Silva set for showdown with Okami in Rio
April 13, 2011
USA Today reports that Yushin Okami will get his title shot against UFC middleweight Anderson Silva in Rio. The title fight will main event the much-anticipated event in Brazil in August.
Via USA Today:
Oddsmakers will favor Silva, but Okami employs a wrestling-based grinder’s approach, which has been the champion’s achilles heel in the past. Chael Sonnen came within two minutes of beating the middleweight champion last year by peppering him from the top after takedowns each round. Dan Henderson used the same approach to win the first round of his March 2008 bout with Silva before succumbing in the second.
Payout Perspective:
This was the best spot for this matchup as the UFC follows up on giving Okami his long-awaited title shot. The UFC does not have to worry about the draw (or lack thereof) of this matchup as it comes secondary to the fact that the UFC is returning to Rio. Not only will Silva draw fans, the anticipated return of Royce Gracie to the Octagon should be an attraction.
The UFC could leverage the fact that Okami trained with Chael Sonnen at Team Quest as potential fodder for publicity leading up to the August matchup. Certainly Sonnen will be a willing volunteer to talk about the matchup and even be a part of a UFC Primetime or Countdown show.
UFC 126: Payout Perspective
February 8, 2011
Welcome to another addition of Payout Perspective. Today we look at UFC 126 held in Las Vegas, Nevada. The Super Bowl weekend show featured a trio of fights: the much-anticipated Anderson Silva facing Vito Belfort, Forrest Griffin taking on Rich Franklin and Jon “Bones” Jones faced Ryan Bader.
Silva KOs Belfort
After an intense weigh-in face off where both fighters had to be restrained, the fight ended abruptly as Silva’s front kick to Belfort’s chin stunned “The Phenom.” A couple shots on the ground by Silva ended the evening in the first round. Although he credits Steven Seagal for teaching him the kick, the Spider is still pretty good.
Next up for Silva is a potential superfight with GSP. Certainly everyone, except Yushin Okami, would like to see it next. As we’ve talked about, a GSP-Silva fight could surpass 1.6 million PPV buys. The anticipated fight should have an international appeal and it will be interesting where the UFC will have the fight. Look for this fight to happen in December.
Griffin beats Franklin
In a fight between fan favorites, Forrest Griffin fought off the Octagon rust to beat Rich Franklin. In the post-fight interview, Joe Rogan helped Griffin “push product” as Griffin put it, by plugging Griffin’s two books. Unfortunately for Griffin, MMA Junkie reports that he is out until August with a foot injury unless he is cleared by a doctor. It will be interesting what Franklin will do next. He is still a quality fighter but his future may not be in the Light Heavyweight division. If Anderson Silva decides to leave the middleweight division, I could see Franklin moving back in.
Jones submits Bader, earns title shot
Jon Jones submitted Ryan Bader in the second round and leapfrogged into a title match versus Mauricio “Shogun” Rua. With Rashard Evans out with a knee injury, and Rampage Jackson not ready for the shot, the UFC decided to give it to Jones. The announcement came via Rogan in the post-match interview. A good ploy by the UFC as you got to see Jones’ reaction as he first heard he was getting the shot. Even though Jones is getting the shot on relative short notice, Rua cannot be happy with the matchup especially since he will be facing a Pro-Jones crowd in New Jersey. Only Matt Serra had it worse for a title defense.
The Rua-Jones fight should bolster ticket sales and PPV buys. Not only is Jones’ popularity at a high, the native New Yorker will get home field advantage in Newark, New Jersey. Obviously, the UFC is playing up the local ties and hopes that the event shows the folks in New York what its missing.
Fighter Payouts
Via MMA Junkie:
Champ Anderson Silva: $200,000 (includes no win bonus)
def. Vitor Belfort: $275,000
Forrest Griffin: $275,000 ($150,000 win bonus)
def. Rich Franklin: $75,000
Jon Jones: $140,000 ($70,000 win bonus)
def. Ryan Bader: $20,000
Jake Ellenberger: $32,000 ($16,000 win bonus)
def. Carlos Eduardo Rocha: $8,000
Miguel Torres: $56,000 ($28,000 win bonus)
def. Antonio Banuelos: $9,000
Donald Cerrone: $36,000 ($18,000 win bonus)
def. Paul Kelly: $19,000
Chad Mendes: $19,000 ($9,500 win bonus)
def. Michihiro Omigawa: $8,000
Demetrious Johnson: $10,000 ($5,000 win bonus)
def. Norifumi Yamamoto: $15,000
Paul Taylor: $36,000 ($18,000 win bonus)
def. Gabe Ruediger: $8,000
Kyle Kingsbury: $20,000 ($10,000 win bonus)
def. Ricardo Romero: $10,000
Mike Pierce: $28,000 ($14,000 win bonus)
def. Kenny Robertson: $6,000
As always, the payouts are not inclusive as certain fighters receive “locker room bonuses” from the UFC and paid from their individual sponsors.
It’s interesting to see that Jon Jones gets paid like a top star. His base was only $5K less than the more-established Rich Franklin. It looks like the base salaries has increased from a $3,000 minimum to $6,000 minimum.
Bonuses – each fighter received a $75K bonus
Paul Kelly versus Donald Cerrone – Fight of the Night
Jon Jones – Submission of the Night
Anderson Silva – Knockout of the Night
No complaints on any of the fighter bonuses. I have been a proponent of giving the benefit of the doubt to a lower-tier fighter for Sub or KO of the night but both Jones and Silva deserved their bonuses.
