15 for 15: No. 3 UFC PPV has its biggest year

December 31, 2015

Coming off a poor PPV year in 2014, the UFC looked to come up big with events in 2015.  It did with 7 events over 600,000 PPVs which was 7 more than it did in 2014.

The UFC branded its first quarter, “Welcome to the Show” and its last quarter “Go Big” which seemed to help.  Despite the usual injuries which cancelled or delayed fights (notably Aldo-McGregor), UFC PPVs in 2015 delivered big events which the casual viewer purchased.

The first three PPVs of 2015 set the company off right.  UFC 182 seemed to gain some steam on the basis of the feud between Jon Jones and Daniel Cormier.  The PPV did 800,000 buys which was the best since UFC 168  in December 2013.  UFC 182 was followed by a great matchup on paper between Anderson Silva and Nick Diaz on Super Bowl weekend which drew 650,000 buys.  The surprise of the first quarter was how well the Ronda Rousey-Cat Zingano PPV did as it was the second time that Rousey was the headliner.  Originally, she was just the co-main event but became the main event.  The event, which actually lasted just 14 seconds, drew an estimated 600,000 PPV buys.  Little did we know that this would be low for a Ronda Rousey PPV this year.

After a couple low buy rates, the UFC spiked once again with Conor McGregor facing Chad Mendes at UFC 189.  On the same card, Rory MacDonald challenged Robbie Lawler for the welterweight title in what was the fight of the year.  Despite Mendes replacing Aldo at the last minute, the event drew 825,000 PPV buys.  It was reported that the event drew 1 million PPV buys.  However, that number was calibrated down.

Despite a traditional slow month for UFC PPVs, UFC 190 on August 1st drew 900,000 PPV buys thanks in large part to Ronda Rousey.  She was featured in the main event against Bethe Correia.  There was some heat between the two which helped sell the fight.  Still, it was all Rousey that drove a PPV which featured two TUF Brazil finals (i.e., 4 fighters many have never heard of) on the PPV.  It was also a rare occasion in which a non-North American PPV event

Rousey’s next fight was moved up to November against Holly Holm.  The event set a record for attendance and gate and scored once again on PPV.  This time, a Rousey fight drew over 1 million PPV buysPer Lorenzo Fertitta UFC 193 was tracking to be the second largest PPV in the company’s history.   Despite losing to Holm, the PPV was promoted around Rousey as she appeared on Good Morning America and Ellen among other mainstream outlets to promote the fight.

McGregor’s third fight of the year (his first was a Fight Night from Boston), the long-awaited showdown with Jose Aldo is tracking at 1 million PPV buys as well.

UFC PPVs 2014

With UFC 193 and 194, the UFC would have for the first time two straight UFC PPVs over 1 million buys.

Not everything was selling well for the company as Demetrious Johnson’s PPVs were the lowest of the year.  Headlining UFC 186 and 191, those events received just 125,000 and 115, 000 PPV buys respectively.

UFC PPVs 2015

The UFC averaged 565,000 PPV buys in 2015 as opposed to 267,000 in 2014.

Has the UFC found a formula for its PPV success?  Or was this one year where it rode the popularity of Rousey and McGregor?  2016 should be a big year with the potential for UFC 198 in New York and UFC 200 in July.  Will there be other big events this year that could keep up with 2015’s success?

15 for 15: No. 4 UFC enlists USADA for anti-doping program

December 30, 2015

After failed drug tests by Jon Jones, Anderson Silva, Nick Diaz and Hector Lombard, the UFC decided to revamp its stance on drug testing and established an anti-doping policy of its own.  In conjunction with USADA, the UFC anti-doping policy went into effect on July 1st of this year.

In February, Lorenzo Fertitta, Dana White and Laurence Epstein presided over a news conference where it announced a “Call to Action.”  The anti-doping policy would require all UFC contracted fighters to be subject to random performance-enhancing drug testing.  When announced, it did not name a third-party administrator although we know now that it is USADA.

