MPO Year in Review: No. 1 The Money Fight

January 1, 2018

MMA Payout’s business story of the year is likely everyone else’s big news of the year: The Money Fight which saw Conor McGregor make his debut in the ring against Floyd Mayweather.

What many thought would never happened at the beginning of 2017 actually came together rather quickly as the two squared off the last week of August at the T-Mobile Arena in Las Vegas.  Although the fight did not break the gate record for a boxing event in Nevada or the PPV buy record (both retained by Mayweather-Pacquiao), it drew blockbuster numbers.

The event was not a sellout but drew 13,904 for a gate of $55 million.  The PPV drew 4.3 million domestic buys and set records overseas for PPV.

McGregor received $30 million for his part in the fight while Mayweather drew $100 million.  With all of the PPV upside and other payouts tied to the event McGregor ended up with something near $100 million.

The event included an ambitious 4 city tour which went from Los Angeles, to Toronto, to Brooklyn, to London in successive days.  The events ranged from heated to comical to off-putting.

Still, the buzz for the event drew mainstream interest and was on the top of ESPN shows during fight week.  There was a small controversy concerning glove size but in the end the Commission allowed a last-minute change.  Then, there was the last-minute change to add Zuffa as co-promoter.  Frankly, the Commission would have let this go with any and all additional conditions as it was willing to allow McGregor, an MMA fighter, with no pro boxing record to step into the ring against one of the best fighters in boxing and a 49-0 record.

The event was truly a spectacle and basically a fantasy matchmaker’s dream.  The fight itself was easy to predict with Mayweather winning via stoppage in round 10.  The match was not that competitive as you could sense that Mayweather was never in peril.

But, from a business standpoint, one might surmise that it was the biggest revenue driving event for the UFC this year.  With a down year for PPV, the company capitalized on this fight with its top star.  McGregor sold himself to get the fight and his confrontational style help promote it to the casual viewer.

The event also made every fighter on the UFC roster dreaming to box.  Also, Dana White unveiled the idea that Zuffa would promote boxing in the near future.  As for McGregor, we will see if/when he returns to the Octagon.  Despite floating the idea of another boxing match, it’s hard to think he would do one for anything less than he was paid for Mayweather.  One would think that his deal with the UFC would include a return to the Octagon to fight in exchange for the boxing match with Floyd.  Yet, with all the money, McGregor might wait until he is given the money he wants before setting foot back into the Octagon.

MPO Year in Review: No. 2 Jon Jones returns to Octagon and is flagged by USADA (again)

December 31, 2017

In addition to the return of GSP, Jon Jones returned from suspension for his long-awaited grudge match with Daniel Cormier.  However, what we thought was a great redemption story turned into another setback for a fighter that could have been the best ever.

Notably, at the Summer Kickoff press conference in May, UFC fans had turned on Cormier, and in pro wrestling-fashion, Jon Jones became the bad-boy turned crowd favorite.

The promotion of the event was great and everyone was happy that the two made it to UFC 214 without injury or setback.  It was a good fight as Cormier looked much better than their first fight at UFC 182.  However, Jones was able to finish Cormier and gave one of the best post-fight Octagon interviews ever which seemed to tie a bow on the Jones redemption story.  A fight against Brock Lesnar in 2018 seemed like a blockbuster waiting to happen.

But then Jones was flagged by USADA a month later for an in-competition violation of the UFC Anti-Doping Policy.  Although his blood tests were negative, his urine tests post-weigh-ins were positive for a banned substance.  His “B” sample was positive for the anabolic steroid and banned substance Turinabol.

The event drew 850,000 PPV buys making it the second-most purchased fight of the year.  But, we learned that Jones had been flagged yet again by USADA for a failed drug test.  Once again, Jones proclaimed his innocence, but just coming off one suspension, Jones faces a stiffer (four-year suspension) one as he might be considered a repeat offender if he cannot clear his name from the failed drug test.

While we are letting the due process work itself out, the legacy of Jon Jones is tainted.  Through all of his legal problems, fans have given him chance after chance.  UFC 214 should have been his triumphant return from the brink.  Now, it appears that it will be a longshot that we will ever see Jon Jones in his prime in the UFC again.

MPO Year in Review: No. 3 GSP Returns

December 31, 2017

2017 saw the return of Georges St Pierre as he faced Michael Bisping at UFC 217 in New York this November.  GSP’s return came with much fanfare, but his future with the company remains uncertain.

