Average resale price for UFC 218 stand at $162 as of Thursday

November 30, 2017

UFC 218 takes place this Saturday at The Little Caesar’s Arena in Detroit, Michigan.  The average resale price for a ticket to UFC 218 is $162 as of Thursday.

Per SeatGeek, the median listing price for the event (as of Thursday) is $236. The get in price for the event is $148 on the secondary market.  A look at Ticketmaster has the lowest price to get into the event to see Jose Aldo fight Max Holloway in the main event is $92.  The highest price per Ticketmaster is $554.

There are still seats on the floor available through Ticketmaster.

The arena, which serves as the home for the NHL’s Detroit Red Wings, seats between 18,000-20,000 based on configurations.

Payout Perspective:

The event resale price is actually higher than last year’s median resale price which was $206.  Last year, Holloway fought Anthony Pettis in December in Toronto at UFC 206.  There are some good fights on this card but it is unlikely to sell out based on the availability on Ticketmaster.  But, the rise in median prices on the secondary market may mean that people that want to go are seeking the best tickets.

TUF 26 Episode 12 draws 220,000 viewers on FS1

November 30, 2017

The season finale of season 26 of The Ultimate Fighter drew 220,000 viewers on FS1 Wednesday night. It’s one of the lowest (if not the lowest) live + SD rating for the TUF franchise.

According to ShowBuzz Daily, it drew 0.09 in the A18-49 demo.

In the last fight of the season to determine who will fight in the live Finale on Friday night Sijara Eubanks defeated Roxanne Modafferi to earn her right to the TUF Finale.  It would have meant two of the lowest seeds (Nicco Montano is the other finalist) in the house squaring off for the inaugural Flyweight title.  However, due to weight cutting issues, Eubanks was forced to pull out and Modafferi was inserted into the final slot.

Payout Perspective:

Wednesday night’s show was not in the usual 10pm ET time slot as the replay of episode 11 aired and the new episode aired in the 11pm ET slot.  The ratings for this season were quite low with an average of 237,000 viewers for live viewership and the lowest rating ever for a first-run episode of TUF.  The fall TUF season is a hard sell due to Major League Baseball’s postseason as the show takes a week or so off due to conflicts and/or the World Series.  DVR ratings have helped bolster the viewership by almost 40 to 50% of the live viewing each week.

Kovalev fight draws second-highest rating boxing event on HBO this year

November 29, 2017

Coming back from his loss to Andre Ward, Sergey Kovalev returned to HBO and drew one of the best ratings for a live event on the network this year.  According to Nielsen, his fight with Vyacheslav Shabranskyy drew an average of 869,000 viewers peaking at 900,000 viewers Saturday night.

Kovalev’s fight lasted just two rounds as he thoroughly outclassed Shabranskyy.  Only the Terrence Crawford-Felix Diaz fight on HBO this past May drew higher ratings for a live event.

There were three fights on HBO Saturday night.  In the first fight, Yuriorkis Gamboa defeated Jason Sosa in somewhat of a controversial win.  The fight averaged 763,000 viewers and peaked at 846,000.  It also drew 0.24 in the A18-49 demo.  Sullivan Barrera defeated Felix Valera in the second bout of the evening.  The fight saw both men knock each other down in one round.  The event averaged 760,000 viewers and peaked with 805,000.  The event drew 0.25 viewers in the A18-49 demo.

Payout Perspective:

The ratings show that Kovalev is still a viable draw for HBO.  His fight did not last long but based on the numbers, it’s clear that there is an audience for him even on a holiday weekend which could have buried this event.  We will see how/when Kovalev returns, the type of promotion he will receive.

EVOLVE files Motion to Dismiss FloSports lawsuit

November 28, 2017

WWN, Inc., the owner of the EVOLVE wrestling promotion, has filed a motion to dismiss for lack of personal jurisdiction and/or motion to dismiss for failure to state a claim against Flosports, Inc.  The lawsuit, which originally filed in state court in Texas, was sent to federal court in the state earlier this month.  FloSports claims that WWN misrepresented its live streaming data to entice the company to invest in its live stream and internet PPVs.