Attendance and Gate
Saturday’s “UFC 126: Silva vs. Belfort” event drew a reported 10,893 attendees and generated a live gate of $3.6 million. This did not include an additional $45,100 in revenue generated by the 1,046 attendees who viewed the fight via closed-circuit broadcast. (h/t MMA Junkie)
Sponsorship Watch
Xbox 360 – Demetrious “Mighty Mouse” Johnson was sponsored by the Microsoft video game console maker. Johnson’s gym in Kirkland (recently featured on Inside MMA) is 15 minutes from the Microsoft campus in Washington. Not sure if this was the tie-in to get him sponsored, but it’s a theory. Not only did Johnson use his twitter to ask his followers to demand that his fight be televised, he used it to promote Xbox 360′s Twitter and Facebook page.
Xyience – The energy drink of the UFC was in full force with signage on the mat and on every bottle of water used by the fighters. It also sponsored an Ultimate Access Sweepstakes where two fans could win the VIP treatment at UFC 129 in Toronto which includes meeting Jon Jones. A great form of brand activation.
Tapout – A new fashion statement coming to the ring replacing the regular fight shirt – the track suit top. Not a lot of design and it looked great.
Form Athletics /K-Swiss – Jon Jones signed a multi-year deal with K-Swiss which promised a Jon Jones shoe. Jones wore the K-Swiss tubes at the weigh-ins. Also, Jones will have a signature line of clothing with Form Athletics. It probably includes this hoodie.
MusclePharm – Despite its past troubles, it sponsored three fighters (two in one fight – Ellenberger v. Rocha) including Anderson Silva.
Speaking of Silva, he reportedly made $100K from Brazilian brand Bonanno for wearing it during the fight. In addition, Silva signed with Brazilian sports marketing agency, 9ine. Although relatively new, the agency is owned by WPP, an established, worldwide advertising firm.
Facebook and Twitter
The UFC utilized its Facebook page to live stream another fight. It first used its page at UFC Fight for the Troops 2. This time, Demetrious Johnson faced Kid Yamamoto. Johnson had campaigned, via his twitter, to have his fight televised. And behold, he gets the opportunity to have fans see his fight via Facebook. Johnson also forged a nice sponsorship deal with Xbox 360.
The UFC also introduced a fight game on Facebook: UFC Fight Nation.
Vitor Belfort and Anderson Silva made waves on Twitter as both were trending prior to weigh-ins. The fight was especially popular in Brazil. After his big KO, Silva remained trending in twitterverse hours after the fight.
UFC 126 Prelims: 2 million viewers
MMA Junkie reports that Saturday night’s UFC 126 prelims hit 2 million viewers. It earned a 1.2 household rating including a 1.7 for M18-49. It was the highest-rated program in its timeslot among M18-49 and 18-34. It was an all-time high for “UFC Prelims” broadcasts.
HD Net at the UFC Weigh-Ins
HD Net’s Inside the MMA held its weekly show at the UFC weigh-ins. Bas Rutten and Kenny Rice were joined by Mike Goldberg. The show provided insight and did a good job in hyping the fights as the fighters got on the scales. It was surreal to see Joe Rogan host the UFC weigh-ins on one channel and then flip to Inside the MMA and see his PPV broadcast partner on HD Net. I think the HD Net broadcast adds value to the weigh-ins but it cannot go up against the live feed hosted by Joe Rogan. It will be interesting to see what the UFC decides to do.
UFC offers new experience via UFC.tv
The UFC introduced a new technology on UFC.tv which includes control of audio and video, multiple camera angles and interaction with other fans. No news yet on how many people took advantage of it but we will keep you updated.
Storylines Post-UFC 126
“Superfight in the making” – Silva v. GSP: Jake Shields is the only man to stop this from happening.
“Next big thing” – Jones gets title shot on 6 weeks notice: At 23, is he ready to hold down the Light Heavyweight Division?
“Rashad Evans moving?” If Jon Jones wins, Evans stated that he will never fight his teammate and move divisions.
Odds and ends
Look for the UFC to do something more with 3-D. With its new technology initiatives, it’s coming soon.
In its pre-main event fight analysis, the UFC used mini-Belfort and Silva to go over the keys to victory. Pretty interesting.
Aaron Rodgers thanked Dana White via tweet for the Championship belt he had on the podium after the Super Bowl.
If you were wondering where Silva got the mask at the weigh-ins, Sherdog has the info. Before Silva donned the mask, there was Shaq.
MMAPayout.com on Toronto Fan 590′s “The Showdown”
October 29, 2010
MMAPayout.com’s Kelsey Philpott sat down with Toronto Fan 590 Radio’s Showdown Joe Ferraro on Thursday, October 28 to discuss the UFC-WEC merger and UFC 121. Be sure to give it a listen and also stay on to hear from the UFC’s latest Canadian signing, Sean Pierson.
UFC and WEC Set to Merge
October 28, 2010
Ariel Helwani of MMAFighting.com has just posted an interview with Dana White in which the UFC President has announced the UFC and WEC will be merging effective January 2011.
Payout Perspective:
This is a topic that I’ve covered almost ad nauseam over the last two years with articles like Exploring a Possible Merger and interviews with WEC GM Reed Harris (Part 1 and Part 2), because I felt it was truly important for the continued growth and development of MMA as a sport and the UFC in particular.
Below, I’ve done my best to distill exactly how the UFC will benefit from the merger and why it needed to happen:
1.) Return on Assets: The company is moving assets like Urijah Faber and Jose Aldo from the WEC platform that is maybe generating 2x to the UFC platform that is capable of generating 10x. I understand that the WEC was profitable, but the UFC will be more profitable using the WEC’s fighters and title belts than the WEC ever could have been.
2.) Title Belts: The UFC uses title fights as PPV anchors and a means to map out their event planning strategy 3-6 months ahead of time. It now has two additional belts to use which should help the company to better withstand injury streaks like those that hit its title holders in the Fall of 2009. And if you still question how much title fights mean to the UFC, I’ll simply say this: The UFC does nearly twice the number of PPV buys with an event featuring a title fight than it does without a title fight.
