UFC 143: Payout Perspective
February 5, 2012
Welcome to another edition of Payout Perspective. This week we take a look at UFC 143 at the Mandalay Bay Events Center in Las Vegas, Nevada where Nick Diaz took on Carlos Condit for the interim welterweight belt.
Condit frustrates Diaz for interim belt
We saw the Stockton Slap but Carlos Condit executed his game plan to perfection in eluding Diaz’s boxing skills and a last round submission attempt to win the interim title. The bout was reminiscent of Frankie Edgar versus BJ Penn at UFC 112 in Abu Dhabi. In that one, Edgar executed a game plan to perfection that by Round 5 you knew that the favorite was in trouble. Same here with Condit.
For Condit, a date with GSP is in the future. Despite his post-fight interview where he quit MMA, Diaz will likely be back and a Josh Koscheck fight seems about right. Even in defeat, a Nick Diaz post-fight interview is always entertaining.
Werdum outlasts Big Country
A solid debut for Fabricio Werdum who edged out Roy Nelson in a battle of BJJ black belts. A very good fight that won Fight of the Night honors. Werdum may not be ready for the top tier of this division but maybe a couple more impressive victories could earn him a return bout against Junior dos Santos.
Koscheck defeats Pierce
A closer bout than most thought. Arguably, Pierce could claim he should have won. Not sure why Josh Koscheck is such a hated man but Nick Diaz is gaining fans for being about as bad. Of course, Koscheck’s post-fight “salute” to the fans won’t help his plea for fans.
Attendance and gate
MMA Junkie reports that UFC 143 drew 10,040 fans for a gate of $2.3 million.
Bonuses
MMA Junkie also reported the fight night bonuses for UFC 143. Each fighter received $65,000.
Fight of the Night: Fabricio Werdum versus Roy Nelson
Submission of the Night: Dustin Poirer
KO of the Night: Stephen Thompson
Poirer and Thompson were the clear cut winners for their divisions as Poirer had an impressive submission and Thompson’s educated foot won him a KO.
Sponsors
The octagon included a couple new logos including the UFC’s new official corn nuts sponsor, Corn Nuts. Also, the History Channels’ new show, Full Metal Jousting. The show is from the producers of the Ultimate Fighter. It also included MetroPCS which also ran commercials during the prelims. In addition, UFC Undisputed 3 was featured as the UFC is pumping up the game for its release as you can purchase the game via GameStop. The Octagon also had its usual mainstays of Harley Davidson, Musclepharm, Tapout, Dodge and Bud Light.
The Corn Nuts sponsorship included a “corn”er cam. A nice play on words. It will be interesting to see what future activation plans it has with the UFC. MetroPCS also sponsored the Judge’s Call which occurred right before the judge’s decision.
The US Marines, as always, sponsored the Tale of the Tape for Koscheck-Pierce. RYU was also a featured sponsor although its signage was not featured.
Every time Josh Koscheck fights I’m reminded that Lugz is still around.
Roy Nelson was sponsored by the History Channel’s new show for his fight. Maybe it was fitting that his white shorts were stained with blood for “Full Metal Jousting.”
UFC Primetime
Good reviews for this set of shows. It was a little weird for the show to feature GSP’s rehab but this may have compensated for the lack of Diaz information. An interesting snippet from the last episode of Primetime: Nick Diaz didn’t know who was playing in the Super Bowl. We will try to update you with ratings if we can obtain them.
Post-UFC 143 Headlines
Condit versus GSP. Its not the matchup that most, including GSP, wanted. But we will see this fight sometime later this year. Perhaps, this is Montreal’s fight to have since its spring card was delayed. It should be a good battle although the UFC could have marketed a Diaz versus GSP fight easier. Nonetheless, the UFC could get Diaz versus Koshcheck which could get a lot of interest albeit not for a title.
What would Nick do? UFC Primetime got more out of Nick Diaz than most have seen. But, how likely would Diaz do another behind-the-scenes look after this loss. His disdain for any type of media coverage is evident. But, he’s a compelling figure that many have grown to like (or hate). Regardless of what fans think, he’s an asset for the UFC that they must manage.