FloSports has a niche in the online industry by streaming a broad spectrum of smaller sporting events to a direct-to-consumer subscriber base.  The business model has grown significantly since its inception and even drew an investment from the WWE.  The company offers streaming of professional wrestling events of which it had a deal with EVOLVE

The crux of the Complaint filed on September 15, 2017 [now Amended Complaint filed on 11/27/17] is that FloSports claims it was induced into a 5-year Exclusive Media Agreement due to a misrepresentation of the number of wrestling fans purchasing viewership access to WWN’s events.  Prior to FloSports, it appears that EVOLVE ran its own iPPVs and Video-on-Demand.  FloSports claims it invested “hundreds of thousands of dollars” in reliance on this information.  But, the numbers were false.  WWN claims that the numbers were based on previous ownership.

Motion to Dismiss for Lack of Jx by JASONCRUZ206 on Scribd

The parties disagreed on which entity contacted the other first.  WWN claims FloSports contacted it about potentially streaming on its web site while WWN claims in its Motion to Dismiss that it was FloSports that attempted to recruit the Florida-based company.

FloSports’ original complaint had scant facts about the background behind the filing of the complaint and causes of action.  WWN removed the case to federal court in Texas and then filed a Motion to Dismiss on the grounds that there is a lack of jurisdiction and for a failure to state a claim upon which relief can be given.  The Amended Complaint provides a deeper factual picture including a timeline of events.  This was filed with its response to the Motion to Dismiss which may address perceived holes in the plaintiffs’ original lawsuit.

Amended Complaint FloSports by JASONCRUZ206 on Scribd

In it’s Motion to Dismiss, WWN argues that even if the court finds jurisdiction over the Florida company, it must dismiss FloSports’ cause of action for negligent misrepresentation since it is essentially a tort claim.  Under what is known as the “Economic Loss” rule, a party suffering only economic harm may recover damages for that based upon a contract theory and not on a theory for negligence or strict liability.  In its Amended Complaint, FloSports does away with the negligent misrepresentation claim and inserts a claim for fraudulent inducement and fraud.  Similar to its original cause of action for negligent misrepresentation, FloSports claims that it was given false data by WWN to invest in the EVOLVE franchise.

The 5-year Exclusive Media Agreement is included in the FloSports opposition brief and is embedded below.

Exclusive Media Event Agreement by JASONCRUZ206 on Scribd

The Agreement allows an out for FloSports starting in January 2018.  However, they must give a 12 month notice which appears to mean that they would have to pay the rights fee for the year.  According to the Agreement, FloSports paid $75,000 in 2016; $500,000 in 2017; $550,000 in 2018; $605,000 in 2019; $670,000; $740,000 in 2021.  There are also incentives in the contract if EVOLVE exceeded certain benchmarks.  Obviously, the glaring step-up is from 2016 to 2017 where the rights fee shoots up from $75,000 to $500,000.

Payout Perspective:

The legal part of the matter involves a basic civil procedure question one might find itself answering on a first-year law school exam.  Does FloSports have the right to sue WWN in Texas when the Florida-based company claims it has no ties to Texas and has only minimal contacts with the state?  If not, then the court would dismiss the action in Texas although FloSports would be able to refile in Florida.  This first question would determine whether it is necessary to answer the second question which is whether FloSports’ claim for negligent misrepresentation is viable.  According to WWN, it cannot stand since it argues that the “economic loss” rule prevails here which precludes a party from repackaging a breach of contract claim into a tort claim.  This is a moot point if we are to accept the Amended Complaint.  Still, I would assume that WWN argues that the Fraud claim not stand as it is the same/similar to the original claim.  From an anecdotal standpoint, fraud claims are hard to prove and while the Court may allow it past the initial pleading stage, the real issue here is the breach of contract.

The story here is that FloSports is not receiving its anticipated return on investment from the EVOLVE shows and believes that they were duped into believing that this was a popular promotion that had followers that purchased its iPPVs.  Notably, EVOLVE does not address the veracity of the data it provided FloSports but the focus is on the jurisdictional issue because if the Court has no jurisdiction it cannot rule on the underlying facts.  EVOLVE may have a explanation for the data but I assume it is strategically withholding that until a ruling on the procedural issue.

TUF 26 Episode 11 draws 273,000 viewers on FS1

November 27, 2017

The Ultimate Fighter 26 Episode 11 drew 273,000 viewers last Wednesday  on FS1 per Nielsen via ShowBuzz Daily.