3.) More Fighters, More Growth. If the UFC plans to continue increasing the number of events it hosts in a calendar year, it will need the added depth of two new divisions to avoid fight cards like UFC 122 that are more or less unremarkable in the mind of the casual consumer. It’s not just the title belts that count here, but also the two sets of highly skilled fighters and serious contenders that will be used to help better fill out every fight card that are also of material interest.
4.) Television Appeal. The new found depth may also prove valuable if/when the UFC signs a new television deal and agrees to further event commitments on any one of the big four networks.
5.) Attention for the Lighter Weights. This deal finally brings some much needed attention to the fast and furious fighters in the lower weight classes that are every bit as good as the men fighting in weight classes above them. The UFC will now give these guys like Faber and Aldo the mainstream attention they deserve. Moreover, the mainstream now has a better platform to discover just how exciting these guys really are and the UFC is surely to benefit from increased product quality as the result of this integration.
6.) No More Confusion. This merger presents an opportunity for Zuffa to present a single and consistent brand message to the consumer. There is no more confusion or double taking on account of an event that looks, feels, and sounds like something from the UFC but really isn’t (but maybe kind of is). It’s all called UFC from here on out. That consistent message will also help Zuffa to focus internally; there are no more divergent or competing goals between two different brands striving to use the limited resources of the same company.
Please excuse me for what you might believe to be hyperbole for this is not: today will prove to be a watershed moment for not only the UFC but MMA in general. That’s how big of a deal this is.
———
Edit: I imagine I might have several more thoughts on this today:
- In thinking about the sponsorship situation I have to wonder what now happens with MusclePharm and AMP Energy. The UFC already has official sponsors in those categories; BSN doesn’t have exclusivity but I believe Xyience does (at least the latest GOOD4U ban would intimate that they do). Interesting. Keep an eye on this.
UFC 121: Payout Perspective
October 24, 2010
Welcome to another edition of Payout Perspective! This week we’re taking a look at UFC 121: Lesnar vs Velasquez which was held at the Honda Center in Anaheim, California on Saturday, October 23rd. The event featured a heavyweight title clash between Brock Lesnar and Cain Velasquez, but also featured the debut of Jake Shields in the Octagon as well as the return of Tito Ortiz.
Velasquez punishes Lesnar, vaults UFC into new territory
Cain Velasquez was able to negate Brock Lesnar’s tremendous size and athleticism with his combination of wrestling prowess and stand-up acumen. He then displayed a great deal of patience and poise in picking Lesnar a part on the ground to finish the fight. Velasquez is the real deal. He may not be the best pure wrestler or pure striker in the division, but he’s the most well-rounded. Perhaps even scarier is the fact that he’s only 28 and still got room to improve just about everything.
The business implications of this fight are several and involve a bit of a trade-off between the short and long term. Lesnar is the sport’s top draw and best mainstream enabler, but he’s likely to lose a bit of his appeal without the belt. Certainly the 1 million buy guarantee is probably gone unless he fights Mir in a rubber match or lands another title shot. However, it is my belief that we’ve witnessed the birth of the next big draw in the UFC in the form of Velasquez. He may not be the most stirring interview or imposing physical specimen, but he finishes fights and that is ultimately what the fans care about most.
Velasquez also happens to bring a new demographic to the table. Say what you want about the UFC’s marketing tactics for this fight, but it knew it had to hedge its bets when promoting this fight. Velasquez may not sell 1 million PPV buys every fight, but he will prove to be a solid draw for the company on the merit of his 89% stoppage rate and the fact that he gives them a somewhat credible entry point into the Hispanic market both North and South of the border.
I also like this new heavyweight reality from the perspective of asset management. Velasquez is likely to fight more often than Lesnar, which means a quicker turnaround for lucrative heavyweight title fights for the UFC. Lesnar is also now unquestionably the biggest non-title draw in the UFC and someone that can anchor a successful PPV card without title fight support. This single fight has just given Joe Silva a host of new options to play around with when booking fights over the next 6-12 months.
The Lesnar loss probably isn’t optimal from a short term perspective, but the combination of Velasquez as a dominant champion and Lesnar as versatile non-title draw will help the UFC cover the gap and even come out ahead in the long term.
Shields earns win, not fans
Jake Shields did what he does best on Saturday and that’s smother his opponent. It wasn’t an endearing performance and it seems reasonable to assume the UFC was looking for a little more from him last night. However, he did get the job done and remains the front runner to challenge the winner of GSP-Koscheck II, according to Dana White. The choice between Shields and Fitch – both of whom have similar styles – has likely come down to providing the welterweight division with a fresh-faced contender. Shields has been hyped for so long as the best welterweight outside the UFC that he’ll likely generate more interest than a guy like Fitch.
Note: Keep a close eye on the payouts this week. It’ll be interesting to see what kind of guaranteed money Shields received from the UFC to defect from Strikeforce.
Ortiz classy in defeat, but that may not help him
Tito Ortiz may have been all class on Saturday night, but I’m not sure that’s going to help him stay in the UFC. He’s now lost four of his last five bouts and is no longer a relevant player within his division – not even as a gate keeper. Furthermore he isn’t the PPV or live gate draw that he used to be which calls the nature of his sizable contract into question.
The new relationship between Ortiz and the UFC was founded upon mutual benefit, but I can’t see it lasting if Ortiz no longer brings something to the agreement. This is simply the nature of the business.
UFC 121 draws the smallest gate of Brock Lesnar’s career
The UFC drew 14,856 to the Honda Center on Saturday night for UFC 121, which generated $2.15 million at the gate. Here’s the paradox: UFC 121 has come in as the lowest gate of Brock Lesnar’s career but on an event that will likely become the second or third highest-grossing PPV card of his career.
