Top 10 of 2012: No. 1 UFC 151 Cancelled

January 1, 2013

The No. 1 MMA business story of 2012 is the cancellation of UFC 151.  The decision to call off the September 1st event raised a number of issues that the company may need to address going forward.

The cancellation of 151 amakes it the event that never was.  It was estimated that the UFC would lose $40 million due to the cancelled show.  The cancellation also caused a trickle-down effect as nixing the show likely meant hotels, casinos, restaurants and bars lost out on potential revenue from UFC fans coming out to Vegas.  Of course, the fighters on the card felt the economic effect as they had to wait for another fight although it was reported that some were compensated despite the cancellation.

UFC 151

Initially Dana White came out and blamed Jon Jones and Greg Jackson for not taking on another opponent at short notice.  White later assessed some of the blame to Dan Henderson for not informing the UFC of his knee issues until it was too late.

Aside from the basics (i.e., losing money) there were other lessons to learn from UFC 151:

  1. Fighter relations – The fact that Jones and Machida turned down a fight brought the issue up of a fighter’s leverage.  No longer could White pick up the phone and call a top-notch fighter to fill in at a moment’s notice.  As the champ, Jones felt he did not have enough time to prepare for Chael Sonnen.   For Lyoto Machida, turning down the fight made some sense if you think about the fact he may never get another shot at Jones.  If you had only one shot to regain the title, you’d probably want a full camp to prepare.  With top stars earning seven figures, something White has confirmed, certain fighters can pick and choose their shots without worrying about their finances.  Even though Anderson Silva stepped up to fill in at UFC 153, one might infer that Silva dictated the terms of his appearance.  He faced Stephan Bonnar in a three round fight at 205 pounds in his home country.  No travel, no weight cutting and no competition.  An easy pay day and he’s revered as a hero.
  2. Media relations – While I do not think this will change in the near future, the dissemination of information from Dana White via twitter and/or his rants at press conferences could be a detriment to the company if it truly wants to be considered as a major sports league along with the NBA, NFL and MLB.  Only David Stern offers up as many potshots in the press (in a sarcastic, “I’m smarter than you” way).  But White’s comments at the initial announcement, the UFC’s press release (press release entitled, “Jones Refuses New Opponent”) calling out Jon Jones and then his subsequent mea culpa are standard fare.  (See also the Jeremy Stephens arrest for another example).  But, does anyone in the MMA media really care?
  3. Fight camps and injuries to fighters – It’s a constant in the UFC.  Fighter injuries and replacements happen almost every fight card.  It was a matter of time that something like this would happen.  It may be time for an examination of fight camps to determine what can be done to prevent injuries.
  4. Depth on the fight lineup – The underlying issue regarding the cancellation of the card was that the rest of the card was not strong enough to sustain without the main event.  Although the problem was Jones not wanting a new opponent so late in the game, the fact that the UFC did not think the card was marketable without the Jones fight reflects the roster being stretched thin to cover all of the UFC events.  With the end of Strikeforce, its the hope that there’s enough talent on the roster to have more than just one compelling fight on a card.

The UFC 151 aftermath had many fans question Jon Jones.  Many sided with White calling the champ selfish and as the person behind the cancellation.  Jones has not always been the sympathetic figure.  Some attribute this to his attitude.  Sonnen’s taunting the champ gained traction with fans and subsequently caused a matchup this spring.

On the positive side, UFC 151’s failure and subsequent goading by Sonnen gave us The Ultimate Fighter with Jones and Sonnen as coaches.

Top 10 of 12

10. Injuries continue to plague the UFC

9. TUF moves to Fridays on FX, poor ratings move it to Tuesdays

8. Zuffa continues international expansion

7. The UFC-Fox relationship

6. Nike sponsors Silva, Jones and JDS

5. GSP returns

4. Bellator moves to SpikeTV

3. Ronda Rousey signs with the UFC

2. The end of Strikeforce

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.

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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.

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.

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.

