Standard & Poor’s revises Zuffa outlook to negative

November 20, 2014

The Standard & Poor’s Ratings Service has revised Zuffa, LLC’s financial outlook to negative from stable on weaker operating performance.  It has indicated that it anticipates a 40% decline in EBITDA in 2014 and credit measures will weaken due to the decline.

In a press release disseminated by S&P, it stated that the negative rating reflects its “belief that Zuffa’s operating performance will deteriorate significantly in 2014, resulting in very weak leverage in the high-5x area.”

In addition to the change to the negative outlook it is affirming its “BB-“corporate credit rating.  The “BB-“ credit rating was assessed last month.  The concern for Zuffa is that a negative outlook may mean that S&P may lower Zuffa’s “BB-“ rating.

More from the press release:

“The negative outlook revision reflects our updated forecast for 2014 EBITDA to decline approximately 40% (compared to a decline of 30% previously), primarily due to a change to a marquee fight card in the fourth quarter of 2014 as a result of another fighter injury causing anticipated pay per view (PPV)  buys and event ticket prices to decline further, as well as higher remarketing expenses for the event, and additional costs related to the company’s international expansion,” said Standard & Poor’s credit analyst Stephen Pagano.

S&P now expects Zuffa’s cash flow/debt leverage to increase to the “high-5x area at the end of 2014.”  In its October 2014 report, it had predicted Zuffa to be in the 3 range.  The cash flow/leverage is based on a scale of 1-6 with 1 being minimally leveraged to 6 being highly leveraged.  Zuffa is now pegged as 5 whereas S&P had forecasted it being a 3.

Payout Perspective:

Obvious bad news for Zuffa as the change in outlook is based on Cain Velasquez’s injury forcing him to drop out of UFC 180.  It ties in directly to the assumption that the PPV buy rate will be low once again – an issue that Dana White recently acknowledged.  What the change in outlook to negative means is that it will increase the cost of borrowing by Zuffa.  As the company falls deeper into debt, its ability to obtain credit will get harder.  The forecast painted by S&P reflects the fact that it no longer believes that the company will be able to turn it around this year or next to address its debt obligations.

With the new lower, negative outlook on its debt, Zuffa will have a lot of pressure to forge new television pacts overseas and push the profitability of Fight Pass.  We may also see initiatives like a formal drug testing policy put off if costs are too high.  We will also see if Zuffa attempts to address the issue of fighter injuries which causes the instability and uncertainty of events.

MMA Payout will keep you posted.

Bellator 131 – Payout Perspective

November 18, 2014

Welcome to another edition of Payout Perspective.  This time we are taking a look at Bellator 131 from the Valley View Casino in San Diego, California.

Ortiz defeats Bonnar in “spectacle”

This fight was sold outside of the cage but inside the cage there was not a lot to say about it.  In the end, Ortiz defeated Bonnar via split decision and perhaps the most entertaining part about these two is the clowning of Bonnar and the middle fingers of Ortiz after the fight.

The famous (or infamous) lead-up to this “grudge match” was the in-cage promo a couple months back where Bonnar confronted Ortiz with that guy in the mask that was revealed to be someone 95% of the casual viewing MMA audience had never seen.  Thus, the reveal meant nothing.  Still, the two promoted the fight to the point where the actual fight (luckily) became secondary.

A quick look at twitter reveals that Ortiz is looking to King Mo next.  Let the trash talk/tweets begin.  As for Bonnar, perhaps he turns on the masked man for his next fight.

131

Brooks defeats Chandler for lightweight title

In what was the most competitive and real fight of the night, Will Brooks defeated Michael Chandler to win the vacant lightweight world title.  Brooks did it with a solid punch to Chandler’s temple which essentially knocked out Chandler on his feet as Chandler made gestures as if he did not know where he was eventually turning his back from Brooks and causing the stoppage.  Brooks and Chandler are two fighters that Bellator needs.  While Ortiz and Bonnar are spectacle, Brooks and Chandler are sport.

Attendance and Gate

No official announcement has been made on the attendance and gate at the Valley View Casino.  However, there are unconfirmed reports of the attendance being 8,100 with a gate of over $400,000.  The Valley View Casino has a max capacity of approximately 18,000 but some of that was taken out due to the enormous set, stage and ramp.  Regardless, it has to be one of the biggest crowds and gates for the organization.

Salaries

As reported, Sunday night, the salaries disclosed by the California State Athletic Commission had Ortiz ($300K) and Bonnar ($100K) as the biggest earners for the night although Ortiz was fined $2,500 for his antics post-fight.  The salaries show that Ortiz can still demand top dollar for his services while Bonnar’s pay is a step up from his time in the UFC.