Dustin Poirier may be the only hope for the 145 division against Jose Aldo. An impressive fight with some great jiu jitsu. We’ll see how he progresses.
Odds and Ends
- I liked the new intro to the PPVs. I’m wondering why they didn’t go with something like this earlier. Long live Gladiator Man.
- Good move by the UFC and Fox to go back to the weigh-ins without commentary. I think for those that tune in to watch them, they like to see and hear the whole thing rather than get analysis.
- What do you think Nick Diaz was saying to Lorenzo Fertitta right after the fight?
-Diaz said he was paid way too much for MMA in his post-fight in Octagon interview. I thought his complaint was that he wasn’t paid enough.
- It will be interesting to see the numbers for the UFC in 3D in theaters. Based on twitter, there were very positive reviews but we’ll have to see if that equates to good attendance.
- We saw the first commercials for TUF on FX.
- For those watching the Super Bowl, here’s the Kia ad with Chuck Liddell. He’s in the commercial briefly around the 1:00 minute mark.
Conclusion
A good night of fights but Diaz-Condit didn’t have the star power of GSP. The co-main events and undercard featured good match-ups but only for hardcore MMA fans. How many casual viewers knew Mike Pierce? It will be interesting to see how much the 3D in theater attendance takes away from the PPV buy rate. A buy rate above 250,000 should be considered a success.
FTC Ends UFC Investigation Regarding Strikeforce Purchase
February 1, 2012
Earlier today, Josh Gross from ESPN.com broke the news that the Federal Trade Commission has closed a non-public investigation into the UFC’s purchase of Strikeforce as of last week.
ESPN reports:
Documents published on the FTC website dated January 25, confirm the FTC’s Bureau of Competition conducted an investigation to determine whether the $34 million acquisition of Explosion Entertainment, LLC, by UFC’s parent company, Zuffa LLC, violated Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
…
In closing letters issued to counsel for Zuffa and Explosion Entertainment, FTC secretary Donald S. Clark stated, “Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed.”
The full letter from the FTC is below (H/T: FightOpinion.com):
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary
January 25, 2012
Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036
Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136
Dear Mr. Axinn:
The Federal Trade Commission’s Bureau of Competition has been conducting a nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed. This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take such further action as the public interest may require.
By direction of the Commission.
Donald S. Clark
Secretary
Tumultuous 2011 Impacts Yahoo! Sports, MMA Coverage
January 31, 2012
Earlier today, Yahoo producer Dave Doyle announced that this was his last day as MMA/Boxing editor over at Yahoo! Sports.
Doyle stated the following message via social media website Twitter:
Today is my last as MMA/boxing editor at Yahoo! Sports. It’s been an awesome ride working with great folks. Thanks for everything.
Sources tell MMAPayout.com that the cutting back on non-mainstream sports by Yahoo was due to their tumultuous 2011, which saw Yahoo’s stock dip under $17 and saw gross revenues decline by over 20%. Along with Doyle – who had been with Yahoo since 2007 – another key member of Yahoo’s MMA team is long-time MMA and Pro Wrestling reporter Dave Meltzer, who has also been a part of Yahoo since it ramped up it’s MMA coverage in 2007. His contract is also up this week. At this time, it is unsure whether Meltzer will be able to continue his affiliation with Yahoo Sports, as the struggling company tries to workout it’s budget for the new fiscal year. Longtime Boxing and MMA reporter Kevin Iole and Cagewrite Blog members Steve Cofield & Maggie Hendricks are reported to be staying with the team.
Yahoo will now shift their coverage to more mainstream sports ( NFL, NBA, and MLB) instead of those that are more niche such as combat sports (MMA/Boxing), Golf, and NASCAR. Rumors of a possible shakeup within Yahoo! Sports first began around the Summer last year. The dismal fiscal results in 2011 made sure those early rumblings came to fruition.
As for Yahoo’s 2011 fiscal results, Forbes stated the following:
“Even with gross revenues declining by over 20% in 2011, Yahoo’s Q4 2011 results were hardly a surprise, as the company completed a tumultuous year filled with leadership and investor squabbles. For now, CEO Scott Thompson has acknowledged that the company has to deliver more monetization on digital content in 2012, which is a must for Yahoo to stop its shrinking presence in the online ad space.”