It’s difficult to reconcile the above, but I think it’s largely reflective of ticket pricing. The range for this fight was $75, $125, $200, $300, $400 and $500. While the demand for this fight may have been there at lower ticket levels or on PPV, the $300+ tickets may have exceeded the Anaheim MMA area reservation price.
I’d be very interested to learn whether the UFC is experimenting with any sort of ticket pricing sensitivity models, because from what we’ve seen over the last few years it appears as though the company is leaving money on the table with some of these inflated prices. Sure, the UFC comps a couple thousand tickets every night and that’s great from an exposure perspective, but at some point you want to maximize ticket revenue. I’d also argue that there are benefits to making the consumer purchase a product that go well beyond short-term revenue: the consumer is far more engaged with a product when they’ve had to sacrifice something to get it and it’s certainly difficult to get someone to pay for something after they’ve been consuming it for free.
Sponsorship watch
UFC 121 marked the official debut of Boost Mobile as an official UFC sponsor. They had a host of cage and mat signage, cut graphics through the telecast, and a presence on the UFC promotional material in the weeks leading up to the fight. It’ll be interesting to see what they drum up in terms of activation. The company has already initiated a nationwide sweepstakes entitled Your Town, Our Fighter, which offers a UFC viewing party with the fighter of your choice. Interestingly, the promotional partner for this activation is Samsung. I’ve said for a while now that the consumer electronics industry ought to seriously look at a partnership with the UFC, and Samsung might be able to use this promotion with Boost as a way to test the waters.
UFC 120: Payout Perspective
October 19, 2010
Welcome to another edition of Payout Perspective! This week we’ll be taking a look at UFC 120: Bisping vs. Akiyama that was held on Saturday, October 16th from the O2 Arena in London, England. In addition to Bisping vs. Akiyama, the event featured a host of British and European fighters including Dan Hardy, John Hathaway, Paul Sass, Cheick Kongo, Alexander Gustafsson, and Cyrille Diabate.
Bisping decisions Akiyama, remains on track for title shot
Michael Bisping gave the home crowd something to cheer about in the main event with a sound decision victory over Yoshihiro Akiyama in a fight that was awarded Fight of the Night by Dana White. Bisping was able to leverage his speed and reach to routinely beat Akiyama to the punch, but he still seems to lack the punching power necessary to really hurt an opponent.
The win was important for both Bisping and development of the UK market. Bisping is now one step closer to a shot at the title. The fact that he won on home turf also helps to reinforce the tremendous support the UK market threw behind this event and its fighters. Moreover, the promise of a potential title fight between Bisping and Silva in 2011 could really help push MMA in the market, because it would play on the tremendous amount of nationalism within the country and give the media a legitimate reason to feature the sport on a consistent basis for a couple weeks (especially if the fight is brought to London or Manchester).
Condit KOs Hardy, stuns crowd
Carlos Condit’s knockout of Dan Hardy will likely prove to be a candidate for KO of the Year. It was the perfect combination of speed, power, and timing with the added element of surprise — no one expected Hardy to be laid out in such a manner.
Now things have just gotten a lot more interesting in the UFC’s welterweight division. Condit has racked up three straight wins in the UFC and managed to knockout the opponent that the champion couldn’t even finish. He’s proved his worth. Here’s the situation as I see it:
- GSP and Koscheck will fight in December and the winner will likely be available by March or April.
- The winner of Shields and Kampmann will likely get the next title shot (especially if it’s Shields) because it puts a fresh face in the main event and Jon Fitch hasn’t earned himself any new fans with his style.
- However, I do expect Fitch to remain in the title hunt – especially if GSP defeats Koscheck — and it would seem to make a lot of sense for him to fight Condit to produce the next challenger in the division come Summer or Fall 2011.
UFC 120 sets UK attendance records
UFC 120 has reportedly set the UFC’s attendance record for Europe with 17,133 fans in attendance for a total gate of $2.56 million. It’s certainly an improvement over the last time the UFC was in London at the O2: UFC 95 did just over 13,000 fans for an estimated gate of $1 million. However, as Junkie points out the UFC earned more at the gate on fewer fans in attendance at UFC 75 with the Rampage vs. Henderson title fight.
UK title fights necessary, but may come at high opportunity cost
UFC 120 was an eye-opener due to its strong sales and the great amount of support the card was able to generate. The use of local talent proved to be an effective strategy for the UFC and evidence that it’s expansion into the market is on course. I’ll admit that when the fight card was first announced, I was very skeptical that it would sell, but it did.
Now, my question is for how much longer is this strategy viable?
I remain adamant that my larger point still stands: if the UFC is to continue its growth in the UK it must deliver better fight cards with bigger stars to the market. Unless Bisping or Hardy or another UK fighter become a bona fide star over the next few years, neither is going to adequately quench the appetite of UK fans for top-quality MMA.
The challenge with delivering bigger stars and fight cards to the UK is, of course, incurring significant opportunity costs. The UFC is rightfully reluctant to pull a great card away from the North American market, because it loses that short-term revenue guarantee associated with the PPV buys. To overcome the opportunity cost the UFC is going to have to do two things:
1.) Maintain its focus on generating medium and long-term growth with the realization that this growth will easily eclipse the immediate sacrifice of domestic PPV revenues. The $5-10 million they give up now could contribute towards annually earning $50-$100 million in the UK market five years from now.
2.) Push the limits of social media and other cost-effective promotional tools that might allow the UFC to increase promotion of its foreign events without significantly increasing costs. It seems to me the UFC could really leverage this “spoilers” controversy to form an interesting internet marketing campaign that might increase awareness in foreign events and motivate fans to actively ignore media outlets on fight day in favor of purchasing the event that evening. The model they used for UFC 112 seemed to work, but I also have to think it was somewhat expensive with all of the extra television and print ad inventory they purchased to go along with the time buys on many RSN’s throughout the US.