Promotion of Fight

The Viacom-owned company utilized its resources in order to hype this “tentpole” event.  It used its sponsor Dave & Busters for a couple events to promote the fight including a meet and greet which featured ex-UFC stars.  It even announced that Wanderlei Silva would be in attendance at the pre-fight party on Friday even though the company had to retract that after contractual issues with the UFC prevented Silva’s appearance.

SpikeTV ran three shoulder programs to promote Bellator 131 and most centered on Ortiz-Bonnar.  Spike ran a one hour Countdown show which focused a significant portion on Ortiz-Bonnar and then Brooks-Chandler and Manhoef-Schilling.  The Countdown dedicated the first half hour or so on Ortiz-Bonnar and showed the Justin McCully incident again and again.  But, it lacked specifically spelling out the “wrong” that Ortiz did to McCully.  If it did, I just did not get it.  It then had a special dedicated to Ortiz and then another one specifically for Tito and Bonnar to have a “sit down face-to-face.”

Sponsorships

In the cage, Bellator’s sponsors included Dave & Busters, pre-pay cell phone company Cricket Wireless, Monster Energy, Gold Bond Ultimate, Everlast, Attack Poker and Miller Light had the center of the cage.  The mat also had something for the new Spike App.

Odds and Ends

-Bellator’s video packages, new stage, big screen and walkouts were all great things that added to the “big event” feel.

-Mo started swimming after his win.  I don’t recall this a trademark celebration.

-ESPN’s Matthew Berry is the signature spokesman for Dave & Buster’s?  Fantasy sports is that popular.

-In promoting Melvin Manhoef during the Countdown show, Bellator showed footage from Japan of Manhoef knocking out Mark Hunt.  Good timing since Hunt was the main eventer at UFC 180.  Irony because Manhoef was laid out by Joe Schilling on Saturday.

-There was a Goldberg (Bill not Mike) citing at the event.  Really.  George Lopez citing too.  Really.

-Joe Warren doing play-by-play during the Mike Richman-Nam Phan fight was a nice touch.

Conclusion

The event had a big event feel and it seemed like a step up for the company.  While it does have a “pro wrestling” feel, the presentation draws you in to watch.  The question will be can it promote non-UFC fighters in the upper levels of its cards.  Ortiz and Bonnar are past their prime inside the cage.  Certainly, they can sell fights but the question will be whether others can pick up where they will leave off. In the end, Bellator 131 was a strong showing and if it’s a sign of things to come in how Bellator will present its quarterly big shows, Bellator, under Coker, will be a strong number 2 promotion.

Bellator 131 produces big ratings on SpikeTV

November 18, 2014

Bellator 131 on Saturday night drew a record 1.8 million viewers and peaked at 2 million during the Tito Ortiz-Stephan Bonnar fight per a Spike TV press release. The average for the overall event drew 1.24 million viewers.

Via Spike TV press release:

Bellator 131 knocked out the competition on Saturday, November 15 with record ratings for the emerging MMA franchise under new president Scott Coker. The Bellator 131 main event between Tito Ortiz and Stephan Bonnar (11:50pm-12:16am) drew 1.8 million viewers, peaking at 2 million, making it the most-watched and highest–rated MMA fight on cable in 2014.

The Ortiz-Bonnar fight ranks as 2nd highest-rated MMA fight telecast in all of television with Men 18-34 and Men 18-49, including broadcast, in 2014. Also, Ortiz-Bonnar ranked #2 in its timeslot in all of cable with Men 18-34 and Men 18-49.

Bellator 131 ratings breakdown:

Bellator 131 – Ortiz vs. Bonnar – 11:50p
1.8 million viewers

Bellator 131 – 10:11p
1.3 million viewers

Bellator 131 – 9p
994,000 viewers

Overall, the entire fight card (9:00-12:16) delivered 1,241,299 viewers, a record for Bellator MMA on Spike TV.

UPDATED:  More breakdown of ratings from Bellator’s big night:

King Mo-Joe Vedepo fight which started the show drew an average of 1.1M viewers (Bell in R1 9:13pm)

Mike Richman KOs Nam Phan was next and drew 1.1M viewers (Bell in R1 9:50pm *Note that the UFC 180 Prelims on FS1 peaked during this quarter hour at 771K average viewers Live +SD)

Joe Schilling KO of Melvin Manhoef drew 1.6M viewers (Bell in R1 10:11pm)

AJ Matthews KO of Kyle Bolt drew 1.3M viewers (Bell in R1 10:30pm)

Will Brooks TKO of Michael Chandler drew an average of 1.3M viewers (Bell in R1 10:59pm)

Tito Ortiz split decision of Stephan Bonnar drew 1.9M viewers (up from initial press release.  Bell in R1 was at 11:50pm)

Payout Perspective:

The event did well on social media as well per the release as it was the most tweeted Bellator event in Spike history. Despite how “pro wrestling” the Ortiz-Bonnar lead-up was, it worked. Spike and Bellator heavily promoted this event and it drew. The release obviously buried the real news which most folks want to know which was the overall viewership of the entire event – 1.24 million.  Its interesting to see the updated ratings per fight as you can the audience remained over 1 million for the fights.

