 179,000 viewers on NBC Sports Network up against stiff competition from both the UFC and Bellator.

The main event featured David Branch defeating Yushin Okami via TKO.  In the semi-main event, Justin Gaethje defeated Melvin Guillard via split decision.

WSOF 15

Payout Perspective:

Once again a WSOF event occurs on the same day as another event by a major MMA organization.  On Saturday, it went up against Bellator and the UFC.  The 179,000 viewers is the lowest WSOF rating since WSOF 7 (which drew just 94,000 on tape delay), yet fair considering that both Bellator and UFC had fights on during its event.  The previous low was WSOF 6 which drew just 161,000 viewers.

UFC 180 Prelims: 624,000 viewers

November 19, 2014

MMA Payout has learned form a Nielsen source that the UFC 180 Prelims on FS1 Saturday drew an average of 624,000 viewers for its two hour show between 8:00-10:00pm (5:00-7:00pm).

The prelims on Saturday peaked in the 9:45-10pm quarter hour (6:45-7pm west coast) with 771,000 total viewers (Live + SD) according to Nielsen.

UFC 180 Prelims ratings

UFC PPV Prelims since August 2013 (FS1 unless specified)

UFC 164                             809,000

UFC 165                             722,000

UFC 166                             628,000

UFC 167                             998,000

UFC 168                          1,554,000

UFC 169                             933,000

UFC 170                             936,000

UFC 171                             305,000 (FS2)

UFC 172                             750,000

UFC 173                             697,000

UFC 174                             784,000 (FX)

UFC 175                             1,000,000

UFC 177                             436,000

UFC 178                             698,000

UFC 179                             536,000

UFC 180                           624,000

Payout Perspective:

The UFC Prelims provided some very good action but a lot of names we did not know and thus it was one of the reasons it likely fell to Bellator.  The prelims did feature the Fight of the Night as well as a submission and an ear almost falling off (Leslie Smith).  UFC 180 did improve upon prelim rating for UFC 179.  The current average of UFC Prelims for 2014 is at 699,000.

Bellator 131 – Payout Perspective

November 18, 2014

Welcome to another edition of Payout Perspective.  This time we are taking a look at Bellator 131 from the Valley View Casino in San Diego, California.

Ortiz defeats Bonnar in “spectacle”

This fight was sold outside of the cage but inside the cage there was not a lot to say about it.  In the end, Ortiz defeated Bonnar via split decision and perhaps the most entertaining part about these two is the clowning of Bonnar and the middle fingers of Ortiz after the fight.

The famous (or infamous) lead-up to this “grudge match” was the in-cage promo a couple months back where Bonnar confronted Ortiz with that guy in the mask that was revealed to be someone 95% of the casual viewing MMA audience had never seen.  Thus, the reveal meant nothing.  Still, the two promoted the fight to the point where the actual fight (luckily) became secondary.

A quick look at twitter reveals that Ortiz is looking to King Mo next.  Let the trash talk/tweets begin.  As for Bonnar, perhaps he turns on the masked man for his next fight.

131

Brooks defeats Chandler for lightweight title

In what was the most competitive and real fight of the night, Will Brooks defeated Michael Chandler to win the vacant lightweight world title.  Brooks did it with a solid punch to Chandler’s temple which essentially knocked out Chandler on his feet as Chandler made gestures as if he did not know where he was eventually turning his back from Brooks and causing the stoppage.  Brooks and Chandler are two fighters that Bellator needs.  While Ortiz and Bonnar are spectacle, Brooks and Chandler are sport.

Attendance and Gate

No official announcement has been made on the attendance and gate at the Valley View Casino.  However, there are unconfirmed reports of the attendance being 8,100 with a gate of over $400,000.  The Valley View Casino has a max capacity of approximately 18,000 but some of that was taken out due to the enormous set, stage and ramp.  Regardless, it has to be one of the biggest crowds and gates for the organization.

Salaries

As reported, Sunday night, the salaries disclosed by the California State Athletic Commission had Ortiz ($300K) and Bonnar ($100K) as the biggest earners for the night although Ortiz was fined $2,500 for his antics post-fight.  The salaries show that Ortiz can still demand top dollar for his services while Bonnar’s pay is a step up from his time in the UFC.

Promotion of Fight

The Viacom-owned company utilized its resources in order to hype this “tentpole” event.  It used its sponsor Dave & Busters for a couple events to promote the fight including a meet and greet which featured ex-UFC stars.  It even announced that Wanderlei Silva would be in attendance at the pre-fight party on Friday even though the company had to retract that after contractual issues with the UFC prevented Silva’s appearance.

SpikeTV ran three shoulder programs to promote Bellator 131 and most centered on Ortiz-Bonnar.  Spike ran a one hour Countdown show which focused a significant portion on Ortiz-Bonnar and then Brooks-Chandler and Manhoef-Schilling.  The Countdown dedicated the first half hour or so on Ortiz-Bonnar and showed the Justin McCully incident again and again.  But, it lacked specifically spelling out the “wrong” that Ortiz did to McCully.  If it did, I just did not get it.  It then had a special dedicated to Ortiz and then another one specifically for Tito and Bonnar to have a “sit down face-to-face.”

Sponsorships

In the cage, Bellator’s sponsors included Dave & Busters, pre-pay cell phone company Cricket Wireless, Monster Energy, Gold Bond Ultimate, Everlast, Attack Poker and Miller Light had the center of the cage.  The mat also had something for the new Spike App.

Odds and Ends

-Bellator’s video packages, new stage, big screen and walkouts were all great things that added to the “big event” feel.

-Mo started swimming after his win.  I don’t recall this a trademark celebration.

-ESPN’s Matthew Berry is the signature spokesman for Dave & Buster’s?  Fantasy sports is that popular.

-In promoting Melvin Manhoef during the Countdown show, Bellator showed footage from Japan of Manhoef knocking out Mark Hunt.  Good timing since Hunt was the main eventer at UFC 180.  Irony because Manhoef was laid out by Joe Schilling on Saturday.

-There was a Goldberg (Bill not Mike) citing at the event.  Really.  George Lopez citing too.  Really.

-Joe Warren doing play-by-play during the Mike Richman-Nam Phan fight was a nice touch.

Conclusion

The event had a big event feel and it seemed like a step up for the company.  While it does have a “pro wrestling” feel, the presentation draws you in to watch.  The question will be can it promote non-UFC fighters in the upper levels of its cards.  Ortiz and Bonnar are past their prime inside the cage.  Certainly, they can sell fights but the question will be whether others can pick up where they will leave off. In the end, Bellator 131 was a strong showing and if it’s a sign of things to come in how Bellator will present its quarterly big shows, Bellator, under Coker, will be a strong number 2 promotion.

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