Then again, perhaps the UFC doesn’t need to make these events PPV at all. Its television ratings have been declining over the last nine months largely because the quality of their UFN and TUF cards has been lacking. If the UFC is going to hold a title fight in the UK, it might consider giving the fight away for free on Spike TV as an exposure play and gesture of goodwill to the fans. This is something that might be easier to do if, say in 18 months, the promotion is on ESPN. Nonetheless it’s an option worth considering.
The State of the UFC Address
October 4, 2010
There’s a lot of misinformation circulating around the MMA community in regards to the state of the UFC, so I’d like to provide a little payout perspective on the hot button issues that currently have some folks troubled.
UFC TV Ratings and PPV Buyrates
Simply put: the PPV buyrates are up and the TV ratings are down.
The UFC is now just exiting an eight (8) event streak where it scored 500,000 PPV buys or more. Moreover, the UFC is currently on pace to break its PPV sales record with a 2010 showing that should come in around the 9 million mark: UFC 121 should do at least 1 million buys with the Brocktober promotion, plus a decent UFC 123 card and TUF-backed UFC 124 should be able to do another million combined.
The PPV sales are encouraging and demonstrate the potential of the UFC. There is a strong demand for its product at the highest levels, which implies strong matchmaking, evocative story telling, and reasonably injury free combatants. If the UFC can continue to develop fighters and carefully select matches that make sense for both the division and entertainment purposes, the sky is nearly the limit.
UFC Average Television Event Rating
However, the television ratings are dropping on Spike for just about everything. I don’t think this a reflection of the sport or a slight to the potential of the product. Rather I think it comes back to provide compelling content. When the UFC provides content like UFN 14 (Silva vs. Irvin) or UFC 105 (Couture vs. Vera) people are going to tune in. When the UFC offers up something like Swick-Burkman as a main event for UFN 12, people won’t.
I hear a lot of concern about over-saturation in the marketplace, but it really all comes down to the product offering. The good events will be highly successful and the bad events will experience just mediocre results.
Ultimate Fighter Ratings
But I will caution that the UFC cannot afford to get complacent. Spike has essentially run the same format on TUF for the last 12 seasons and the results of a stale and bland product are starting to show. The UFC is a company known for its willingness to experiment and live on the edge – both with its product and its marketing tactics – but we haven’t seen the same level of innovation (or risk taking) on the production side. It would be a shame to see the company fail to change and adapt to an evolving fan base with new and different tastes and preferences. The issue of what exactly should be done with TUF is something I’ll save for another day.
UFC Attendance and Gate Revenues
The attendance and gate revenues for UFC events are a bit of a mixed bag. The UFC claims to be selling out many of its events, but they’re often papered to varying degrees and the setup is often built to less than arena capacity. However, I don’t buy the argument that the percentage of out-of-town fans at each event should somehow diminish the attendance or gate figures. These fans are part of the sport and what make it so great.
Overall, the attendance and live gate are still pretty solid. Las Vegas and all of Canada are incredibly strong. New markets like Philadelphia and Boston have good potential. Yet, by and large, the average gate sits in and around the $1.5 million to $2.5 million mark. People were shocked to hear Indianapolis did $1.6 million, but that’s not a terrible gate.
If anything, I think the reaction to some of these things is more a reflection of heightened fan expectations than anything else. There’s been a certain falsehood perpetuated by some in the media that suggests the UFC should sellout and do a huge gate in every new market, but rarely is this the case. It takes time to build a local spectator market – no matter if you’ve had television exposure in the area or not.
Yes, the UFC did tremendously well in its Montreal and Vancouver debuts, but Canada is MMA crazy and certainly not representative of the American market. More to the point, only Montreal has done multiple events and I can almost guarantee you that UFC 124 will sell better than UFC 83. Why? There are far more UFC/GSP fans in Montreal now than in April 2008.
The Popularity of UFC Fighters
The UFC is having no more or less difficult a time producing star fighters than it ever has. In this regard MMA fans seem to have very short memories; the prevailing thought seems to be that if a star isn’t born every six months, something must be going wrong. However, there are a number of examples that currently point to the contrary:
- Three years ago the MMA community was questioning the ability of Rampage Jackson to fill the shoes of Chuck Liddell, both as light heavyweight champion and one of the biggest draws in the sport. Now he sits at #3 in terms of average PPV buys since 2008.
- Two years ago it was widely believed that Lyoto Machida was boring and incapable of headlining a fight card. Now we know different as he currently sits at #6 in terms of average PPV buys since 2008.
- Today we’ve got men like Jon Jones and Cain Velasquez emerging as viable fighters that could very likely reign over their respective divisions for many years. Others will emerge in their respective divisions given time. That’s really the beauty of MMA right now: we’re finally starting to see elite athletes like Jones and Velasquez enter the sport. It’s only a matter of time before more follow.
The most important thing to remember about star fighters is that it’s not necessary for them to be charismatic, good looking, and own a life story that could land them on the New York Times #1 Best Seller list. A fighter’s popularity simply all depends on performance. If a fighter proves to be highly skillful and entertaining, people will start to watch and the word will spread. It’s really not complicated.
I tend to think that sometimes people confuse being a star or draw with being a cross-over pop culture icon. Very few athletes have this potential in any sport – let alone MMA. There are only so many athletes like Derek Jeter or Shaq. Perhaps MMA will have one some day, but it doesn’t need one to be successful or continue its growth, either.