It was a good night for Bellator as it was the clear winner of the night where the UFC and WSOF were options for MMA fans.

MMA Payout will have more on this. Stay tuned.

UFC 180: Payout Perspective

November 17, 2014

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 180 from the Mexico City Arena in Mexico City.

Werdum wins interim Heavyweight title

It was to be Cain Velasquez fighting in Mexico City against Fabricio Werdum.  However, an injury to Cain allowed Mark Hunt the chance to step in and seize the title.  Hunt looked good until a well-timed knee spelled the beginning of the end for Hunt.

Werdum wins the title and will eventually get to face Cain Velasquez to unify the titles.

UFC 180

Gastelum ascends while Ellenberger descends

Kelvin Gastelum defeated Jake Ellenberger with a rear naked choke in the first round.  The win should propel the former TUF winner into the top 10 of the welterweight division while it showed the Ellenberger maybe a broken fighter.  Gastelum secured a rear-naked choke with ease as it appeared that Ellenberger did not defend his neck despite his back being taken.  The win should mean a step up in fights for Gastelum while Ellenberger is teetering on the cusp of being cut.

Attendance

Initial reports in August had UFC 180 a sell out in just 8 hours after the announcement of Velasquez-Werdum and the launch of TUF in Mexico (which drew 7 million viewers on Televisia according to Yahoo! Sports).  The announcement made post-fight had the attendance at 21,000 although no official gate was given.

Bonuses

The bonuses of $50K were given to Werdum, Gastelum, Henry Biones and Guido Cannetti.  Briones and Canetti put on the Fight of the Night.  White indicated that Ricardo Lamas would also be given a bonus although that was unofficial.

Promotion of Fight

Once again one of the main drivers of the promotion was the UFC Embedded series which followed the fighters on the main card.  It caught the best moment of the pre-fight hype with Werdum-Hunt singing together.

The UFC also did a photo op with the NBA as the Houston Rockets and Minnesota Timberwolves played a game in Mexico City earlier in the week.

The UFC and Fathom Events put the event on movie screens across the country hoping that the event would gain more eyes.  Unfortunately, if we look at the tweet from Mike Bohn, it did not.

Sponsorships

The Octagon sponsors were without UltimatePoker.com, the Stations Casinos online poker site which was closed down last week.  Notably, one of the Octagon sponsors for UFC 180 was Costa Rican online gaming company, BetCris.  The sponsors included the UFC Network, UFCStore.com, UFC Fit, MateFit.me, MusclePharm, Toyo Tires, video game FarCry 4, the aforementioned BetCris and Bud Lite in the center of the Octagon.

Gastelum wore the UFC Network logo as did Werdum during pre-fight activities and but wore Bad Boy to the Octagon.

Hunt wore his own clothing brand Juggernaut on his shorts.  It’s interesting that Hunt does not have more sponsors.  You may recall he had zero as a fill-in when he fought Junior dos Santos at UFC 160.  Werdum most prominent sponsor was clothing brand Torque.

Doritos was a prominent sponsor for this event as it banked heavily on the Werdum-Velasquez matchup including producing in-store placement of 2.5 million bags with the fighter likenesses on them.  It was described as a “360 degree activation” around UFC 180.  With Cain falling out, the campaign likely fell short of its goal.

Post-UFC 180 Headline

Werdum-Velasquez should be next although White indicated that if Cain were to have another injury that forces him from action, he could be stripped of the title.

Odds and Ends

  • The WWE collaborated with the UFC during the UFC Prelims on FS1. To be exact, a 2K Sports commercial for the WWE video game, WWE2K15, infused images of the video game and UFC action.
  • The main event ended at 8:50 pm on the west coast. Only about an hour and a half of fights before the UFC showed the prelims to fill the time.
  • Bellator used the footage of Melvin Manhoef knocking out Mark Hunt from 2008 during its pre-fight hype package to put over Manhoef.
  • Jessica Eye almost took Leslie Smith’s ear off but Smith still wanted to fight.
  • Google Trends revealed that the top countries searching for UFC 180 were Mexico, Canada, Brazil and the United States in that order.
  • The Sports Business Journal (subscription required) ran a story on the Fertittas and Dana White and their ties to Las Vegas’ Bishop Gorman High School in last week’s Sports Business Journal. It was placed “below the fold.”  Prominent placement for a rather evergreen story during UFC 180 week.
  • Chael Sonnen began his duties with ESPN as an analyst.