Call to Action

In an effort to provide transparency, the UFC-USADA policy was posted its policy online. The new policy would suspend fighters a minimum of 2 years for violating the anti-doping policy and harsher penalties for subsequent violations.  Of the new responsibilities of the UFC contracted fighters was to provide “whereabouts” information so that USADA officials would know where to contact a fighter if they were selected to be tested.  In addition, if a fighter would like to appeal a failed drug test, he or she would go through an appeal process with a third party organization.  The cost of the appeal for the fighter would be $2,700 although a fighter could petition to receive a waiver of the fee.

Despite its attempts to ensure that loopholes were tied up, there are still issues with the handling of certain issues.  For instance, there seemed to be ambiguity when a fighter requests a Therapeutic Use Exemption as in the case of Frank Mir.

The other big issue would be whether commissions and other fight organizations adhere to a fighter’s suspension.

One of the more controversial decisions by USADA was the elimination of the use of IVs to rehydrate from cutting weight.  The ban on IVs went into effect on October 1st.

USADA posts the names of the fighters it tests on its website.  In its first reporting period, Ronda Rousey was the fighter tested the most by USADA.  At the end of 2015, USADA reports 81 fighters tested with 28 “in-competition” and 53 “out of competition.”  So far, 2 fighters have been flagged for failing tests.

Mirko Cro Cop was the first UFC fighter flagged by USADA as having failed a test under the new UFC-USADA anti-doping program.  Cro Cop was suspended 2 years although he had announced his retirement from the UFC prior to the punishment.  He admitted to using hGH.  Gleison Tibau was the second fighter flagged.  Tibau was provisionally suspended although he has indicated that he would appeal the decision.

If Tibau appeals, it would be the first test for the new policy and its appeal procedures.

The cost of this program likely came as an unscheduled expense at a time of the year in which it was unknown how well financially the UFC would do.  The UFC needed the program as it was suffering from a PR disaster.  While Jones’ drug test was non-PED related, it still left a bad perception on the company.  Moreover, the fact that both main event fighters of UFC 183 tested positive for banned substances led the company to do something.

We shall see if more fighters will be tested and how many will be flagged in 2016.

15 for 15: No. 5 UFC Antitrust Lawsuit survives through 2015

December 29, 2015

The antitrust lawsuit filed by former UFC fighters against the company continued on into 2015 with various motions attempting to move and dismiss the case. As we end 2015, the case is now in Nevada before Judge Richard Boulware and the parties enter the discovery phase of the lawsuit.

In December 2014, fighters filed multiple lawsuits against the UFC (“Zuffa” to be technically correct) in federal court in San Jose. The attorneys for the UFC filed a motion to transfer the venue to Nevada. In June, the court in San Jose granted the UFC’s request and the lawsuit was moved to Nevada.

Order – Motion to Transfer Venue by JASONCRUZ206

In addition, the UFC filed a Motion to Dismiss.  The motion was denied by Judge Boulware in late September.  This meant that the lawsuit would continue.

The parties now are in the discovery phase as the UFC is turning over a voluminous amount of documents over to the plaintiffs.  There is no trial date set.  At some point in 2016, we may see the parties reach out to the third parties that may relate to some of the claims in the lawsuit (e.g., Scott Coker, Bjorn  Rebney, etc.).  Expect this to take some time as their lawyers will get involved.  Also in 2016, we should may see depositions of UFC employees and plaintiffs.  After that, you can expect a motion for summary judgment by either side (or perhaps both).  If you were hoping to see a trial in 2016, you are probably hoping against hope.

Silva reveals UFC 197 in Brazil Cancelled…or is it?

December 29, 2015

The UFC has canceled its March 5th PPV show set for Rio de Janeiro, Brazil.  Anderson Silva referred to being taken off of the card because of its cancellation at today’s media conference for UFC Fight Night 83.

Updated:  Maybe UFC 197 is not off per Sean Shelby’s tweet:

“(The plan) was to have me fighting in Brazil against I don’t know who,” Silva said, at the media conference “but with this situation going on in Brazil, economically and everything, the UFC decided to abort this event for now.”