UFC Payouts
There’s been a lot of fuss made over the recent firing of MMA agent Malki Kawa as the result of his failure to generate more than $5,000 in sponsorship money for Matt Mitrione at UFC 119. It’s again raised the issue of fighter compensation in MMA; something that we’ve discussed at length before and quite popularly in this MMAPayout.com feature earlier this year. Here’s an excerpt:
The UFC likely earned somewhere in the range of $300-$350 million last year, which absolutely pales in comparison to the estimated $2.7 billion the NHL will have made or the $3.8 billion of the NBA. It’s far easier to pay your personnel 50~% when you’re left with $1-2 billion in company coffers to cover expenses and provide some modicum of return. Even then it can be difficult to earn a profit, just ask the Phoenix Coyotes that have lost over $30 million since the year-long lockout that was supposed to deliver a miracle cure for the NHL’s business model ails.
Standard & Poor’s credit reports have indicated that the UFC’s gross margin hovers around 30%, which means that even in the best case scenario of $350 million in revenue, the UFC could only afford to pay roughly 100 fighters $1 million each. But if that were the case, the company would have no revenue left to cover its substantial operating and marketing expenses (the stuff that keeps this sport growing through expansion, regulation, and promotional efforts).
The chart below plots the average disclosed payout, disclosed bonus, and disclosed compensation of UFC fighters from 2006 to the end of September 2010. It clearly documents the growth in fighter pay. While the percentages do not perfectly align with the growth in UFC revenues, there are at least a few different potential causes for this discrepancy.
UFC Average Payouts
The most likely scenario is that as the UFC has grown, it’s compensation models have evolved away from disclosed payouts towards more percentage-based and discretionary means. For example, the disclosed pay for UFC 116 was $923,000 but it’s widely known that Brock Lesnar receives a percentage cut of PPV sales that likely put his total compensation over $3-4 million. Then factor in the number of discretionary bonuses handed out to fighters who all contributed to what was arguably one of the UFC’s best events ever (especially considering its hype and the size of its audience). This the kind of information not available to the public and absent in so much of the speculation that I read.
Industry Outlook
The promotion side is healthy at the local and regional levels, but competition is quite fierce. There are some metropolitan markets with as many as 5 or 6 competing fight leagues, which can make differentiation difficult. Still there’s enough money to go around if promoters keep an eye on their bottom line, know how to effectively market to the right audience, and establish a consistent brand over the long term.
However, the jury is still out on some of the major second tier organizations like Strikeforce, WEC, and Bellator. It’s very difficult to compete on an elite level when 85-90% of the that elite talent is locked up with the premier organization in the sport. The biggest reason why the AFL, XFL, and soon-to-be defunct UFL have not been successful is due to the NFL’s control over the talent pool, television networks, and media outlets. The UFC isn’t quite on that level, but it still has a monopoly that’s difficult to work around.
The key to success for organizations like Strikeforce, the WEC, and Bellator will be finding niche segments of that upper tier market that the UFC doesn’t serve and becoming the best in that area. I’m not sure that Strikeforce has found that niche yet; the company is still attempting to become another UFC but lacks the depth within its divisions or production/marketing capacity to really strike a chord with the MMA audience. The WEC has found its home with the lighter weights, but I question if the best long term play isn’t to take those assets (divisions, titles, and fighters) and place them on the much stronger UFC platform. While Bellator has an intriguing format, it’s plagued by both product and promotion issues; poor attendance and a bad television deal have soured the buzz from the tournaments.
The apparel industry is experiencing a bit of a shake-up as Tapout, Hitman, and Silver Star were all just purchased by Jamie Salter’s Authentic Brands Group (ABG). I’ll be watching quite intently to see ABG handles the brands with its full licensing model, and I’m eager to see if any licensee will take the clothing in a new direction. I have been calling for moderation in the MMA apparel market for some time; essentially clothing that MMA fans can wear in any number of social settings without perpetuating certain negative stereotypes currently associated with graphic t-shirts or MMA clothing in general, but articles that would still allow fans to promote the sport and advertise their chosen lifestyle. The MMA audience is evolving, so too should its clothing.
I’ll also be watching for any impact on the fighter sponsorship market. Imagine if ABG, with its three new brands in tow, approached the UFC to purchase an exclusive apparel sponsorship agreement. It would probably cost somewhere in the range of $8-12 million per year, but it would also afford ABG a host of negotiating leverage over fighters as they would only have one place to go for in-cage apparel sponsorships deals. I don’t see this as tremendously likely. These brands were founded on the principle of supporting the fighter, not to take advantage of them. Moreover, the consequences of a scorned fighter roster could hurt the business of both the UFC and ABG. It’s intriguing nonetheless.
UFC 119: Payout Perspective
September 27, 2010
Welcome to another edition of Payout Perspective! This week we’ll be taking a look at UFC 119: Mir vs. Cro Cop which was held at the Conseco Fieldhouse in Indianapolis, Indiana on September 25th. The event was headlined by a heavyweight tilt between former UFC Champ Frank Mir and Pride OWGP Champ Mirko Cro Cop.
Mir finishes Cro Cop in otherwise uneventful main event
Frank Mir ended a fairly lackluster main event with a bang when he delivered a crushing knee to the chin of Mirko Cro Cop. To that point neither fighter had managed to do much damage. The crowd booed consistently throughout the match, seemingly to break with applause only when referee Herb Dean intervened to separate the numerous stalls in the clinch along the cage.
If you subscribe to consumer psychology and believe in the recency effect, this event may be remembered for the dramatic knockout in the main event. However, given the volume of discontent currently visible on many blogs and MMA forum boards, it’s more likely to be remembered as an average event at best.
The win over Cro Cop won’t be enough to immediately establish Mir as the next in line after dos Santos, but it does provide the UFC with a solid fighter for a contenders bout in the future. He’ll also be available for a rubber match with Lesnar should Lesnar be defeated by Velasquez next month; an event that would provide the UFC with an extremely lucrative non-title PPV event.