Conclusion

It was a good night of fights but the lack of brand-name power was one of the detracting factors about this event.  When the Werdum-Velasquez fight was initially announced and the two were TUF coaches, there was much hope that UFC 180 would be one of the bigger PPVs of this year.  Entering a new market and the quick sell out appeared to be good signs for the PPV.  But, Velasquez’s injury was a significant blow to any hopes that this PPV would do well.  Without a good undercard, the UFC was placing its hopes on Cain’s drawing power.  Based on Google Trends, we are looking at a buy rate comparable to UFC 174 or 177 which drew between115-125K PPV buys.

Former wrestler files lawsuit against WWE regarding head injuries

October 27, 2014

A lawsuit filed last week in the U.S. District Court of Oregon by former professional wrestler William Albert Haynes III (aka “Billy Jack” Haynes) citing class action status related to “head injuries occurring in former and current WWE wrestlers” per the lawsuit.

Haynes wrestled in the WWE for only two years from 1986-1988.  Perhaps his most notable match was at Wrestlemania III.  Most of Haynes’ career was spent in the Pacific Northwest.

The lawsuit spells out the dangers of the professional wrestling business amplified by embedded photos in its lawsuit as well as YouTube links.  Essentially, WWE allowed its wrestlers to perform dangerous stunts, some of which include taking shots to the head causing head injuries.  The claim made by Haynes’ lawyers is that these head injuries cause traumatic brain injuries (i.e., concussions) and chronic traumatic encephalopathy (“CTE”).

photos of WWE wrestlers CM Punk and Rob Van Dam getting stitches after a match

photos of WWE wrestlers CM Punk and Rob Van Dam getting stitches after a match

Vince McMahon swinging a chair makes the case for Haynes that WWE allowed head shots.

Vince McMahon swinging a chair makes the case for Haynes that WWE allowed head shots.

A section of the lawsuit includes: “WWE is a Fake Sport with Real Consequences to Its Wrestlers.”  It also cites the numerous matches which include the use of chairs, chains, ladders and tables.  It also details different wrestling moves which involve potential trauma to the head including the “Brain Buster,” “Bulldog,” and “Facebreaker.”  They also bring up the case of a 13 year old that killed his 5 year old sister while performing a move he saw from the WWE.

Haynes vs. WWE

The lawsuit accuses the WWE of not protecting its wrestlers from brain damage.  Essentially, Haynes and his attorneys accuse the WWE of doing little, if anything, to protect its wrestlers.  It also claims to denying or concealing injuries of its wrestlers.

The claims in the lawsuit include:

-Fraudulent Concealment and Failure to Disclose or Warn

-Negligent Misrepresentation

-Declaratory and Injunctive Relief

-Negligence

-Medical Monitoring –this claim requests that the WWE establish a trust to pay for medical monitoring of all wrestlers as frequent as medically necessary and would pay to develop and research other methods to reduce risks

-Strict Liability for Abnormally Dangerous Activities

In addition to the requests under “Medical Monitoring,” it is requesting that the court grant it class action status and designating the attorneys as Class counsel.  It also is seeking actual, compensatory and punitive damages as well as attorney fees.

In response to the lawsuit, the WWE’s Senior Vice President of Marketing and Communications provided a brief statement: “Billy Jack Haynes performed for WWE from 1986-1988.  His filed lawsuit alleges that WWE concealed medical information and evidence on concussions during that time, which is impossible since the condition now called chronic traumatic encephalopathy (CTE) had not been discovered.  WWE was well ahead of sports organizations in implementing concussion management procedures and policies as a precautionary measure as the science and research on this issue immerged.  Current WWE procedures include ImPACT testing for brain function, annual educational seminars and the strict prohibition of deliberate and direct shots to the head.” (H/t :  wrestling-online.com)

Payout Perspective:

I grew up watching Haynes wrestle in the Pacific Northwest mainly in a Portland, Oregon based promotion.  He had a very brief stint with the WWE.  This is a lawsuit that shall be interesting to follow and see whether or not the court grants Haynes class action status.  For those wondering, the essential elements a court determines when deciding whether or not a lawsuit may receive class action certification are:

-Commonality:  One or more legal or factual claims common to the entire class.