The last time Anderson Silva fought in Brazil was as a last-minute fill in to fight Stephan Bonnar at UFC 153 in October 2012.

Silva returns to the UFC against Michael Bisping as the headlining event at UFC Fight Night 83 in February on UFC Fight Pass.

Payout Perspective:

With the cancellation of UFC 197, we will see if the UFC will find a replacement event or recalibrate its numbers to ensure that UFC 200 is in July.  Whether or not the economy was a reason for cancelling the event is an interesting issue as this has been brought up in the past.  This past year, UFC Fight Night 67 drew only 3,500 in attendance from Goiania, Brazil so nixing a PPV due to potential low turnout would not be out of the question.

15 for 15: No. 6 UFC-Reebok partner to tepid, disastrous results

December 28, 2015

In July, the UFC officially added Reebok as the company’s exclusive clothier.  No longer would contracted fighters wear non-UFC sponsors on their shirts, shorts or hats as “fight kits” would be issued for each fighter.  In addition, we said goodbye to fight sponsor banners.  The overarching issue was the new pay structure which drew the most criticism.

The official policy was outlined by the UFC.  The launch was self-gratuitous and felt out of place for an MMA organization.  Judge for yourself.

Since the inception of the UFC-Reebok relationship, there has been criticism on the operation and execution of the sponsorship.  The sponsor payouts for Reebok would now be based on the amount of fights within the company.  Overall, this meant a loss of revenue for fighters.  From our post earlier this year:

Fighters with 1 to 5 bouts will receive $2,500 per fight; 6 to 10 bouts get $5,000; 11 to 15 bouts get $10,000; 16 to 20 bouts get $15,000; and 21 bouts and above get $20,000.  As it previously indicated, title fights would receive more.  Challengers will receive $30,000 and Champions will receive $40,0000.

The sponsorship deal also left out cut people.  Thus, cut men such as Stitch Duran were “cut” out of the sponsorship payouts from Reebok as they lost out on the previous sponsors they once had.  Duran spoke out about this fact and was summarily dismissed from the UFC soon thereafter.  Whether or not Duran’s comments were planned, the UFC suffered a PR hit as they let one of the more known cut people go.

Dana White addressed the Duran firing in an FS1 interview and was unrepentant about the dismissal.  Rather, he used the old technique of switching the conversation (i.e, whether or not Duran was a friend of White; something Duran stated in an interview) in his interview with Karyn Bryant.

Sara McMann indicated that she would look into hiring an attorney as the Reebok deal may be unfair to women.  No word on a lawsuit as of yet.

The rollout of the Reebok jerseys saw many glaring misspellings.  Reebok attempted to address these issues.  However, the mishaps continued through the year.

An official Reebok shirt that promoted an event in Ireland left out Northern Ireland in a depiction of the country.  Another shirt promoting Jose Aldo actually referred to a fictional “Anderson Aldo.”

The start of the Reebok sponsorship has been one public relations problem after another.  We shall see if the company rights itself in 2016.  As for now, MMA fans have yet to warm up to Reebok as the company’s official sponsor.

Fertitta interviews states UFC made $600M in 2015

December 28, 2015

In an interview with CNN Money, the UFC’s Lorenzo Fertitta stated that the company will generate “about $600 million” in 2015.

In an interview with Rachel Crane, Fertitta goes over the purchase of the company for $2 million and how it grew since its acquisition.  According to Crane, Fertitta stated that it was the best year in the UFC’s history.  While no exact numbers were given, he stated that the company would generate about $600 million in 2015 and is “significant growth” from 2014.

Fertitta indicated that PPV is the key economic driver for the company.  It also stated that its media rights and UFC Fight Pass, it’s over the top platform were key to the success this year.

Fertitta did state that the UFC does pay for all of its production.

In addressing the issue of fighter pay, Fertitta mentions that the company’s top athletes are making millions of dollars.   He also stated that as revenues grow, so will fighter pay.

