November 21, 2013
Forbes.com ran an article last week on Georges St. Pierre and how he makes $12 million per year. The article gives a rundown of all of GSPs revenue streams including salary, PPV and sponsorships.
According to Forbes, GSP made “roughly $9 million combined from his past two fights” and another $3 million from “endorsements, memorabilia and licensing.”
If we are to parse out his past two fights, which would be UFC 158 (against Nick Diaz) and UFC 154 (against Carlos Condit) he would have made $870,000 in reported salary and bonuses and an additional $8,130,000.
GSP’s payday for UFC 158 was $400,000 total. The buy rate was a reported 950,000 PPV buys.
GSP’s payday for UFC 154 was $200,000show/$200,000 win plus $70,000 for Fight of the Night for a total of $470,000. The buy rate was a reported 700,000 PPV buys.
If GSP received the rest of his pay via PPV revenue for the past two events, he received around $5 per PPV buy. While his $9 million in pay has been reported from sources close to GSP according to the article, extrapolating the numbers from the pay sources (i.e., salary, bonuses, PPV), it’s debatable whether his earnings were $9 million for the past 2 fights. He may have received another lump sum bonus, but once again, this seems like a hefty amount of money to give GSP.
The $3 million in sponsorships is believable as GSP has blue chip sponsors in Under Armour, Coca Cola, Google and MMA brands Affliction and Hayabusa.
Next year, GSP’s earnings will also include his part in a Captain America movie which will open in 2014.
As Dana White told and retold reporters on Saturday night, GSP is rich. GSPs salary/bonuses and PPV upside has to be the biggest in the company if he could make over $8 million in PPV earnings alone. But making $5 per PPV buy would seem very high for just one fighter. Whether or not GSP has made $9 million in his last two fights, it’s clear that he’s the highest paid fighter in the company. The TMZ rumors are bad for business for GSP’s personal brand but should not affect his UFC earnings. At this point, GSP does not need to fight so long as he’s invested his money wisely. But knowing that he’s a big draw, the UFC will try to keep him (despite his hefty salary) from taking too long of an absence.
October 2, 2013
UFC welterweight contender Johny Hendricks has extended his endorsement deal with Reebok. Hendricks should sport the Reebok logo in his next fight, November 16th against Georges St. Pierre.
Hendricks first partnered with Reebok in conjunction with the Spartan Race – an outdoor, extreme obstacle course. Hendricks and UFC lightweight Jamie Varner participated in Spartan Races this year.
KOreps president Oren Hodak stated “I am very excited to extend our relationship with Reebok. After our meetings at the Reebok corporate headquarters in Boston, I was confident that a long term deal was soon to follow. We look forward to providing Reebok with an incredible amount of exposure just as we have done with so many other great sponsors.”
A good deal for both parties as Hendricks adds a blue chip sponsor to his roster and Reebok gets prime exposure for one of the marquee PPVs this year. The Hendricks deal could lay the groundwork for more fighter sponsorships. It could also associate the brand with UFC Gyms as Reebok is also looking to link its brand with fitness groups. You may recall that the UFC and Reebok had discussions over a possible sponsor deal earlier this year.
September 2, 2013
Welcome to another edition of Payout Perspective. This time we go to the Bradley Center in Milwaukee, Wisconsin and take a look at UFC 164 where the lightweight title changed hands.
Stain remains for Bendo as Showtime subs Henderson
In a sudden, decisive and anti-climactic way, Benson Henderson’s title reign ended Saturday as Anthony Pettis made Bendo submit to an armbar in the first round. Henderson, a newly minted jiu jitsu black belt appeared to use a technique known as the “can opener” while in Pettis’ guard (a move used by GSP as well) to improve position and open guard. The problem is that the technique is susceptible to an armbar.
Pettis wins the lightweight title and might have a shot at Jose Aldo in his next fight dependent on the status of his knee. A bad spot for Henderson here. With the decisive loss, Henderson will have to wait for Pettis to lose the title and/or win a couple fights in a row in decisive fashion. For a guy that defended the belt three times and having to had defend it a fourth time in Pettis’ hometown, and then told he wouldn’t get a rematch, it has to be deflating.