-Adequacy:  The parties in the class must adequately protect the interests of the class.

-Numerosity:  The class must be large enough that individual lawsuits would be impractical.

-Typicality:  The claims or defenses must be typical of the plaintiffs.

The four elements commonly are remembered (mainly by bar exam takers) as CANT.  It will be interesting to see whether or not the law firm can attain enough members willing to be a part of this lawsuit.  Certainly there are enough wrestlers out there that could establish a sufficient amount of plaintiffs.  However, how many are willing to come forward?  On his own, Haynes may not have a strong case considering he only spent two years with the company and much of his time wrestling was on the regional circuit where he could have been subjected to similar risks and injuries.  Thus, his case may not be as strong as someone who may have spent 20 years with the company.

This will be an interesting case that the UFC should take note of for future consideration.  While the ways that the participants attainhead trauma are different, there are still issues related to MMA fighter safety and blows to the head that might be a part of future legal claims.

Cung Le suspension lifted by UFC

October 21, 2014

The UFC announced Tuesday that it has rescinded the 12 month suspension of Cung Le.  The news comes as a surprise considering Le and the UFC were heading to arbitration over the suspension.

Via UFC.com:

At UFC Fight Night Macao on August 23rd, UFC contracted with an independent drug testing laboratory in Hong Kong to perform urinalysis testing on all fighters on the card.  Additionally, UFC requested the laboratory to test blood samples from 4 fighters for human growth hormone (HGH), erythropoietin (EPO) and testosterone.

One of the athletes who had his blood tested was Cung Le.  The laboratory results from Le’s blood test were sent to the UFC and showed that his blood had a total HGH level outside the reference range.  Based on such results, UFC officials determined that Le had violated his promotional agreement and the UFC Fighter Conduct Policy.  Consequently, UFC decided that Le should be suspended from unarmed combat competition for 12 months.

Following the announcement of Le’s suspension, UFC officials have been provided with medical advice regarding the elevated total HGH present in Le’s system.  In accordance with such medical advice, UFC has determined that Le’s elevated total HGH by itself does not prove that he took performance-enhancing drugs before the August 23rd bout.  As a result, UFC has informed Le that his suspension is rescinded.

Le had requested an appeal of his suspension, and was entitled to arbitrate the drug test results and suspension.  However, based on the lack of conclusive laboratory results, UFC officials deemed it appropriate to immediately rescind the suspension without the need for further proceedings.

The UFC organization has always been a leader when it comes to testing for performance-enhancing drugs in combat sports.  All UFC athletes know they are subject to drug testing by an applicable state athletic commission, an international governing federation, or by an independent laboratory contracted by the UFC when no regulatory body is overseeing the event.  In those cases where regulatory oversight is unavailable, UFC voluntarily chooses to adhere to the highest level of athlete health and safety protocols similar to if the event were being held in the state of Nevada.

Payout Perspective:

It’s clear that the UFC did not want to go to arbitration as it would have likely exposed the UFC’s drug testing policy (or lack thereof).  Le’s attorney Steve Pacitti and manager Gary Ibarra stuck with the situation despite the overwhelming public perception that Le was guilty.  Of course, the rescission does not mean that Le was not guilty of taking illegal substances, it’s just that the process for testing this was faulty.  As an advocate for Le, Pacitti and Ibarra spelled out Le’s case with the facts of the situation.  Namely, the lab that gathered the samples was not a WADA-approved lab.  Also, the taking of the sample from Le occurred at a time when his hGH levels were naturally high and a WADA required test was never conducted on the sample.  All of this information appears to have mounted in favor of Le and the UFC’s decision to rescind the suspension.  With the suspension lifted, we will see how ready the UFC will be to book Le for another fight.

The UFC must recognize that its current drug testing policy is shaky at best.  The fact that it was unclear what process for appeal Le had reflects the need for the company to sit down and spell out a comprehensive policy for its fighters.

Standard & Poor’s downgrades Zuffa, LLC from BB to BB-

October 10, 2014

Standard & Poor’s has downgraded Zuffa, LLC’s credit rating from a “BB” to a “BB-“ this week as a result of what it calls “greater EBITDA volatility.”  However, the analyst report states that the outlook for company is stable.

Standard & Poor’s issues credit ratings for the debt of public and private companies.  It is one of several credit-rating agencies that has been designated a nationally recognized statistical rating organization by the Securities and Exchange Commission.

In its overview, S&P concluded that Zuffa “will experience a 30% decline in EBITDA (Earnings Before Income Tax, Depreciation and Amortization) in 2014 and greater EBITDA volatility over time than we previously had anticipated.”  Despite the gloomy outlook, it stated that Zuffa’s outlook is stable and 2015 will be a recovery year for the company.  This is based on the belief that injured fighters return and PPV buys and ticket prices increase.