According to ShowBuzz Daily, it drew 0.09 in the Adult 18-49 category.  It was the penultimate episode of the season with Barb Honchak taking on Nicco Montano one semifinal.  The 14th seed Montano scored another upset as she defeated the 2nd seeded Honchak.  Montano will face the winner of the Roxanne Modafferi-Sijara Eubanks fight airing on the season finale of TUF 26.

Payout Perspective:

We will update the DVR numbers from the last couple weeks later this week.  The Wednesday before Thanksgiving is usually a tough time for viewership although TUF rebounds from an all-time low last week of 158,000 viewers.  Last year, TUF 24’s 11th episode which also took place on the Wednesday before Thanksgiving drew 304,000 viewers.  The night belonged to the NBA with the two games on ESPN drawing the top two spots for cable watchers.

Report: Fox offer in $200M range for UFC media rights

November 27, 2017

John Ourand of the Sports Business Journal reports that Fox has made an initial offer to the UFC in the $200 million range.  This is far less than the predicted $450 million forecasted by the previous UFC regime.

The offer was also confirmed by Darren Rovell.

In its pitch to potential buyers, the UFC stated that its media rights revenue would be $450 million with its next deal.

The current deal ends next year.  It yields an average of $115 million per year over the course of the 7-year pact.  Per the Sports Business Journal, it is seeking a 10-year deal which would place its ask at $4.5 billion overall.

The UFC and Fox had an exclusive negotiating period of 3 months prior to the promotion going on the open market to solicit other buyers.  Although the two could not come to an agreement within that window, it seemed almost expected as the new owners of the UFC would like to see what market it might have for it.

WME-IMG paid $4 billion for the UFC promotion in July 2016.

Payout Perspective:

The $200 million is a modest boost from its $115 million rights fee.  It’s not clear whether this includes any digital rights and/or any changes in its broadcast terms.  One might expect this to be an opening and see what WME-IMG might be able to do about getting other bidders for its rights.  The $450 million figure seems like an aspiration and we are not sure if the new owners believed this to be a reality.  WME-IMG are savvy negotiators and even though the initial bid is low, one might expect once other entities get in on the bidding, the price to increase.

UFC Fight Night 122 attendance and bonus winners

November 25, 2017

UFC Fight Night 122 took place in Shanghai, China and was a success from the box office as the company reports a sellout.  In the main event, Kelvin Gastelum earned a Performance Bonus with a 1st round KO over Michael Bisping.

In addition, Li Jingliang, Zabit Magomedsharipov and Song Yadong earned the $50,000 bonuses for their Performances which all ended in stoppages.  There was no Fight of the Night bonus.  The company made the announcement post-event.

In addition, the UFC announced the event as a sellout with a reported 15,128 fans in attendance.  No gate was announced for the event.  The event took place at the Mercedes-Benz Arena in Shanghai.  According to this, ,the maximum capacity is 18,000 altho0ugh the 15,000 may be a sellout based on the configuration for the event.

Payout Perspective:

A good turnout for the promotion’s first event in China.  The Gastelum KO know brings concern about Bispimg’s health.  But one has to wonder where this was prior to signing him on as a replacement.  Recall, the event was to be headlined by Gastelum and Anderson Silva.  Still, the event featured many Chinese fighters including bonus winner Jingliang.

Former UFC fighter handed 10-month prison sentence for role in attempted fixing fight

November 24, 2017

Tae Hyun Bang has been sentenced to a 10-month prison sentence after being found guilty of taking bribes for alleged fight fixing.  The former UFC lightweight was sentenced in the Seoul Central District Court in South Korea per the The Korea Herald.

The alleged scheme occurred at UFC Fight Night 79 in November 2015.  It was the company’s first visit to South Korea and Bang took on Leo Kuntz.  Bang was given $92,160 in U.S. dollars for his role.  The brokers who gave him the money were given jail sentences as well.

According to the court match fixing damages the credibility of the sport and had a bad effect on the country’s credibility.  Bang took the bribe and then bet roughly half of the money he received on Kuntz.  He was to lose the first two rounds of their three-round bout.  Thus, ensuing victory for Kuntz.  The UFC noticed the huge swing in betting lines and warned both fighters about the consequences of fight fixing.  Bang ended up winning the fight via split decision.

Bang had claimed he had not known of any scheme to fix the fight but received death threats due to his win.