War Master KOs Mir
Both guys have reasons to hate them. In this battle, Barnett was able to land a knee which took Mir down. While the stoppage may have been premature, Mir did not look like someone that could have made a comeback. It will be interesting to see where the UFC puts Barnett next. He could be a contender, but he did just fight a past his prime Mir. As some have suggested, a Mir-Overeem matchup seems just right for so many reasons.
Mendes takes care of The Carpenter
Chad Mendes solidified his position as next in line for the Featherweight title as he knocked out Clay Guida. Prior to the stoppage, Guida had never been stopped in his career.
Its his fourth straight stoppage since being stopped himself by Jose Aldo in January 2012. Depending on whether Aldo fights Pettis, Mendes should get the next shot at Aldo. If not, Ricardo Lamas or Cub Swanson seem ready for him.
Rothwell stops The Truth
Ben Rothwell decided to do a “Clay Guida” like impression in the final round of his fight with Brandon Vera and overwhelmed Vera causing him to cover himself waiting for the ref to stop the fight. Rothwell used his post-Octagon interview time to thank the fans and then call out Travis Browne. For the second straight fight, Vera was in a position where he waited for the ref stoppage (Shogun Rua stopped Vera last August in similar fashion).
Attendance, Gate and Bonuses
As we reported earlier, attendance was 9,178 for a gate of $907,116. It was decisively better for a previous visit to the Bradley Center for a UFC on Versus 5 card.
Bonuses of $50K each were given to Anthony Pettis (Sub), Chad Mendes (KO) and Hyung Gim Lin and Pascal Krauss (FOTN). Arguably, Lin could have been a double recipient for KO. Magnus Cedenblad could have had the Sub of the Night as well for his quick work on the prelim card.
The Countdown show featured The Showtime Kick…of course. Aside from hearing about the history of the fight that shut down the WEC, the feature on Josh Barnett and Frank Mir was excellent. It reminded people that both these guys held the UFC title at one point.
The Octagon sponsors included TapouT, UltimatePoker.net, Dodge, MetroPCS, MusclePharm, the latest video game from Assassin’s Creed, Harley Davidson and Bud Light in the center. The Discovery Channel’s Ahmish Mafia also sponsored the PPV which I do not quite understand.
UFC 164 was sponsored/presented by Harley Davidson which presented its Hometown Throwdown promotion for the 110th Anniversary of the company. It had a special “110” logo on the Octagon mat to commemorate the occasion. Also, Harley Davidsons graced the stage during the weigh-ins and Arianny and Brittany wore the branded colors of Harley Davidson. There were also Harley Davidson events which included UFC fighters doing autograph signings as part of the brand activation.
Pettis’ sponsors included Hayabusa, Headrush, Corn Nuts and Toyo Tires. Henderson was sponsored by Dethrone which also came out with Dethrone “toothpicks”. Phoenix International Speedway, Musclepharm and Training Mask were the ex-champs other sponsors. FighterxFashion has Henderson’s fight shorts here which depicts the fact he now has a jiu jitsu black belt.
Hayabusa had a cadre of fighters wearing its shorts including Pettis.
Frank Mir was sponsored by the UFC and also wore out the UFC sponsored Monster Headphones to the ring. He also had big logos for Midway, which appears to be some sort of exercise equipment.
Post-UFC 164 Headlines
Who is next for Pettis? It was made clear that Benson Henderson would not get a rematch. It appears that Pettis may want to go after Jose Aldo which begs the questions of whether the UFC wants a “superfight” between two of its division champions which it could market and sell for the possibility of a high PPV number. Or, does the UFC make Pettis defend against TJ Grant. While he’s earned the shot, Grant is not really known and would not elevate Pettis in terms of PPV star. While Pettis is not a PPV draw yet, he has the entertaining style, good looks and great backstory to be a guy people would want to follow (one might recall his “World of Jenks” episode) He is a marketable fighter and one would think the UFC needs to capitalize on this.