Top 10 of 2012: No. 9 TUF moves to Fridays on FX; poor ratings move it to Tuesdays for 2013

December 26, 2012

With the UFC-Fox relationship, much anticipation came with The Ultimate Fighter moving to the FX Network.  Despite a Friday night time slot, Dana White was bullish on the move.

Via MMA Fighting:

When signing the [FOX] deal more than a year ago, UFC President Dana White talked about drawing 3 million viewers weekly for TUF reality show with the combination of the new network and the fights going live for the first time in the history of the show.

However, TUF 15, which was aired live, did poorly as the ratings reflected viewers turning off the show before it ended. Two seasons on FX this 2012, and White’s prediction for 3 million viewers a week were inaccurate.  In fact, the porous ratings have the TUF franchise moving to Tuesdays in 2013.  Looking to revive the franchise, the UFC has enlisted Jon Jones and Chael Sonnen as coaches for its Tuesday debut this January.

TUF Live featuring Dominick Cruz and Urijah Faber as coaches drew an average viewership of 1.01 million viewers.  It was the lowest season average of the TUF franchise (until TUF 16).  Also, Cruz knee injury kept the anticipated Cruz-Faber rematch from happening.

TUF went back to taped shows and fights for season 16 which featured Shane Carwin and Roy Nelson.  As was the case for TUF Live, an injury forced Shane Carwin out of the TUF Finale.  Ratings were poor once again as the season had the three lowest ratings in the 16 season history of TUF.  It drew an average of 829,250 and surpassed 1 million viewers for only two episodes.

The episodes and fighters were mediocre.   In fact, the most memorable moment of TUF 16 was White coming in to give the fighters a pep talk on fighting more exciting fights.  A bit of foreshadowing as most of the TUF 16 cast will not be signed to UFC contracts.

Top 10 for 2012: No. 10 – Injuries continue to plague fight cards

December 25, 2012

Welcome to the year end edition of MMA Payout where we’ll count down the top 10 business stories of 2012.  We start off with number 10 with injuries plaguing fight cards this year.

The biggest example of an injury affecting a card was UFC 151 (more on this later) when Dan Henderson went down with a knee injury causing a last minute shuffling of main event competitors that went awry.  GSP also went down with an injury which gave us Condit-Diaz Super Bowl Weekend instead of the anticipated GSP-Diaz tilt which would have received good PPV numbers based on GSP’s popularity and the general dislike (and contrasts) between the two.  UFC  143 drew 400K PPV buys which is respectable but that number would have doubled if GSP was not injured.

UFC 147 was to have Sonnen-Silva II and Vitor Belfort-Wanderlei Silva as headlining a card in Rio.  However, Sonnen-Silva II was pushed back to July and Vitor Belfort was injured allowing Rich Franklin to step in.

In October, UFC 153 was in jeopardy as Jose Aldo was injured in a motorcycle accident and had to pull out.  Before Aldo’s injury, his opponent was switched from Erik Koch to Frankie Edgar.  The Aldo-Edgar fight was tabled until a later date (which is now Super Bowl Weekend 2013).  At about the same time that Aldo was pulled from the card, Rampage Jackson had to pull from his co-main event fight with Glover Texeira.  This caused the UFC some tense moments as it appeared that another card was going to be cancelled.  Fortunately for Dana White, Anderson Silva and Big Nog agreed to fights in front of their home country to save the PPV.  A Silva-Bonnar main event actually did better than Condit-Diaz in terms of PPV buys as UFC 153 scored 410K buys.

In addition to these big injury issues, Strikeforce had to cancel a September card due to an injury to Gilbert Melendez and put off a November card (which is now its last this January) due to an injury to UFC fighter Frank Mir (who was an injury replacement).  This post does not even cover the spate of injuries by fighters not on the main card of UFC events.

Although not an injury, Alistair Overeem was to face Junior dos Santos May 26th but had to be replaced after a failed drug test.

The injury bug has been so common that Dana White half-jokingly told fighters on the UFC on Fox 5 to tone down their training leading up to the card in hopes of preserving the card for Fox.

Here’s hoping 2013 has less injury replacements.