Yahoo will now try to focus on it’s core business, which will include selling off foreign assets and letting non-performing Yahoo! properties go, as Yahoo’s CEO Thompson has stressed “effective allocation of capital” is a priority moving forward.
This isn’t the only mainstream sports media shake-up that has impacted MMA recently. In November of 2011, AOL’sMMAFigthing.com was sold to Vox Media – parent company to SB Nation- as AOL struggled to compete with media giants Google and Facebook in the last few years, a problem Yahoo has also been facing. A few days later, USA TODAY Sports Media Group (Gannett) made the announcement that they had acquired MMAJunkie.com, one of the biggest MMA media sites in the industry.
New York files Motion to Dismiss portions of Zuffa’s lawsuit
January 30, 2012
The New York District Attorney and Attorney General filed separate motions to dismiss two claims in Zuffa’s lawsuit in New York City. While the lawsuits seek to dismiss only a portion of the UFC complaint, it appears that the defendants are leaving open a motion to dismiss the entire complaint in total at a later date.
Courtesy of the Fight Lawyer, the two motions are below:
Attorney General’s Motion to Dismiss
District Attorney’s Motion to Dismiss
Payout Perspective:
The crux of both arguments appear to be that despite Zuffa’s claims, the fact remains that New York had a rational basis for enacting the ban at the time it was drafted. And based on this, the statute was not vague and overbroad as it relates to the due process and equal protection claims. They cite to case law which supports the theory that despite changes over the years that may, arguably, antiquate a statute’s purpose, under a rational basis review of a law, so long as there was a rational purpose for it at the time of its introduction it is valid.
Both motions argue that the proper forum for Zuffa’s claims is with the legislature and that if Zuffa wanted to enact change, it should direct its efforts to the legislature.
Via the District Attorney’s motion to dismiss:
…as a proper exercise of judicial restraint, federal courts must uphold a statute that was rational when enacted, even when post-enactment developments cast doubt on the wisdom, logic, or providence of prior legislative decisions
It also argues that legislatures are given “substantial latitude” when it comes to enacting laws under a rational basis review of the law as “imperfections and even inequality must be tolerated.”
The defendants’ motions are persuasive and could set the dominoes in line if the court grants the motion to dismiss Zuffa’s claims. As indicated in its motions, both parties contemplate a further motion to dismiss the rest of Zuffa’s claims if it is successful with this motion.
Pro-SOPA editorial may have led to hacking of UFC.com
January 22, 2012
The UFC’s Executive Vice President and General Counsel Lawrence Epstein wrote an op-ed in Sunday’s Las Vegas Review Journal in defense of the UFC’s position in favor of SOPA. On the same day, the UFC web site was hacked in what is believed to be a response to the UFC’s position on the bill.
In addition to its support of the controversial SOPA bill, Epstein’s editorial argues in favor of the Protect IP Act (PIPA). A bill supported by Nevada Senator Harry Reid – a friend of the UFC.
Overall, Epstein’s piece attempts to find common themes that the reader would agree with (stealing is bad, it hurts the economy and hurts American businesses) before coming to his point that the UFC is against piracy of its PPVs. The piece uses the UFC as an example of a U.S. success story.
Via the Las Vegas Review Journal:
The UFC itself is an example of American innovation. The Fertitta brothers, who are Las Vegas natives, along with their friend, Dana White, co-founded today’s UFC by rescuing a dying company from bankruptcy. They cleaned up the sport by inviting clear, enforceable regulation of fighting events, put their own livelihoods on the line and created a new market (with thousands of jobs) where none existed prior. That is exactly the kind of entrepreneurial engine that our country needs, especially now.
The op-ed also indicates that the UFC “contributes more than $300 million” to the economy. It also argues that there must be a rule of law to regulate online sites from stealing from businesses like the UFC.
Payout Perspective:
The timing of the op-ed piece is interesting considering the SOPA boycott occurred earlier this past week. As a result, a scheduled vote on SOPA this week has been put off. The UFC’s position on SOPA is of no surprise as Lorenzo Fertitta sent a letter of support to the bill’s sponsor last November. The WWE was another company in favor of the legislation.