Truth departure likely delayed. The UFC has been kind to Brandon Vera. He was cut but that was rescinded when it was discovered that Thiago Silva tested positive for a banned substance. The announcement that the UFC wants to head to the Philippines in 2014 means that Vera is likely to stay in the UFC to help promote the visit as well as fight. Aside from this, there is no reason why Vera should stay.
Odds and Ends
-Since its debut on FS1, it appears that the UFC is putting up Vegas Odds in the introductory fighter graphic. An interesting move. Does this encourage people to gamble?
-Pettis’ chain he wore post-fight was a nice touch.
-Somewhere Brian Stann was likely smiling. Vera had called out Brian Stann for questioning Phil Davis’ win over Lyoto Machida.
-Sure Barnett has had a checkered past, but how can you not like a guy that almost suplexed Joe Rogan in his post-Octagon interview.
-Doesn’t Tim Elliott look like the WWE’s Daniel Bryan?
-Dethrone trotted out Benson Henderson toothpicks (via FighterxFashion) so you too can learn this disgusting habit.
It was an entertaining card which had a very intriguing rematch in the main event. But was that enough? The start of college football season and the three day weekend may contribute to a lower PPV buy rate. In addition, the lack of a true PPV star will limit the amount of buys. One might expect around 300,000 buys for this event.
August 26, 2013
MMA apparel brand HeadRush has signed a global distribution agreement with One Punch Distribution. The new partnership should broaden the reach of HeadRush products.
HeadRush joins other MMA brands under the One Punch Distribution banner including TapouT and Jaco. One Punch Distribution is a wholesale distribution company that delivers brands in “Action Sports and Streetwear Apparel” to diverse retailers from the specialty stores to the big box retailers.
Dustin Poirier, Carlos Condit and Anthony Pettis are the only MMA fighters currently sponsored by HeadRush according to its web site. Tri-Star impresario Firas Zahabi better known as GSP’s head trainer also has a HeadRush deal. The brand also sponsors action and motor sports stars.
The deal should help expand the HeadRush brand with the hope that more people are buying its t-shirts in retail stores. This week should be a big week for the brand as Carlos Condit and Anthony Pettis are in the main event of UFC events. Its likely that other fighters will be sponsored by the brand at each of the events this week. With the distribution announcement, we should expect more visibility for the brand as its t-shirts will be available in more stores.
August 13, 2013
MMA Junkie reports that the three stripes, sporting apparel giant, Adidas is entering the sponsorship market of MMA. Through its global licensee Double D, Adidas Combat Sports has entered into a multi-year deal with Ed Soares’ Resurrection Fighting Alliance.
Soares’, also known for managing Anderson Silva and Jose Aldo among others, is positioning his promotion as a feeder league for the UFC. The RFA-UFC connection may be a reality considering RFA will be allowed to use the Octagon for its event this weekend. A good move considering Adidas would like to enter into the area mixed martial arts.
The agreement between RFA and Adidas is a good sign that mainstream sponsors are still eyeing the sport of MMA for sponsorship opportunities. The RFA relationship seems to represent a bigger plan to enter into the MMA market as the article indicates it would like to work with the UFC although it would focus time with “grass-roots efforts.” You may recall that Reebok and Zuffa were in talks about partnering, however, we’ve seen the Reebok logo appearing in Bellator.
June 17, 2013
Welcome to another edition of Payout Perspective. This time we take a look at UFC 161 from Winnipeg, Manitoba, Canada where Rashad Evans took on Dan Henderson in the main event.
Evans edges Henderson
In what was an entertaining fight, Rashad Evans regained some career momentum with a split decision victory over Hendo. The result could have gone either way with each fighter having their moments. Hendo was visibly upset after the result and took a jab in the post-fight Octagon interview at Lyoto Machida stating that “at least Rashad fought him.” For Hendo, its his second straight split decision loss. This is definitely not what he wanted after he had to back out of his title shot against Jon Jones in September.