For those wondering, as I have in the past, EBITDA is an accounting measure calculated using a company’s net earnings, before interest expenses, taxes, depreciation and amortization are subtracted as a proxy for a company’s current operating profitability.

The report identifies Zuffa having $535 million in credit with $60 million in “senior secured revolving credit facility due 2018 and a $475 million senior secured term loan due 2020.”

Zuffa’s credit rating had maintained a “BB rating” since December 2010.  It was previously downgraded in November 2007 from BB to BB-.

Other notes:

– In 2013, the revenues for Zuffa were split 58% event-based (i.e., PPV and ticket sales) and 42% from TV, sponsorships, merchandising, licensing and content distribution agreements.

We note that last year’s S&P report had the company’s 2012 revenue at 55% event-based (including PPV and live gate) with the other 45% dedicated to TV revenue, sponsorships, merchandise, licensing and content distribution agreements.  Thus, a slight increase in revenue geared toward events rather than other streams.  This is interesting considering the report finds the broadcast deals to be a more stable revenue provider than PPVs and live event gates.

– There’s an expectation that debt to EBITDA will increase to the high-4x area compared to the low 3x area previously.

We should also note that there was no mention of how Fight Pass impacts its revenue unless you consider it falls under content distribution agreements.

Payout Perspective:

There’s nothing earth-shattering in the report despite the downgrade in credit rating.  The silver lining for Zuffa is the S&P report believes that 2015 should be a recovery year dependent on key fighters coming back which the report suggests will mean higher PPV buys and gates.  The report lists the international expansion and the broadcast deals as positives for the company and even suggests a more stable form of revenue than the PPV model.  Still, the company is based on its events and fighters and the report indicates that injuries and juggling of events due to key injuries to fighters is directly related to the downturn in its business.  I should also note that the report never suggests that there is an oversaturation of the product that contributes to its current business climate.  One might argue that fighter injuries/juggling of events is related to too many events too close together but the report does not address this possibility.

It is ironic that there are reports that the UFC office in China is closing when the S&P report identifies international expansion as a key to produce additional revenue for the company.  Also, the report stresses the need for more fighters that will appeal to its core youth demo the same week that the Sports Business Journal comes out with a report that the company is in search for more stars.

What a week for the UFC.  The UFC’s credit rating is downgraded, Cung Le will appeal the UFC’s suspension which could reveal a rather shaky drug testing policy, the UFC reportedly closes its office in China and a former UFC fighter live-tweets a standoff with a SWAT team.  What a week.

Sports Business Journal lists UFC’s top PPV draws

October 6, 2014

Bill King of The Sports Business Journal reports on the UFC’s need for its next PPV star.  It has compiled a list of the top PPV draws in its history and the top of the list may (or may not) surprise you.

Although we cannot produce the entire list and/or article, it can be seen in this week’s Sports Business Journal’s issue which is through subscription only.

The list compiled by the SBJ factors in fighters’ PPV draws based on them fighting as one of the top two fights on a card dating back to January 2006.  Per the SBJ process, the list includes only fighters who were co-featured in at least three bouts and looks at their PPV averages as the headliner.

The top of the list has Brock Lesnar, GSP and Rampage Jackson who narrowly edged Chuck Liddell for the third spot.  To show how significant Lesnar was as a PPV draw, his average as a headliner (which can also be found at MMA Payout’s Blue Book), is at 1,021,000.  GSP, who ranked second, averaged slightly over 688,000 PPV buys.  Jackson averaged 613,000 and Chuck Liddell placed 4th and averaged 605,000.

The rest of the top 10 in order goes Tito Ortiz, Rashad Evans, Lyoto Machida, Randy Couture, Anderson Silva and B.J. Penn.

Cain Velasquez, Jon Jones and Ronda Rousey missed out on the top 10 spot.

One interesting fact from the article:  UFC PPV business went from 45% of the UFC’s revenue in 2009 to 30 % in 2013 but the overall business grew by about 50% driven by international TV rights.

Payout Perspective:

The article is a very good analysis of what the UFC is facing with more shows and less draws for its PPVs.  If you are to look at the top 10, only Lyoto Machida may be considered as active on the UFC roster (hard to think Evans will be a headline on a PPV in the future).  The UFC has to hope (and think) that Cain, Jones and Rousey will surpass some of those names in the top 10s as they continue to star on PPV.  One ominous point shown from the SBJ article is that Demetrious Johnson’s 3 main events on PPV had him pull in an average of only 175,000.