Payout Perspective:

This is an unfortunate result for Bang who may have been an unwilling participant in this scheme.  10 months seems like a substantial amount of jail time for his part.  Yet, he took the money and then attempted to make money on the scheme but with organized crime involved, its hard to say what may have happened if he did not comply.  The jail term shows the seriousness of credibility in the sport especially when gambling is involved.  For the UFC, it is an important issue since we know that sports betting is inherently tied to this sport.

Retro Payout: The UFC goes to China

November 23, 2017

As the UFC makes its debut this weekend in mainland China, MMA Payout goes in the wayback machine to a post the site did a little over 7 years about the hurdles of entering the Chinese market.

The post was written by Kelsey Philpott and was part of his travels while a graduate student at the University of Oregon.

The full article is below with a current Payout Perspective:

I recently traveled to China with my fellow MBA students at the Warsaw Sports Marketing Center in order to consult with several sports leagues and firms doing business in the country. Not only was the trip very successful for the Warsaw Center, but I’ve personally returned home with a better understanding of the Chinese consumer and the key challenges facing the UFC as it looks towards expansion.

Traits of the Chinese Consumer

  • Exceptionally nationalistic
  • Historically very conservative, especially where violence in concerned
  • The average salary in urban areas is 4,000 RMB/month (~$600)
  • A great majority of their entertainment is consumed through free, state-owned television programming
  • Increasingly influenced by consumer trends in Japan and the US
  • Possess global aspirations in all walks of life; money, cars, clothes, etc.

While in China, I very much got the sense that the country is in the midst of a culture shift; much in the same way that the country has experienced somewhat of a paradigm shift regarding its political and economic ideologies. The rapid development of China’s economy and underlying infrastructure (in most areas) has generated tremendous wealth, but it’s also provided the Chinese with a sort of global aspiration: they want – and can now afford – what everyone else has (i.e., fast cars, fancy clothes, and good entertainment).

The traditional Chinese values pertaining to face, family, and country are still very much in place. However, the added element now is a young Gen Y group with the confidence, ambition, and wherewithal to adapt those core values to the Western world.

Key Challenges

1. Chinese conservatism

Despite China’s storied martial arts history and emerging cultural thaw, MMA will not be an easy sell in the country. The Chinese are still by and large a conservative and risk-averse group of consumers led by an extremely protective and controlling government. MMA is a very aggressive and violent sport that’s easily misunderstood.

The biggest challenge for the UFC in China will be obtaining buy-in at the governmental level. If it cannot cultivate key relationships within the government it can forget about television coverage, live event permits, and any sort of merchandising initiative. The Chinese still follow the cultural lead of the government in many ways, and if the government decides to throw its weight behind something, not only does that something get done, but people tend to take notice pretty quickly.

2. Revenue generation

The next biggest challenge relates to the UFC’s business model. Nearly 75% of the UFC’s revenue is event-related, but China is neither a PPV market or a significant spectator market.

The Chinese consume a great deal of their sports through free, state-owned television programming and are reluctant to pay for what they’ve always had for free – even despite the increase in the number of set-top boxes in the country. Various different sports properties have tried PPV or subscription models in the last couple years, but each have failed (including a group that bought the rights to the EPL for three years at some $70m and fell into bankruptcy two years into the deal).

The fact that it’s far more easy and cost-effective for the Chinese to stay at home and watch an event for free makes them less inclined to watch live, especially in the densely crowded and difficult to navigate urban areas. The high rate of television consumption contributes to the lackluster live-game experience at most sporting events, which in turn provides even less incentive for fans to attend. It’s a self-perpetuating cycle.

Nearly every sporting event taken to China has struggled at the gate – the Olympics, F-1, ATP, European TOUR, etc. In many cases the government often resorts to hiring groups of people or assigning army units to attend events as paid spectators just to beef up the look of the event for global television audiences. It’s a very difficult ticket sales market.

Perhaps the best way to be successful is to play on Chinese aspirations for the consumption of world class goods and services. If the UFC brings its best and brightest to China and sells it as such, it may gain an audience on the merit of simply providing its best offering to the country. It would be seen as a sign of respect to which reciprocation is almost guaranteed as a matter of courtesy and obligation.

3. Patience

In the late 1980s, the Commissioner of the NBA, David Stern, crossed the Pacific and sat in the lobby of the CCTV HQ with a box of tapes on his lap looking to accomplish one thing: get his product on television. More than 20 years later, basketball and the NBA have finally started to take hold.