Still, the placement of the editorial is interesting considering the timing. But the actual intent of the piece lacks persuasiveness. A better use of the editorial would be to acknowledge the strong opposition but assert the reasons why SOPA protects intellectual property rights of many companies including the UFC. It does get into its position a little. But mostly we get a broad American values editorial which carries no weight. While there are certain political lines that the UFC is trying to straddle with its position, it could have asserted its support of the controversial legislation while carving out its reasons. Since a big portion of the UFC’s target audience are those that would support a protest of SOPA, it would make sense for the UFC to explain itself in better detail.
As some believe, Sunday’s “hacking” of UFC.com could have been a result of the UFC’s position. While the UFC will be concerned from an online security perspective, it should also look at it from a PR perspective. For the UFC, this may not be as easy as it seems. The UFC has been aggressive in its stance against illegal streaming and distribution of its fights. In supporting SOPA and PIPA, it sees legislation that can assist in its fight against online piracy. But, opposition to the laws, which include many young, internet savvy individuals – the same people that likely follow Dana White and many other UFC fighters on twitter, utilize social media and embrace the online community oppose the restrictions that would come with the proposed laws. We will see how SOPA and PIPA will evolve and if the UFC will continue to support it.
UFC 142: Payout Perspective
January 19, 2012
Welcome to another edition of Payout Perspective. This week we look at the UFC’s return to Brazil in which Jose Aldo defended his featherweight title against Chad Mendes.
Aldo finishes Mendes and celebrates in crowd
Jose Aldo’s explosive power was on display as a knee coming out of a clench ended Chad Mendes’ title shot. After the fight, Aldo ran into the crowd which provided a great moment albeit a gasp for UFC security.
Realistically, Aldo’s security breach is much ado about nothing. He knew that he had the crowd behind him and he wanted to celebrate with his fans. Sure, someone could have done harm to him, but as I stated, he knew his audience. If someone wanted to do harm to him, they could have done so on the walkout. While the trampling of fans may have occurred, it seems as risky as when fans storm the court or field as they do in football or basketball. Do fans feel concerned when a Green Bay Packer does a “Lambeau Leap” after a touchdown? Yet, this was a “teachable moment” for UFC security for next time. It was awkward seeing Aldo trying to shake UFC security as he was trying to celebrate. Even Reed Harris tried to step in to direct Aldo back to the cage.
For Aldo, he’s cleaned out the Featherweight division. It will be interesting to see what he’ll do next. A possible superfight with Frankie Edgar (or Ben Henderson) would be a great matchup and something that could be promoted as a battle of current division champs.
Belfort chokes out Johnson
What a bad trip for Anthony Johnson. A failed weight-cut, losing a portion of his show purse, a first round submission and Johnson returns to the United States without a job. Johnson weighed in on Friday at 197 pounds for his middleweight fight. That means he was 11 pounds over (considering the 1 pound allowance). Belfort, understandably would agree to take the fight if Johnson weighed no more than 205 pounds on Saturday. If Johnson didn’t make it, it certainly would have killed the top end of the PPV. Fortunately, he made weight Saturday.
Still, making Dana White sweat the night before whether one of his fighters would make weight was the likely nail in the coffin for Johnson’s UFC career.
Johnson has had past problems with cutting weight. He definitely is a chiseled athlete, but an athlete that should fight at 205.
For Belfort, its another step back toward Anderson Silva’s title.
Attendance and Gate
According to the Wrestling Observer (subscription required), the attendance at the HSBC Arena garnered 10,605 paid fans for a gate of $2.8 million. The arena is said to hold 14,000 so we may extrapolate the number of comps assuming the arena was at capacity.
In Brazil, UFC 142 was seen on Globo, its top-rated network. Although the three live fights were shown between 12:45am to 2:00am, it garnered 23 million viewers (Wrestling Observer).
Bonuses
MMA Junkie reports that the bonuses were worth $65,000 each. Edson Barboza won KO of the night for his spectacular spinning heel kick of Terry Etim. Barboza and Etim also won Fight of the Night. The leg lock machine, Rousimar Palhares won for submission of the night.