The matchup with Bisping appeared handpicked by GSP for his return.  It was scheduled for July’s UFC International Fight Week event, but was postponed due to injuries to both fighters.  FS1 aired a 30-minute special documenting the return of the former welterweight champion.  The PPV had the best buy rate (estimated at 875,000 buys) in an otherwise down year for the company.

GSP looked rusty but had enough to stop Bisping to win the middleweight title.  However, it became clear that this was a “one off” for St Pierre because he relinquished the title shortly after winning it.  White.  GSP claimed ulcerative colitis was the reason for giving the title up as he was slated to unify the titles against Robert Whittaker.  White was upset with GSP but he came to terms with the fact it was expected that he did not want to go up against a very competitive (and younger) division.

Will we see GSP again in the UFC?  You have to think that once he gets healthy, he will fall back into the UFC’s good graces.  He is a proven PPV draw on a roster that has few.  The question will be whether he will be able to dictate another “one off” fight with the UFC and if the new owners would be willing to dole out the cash for it.  Something tells me that if they can have him return in July for International Fight Week, the UFC will do it.

MPO Year in Review: No. 4 Ali Act Expansion moving forward?

December 31, 2017

Push for the expansion of the Muhammad Ali Boxing Reform Act to combat sports continued this year with another Congressional Subcommittee Hearing.  This time, the questions were pointed specifically about the impact the Ali Act might have on MMA.

In December, Randy Couture, Dr. Kristen Dams-O’Connor, Pennsylvania Athletic Director Greg Sirb and the UFC’s Marc Ratner testified at the hearing.  The most interesting exchange came from the bill’s sponsor Markwayne Mullin and Ratner.  Taking on the appearance of a contentious cross-examination, Ratner was grilled about the UFC and the rankings system.  He also questioned the matchups of certain events including why the UFC allowed Georges St Pierre to get a title shot against Michael Bisping despite coming back from a long absence.

In addition to the hearing, Bellator filed a Statement supporting the Ali Act.  Jon Fitch also filed a statement.  He also authored an op-ed in the Washington Examiner the same day as the hearing.  On the other end, Marc Ratner provided a statement opposing the Ali Act expansion.

Despite talk that Conor McGregor would be willing to testify before Congress, that rumor did not come to fruition.

We will see if there is enough congressional support for Mullin to bring it to a vote before the House or whether there will be a need for more education on the Act before it can move forward.  Thus far, there are 58 co-sponsors for the bill.

MPO Year in Review: No. 6 Down year for UFC PPVs

December 29, 2017

It was a disappointing year for UFC PPVs as 4 UFC PPVs did not surpass 200,000 PPV buys.  The absence of Conor McGregor, Ronda Rousey and lack of another UFC star to appeal to the mainstream hurt this year’s events.

UFC 208:  200,000

UFC 209:  300,000

UFC 210:  300,000

UFC 211:  300,000

UFC 212:  167,000

UFC 213:  150,000

UFC 214:  850,000

UFC 215:  100,000

UFC 216: 120,000

UFC 217:  875,000

UFC 218: ~230,000

The estimated buy rates would mean the UFC averaged 326,000 buys per event.  Only UFC 214 with Jon Jones-Daniel Cormier II and the promotion’s return to MSG (along with the octagon return of GSP) drew over 800,000 buys.  Perhaps the concerning factor this year was that there were no PPVs which averaged between 300,000-500,000 buys.  There were 3 events that estimated 300,000 PPV buys and 6 events that drew 200,000 PPV buys or less.

The buy rates reflect the fact that the casual MMA fan is not tuning in unless it’s a big event.  In fact, they are skipping events due to the lack of interest.

There are many reasons for this decrease in the buy rate.  First, Conor McGregor focused on boxing this year.  In 2016, McGregor’s 3 appearances drew over 1 million PPV buys.  UFC 200 featured the return of Brock Lesnar and drew another 1 million buys. December 2016’s return of Ronda Rousey also drew 1 million buys.  Notably, UFC 203, which featured the debut of C.M. Punk produced a strong 450,000 buys.

In 2015, there were 2 PPVs over 1 million buys, McGregor (UFC 193) and Rousey (UFC 194) were in the main events, and 2 more over 800,000 buys (Jones-Cormier I at UFC 182 and McGregor-Mendes at UFC 189).

Second, the lack of cultivation of UFC stars reflects in the lack of PPV buys.  Perhaps most disappointing was the lack of drawing power for stars such as Stipe Miocic, Holly Holm, Tyron Woodley and Amanda Nunes.  In addition, the Diaz brothers sat out this year.  Even though they are not true contenders for a title, they are big draws.