Payout Perspective:

An interesting little interview.  It was clear that 2015 was a big year for the company (one need only look at the PPV buy rates this year) and $600 million in revenue reflects the fact that it has performed well despite obstacles.  While the UFC is generating this amount, a lot of the money is being spent too.  Not only is it investing in its anti-doping program, it dug deep in its legal budget this year with a second FTC investigation, the antitrust lawsuit venued in Nevada, a federal appeal in New York and another lawsuit which includes a request for a preliminary injunction to hold an event at MSG in 2016.  It was interesting that Fertitta indicated the three economic drivers for the company were PPV (a given), media rights (Fox) and Fight Pass.  Certainly live attendance and merchandise are revenue streams but the mention of Fight Pass makes you think that the company has big plans for its future.  Also, the subscriptions (although never mentioned) have to be doing well for its OTT platform.

15 for 15: No. 7 – UFC’s legal battle in New York

December 27, 2015

The lawsuit filed by the UFC, its contracted fighters and others seeking to overturn the law prohibiting MMA in the state seemingly came to an end in March when Judge Kimba Wood dismissed the remaining claims against the state of New York.  However, that was not it for the legal maneuverings for the UFC in the state.

The UFC subsequently appealed the decision and retained former U.S. Solicitor General Paul Clement and his firm to handle the appeal before the Second Circuit Court of Appeals.  Clement also is known as the attorney working on the NFL Deflategate litigation.

Last month, the state of New York filed its response to the UFC’s appeal brief.  The UFC filed its reply and requested oral argument.  If granted, the oral argument should take place sometime in 2016.

The issues in question deal with whether the law banning pro MMA in the state violates the First Amendment and whether the law is unconstitutionally vague.  The First Amendment issue presents an interesting issue as we have delved into its implications.

Not only does the UFC have an appeal, in September in filed another lawsuit in federal court in New York seeking an injunction to hold an event in New York’s Madison Square Garden this April.  The new lawsuit takes heed to the words written by Judge Wood in its opinion dismissing the original lawsuit earlier in the year.

Kimba Wood opinion

The one issue which has been brought up during the litigation by the state of New York was that the case should be decided by a state court.  The state of New York does not buy the UFC’s argument that it would be harmed if it does not hold UFC 198 at MSG.  Rather, it states that the UFC still does not have legal “standing” in the state even though it has signed a “conditional agreement” with MSG.  Among its arguments opposing the grant of a preliminary injunction, New York argues that a state court should decide the law regarding the constitutionality of the law.  It also claims that the deposit for MSG would be refunded to the UFC if it coincided with an NBA or NHL playoff game stating that the Knicks or Rangers would trump the UFC event.

The lawsuit filed this past September by the UFC requests a preliminary injunction which would allow for the UFC to hold an event in New York despite the existing law preventing pro MMA in the state.

In 2016, we should see a resolution to the preliminary injunction and whether or not UFC 198 will be in Madison Square Garden or not.

15 for 15: No. 8 MMA Free Agency

December 26, 2015

Free agency in MMA has been a relative unknown for fighters but with the Reebok sponsorship deal plus other organizations willing to pay them more than the UFC’s seemingly lockstep rate, fighters are thinking about testing the waters.

Benson Henderson and Aljamain Sterling are the first fighters to take their careers in their own hands by looking at options outside of the UFC rather than re-sign with the company before their last fight.

Henderson made the announcement in a subtle post-fight interview this past November and Sterling was informed that the company would waive its “matching” clause after his last fight at UFC Fight Night 80.

Aside from these recent moves, the UFC has allowed other fighters to let their contracts expire without actively pursuing them.  Josh Koscheck and Phil Davis jumped to Bellator after their fight contracts with the UFC ended.

The UFC is not letting everyone go.  It has signed fighters to long-term deals this years.  Paige VanZant, Chad Mendes,  Daniel Cormier and Fabrico Werdum all come to mind as contracted fighters signing deals.  Mendes, Cormier and Werdum signed 8 fight deals.  Nothing confirmed as to the length of VanZant’s new fight deal.  At UFC Fight Night 80 she earned $40,000.  Prior to that, she was making $12K/$12K at UFC 191.