UFC Prelims on FX
This was the first time that the UFC Prelims appeared on FX and it received an 880,000 viewer average. The ratings were lower compared to its regular showings on Spike TV. We will try to update you with the UFC 142 Countdown rating on Fuel.
Sponsorships
The Octagon included MetroPCS, Xyience, Burger King, Bony Acai, Manguinhos Refinaria, and IntegraMedica with Bud Light in the center of the Octagon. In addition to these sponsors, the UFC advertised its upcoming video game UFC Undisputed in the Octagon.
Burger King also ran a promotion with Anderson Silva in which he would have lunch with a fan that won a contest for what the Spider should do to celebrate 1 million twitter followers. The Burger King sponsorship has only been in Brazil but we shall see if the relationship will extend to the United States.
KMart is back with the UFC as it placed a voiceover at the beginning of the first round of each fight for its new promotion offering $10 off for UFC 143. It was a nice form of brand activation as its logo and the promotion reminded viewers at the beginning of each first round on the PPV.
MMA Junkie reported on soccer clubs getting into the sponsorship of UFC fighters in Brazil. The UFC was said to be cautious about the newfound sponsor money due to the intense rivalries between the clubs.
Along with his normal pre-fight sponsor banner, Belfort had another banner in honor of his kidnapped sister. He also spoke about the rash of kidnappings in Brazil at the post-fight press conference.
Silva also participated in the UFC’s #Hunt4UFC promo where he gave out tickets to lucky fans.
It will be interesting to see how much value the Brazilian sponsors such as IntegraMedica and Manguinhos will bring to the UFC and vice versa.
Odds and ends
-Another set of fights which ended with first round stoppages. UFC 134’s main events all ended in the first round and the same occurred for UFC 142.
-Aldo’s crowd surf and Barboza’s heel kick were featured on Deadspin right after the fights. Barboza’s heel kick made number 3 on ESPN’s top plays of Saturday night.
-No word whether there were any glitches with the XBox Live platform as many of those shut out of UFC 141 were given 142 for free.
-For you pro wrestling fans, Aldo’s run in the crowd, reminded me of DDP of WCW fame heading into the crowd after a match.
-Mike Pyle embraced the “heel” role in his victory over Brazilian Ricardo Funch as he egged on the crowd after his victory.
Conclusion
UFC 142 was a success from the perspective of its further ties with its Brazilian fan base. There were many PR events during the week including UFC fighters taking surf lessons and open workouts. No doubt the UFC has reengaged with the fans and it bodes well for local viewership of the first international Ultimate Fighter held in the country this year. But, the U.S. buy rate will not reflect the same as it ran opposite the NFL Playoffs. In addition to the playoffs, the fact that this card catered to Brazilian fans meant less known names to the U.S. fan base which will affect the final buy rate results. We also have the factor that a lighter weight division was at the top of the card which has meant (in recent history) a lower buy rate.
UFC responds to ESPN piece
January 16, 2012
The UFC released its response to ESPN’s feature on fighter pay. Dana White introduced ESPN’s full-length interview of Lorenzo Fertitta and called ESPN’s story “a piece of trash.”
The response video is what the UFC calls the unedited version of Fertitta’s interview which implies that ESPN edited its story to fit with what it wanted to portray. In the UFC’s response, Fertitta points out that some of the boxers featured on ESPN’s Friday Night Fights received $275 and that the UFC pays its lower tier fighters much more than that.
Seems like a good comparison but for the fact that the UFC and boxing structures are different. Also, ESPN’s role in its Friday Night Fights is not the same as the UFC’s.
Bad Left Hook sets us straight:
First of all, ESPN is not a fight promoter. This is an enormous difference. For a UFC card on FX, the UFC is pretty much in control of everything. ESPN just airs fights. They have the right to turn down a proposed fight, but that’s about it. Everything is really up to the promoters of the actual fight card.