TUF winner Bader takes next step, defeats Nogueira
The Ultimate Fighter has had a difficult time developing top-tier talent over the last few seasons, but Ryan Bader appears to be an outlier. Bader is 12-0 (5-0 UFC), an excellent wrestler with solid ground and pound, and an evolving stand-up game with decent power. His victory over Rogerio Nogueira wasn’t overwhelming, but he showed that he definitely belongs in the UFC’s top ten.
Prior to UFC 119, it was largely speculated that Jon Jones would face the winner of Nogueira-Bader. However, I’m not sure that makes a lot of sense at this point in time. Jones is not only at another level than Bader, but a win over Bader wouldn’t advance Jones’ career as much as a fight with someone like Forrest Griffin or even Thiago Silva. Plus, if you look at this from the perspective of continuing to develop Bader, it might be in the UFC’s best interest for him to fight someone else (perhaps also a Griffin or T. Silva).
UFC 119 meets mixed reviews
The jury is still out on UFC 119. I’ve heard and read everything from it was the worst UFC event of all-time to it was a solid card given the names and caliber of fighters involved.
I, myself, don’t think it was even close to the worst UFC show of all-time — I still think that’s UFC 72 — but I do see where some people are coming from. The card featured a host of decisions and a few grappling matches towards the end of the night that probably tainted how the entire show was perceived by most.
In fact, I’d argue the card was probably at a disadvantage to begin with. I’m inclined to believe that most people wrote the night off before it even began due to its lackluster main event and the absence of any truly compelling match-ups. Sometimes that’s a good thing, because it takes the pressure off the fighters and removes some of the expectation placed on an event. UFC 108 and 109 come to mind as events without great main events or compelling match-ups that ended up delivering entertaining fights. UFC 119 just wasn’t on that level.
However, I don’t think the performance of UFC 119 — the value it provided for fans or PPV buys it generated for the company — is an issue or cause for concern. The UFC is going to have bad, good, and great events just like any other sports property. The fans will continue to return so long as the UFC can consistently deliver a compelling reason to purchase the events. For example, this show certainly won’t prevent anyone from watching UFC 121 next month or dissuade them from UFC 124 in December.
This is interesting to me, because I think it underscores the continued development and growing sophistication of MMA fans. The hardcore fan is obviously quite well educated about the sport, but we’re now seeing similar levels of awareness from the average and casual fans (i.e., they are able to discern fights with good potential from fights with bad potential).
There’s definitely both a glass half-full and glass half-empty view to this trend for the UFC. If you’re an optimist, you see growth and a deeper level of awareness which should translate to an eventual expansion of the dedicated/hardcore fan base (your bread and butter). If you’re a pessimist, you’re perhaps disappointed that the influence of the UFC brand is slowly waining – people are no longer buying just because it’s a UFC fight.
Strong Prelim Show May Boost PPV Buys
The UFC 119 buyrate is expected to be relatively weak compared to the last eight events that have all done over 500k buys, but the stellar set of preliminary fights broadcast on Spike might help to boost the show’s bottom line. The Mitrione-Beltran slug fest went all three rounds and likely gained pretty well on viewership; and, despite the rather short nature of the Dolloway fight, his submission of Joe Doerksen was also impressive.
If you combine theose two bouts, it’s more than possible that the UFC did enough to convince additional households to purchase the fight card. It’s very tough to quantify any of the Prelim’s potential impact, but we’ll at least have an idea if it might have helped when we get the quarterly ratings this week.
Sponsorship Watch
This is often my favorite segment, but today I’m going to keep it short.
The one thing I really wanted to mention was the addition of Boost Mobile as a sponsor on the mat and cage padding. Boost has been slowly increasing it’s investment in MMA over the last year; most notably with it’s sponsorship of Rampage Jackson back at UFC 114. It appears the brand will be the presenting sponsor for UFC 120, so look for plenty of signage that evening. I’d also expect, seeing as it’s a Spike TV broadcast, that Boost will purchase some additional ad inventory to further activate it’s new found relationship with the UFC.
I’ll be watching this with a keen eye over the next couple of months to see where this relationship goes. The UFC is a potentially incredible platform for a mobile phone operator to advance on that coveted 18-34 demographic; especially one such as Boost that doesn’t require users to sign contracts.
UFC 117: Payout Perspective
August 9, 2010
Welcome to another edition of Payout Perspective! This week we’ll be taking a look at UFC 117: Silva vs. Sonnen, which was held Saturday, August 7 from the Oracle Arena in Oakland, California. The stacked event not only featured Silva vs. Sonnen, but Fitch vs. Alves, dos Santos vs. Nelson, and Hughes vs. Almeida.
Silva pulls off triangle in final minutes, defeats Sonnen
Anderson Silva was dominated by Chael Sonnen for much of their 23 minute fight on Saturday, but it was ultimately the last 2 minutes that proved most pivotal as Silva slipped on the triangle and then pulled down on an arm to secure a quick tap.
I try not to indulge in senseless hyperbole, so I’ll just call it an unbelievable comeback. Silva proved his mettle in this fight: getting beat on for four rounds and still having both the capacity and presence of mind to look for the late submission. I’m not sure he won himself a ton of new fans – if anything, probably now more people than ever believe he’s vulnerable – but he did earn back some respect after previous performances.
There’s a debate raging as to whether Sonnen should receive an instant rematch. I’ve heard good arguments on both sides. The pro-rematch crowd argues that an instant rematch needs to happen as soon as possible, because it’s just too good of a business opportunity to risk by delaying. Silva hasn’t been a tremendous draw for the UFC (he averages just 455,000 PPV buys), but a rematch with Sonnen would sell huge. If the UFC decides to book something else, it could lose the appeal and relevance of an immediate rematch. However, the counter argument to a Silva-Sonnen instant rematch is also strong: Silva won without the reffing or judging controversy that usually demands an instant rematch; plus, the UFC likely does not want to set a precedent for handing out instant rematches every time a contender loses a close fight.