Report: UFC 177 nets 125K PPV buys

October 2, 2014

Dave Meltzer of The Wrestling Observer (subscription recommended) reported that UFC 177 which featured T.J. Dillashaw defending his bantamweight championship against late replacement Joe Soto netted an estimated 125,000 PPV buys.

The numbers are more than most had expected considering that Soto replaced Renan Barao the day before the fight.  It’s the second lowest output this year but considering the circumstances, the reported number is a pleasant surprise.

Going into the Saturday of UFC 177, there was concern that it would beat UFC 174 for lowest PPV buy rate in years.

UFC 2014s PPVs

Payout Perspective:

I was of the opinion that this number would never come out due to the potential for a disastrous PPV number.  The Google metrics that many go by in anticipating a buy rate were non-existent.  However, if correct, the 125,000 PPV buys reflects that there is a base (as discussed by Meltzer and Bryan Alvarez on their podcast) audience that will order UFC PPVs regardless of the fights on the card.  Realistically, the advertised card rivaled a Fight Night card with the exception of a title fight.

UFC 178: Payout Perspective

September 29, 2014

Welcome to another edition of Payout Perspective.   In this edition, we review UFC 178 which took place at the MGM Grand Garden Arena where Demetrious Johnson took on Chris Cariaso in the main event.

Johnson outclasses Cariaso

Despite the lack of fan support (i.e., PPV buys), Demetrious Johnson can legitimately stake a claim to being the best pound for pound fighter in the UFC.  It was clear in the first minute that Johnson was the better fighter and ended Cariaso in the second round with a submission.

Johnson is getting prime placement on UFC shows and it’s the second PPV he’s headlined this year.  One should also stress the fact that Johnson has not been hurt during his title reign and is not an outside-the-Octagon problem.  So, why don’t people buy his PPVs?

UFC_178_event_poster

Cowboy welcomes Eddie to UFC

The skeet shooting and wakeboarding training regimen pre-fight aside, Donald Cerrone is an extremely good fighter.  In what was one of the more entertaining fights on the card, Cerrone defeated Eddie Alvarez.  It was the long-awaited debut for the former Bellator champ and the first round he showed why the UFC wanted to acquire his services.  Yet, Cerrone moves on looking for another fight before 2014 closes.

McGregor makes quick work of Poirier

You would have thought that this was the main event based on the crowd reactions.  The hype, trash talk and vitriol between the two (especially during any face off promoting the fight) was classic in what to do to have people interested in purchasing your fights. The Conor McGregor experience continues and likely his most impressive fight on the biggest platform so far.  McGregor easily handled Dustin Poirier in the first round.  It’s clear that McGregor is ready for a title shot after Saturday night.

Attendance and Gate

The attendance and gate announced at the post-fight press conference was 10,544 for a gate of $2.2 million.  Out of 9 PPVs this year, it ranked 7th in attendance.

Bonuses

The bonuses of $50K each were awarded to Yoel Romero-Tim Kennedy for Fight of the Night and Dominick Cruz and Conor McGregor for Performances of the Night.

Promotion of the Fight

The Embedded episodes continue to be popular as the UFC has found a formula to promote the fights digitally.  For the most part, viewers got to see Cowboy Cerrone wakeboarding and skeet shooting prior to his fight with Eddie Alvarez, Conor McGregor get a haircut, Demetrious Johnson getting a shave and Dustin Poirier at the Whole Foods at Vegas.  The one thing really missing from the embedded episode was a profile on Chris Cariaso.  The Countdown show did have a profile on Cariaso but it seemed incomplete.  Even if it was a foregone conclusion that he would likely lose (which happened), it would have been nice for them to have elevated his profile for this fight.  It seems to get better reviews than the UFC Prime Time episodes because they are short and can be viewed whenever people want to see them.

Conor McGregor did a good amount of pre-fight press.

Mighty Mouse appeared on the local Fox affiliate in Seattle last week hyping UFC 178.