Finally, the injury bug sprang up once again as Amanda Nunes was a late scratch for her main event at UFC 213. While it may not have impacted PPV buys, Demetrious Johnson’s fight against Ray Borg was scratched at UFC 215.  Ironically, Nunes stepped into the main event against Valentina Shevchenko.  Also, Khabib Nurmogomedov and Tony Ferguson’s fight never came to be due to Khabib’s weight cutting issues.

The good news is that Francis Ngannou is stepping up as a force in the Heavyweight division and his fight with Stipe Miocic at UFC 220 should draw some mainstream appeal.  Also, Dana White has indicated that Conor McGregor may be back in the summer of 2018 which means another big event that will likely headline International Fight Week.

MPO Year in Review: No. 7 UFC secures new sponsors

December 28, 2017

The UFC brought in new sponsors for the company in 2017.  The sponsors reflect a new era brought in by WME-IMG.

One of the most notable departures from the sponsor list is Bud Light leaving the Octagon as the UFC forged a deal with multi-million dollar deal with Modelo Especial starting in 2018.

In addition, the UFC recruited Air Asia, Body Armor, TriFecta Nutrition, 7-Eleven, the Hospital for Special Surgery and Performance Inspired.  With the broad reach of WME-IMG, look for the UFC to announce new partners in 2018.  It appears that the UFC would like to work more with sponsors in integrating the UFC brand with sponsors.  For instance, UFC fighters are featured on Big Gulp cups at 7-11 and Cody Garbrandt did a spot for TriFecta Nutrition in leading up to his fight with T.J. Dillashaw this past November.

Look for the UFC to fill more sponsor spots.  Notably, Air Asia is the “Official Airline” of the UFC but the deal is limited to Asia and Australia.  We may see one for North America and Europe soon.  Also of note, you would think that will all of the Embedded filming at hotels, we do not see an “Official Hotel” of the UFC upcoming.  Based on its TUF appearances, we could see Geico serving as an “Official Insurance” company of the UFC.

MPO Year in Review: No. 8 Bellator among the parties pulled into UFC Antitrust Lawsuit

December 28, 2017

Bellator MMA found itself a part of the UFC Antitrust lawsuit as the two companies were opposing sides in a discovery dispute.  Bellator sued the UFC in Los Angeles, but the Court determined that the dispute should occur in the Vegas court handling the case between former fighters and the UFC.

Prior to the filing of the lawsuit in February, Bellator claimed that it had “produced in excess of two thousand pages of responsive documents.”  Yet, the UFC argued that it needed more which included payouts for Bellator fighters, contracts and financial information.

Bellator Motion to Quash Subpoena by JASONCRUZ206 on Scribd

Zuffa Opposition to Bellator Motion to Quash by JASONCRUZ206 on Scribd

The Vegas court issued a ruling in June.  Some of the findings are below:

Bellator was ordered to produce:

  1. A random sample of at least 20 percent of fighters under contract with Bellator between January 1, 2010 and the present. This will include any “amendments, modifications, side letters, or extensions that may exist with respect to any contract that is produced…”
  2. Bellator will produced “Anonymized contracts” with a unique identifier although identifying information “may be redacted.”
  3. The contracts “shall include the fighter’s gender, weight class, number of fights during term of agreements and any compensation to be paid.
  4. The Court limited and modified Bellator’s request for production to the following
    1. A list of all MMA events it promoted or co-promoted from January 1, 2010 through the present.
    2. An unaudited profit and loss statement through the quarter ending March 31, 2017 which will include Revenue, Expenses, Operating Income and Net Income.

In addition, Matt Hume, had a similar discovery issue in which the Plaintiffs sought information from OneFC (Hume is an executive for the company).  A lawsuit in Washington state ensued in which a motion to compel the documents of Hume in July included a request for attorney fees in the amount of $21,000.  Similar to the Bellator lawsuit, the federal magistrate dealing with the dispute decided to kick the case to Vegas for the trial court to handle.  The Plaintiffs demanded certain documents from Hume’s involvement with OneFC as well as to take his deposition.

Motion to Compel Depo of Matt Hume by JASONCRUZ206 on Scribd

Plaintiffs’ Opposition to Motion to Quash Hume Subpoena by JASONCRUZ206 on Scribd

The Washington state court decided that it did not want to intervene in the lawsuit and kicked the case to Vegas.

These were not the only two discovery issues in this case.  Zinkin Entertainment was ordered to produce documents related to the representation of its fighters.  Top Rank also came to terms with the UFC in the lawsuit over discovery.

Zuffa was ordered to hand over a study on fighter pay.