There are many reasons for the NBA’s success in China – it wasn’t just Yao Ming – but perhaps the most important is the combination of effort and money over the period of the last 20+ years. If you look at the current foreign sports landscape in China, the most successful organizations are all those that have spent a good chunk of time in the country. I do not think this is coincidence.

This third challenge is one borne of patience. Is the UFC willing to make the necessary investments — concessions on rights fees to get on TV, localized manpower to cultivate government relationships, and enduring rather high opportunity costs to put on live events — in a market that isn’t likely to provide a solid return for at least another five years?

4. Others

The above three considerations are probably the biggest challenges facing the UFC in China, but it will also have to contend with a variety of other issues to establish itself in the country:

  • Navigating the sometimes very different distribution infrastructure within the country
  • Protecting its intellectual property
  • Implementing or supporting a national development program

Payout Perspective in 2017:

There are obvious changes to the cultural and media landscape in 2017 than in 2010.   This article seems to believe that MMA has a future in China due to a deep talent pool.  The UFC now has a television deal and a digital platform, UFC Fight Pass.  This weekend’s event from Shanghai will be on UFC Fight Pass.  The fact that this event will cater to the local market, the event will air live starting in the middle of the night in the U.S.  But, for Fight Pass subscribers, this will be no issue since they can watch it whenever they please.  The globalization of MMA has expanded the popularity of the sport and with ONE FC operating in Asia, the Chinese market for combat sports seems attainable for the UFC.  With a population of 1.4 billion and a financially stable middle class, there’s a reason why the UFC would like to penetrate this market.

Report outlines Top Rank’s path to its ESPN deal

November 22, 2017

Last week’s Sports Business Journal reported on ESPN’s return to boxing.  The article focused on Top Rank’s deal with ESPN this past July and how it transitioned from premium cable to basic cable.

There was interest from Top Rank into obtaining a rights fee deal the likes of the UFC and Fox.  A key point was shoulder programming which would help with promoting the fights.  Top Rank Boxing president Todd DuBoef analyzed the promotion’s ratings on HBO and saw that they were comparable to the shows the UFC put on FS1 and thought there might be interest for shopping his rights with the knowledge that the UFC was doing the same.  DuBoef sought help from CAA about the possibility.

According to the SBJ article, there were three reasons for ESPN’s dive back into boxing:

One is the opportunity to capture all of the promoter’s fighters and fights, without the concern that the stars they develop will then move to premium cable. Another is the soon-to-be launched OTT service, which will rely on deeply engaged fans who will pay for content like Top Rank’s fight library, and also brings the distribution of pay-per-view into play. The third is the data narrative that DuBoef and CAA brought to the initial conversation.

The article notes that Al Haymon’s PBC was an archetype for Top Rank to gage the level of interest boxing may have with a broader audience.  The interesting take is that despite the sport skewing to the older demographic, it grabbed a slice of the 18-49 demo.  PBC’s business model to buy time on the air with the hope to “flip” the model has not worked.  The article notes that deposition testimony from the litigation involving PBC professes that the flipping of the script for PBC to turn the model for networks to pay for PBC rights was to have occurred in 2018.

Ratings reflect that young male demo is watching boxing.  The first Top Rank fight featuring Manny Pacquiao taking on Jeff Horn drew well in the 18-34 demo as 836,000 of them tuned in when Pacquiao stepped in against his Aussie challenger in July.  The next month, a fight featuring Vasyl Lomachenko beat out a UFC Fight Night in the demo 137,000 to 109,000 and 317,000 to 271,000 for males 18-49.  Although the UFC show on FS1 fared better overall, the ratings saw the younger male demo scoring better.  In September a Top Rank card headlining Oscar Valdez drew better than a UFC Fight Night on FXX.  Boxing beat the UFC 706,000 to 502,000 viewers.

Payout Perspective:

It’s an interesting article because of the perceived newfound partnership between each party and its duties with the main goal of attracting a broader audience which includes a younger demographic.  There is an inference that television boxing consumption skews to the older demographic which may be true.  However, there is a sense that the premium channels on which boxing aired, as well as the lack of advertisements on those networks were key factors as to the older demo.  The ESPN deal helps both boxing and the network.  ESPN gets live content while boxing has the chance to be viewed by a broader audience and will be aided by programming that will help its own events on the network.  So far, ratings seem to show that it is successful.  We shall see how it does in the long run.  As of now, it seems that Top Rank has learned from PBC’s falters in what works on the network and what does not.

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