My own opinion is that the UFC cannot afford to pass up an immediate Silva-Sonnen rematch for the following reasons:
- Ultimately this business is about putting on fights that people want to see – this is one of them.
- The fight would not require a substantial co-main attraction, which frees up assets for Joe Silva to use to reinforce other cards.
- The winner is surely to emerge with at least a short-term popularity spike that carries forward into other bouts.
- The UFC middleweight division could actually use an extra six months to sort itself out: let Vitor fight the winner of Marquardt vs. Palhares or Bisping vs. Akiyama.
Fitch victorious, but no guarantee of next title shot
Jon Fitch was once again victorious in the Octagon, racking up his fifth win in a row, but the fight also marked the 8th time in a row that he’s gone to a decision. Dana White had commented before the fight that the winner of Fitch vs. Alves would receive a shot at the winner of St-Pierre vs. Koscheck, but all bets were off when Alves came in over weight and even more so when Fitch failed to finish against Alves.
Fitch was good, but not so good that the UFC can’t deny him an immediate shot in favor of someone like Jake Shields. It’s hard to fathom that Joe Silva and the UFC would book St-Pierre in back-to-back title bout rematches with guys he’s already trounced unless they had no other real alternative. The winner of Shields-Kampman could provide that alternative.
dos Santos defeats Nelson, earns shot at winner of Lesnar-Velasquez
Junior dos Santos demonstrated his superb stand-up in the victory over Nelson. It’s difficult to envision another heavyweight being able to match dos Santos on his feet. The fact that he did not knock Nelson out is more a testament to Nelson’s chin and heart than it is to dos Santos’ power. Dos Santos will now face the winner of Lesnar-Velasquez some time in the New Year.
The UFC has done a great job of organizing its heavyweight division and producing never-before-seen depth from the big men. If Lesnar gets through Velasquez and dos Santos, he’ll truly be the top heavyweight in the world. Hopefully that’s something the organization can replicate in the lightweight and middleweight divisions – both of which are kind of in disarray at the moment.
UFC revamps website
MMAPayout.com covered the unveiling of the UFC’s re-designed website last week. After playing around with things for a few days it’s become clear that there are still a few kinks to be worked out functionally. It remains, however, a less cluttered environment than before – one which provides a lot more substance.
Sponsorship Watch
The UFC and Edge Shave Gel ran a contest a few months ago in which the bar code from purchased Edge containers could be used to obtain a free three-month subscription to the UFC Vault. It was good activation for Edge, but something that probably wasn’t advertised as much as it could have been. I’ve been happy to learn over the last month that the Vault subscription is more valuable than access to a select number of fights relevant to the up-coming card; subscribers also have access to recent prelim fights in the days immediately following a UFC event.
The Tequila Cazadores spirit award went to Clay Guida. The UFC is slowly starting to do more with this award, but I really think it’s missing something on the PR end by not getting the story out a little better. It’s got good cause marketing potential; and, with Clay Guida as the most recent recipient, this last one definitely could have had some legs.
I found it interesting that Tequila Cazadores – the presenting sponsor of UFC 117 – had graphics posted during each between-round replay, yet the odd post-fight replay was still brought to us by Bud Light. I wonder if this was a mistake or if Bud Light owns the post-fight replay (finishing sequence) no matter the card.
The Blue Book has been updated.
UFC’s Zelaznik on International Business
July 20, 2010
Ben Fowlkes of MMA Fighting has posted an interesting interview with the UFC’s Managing Director in the U.K., Marshall Zelaznik, that broaches a variety of subjects including the UFC’s latest absence from the U.K. market.
The U.K. market seemed like a big deal to the UFC when it first began expanding internationally, but so far in 2010 you’ve been to places like Australia and Abu Dhabi, but no U.K. shows. Do you worry that the U.K. fans will feel like they’ve been ignored as the UFC focuses on the rest of the world?
I think that if anyone has that impression, when you look objectively at how we haven’t been here in over a year, you can understand how someone might feel that way. But no one is ignoring the U.K. It’s just an effect of trying to be everywhere at one time. And just the way schedules work out, we probably would have been back in the U.K. earlier, but the TV dates we commit to and how we start working out our calendars, with the lack of availability of venues in the U.K., it just worked out this way.
We would have liked to have been in the U.K. before the summer, but it just didn’t work out with the schedules and the availability. But the offices here in the U.K., there are ten of us who live and breathe the U.K. and we’re always focused on it, so if people hear that they should know that no one is thinking of them as second-class citizens.
Payout Perspective:
It remains to be seen exactly what UFC 120 is going to look like, but it appears as though the UFC will rely on a bevy of British fighters to anchor yet another UK card without a title fight. The UK has not hosted a title bout since January 2008 when BJ Penn defeated Joe Stevenson at UFC 80.
The UFC cannot afford to bring a title fight to the UK every time it visits, but it must be careful not to treat the market as an after-thought. The company has devoted a lot of time and money into developing the UK and it must continue to serve the fan base with appealing fights with beyond the likes of British fighters like Bisping and Hardy or UFC legends like Matt Hughes and Randy Couture.
I tend to sympathize with Zelaznik and the UFC in regards to scheduling and timing, because if a few fights go the other way, they’re probably bringing two title fights to the UK in 2010. Just think about what could have happened had Bisping won at UFC 100, Hardy won at UFC 111, or the UFC had not suffered a host of injuries near the end of 2009 that put pressure on the company to re-establish some momentum in North America in 2010.
Yet, I also tend to think this entire situation exemplifies why rapid expansion is so difficult: the UFC has a limited number of resources and can’t possibly give each market the attention it deserves. The fans in the UK want a title fight, but so do the fans in Canada, Germany, Australia, and every other place the UFC visits.
I understand the allure of big markets like China and India, but the UFC can only move so quickly. It would be foolhardy to expect otherwise.