In addition, Zuffa filed a lawsuit to dismiss the claims of plaintiff Nathan Quarry due to statute of limitations.  The Court has yet to issue an order on the motion.

The UFC Antitrust lawsuit was a “discovery year” for the case as depositions were taken and fact discovery took over most of the year.  As expected, there were fights over the discovery of documents which seemed to have resolved.  In 2018, we will see the expert discovery phase start as the wheels of justice move slow on the civil side.

MPO Year in Review: 9. UFC Performance Institute opens

December 27, 2017

The UFC Performance Institute unveiled its new 15-acre, 184,000-square foot campus in Las Vegas this year.  The institute serves as an upgrade to MMA training offering the latest in technology to help the company’s contracted fighters.

The Performance Institute serves as a facility for training for many of the UFC fighters.  Conor McGregor took advantage of the facility as he prepared for his boxing match with Floyd Mayweather.  The UFC estimates 30% of its athletes have taken advantage of the Performance Institute.

The Institute has everything that a fighter needs for nutrition, health and injury rehabilitation and prevention.

One of the reasons for the Performance Institute is to help fighters train and train without getting injured.  In the end, the UFC has a vested interest in ensuring that fighters are healthy and are able to cut weight wisely.  Of course, its easier said than done, but the investment in this state of the art facility should help with the health of the fighter.  It also helps the UFC monitor the health of athletes.

Through the Performance Institute the UFC has forged partnerships with a couple surprising companies.  Endeavor (WME-IMG), the UFC’s owners, secured a sponsorship with New York’s Hospital for Special Surgery and Performance Inspired as “official sports supplement” of the UFC.  It also partnered with Body Armor to become the “official sports drink” of the UFC.  Recently, Trifecta Nutrition became an official UFC sponsor as well and will likely be a part of the Performance Institute’s nutrition menu.

While it was a big investment, the Performance Institute has opened up other areas of revenue through health and wellness that may not have occurred if it did not attempt to build the facility.

MPO Year in Review: 10. Bellator continues to sign former UFC stars

December 27, 2017

Another year, another group of UFC fighters are testing the other league with former Zuffa indy contractors heading over to the Viacom-owned company.

Michael McDonald, Gegard Mousasi, Frank Mir, Roy Nelson, Valerie Letourneau and Ryan Bader all signed with Bellator in 2017.  Rory MacDonald made his promotional debut for Bellator in May with a successful victory over Paul Daley.

The “Red King” might be the only one from the above group that the UFC may have wanted to hold onto.  MacDonald’s defection to Bellator was the best acquisition thus far (excluding Tito Ortiz) from the UFC fighters testing free agency waters.  Mousasi may be another although it seemed as though the UFC could not capitalize on his international appeal.

For Bellator, the acquisitions help builds up their roster.  Even though most of the fighters the UFC let go are past their prime and/or deemed not entertaining, the UFC brand has pull with the casual fans.  We shall see if Scott Coker will make a push for more former UFC fighters in 2018.  For the fighters, it provides a fresh start and a chance to capitalize on earning opportunities (i.e., sponsors).

MPO Year in Review – WSOF repackages as PFL

December 26, 2017

The World Series of Fighting went under new management and repackaged itself as the Professional Fighter’s League.

The league, which is set to roll out in 2018, promises steady pay and fights for its athletes which will see them compete for a $1 million payoff.

Via our April post:

The inaugural season will run for 10 months and will feature seven different weight classes.  Similar to league play, fighters will compete in three regular season fights with the best records moving to a playoff and then a championship round.  There will be $10 million in prize money with $1 million going to each winner of the 7 divisions.  The remaining 3 divisions will go to regular season and playoff competitors.

The Washington Post reported that the PFL’s new investors included Russ Ramsey, an investment banker and hedge fund manager along with venture capitalists Donn Davis and Mark Leschly.  Sports franchise owner Ted Leonsis is also an investor.  Leonsis owns the Washington Capitals, Mystics and Wizards.  Also, members of the Lerner family who own the Washington Nationals are investors.

The company’s first event took place this past July.  It also held an event in Everett, Washington and also a special Thursday night event in D.C.  in November.  The event drew 238,000 unique views in the online-only event.

Last spring, the company was hoping to secure a television deal but there has yet to be a movement on that area.

Recently, a PFL-signed athlete threatened to sue the company after he learned he would not be part of the upcoming season.

No word on the status of the company and its 2018 events for the PFL which is a little concerning because of the lack of promotion.  If the PFL is looking to make a splash in 2018, we might not see the promotion until the spring of 2018.

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