The Reebok deal which assigns a payment structure based on the number of fights with the organization has eliminated the sponsorship market for fighters.  The belief is that without sponsors, it has eliminated a lucrative revenue stream for fighters.  While the Reebok deal will allow for gear and guaranteed payments, the word is that the Reebok payouts are low compared to the possibility of how much money fighters could earn by attaining sponsors for fights.

The UFC has been the major organization in MMA and most every professional fighter wants to fight for the company.  But now, some fighters are considering other options in looking for the best payday.

Bellator has done well with packaging older, UFC fighters and making them stars for their tentpole events.  Notably, Tito Ortiz, Ken Shamrock and Kimbo Slice have all headlined Bellator events.

We shall see if Henderson and/or Sterling make waves by signing with another organization.  It will be interesting to see if 2016 will be a year that other UFC contracted fighters decide to take a leap of faith and sign on with another organization.

15 for 15: No. 9 Nick Diaz vs. NSAC

December 25, 2015

Nick Diaz returned to the octagon in February 2015 to face Anderson Silva at UFC 183.  No one would have thought that each fighter would test positive for banned substances let alone the penalty issued Diaz.

Not surprising, but Diaz tested positive for marijuana.  Although Diaz’s lawyers pointed out inconsistencies with the testing, the commission determined that Diaz violated the commission rules.  What was surprising, the penalty issue by the commission: 5 years, $165,000 fine.  Perhaps the reason for the upheaval with the ruling was the proceedings that transpired.  Diaz, represented by lawyers, pleaded the Fifth Amendment right not to incriminate himself when asked questions by the commission.  Despite having lawyers on the commission, it was clear that Diaz’s lack of response irked the commission.

While the commission hearing is not considered an adversarial proceeding or a court hearing, the refusal to respond to the commission questions was likely a reason for the stiff sentence.  Moreover, the fact that the commission has yet to issue a written ruling has precluded Diaz from seeking a judicial review in court.  There has been news that UFC’s lawyers at Campbell and Williams have been negotiating a settlement with the commission to avoid further litigation.  However, that has yet come to fruition.

Its clear UFC Fight Pass played a role in the grassroots effort to reinstate Diaz.  The fact that people could watch for themselves as the hearing went on, viewers had a chance to judge for themselves what was going on instead of reading reports from the hearing.

The penalty issued Diaz set off widespread support for the fighter.  Ronda Rousey spoke publicly about the perceived unfair decision.  Henry Cejudo  and Leslie Smith vowed not to fight in the state of Nevada due to the ruling.  A White House petition was started to overturn the commission decision.  The petition drew over 108,000 signatures.  It needed 100,000 to receive a response from the White House.  Of course, the response from the White House was nothing earth-shattering as it deferred to the state of Nevada.

Report: UFC 193 draws over 1M PPV buys

December 25, 2015

MMA Fighting’s Dave Meltzer reports that UFC 194 featuring Ronda Rousey and Holly Holm drew over 1 million PPV buys.

According to Melzer’s report, the PPV last month drew between 1 million and 1.1 million PPV buys.  Not only did UFC 193 draw over 50,000 fans, it also surpassed the vaunted 1 million PPV buy barrier making it one of the most successful UFC events ever in terms of business revenue for the company.

Ronda Rousey PPV’s 2015

UFC 184: Rousey v. Zingano – 600,000

UFC 190: Rousey v. Correia – 900,000

UFC 193: Rousey v. Holm – ~1 – 1.1 million

Payout Perspective:

The news makes 2015 the biggest PPV for the company ever.  Lorenzo Fertitta stated that December’s UFC 194 would be the third-biggest in UFC and based on MMA Fighting, it could be second to only UFC 100.  For Rousey, it makes it the second straight PPV where she has drawn 900,000 PPV buys or better.  Obviously, with her drawing power, the UFC hopes she doesn’t take too much time off between movies as they would want her back in the Octagon in 2016.

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