For Evans, the speculation is that Glover Texeira would be next. Gatekeeper or another shot at making a run for the title? We will see.
Stipe stops Nelson
Stipe Miocic upset Roy Nelson in the co-main event of the evening. Despite fighting just six weeks prior, Nelson looked sluggish and lacking cardio. Miocic looked crisp compared to Nelson who desperately needed a first round KO to win the fight.
Miocic gets a quality win under his resume and can continue to build it. In fact, he’s cracked the UFC Heavyweight rankings. For Nelson, the fight represented his last under his current Zuffa contract. It was a risky proposition for Nelson to take the fight on short notice even if his fight with Cheick Kongo ended in the first round. Now, with a disappointing loss and at 36 years old, Nelson has little bargaining power in negotiating a new contract with the UFC or any other organization. Nelson turned down an extension earlier this year and another offer prior to 161. This and we didn’t even touch upon his “Uncle Tom” comments this week during the pre-fight press conference.
Attendance and Gate
As we reported, attendance was 14,754 for a gate of $3.15 million (not sure if Canadian or US dollars – regardless a good gate). According to Dana White, it was the best gate for the venue and outdid The Rolling Stones at the same venue.
The UFC debut of James Krause was memorable as he not only pulled out a submission in the last seconds of his fight with Sam Stout, he received an additional $100,000 in bonuses for his work. Each received $50,000 each.
Fight of the Night: Krause-Stout
Submission of the Night: Krause.
KO of the Night: Shawn Jordan
UFC official sponsor Alienware was the presenting sponsor for UFC 161. It had signage on the mat and had the fighter “prep point” at the event. The octagon had its usual sponsors including Prestone, Harley Davidson, TapouT, Xyience, Musclepharm, Dodge, SafeAuto Insurance, UFCFit.com and Bud Light with the center Octagon. Also, Disney’s The Lone Ranger was a sponsor on the mat and ring posts. Disney sponsoring the UFC? Not too surprised considering that it fits within the demo for the movie.
Roy Nelson just signed a deal with Affliction. Probably not the best signing for the clothing company.
Evans wore a Jaco track suit to the Octagon. He also wore a “Refuse to Be Ordinary” Jaco shirt.
Notable sponsor of the night: Alexis Davis was sponsored by Purchase Green – an artificial grass manufacturer. Davis had other sponsors but the Purchase Green logo stood out due to the motto on the back of the shirt – Kickin’ Grass.
Other notable sponsors: Roland Delorme represented Winnipeg Academy of Mixed Martial Arts. Delorme’s opponent Edwin Figueroa was sponsored by River City Ink and Steel. Sean Pierson was sponsored by Cookin’ Greens – a company focused on helping people eat healthier with fresh, frozen greens.
- Status of Bantamweight Division. With its original champion, Dominick Cruz out indefinitely and its interim champion, Renan Barao, injured – what to do with the division? There have been some good fights in the division but there needs to be a title defense soon so that fans don’t forget about it.
- What happens with Roy? It was a gamble and Roy lost. Now, with a loss and heading into free agency, what will Nelson do?
- What will Hendo do? 2 losses by split decision is not the kind of resume to ask for a title shot unless your Chael Sonnen. Hendo is not at the cliff of his career but there can’t be too much time left.
Odds and ends
- “City on Steroids” was the headline in the print edition of the Winnipeg Free Press. Obvious poor choice for this sport. Yet, Winnipeg Press gave good reviews of the fight night.
- The UFC 162 preview with Jay Z’s music was the second best commercial featuring Jay Z this weekend. The first of course was the Samsung commercial during The Finals Sunday night (IMO I think Rick Rubin was the key).
- I wondered why Tyron Woodley v. Jake Shields was not on the main card. I watched the fight and realized why.
- Shawn Jordan’s backflip may have been more impressive than his KO of Pat Barry.