Fertitta claims, and I’m sure he’s telling the truth, that someone fought on Friday Night Fights in a four-round bout for $275. What Fertitta doesn’t reveal — or perhaps does not actually know — is that anyone in a four-round fight that winds up on the broadcast, on TV, was positioned in a swing fight that was going to air only if there was time remaining in the two-hour time slot. There are no four-round fights purposely scheduled to air on ESPN’s series. A four-round fight is the lowest level of professional boxing, and frankly to call the majority of four-round bouts “professional boxing” is kind of a stretch; the fighters don’t often resemble what we’re used to seeing on TV, even from the middle-of-the-pack guys that get on ESPN or HBO or Showtime. It’s kind of like comparing high school football to the NFL most of the time.
Additionally, Scott Christ reiterates the sentiments I have had when the UFC-Fox deal became a reality:
UFC wants to play with the big boys in sports now. That means attention from big boy sports media, and that inevitably leads to criticism and a realistic assessment of their product and their business. The rah-rah days are dying, and it’s because of White’s ambition as much as anything else. He’s brought them here. Now they have to accept where they’re at and what comes along with that standing.
How much Zuffa revenue goes to fighters is another issue in the fighter pay debate. Dave Metzler points out that without the financial information the percentage of revenue going to fighters is a moving target:
In an attempt to use figures based on Zuffa’s percentage of an 800,000-buy show, which is the rough industry estimate on UFC 141, the $3.1 million live gate, using listed fighter pay, announced bonuses, estimates of unannounced bonuses, and percentages of pay–per-view revenue built into the main eventers’ contracts, give you a very rough figure of 28 percent going to talent. However, for the Jan. 7, Strikeforce show in Las Vegas, with a very small gate figure and a full roster of fighters to pay, that figure could easily have been in the range of 50 percent.
Metzler goes on to assert that pro wrestling, not boxing, is a closer business model to the UFC:
The closest business model to UFC is that of World Wrestling Entertainment, which is believed to pay in the range of 13-15 percent of its total revenue to its performers. While some will argue WWE is a form of performance art and not a real athletic competition – and thus the performers don’t deserve as much money – the dollars WWE derives from its performers, who take a legitimate physical pounding, is every bit as green as those which UFC makes.
Payout Perspective:
I think the UFC response (minus Dana White’s usual pleasantries to opposition) is compelling but it obviously has some flaws. From a purely PR standpoint, its a good response to the ESPN piece. What would have helped the UFC in its response is if the UFC had some up and coming fighters state how much they are paid and agree that its great. Realistically, I think the UFC could have done this because I’m sure some fighters are just glad they are getting a shot. Having Serra, Liddell and Griffin talk is fine but they are all “company men”; well-established, past champions of the UFC.
If you didn’t read Metzler or Christ’s great piece over on Bad Left Hook, most people exposed to this debate would look at the UFC response and say, “Hey, that’s true. What about boxing’s pay?” But, its hard to compare the UFC to other sports league due to the difference in business models. The fact remains that with success comes scrutiny. ESPN, like every other TV investigative show, likely had an agenda when interviewing Fertitta. That does not necessarily mean ESPN is bad or “hates the sport.” But, it means that the UFC should be aware of the issues it now faces with more exposure.
ESPN investigates UFC fighter pay
January 15, 2012
ESPN examined the question of fighter pay in an article published earlier this week as well as a piece on its investigative show, “Outside the Lines.” OTL ran Sunday morning as it discussed issues of fighter wages and whether the UFC is a monopoly.
Dana White has denounced the article and promised a response. As MMA Fighting points out, White will likely point out factual errors with the piece but some of those errors deal with the fact that Zuffa, as a private company, does not have to disclose financial information which would reveal how much revenue Zuffa generates. The number could show how much it shares with its fighters. The OTL feature compares revenues of other leagues (NBA, NFL and NHL) with the percentage it shares with its players. However, that information is not publicly known for the UFC.
The article specifically looks at fighter pay in the UFC. No other organizations are featured in the piece to compare or contrast. Notably, the piece takes issue with the relatively low pay that entry-level UFC fighters receive – $6,000 a fight. On the other hand, Georges St. Pierre and Anderson Silva make millions per fight with GSP making between $4-$5 per fight. Its not clear whether this amount is the base or (more likely) after inclusion of sponsor, bonus and PPV cuts.