Salaries

Salaries have been disclosed via MMA Junkie:

Demetrious Johnson: $183,000 (includes $54,000 win bonus)
def. Chris Cariaso: $24,000

Donald Cerrone: $126,000 (includes $63,000 win bonus)
def. Eddie Alvarez: $100,000

Conor McGregor: $150,000 (includes $75,000 win bonus)
def. Dustin Poirier: $34,000

Yoel Romero: $58,000 (includes $29,000 win bonus)
def. Tim Kennedy: $70,000

Cat Zingano: $18,000 (includes $9,000 win bonus)
def. Amanda Nunes: $15,000

Dominick Cruz: $100,000 (includes $50,000 win bonus)
def. Takeya Mizugaki: $32,000

Jorge Masvidal: $90,000 (includes $45,000 win bonus)
def. James Krause: $15,000

Stephen Thompson: $32,000 (includes $16,000 win bonus)
def. Patrick Cote: $33,000

Brian Ebersole: $42,000 (includes $21,000 win bonus)
def. John Howard: $21,000

Kevin Lee: $20,000 (includes $10,000 win bonus)
def. Jon Tuck: $10,000

Manny Gamburyan: $50,000 (includes $25,000 win bonus)
def. Cody Gibson: $10,000

Some notes:

Some interesting figures including Demetrious Johnson being paid like a champ (base of $129K).  The last official report of his purse was at UFC on Fox 9 where he made a base of $125K (notice a bigger bonus for that Fox event).  You might assume that June’s UFC 174 he made a base of $127K although those salaries were never officially reported.  Eddie Alvarez was paid $100K (show) for his first UFC fight.  You might recall when he was originally offered a UFC contract which precipitated the Bellator lawsuit, he was offered $70K for his first match in the UFC.  Conor McGregor is already up to $75K base.  Cat Zingano only made $9K/$9K which is only a $2K bump from her last fight in April 2013 against Miesha Tate.

Sponsors

The octagon sponsors included MusclePharm, MetroPCS, Alienware, Harley Davidson, Toyo Tires, Fram, UltimatePoker.net, Assassin’s Creed’s latest game, Matefit.me and Bud Light in the center.

Missing from the octagon was long-time sponsor, Xyience, which was purchased by another company that quickly pulled the sponsorship with the UFC.

Yoel Romero was sponsored by likeaboss.com.  I’m not sure what they do.

Cain Velasquez appeared in a promo for Harley Davidson Motorcycle’s “Hometown Throwdown.”

Mighty Mouse had his traditional sponsor of Xbox 360.  The only sponsor for Johnson, his fight banner told folks to pre-order an Xbox One.  I thought those were already available?  If you were wondering, on his recent Wrestling Observer podcast, Dave Meltzer did not know how much Johnson is receiving from Microsoft.

Cariaso was sponsored by Mountek.  Really.

Dominick Cruz was sponsored by the Phoenix International Raceway which stuck with him despite Cruz being on the shelf for a long time.  It paid off as PIR had a prominent logo on Cruz as he was demolishing Takeya Mizugaki.  He also wore the shirt in his post-fight interview.

Odds and ends

-Didn’t mention this earlier, but Cat Zingano-Amanda Nunes fight was the way to start a PPV.  Zingano has been through a lot and it appears that she will be the next for Ronda Rousey.

-MMA Fighting has backstage footage of Tim Kennedy confronting Yoel Romero about the extra time he took to get up from his stool in between rounds.

-Interesting that the UFC are rolling out different types of Bruce Lee t-shirts.  Hopefully some of the money that I suppose the estate is receiving from licensing his likeness is going toward this.

-Dominick Cruz won me over in just the 61 seconds of work.  First, his Jay Z/Cypress Hill remix entrance, Then, the plain black CRUZ sweatshirt.  Easily the best thing anyone has worn to the octagon in the history of this sport.  Finally, his “Alpha-Fails” drop is probably one of the best post-fight lines in a while.

-UFC on Fox YouTube channel has the whole 61 second Cruz return fight.

-Some argument as to whether Cruz fight should have been on PPV.  You can see it as perhaps a concession to boost FS1 ratings.  In hindsight, all of the fights on the PPV were great and hard to see replacing one.

-The good news is that the clay pigeons that Cerrone shot during that Embedded episode were not real as they were made at the same place that Floyd Mayweather got his fake weed from All Access.

-Not surprising, but according to Google Trends, Dublin and Ireland were the most interested city and country for search term “UFC 178”.

Conclusion

This was to be Jones-Gus II.  But after that was scrapped, it was Jones-Cormier.  After the Jones-Cormier media day brawl in August, one could have made the argument that UFC 178 would be the second-biggest PPV event of the year after UFC 175.  But with Jones getting injured, the need to adjust the lineup probably hurt the buy rate.  Overall, this card was very solid with every PPV fight being an entertaining one.  However, selling the Johnson-Cariaso was tough and you might infer that most of the pre-fight hype was for McGregor-Poirier. Although McGregor could be a breakout PPV star, he is not one yet.

While Google Trends saw an uptick in searches for UFC 178 from Ireland, it’s worth to note that the US was the 4th interested country for the event.  In the end, a buy rate of 300,000-325,000 seems reasonable.

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