- It’s good to see that Rashad went back to BDP for his entrance music. Evans’ walkout music wins best of the night although Alexis Davis’ “Its Tricky” by Run DMC runs a close second.
- Anyone else notice the octagon side camera view near the cage in the Sexton-Davis match during the end of the second round? I don’t believe I’ve seen it before but it definitely is an added view to what is going on with fighters grappling on the ground.
- MetroPCS ran a new Cain Velasquez commercial during the Prelims. It seemed like a little more focus on his Mexican roots in this commercial..
- Worst weekend? Jon Fitch or Roy Nelson. Have to go with Fitch here. Not only was he portrayed as a malcontent by his former employer, he lost in under a minute and was paid half the amount of his former salary ($30K).
Although it was received well by the local fans, the overall PPV buys will not be good. Even if the Renan Barao and Eddie Wineland interim championship match and the Shogun Rua-Lyota Machida fight took place, it would not have moved the dial too much. If there’s anything that can be seen as a positive from this weekend’s event is that it appears that based on the attendance figures and local press, the UFC has grabbed another Canadian city it could rely on if it returned to the area. Notwithstanding this, a PPV buy rate of 250,000 would be good.
May 31, 2013
The UFC decided MMA equipment company Pretorian Hard Sports will no longer be an approved sponsor of the UFC. John Morgan of MMA Junkie revealed the news via his twitter this week. A memo was circulated to agents of fighters but no reason was given for the sudden development.
The move comes as a surprise of sorts for those of us not in tune with the brand or the UFC’s motives. It has sponsored many of the Brazilian fighters as well as fighters at the top of cards. In addition, it had signage in the Octagon at many UFC events. With the steady diet of cards in Brazil, one would have believed that the company would be one of the mainstays for the UFC.
In January of last year, MMA Junkie featured the brand in a nice writeup as it was talking about global expansion. The MMA equipment company was an idea of businessman Ruy Drever. The company expanded within Brazil and looked to do so globally. He also took pride in the company’s commitment to social good as the company was involved in numerous community projects. Last year, it had 170 employees and 170% revenue growth in 2011.
Notably, its web site still has it as a UFC Official Sponsor. We will follow this story as it continues but this move is surprising considering the position of the brand and its heavy involvement in sponsoring UFC fighters in addition to being an official sponsor. Whether its a financial issue, a strategic issue or a personality issue between companies, the announcement hurts fighters that received sponsor money from the brand. Its not clear whether the company will sponsor athletes outside of the UFC but time will tell.
April 30, 2013
Welcome to another edition of Payout Perspective. This time we take a look at UFC 159 from the Prudential Center in Newark, New Jersey where Jon Jones defended his Light Heavyweight title against Chael Sonnen.
Jones takes care of Sonnen, now must heal toe
It was the outcome that most had expected. Despite Sonnen’s promos, Jones did what was needed to stop Sonnen with a few seconds left in Round 1. It was a good thing, because if he didn’t, it would have been interesting what may have happened for Round 2. Jones could not have gone out there with his toe pointed in an opposite direction.
Now, the question is how long will Jones be out and who will be next for him. Anderson Silva? Lyoto Machida? Alexander Gustafsson? We will see.
For the “Gangster,” I hope to see him in a suit as an analyst.
Nelson KOs Kongo
Jones does what he does and Nelson does what he does – knock people out. While Nelson asked for a title shot, it’s likely he gets at least one more fight before there’s serious consideration.
Bisping beats Belcher after eye poke
Michael Bisping showed once again why he should receive a title shot. The TUF alum beat up Alan Belcher but the fight was stopped after a nasty eye poke which was the second gruesome thing on the PPV next to Jones’ toe.
Bisping must now wait in line once again for a shot.
Attendance and Gate
As reported earlier, attendance at UFC 159 placed second in terms of UFC events at the venue with Hardy vs. GSP being first. UFC 159 reported attendance of 15,227 fans for a $2.7 million gate.