The ESPN article also interviews an unnamed UFC Figher which revealed the following:
“Training expenses in an average year can run $22,000, and that’s with no travel. For a typical fight, you and your corner man share a room. You fly in on Tuesday and leave Sunday and get a $50 per day per diem. If you bring anybody extra, they take it out of your show money.”
He also indicated that locker room bonuses range from $5,000 to $10,000 although most are $5,000. These are the bonuses that are not included in the salary payroll or 3 bonus categories.
The article shows the difficulty in covering a very sensitive subject. In the ESPN and OTL feature, no UFC fighters would publicly comment with their name. As one fighter put it, “It would be the end of my career.” While ESPN does speak with a “Fighter X” no names are attached so Zuffa could still dismiss the claims made. Also, Ken Shamrock and Ricco Rodriguez have had past troubles with the UFC. Zuffa could easily claim their opinions are merely ones of spurned former employees.
Another issue to point out is that entry-level fighters still have training expenses such as gym, trainers, nutritional supplements and travel. These things are usually covered for top tier guys by sponsors or are written into their contracts.
Some interesting notes from ESPN’s interview of Lorenzo Fertitta:
• Since 2005, the first year the UFC became profitable, the company has paid more than $250 million to its fighters.
• 39 UFC fighters have become millionaires as a result of their earnings from the company.
• 29 fighters on the current roster receive a cut of pay-per-view profits.
• Since 2005, fighter pay has grown at twice the rate of revenue growth
MMA Payout will have more on the issue later this week. The story shows the great divide between entry-level fighters and the main event fighters. Its interesting that the question of a fighter union is not discussed more. Of course, if any fighter tried to put together an effort to unionize, they would be blackballed.
There is the argument that Zuffa is like any other private company. Entry-level workers start out with less pay while the best workers make the most. The company can decide how much (or how little) the worker is paid and what type of pay raise or bonus they may receive. The worker can take it or leave it.
With the UFC trying to move into the mainstream, we’ll see if this issue receives more scrutiny.
Update on Zuffa vs. New York: NY files motion
January 9, 2012
The Fight Lawyer reports on the latest from the Zuffa lawsuit in New York. Notably, the New York AG and the New York DA will file a motion to dismiss on the issues of due process and equal protection but the First Amendment issue will not be contested in the motion.
On January 5, 2012 a status conference was held:
Minute Entry for proceedings held before Judge Kimba M. Wood: Status Conference held on 1/5/2012. Defendants will submit a limited motion to dismiss addressing only the issue of whether due process and equal protection analysis requires the Court to determine whether there was a rational basis for the law at issue only at the time it was passed, or whether the Court must determine whether there is a rational basis for the law at present (in other words, whether the Court should take into account a change in factual circumstances that makes the law no longer rational, even if it had a rational basis at the time of passage). Defendants’ motion is due 1/27/12. Plaintiffs’ reply is due 2/17/12.Defendants’ response is due 3/2/12. (js) Modified on 1/9/2012 (tro). (Entered: 01/06/2012)
Payout Perspective:
It will be interesting to see the arguments in the motion. The minute entry appears a little confusing upon first read considering the court will consider whether a law can become constitutionally irrational. But, it appears that the Court will decide whether the MMA Ban is rational now based on the current state of MMA or whether it was rational when the law was introduced in 1997. A breakdown of the due process and equal protection claims are 3, 4 and 5 in the lawsuit addressed here.
As the Fight Lawyer commented in his post, its a limited motion and there is no mention of the First Amendment claim.
One has to wonder whether the defendants believed that Zufffa’s First Amendment claim would survive a motion to dismiss at this point or whether its strategy is to prevail on its limited motion first prior to addressing the other claims in the lawsuit.
More on Overeem-Golden Glory contract
January 6, 2012
The lawsuit filed by Golden Glory against Alistair Overeem in Clark County, Nevada last week included the Golden Glory-Overeem contract.
As The Fight Lawyer points out, this lawsuit is not the same as Overeem’s lawsuit filed in Los Angeles in November. A summary of that lawsuit is here. However, both lawsuits relate to the contract dispute the UFC Heavyweight had with his former gym.