This event’s bonuses were $65,000 each as opposed to the UFC standard of $50,000. As reported earlier the bonuses were as follows:
Fight of the Night: Healy vs. Miller
KO of the Night: Nelson
Submission of the Night: Healy
-The Octagon included the usual sponsors: TapouT, MetroPCS, Toyo Tires, Xyience, UFC Gym, Harley Davidson, Dodge, MusclePharm, Alienware, UltimatePoker.net and Bud Light. It also included local sponsor Modell’s Sporting Goods.
-UFC Gym sponsored the prep point. UFC Fit was also prevalent last week at UFC on Fox 7. The move into fitness is a reason that Reebok may be a potential sponsor. Could this be one of the reasons why Dana White met with Reebok officials? Also interesting that a potential Reebok deal may happen and just a few months ago Rampage Jackson could not wear Reebok logos in the Octagon for his last fight.
-Representatives from Doritos were also present as it may have a potential interest in sponsorship.
-Ronda Rousey was featured in a MetroPCS commercial shown during the Prelims. It was also revealed that she signed a one year deal with Xyience
-Jones was sponsored by Nike and had his signature shoes released the week before the event. The shoes sold out quickly although there were limited quantities. Jones actually threw out his shoes to the weigh-in crowd on Friday. He also wore Monster headphones, another UFC official sponsor, at the weigh-ins, to the ring and even when he sat on the stool being interviewed post-fight.
-Sonnen wore a TapouT blue ring robe with a Modell’s patch on the arm. It was reminiscent of boxers or pro wrestlers and appropriate for Sonnen.
-An ironic sponsor for Sonnen was VA Mortgage Lending. As you may recall, Sonnen plead guilty to money laundering in a mortgage fraud case during his realtor days in Oregon. While Sonnen’s actions were not related to VA Mortgage Lending, its still strange that you would want to have it as a sponsor because it reminds people of what happened in the past.
-Phil Davis had a couple throwback sponsors: Affliction and Lugz
When you talk about hype, Chael Sonnen comes to mind. The Ultimate Fighter was to serve as the 12 week promo piece for this fight but it was actually Sonnen’s banter the week or so after the TUF Finale that served as the real promotion for UFC 159.
I really enjoyed the UFC Countdown show this time around especially the Alan Belcher-Michael Bisping back and forth. Perhaps, Bisping can pick up the “King of MMA Smacktalk” when Chael Sonnen retires.
This card produced a couple interesting articles on the issue of race. Tim Marchman wrote an article on Deadspin and Tomas Rios wrote one for The Pacific Standard which explores the issue and whether Chael Sonnen uses race to gain fans. We explore the public relations aspects of Sonnen here. When challenged on the subject of race on ESPN’s Dan LeBatard show, Sonnen deflected the direct issue and seemed genuinely uncomfortable about talking about it. This was something unusual for Sonnen who was on in each appearance he did for the promotion of UFC 159.
Odds and Ends
- Darren Rovell sent a tweet Saturday night which stirred the pot for defenders of the UFC. Rovell indicated that the UFC may have lost its “edge” based on the fact he knew someone that purchased a ticket for $50 with a face value of $553. UFC PR’s Dave Sholler tweeted defending the UFC and its attendance indicating that it mattered and then Dana White sent a tweet professing that its numbers are improving and would prove it by sending it to the ESPN Sports Biz guy. We will see if Rovell gets that information. We’ll have more on this interesting story later.
- The card was deemed “cursed” by Joe Rogan for the various stoppages due to injury. This started with two stoppages due to injury during the Prelims and continued with Alan Belcher’s eye poke and then Jon Jones’ toe. And of course, we get a full on brawl in the stands caught on camera during Bruce Springsteen’s “Born in the USA.” No word on the deep voiceover between rounds during Bisping-Belcher but it seemed fitting for what happened during the night.
- Sarah McMann v. Sheila Gaff was aired on the prelims twice on FX as a result of filler. But, the fight was the first women’s fight not hyped for the fact it was a women’s fight in the UFC. McMann disposed of Gaff quickly.
- Leonard Garcia-Cody McKenzie was the only fight not aired. McKenzie indicated he was going to take some time off for personal reasons. Garcia may be on his way out of the UFC.
The card was not as interesting on paper as last week’s UFC on Fox 7 and it played out that way in reality. Sonnen did his usual work to hype the fight but many believed that it was a mismatch from the start. The unusual issues during the card confirmed its demise as probably one of the strangest in some time. Although Nelson’s KO and Healy’s submission were highlights, the rest of the night proved so-so. A buy rate of 500K would be a success here and many probably bought it because they were fans of Sonnen and/or Jones as the supporting card lacked intriguing matchups.
April 18, 2013
FighterXFashion reports that Nike will be releasing shoes and shirts for UFC Light Heavyweight Champion John “Bones” Jones this Friday. Shoes will be released in limited quantities at select NikeTowns in New York and Las Vegas and online at Nike.com.
Jones is one of three UFC fighters with a Nike contract and is the only fighter to have his gear released for public consumption.
It will be interesting to see how sales of Jones gear will do and whether the sales will determine if the swoosh will look to other UFC athletes to sponsor for future retail opportunities. The hope for Nike is to gain some momentum for Jones’ upcoming title defense so fans will be wearing those t-shirts in the crowd at UFC 159.
April 8, 2013
RYU formally announced that it is no longer a sponsor of the UFC. In its recent Form 10K (page 5) filed this April, it stated that it no longer will cater to the MMA Marketplace.
Despite an initial positive outlook for the company, it failed to find an adequate financial return on its investment in the sport of MMA.
RYUentered the MMA landscape at the beginning of 2012 as an official sponsor and was a part of UFC broadcasts and PPV. It also opened a store and training facility in Las Vegas. It boasted several former Nike executives which brought an instant credibility to the brand. The brand received good PR including glowing articles about the prospects of the brand.
RYU sponsored fighters with former UFC vet Jon Fitch as its main fighter. RYU aspired to be a lifestyle clothing brand for MMA fans however it did not pan out. As noted in a July 2012 Sports Business Journal article (via MMA Payout), the success depended on the consumers:
While RYU is getting some good buzz, SBJ notes that its success will depend on how well the products sell. A selling point for the brand is that the clothing uses natural materials as it prides itself on being “95% sustainable” and stresses the newest performance technology. Compared with the likes of Nike and TapouT, RYU clothing is much more expensive than it competitors. The question is whether consumers would be willing to spend more on this new brand.
It turns out, consumers did not.
A director resigned although the release did not state that it was related to the financial results of the company. It has moved its headquarters from Las Vegas back to Portland, Oregon where it originally had offices.
On page 9 of its Form 10K, RYU noted a gross loss of $1,115,157 which it attributed to its product development and a write off. It also showed a bigger net loss related to selling and marketing expenses, production creations costs and administrative costs which amounted to $9,868,603.
The company notes that the company will “need to raise substantial additional equity” in 2013 in order to continue RYU as planned.
It goes on to state that 2012 sales fell short of expectations and management cites its UFC partnership in which it tried to position the brand as a “premium performance apparel brand.” The company suffered losses as a result of lower than expected sales from its sponsorship of the UFC.
RYU is undergoing a rebranding strategy which will appeal to a broader base of consumers according to its filing.
RYU’s demise in MMA might be attributed to an assortment of factors. It did go into the endeavor with both feet as it became an official sponsor, opened up a training facility in Las Vegas and sponsored fighters. However, it failed to sell its product as it had envisioned. This could be attributed to the higher price point on its apparel. As we indicated early on, the question was going to be whether consumers would buy a hoodie that was priced $10-$20 higher than a competing brand. Further, the Jon Fitch sponsorship did not work out as Fitch lost his first bout as a RYU sponsored fighter in seconds to Johny Hendricks.
We will see if the RYU brand will continue on without MMA. But, RYU’s story in MMA reflects the fact that despite the best plans, it all depends on the consumers.