The contract attached to the Nevada lawsuit is interesting insight into the terms and conditions Knockout Investments (KOI) and Golden Glory (GG) had with Overeem. An initial impression is that it was not drafted by an attorney and has certain clauses which seem one-sided and unenforceable. Yet, we presume that Overeem signed the contract with knowledge of its terms.
Here are some interesting tidbits from the Nevada lawsuit:
- The 2007 contract with Overeem was set for 5 years. KOI/GG would receive 30% of essentially everything made by the fighter.
- In paragraph 34 of the Complaint, it states that Overeem receives $2.00 per view for views over $500,000 in the United States, Canada and online. Later in the Complaint, it claims that Lorenzo Fertitta told Overeem that the $1 million signing bonus was Overeem’s and that KOI/GG was “ripping him off.”
- The terms of the UFC contract also includes a $1 million “signing bonus” paid over the first 3 fights of Overeem’s contract. Overeem’s contract guarantees the first 3 fights and could “potentially” cover 8 fights. Here, it appears that the UFC has the option to pick up the additional 5 fights.
- In addition to the UFC-Zuffa contract, the Complaint indicates that there is a separate Merchandise Rights Agreement. No known value was stated although its believed to be in excess of $100,000.
- Overeem made $50,000 from sponsorships from his June 2011 fight with Fabricio Werdum. Of which, KOI/GG demand 30% or $11,000. In addition, Overeem did not pay KOI/GG its cut of Overeem’s fight purse for the Strikeforce fight. Basically, Overeem was paid for his June Strikeforce fight and withheld payment to KOI/GG because he believed that his then managers owed him money.
- Article 10 of the contract includes a monetary penalty for violation of the contract. A $10,000 penalty plus a $5,000 per day penalty for each day the contract is in violation. It also states that the fine “can’t be lowered by any legal authority.”
Here is a further explanation of the Nevada lawsuit from F4WOnline (subscription required):
Knock Out Investments claimed that due to Overeem’s existing five-year contract with them that was signed in 2007, they are entitled to 30%. 30% of [Overeem’s] pay between all the money he got for UFC 141 is $684,000, so they are fighting for a huge chunk of change. They also alleged Overeem never paid them their 30% from the 6/18 fight with Fabricio Werdum. Overeem had already, in November, filed suit against Knock Out Investments, claiming they owed him $151,000 prior to the Werdum fight based on fights he already had, and asked for a court order stating that due to that, his contract should be null and void. Prior to the Werdum fight, almost all of Overeem’s fight money, whether it was from Japan or previously with Strikeforce, was sent to Knock Out Investments and then after they got paid and took their cut, they paid their fighters. Zuffa, after purchasing Strikeforce, refused to continue that practice, stating that they were going to pay fighters and not management teams. At one point Zuffa even fired all of the Golden Glory fighters, including Overeem, because Golden Glory made the demand that they wanted the money to be paid to them. After firing a number of fighters, Overeem included, Golden Glory relented and agreed to let Zuffa pay the fighters. By that time Overeem had been fired and removed from the Strikeforce tournament, and at the time nobody knew the future of Strikeforce and Overeem would have been far more valuable on the UFC side.
“The reality is that a fighter is paid within 24 hours of the bout,” wrote Knock Out Investments attorney Roderick Lindblom. “Given past failure to pay management and training fees, there is serious concern on my client’s part that Mr. Overeem will simply walkaway with the money.”
An explanation of what occurred regarding the failure to recoup UFC 141’s payment is here. Essentially, a surety bond needed for garnishment after the order was issued was never secured.
Payout Perspective:
One has to wonder why Overeem agreed to some of the terms of the contract and whether he had his own legal counsel look over the contract. Notably, Overeem was granted a $1 million signing bonuses (spread over the course of 3 UFC fights) after he was released from Strikeforce. What interests most people with the terms of Overeem’s Zuffa-UFC contract is the PPV points he received for UFC 141. Its rare that the general public get to see the portion fighters receive for PPVs. One might assume that Brock Lesnar received more of a portion of the PPV revenue due to his status with the company.
