W. Silva appeals commission ruling to Nevada Supreme Court

May 21, 2015

MMA Fighting reports that Wanderlei Silva will appeal the Nevada district court ruling which reversed the Nevada State Athletic Commission’s lifetime ban and fine of Silva.

Silva’s attorney, Ross Goodman, was pleased with the court’s ruling that Silva’s punishment was overturned but no happy with its ruling that it had jurisdiction over Silva.  With the court ruling, Monday, Silva would have to go back before the commission to determine his punishment for fleeing a drug test last year.

Silva argues that the commission had no right to drug test him since he was not licensed at the time.  The commission counters that it has oversight over combat sports within the state and thus had the right to test Silva.

Payout Perspective:

The appeal to the Supreme Court for the state of Nevada is a calculated risk but worth it.  The district court ruled in Silva’s favor but he still must go before the commission to be punished.  If Silva wins on appeal with a finding that the commission never had jurisdiction, his name is cleared.  It would also spur an amendment to the laws in Nevada.  Silva has a good chance with his appeal to the Supreme Court as the commission’s argument sought a very broad interpretation of the laws of the state.  Reading the laws plainly, one could see Silva winning the appeal.  We will see what happens.

W Silva wins reversal and remand of NSAC ban, fine

May 18, 2015

ESPN.com reports that a Nevada state district court judge has reversed and remanded the Nevada State Athletic Commission’s lifetime ban and $70,000 fine issued against Wanderlei Silva last year.  Judge Kerry L. Earley determined that while the NSAC had jurisdiction over Silva, the punishment was “arbitrary, capricious and not supported by substantial evidence.”

Judge Earley’s decision orders a new hearing by the commission to find a proper punishment for Silva’s violation of evading a random drug test in lead-up to his fight against Chael Sonnen at UFC 175.

The court indicated that a decision would be handed out by May 11th but the decision came a week later.

According to the ruling (as reported by ESPN, we will attempt obtain a copy), the court agreed with the NSAC’s argument that it had jurisdiction over Silva but not with the method the commission determined the penalty. If you watched the commission hearing, you may recall that there was an ad hoc moment where the commission determined a penalty based on what they knew of Silva’s pay.

Silva’s attorney, Ross Goodman, applauded the reversal of the suspension and the re-hearing but may consider an appeal of the ruling with respect to jurisdiction.

As a quick procedural background as to how the decision made its way to state superior court, as in many jurisdictions, the process for appeal of an administrative decision is to the state court.

Payout Perspective:

While I believed that the court may have found jurisdiction, Goodman’s potential appeal may not be as far-fetched as you might think.  The ruling means that we should see the commission re-evaluate Silva’s penalty.  It’s unlikely it will be able to impose the recommended guidelines it passed last Friday although one might surmise the commission will have this in the back of their minds.  Ironically, the NSAC discussed not wanting its decision to be overturned at the hearing (and cited in Silva’s petition for judicial review) for being “outside of the norm” of what the commission has done in the past.  It looks like the court has found it did overreach with its penalty.

Report: Buy rates for UFC 185 and UFC 186

May 14, 2015

The Wrestling Observer (subscription recommended) reports the PPV estimated buy rates for the last two UFC events.  UFC 185 drew 275,000 while the much-maligned UFC 186 garnered somewhere between 100,000-125,000 buys.  It also updates the estimate for UFC 184.

The PPV estimates are based on information obtained from Dave Meltzer.  UFC 185 featured two title fights with Rafael dos Anjos winning the lightweight title from Anthony Pettis and Joanna Jedrzejczyk’s victory over Carla Esparza for the women’s strawweight title.  Yet, it failed to break 300,000 PPV buys.

Most expected the poor PPV buys for UFC 186 so the 100,000-125,000 PPV buy rate estimate seems appropriate and might even be better than anticipated.  It’s the second time that Demetrious Johnson has main evented a PPV with such low PPV buy rates.  His fight at UFC 174 against Ali Bagauitinov mustered just 115,000 PPV buys.  UFC 186, taking place in Montreal, was hindered by the cancellations of the rematch between TJ Dillashaw and Renao Barao and then the Rory MacDonald-Hector Lombard fight was called off.  On top of that, there was the removal of Rampage Jackson from the card only to be added back onto the card after a trial court’s injunction was overturned by a New Jersey appellate court during fight week.   UFC 185 featured Demetrious Johnson taking on Kyoji Horiguchi.

On the bright side, UFC 184 PPV featuring Ronda Rousey’s quick tapout of Cat Zingano is up to 590,000 buys.

Below are the PPV buy rate estimates this year so far:

UFC 185

Payout Perspective:

While the UFC had a great first quarter of PPVs, it has produced two shows that many believe underperformed and/or underwhelmed.  Even with two title fights and hometown favorite Johny Hendricks on the UFC 184 card, it still did not produce on PPV.  UFC 185 was expected to draw low PPV numbers based on the constant shuffling on the card and the stark reality that Johnson just does not draw PPV buys.  We should see a bounce back with next week’s UFC 187.  Even without Jon Jones, we should see a decent buy rate with Weidman-Belfort and Cormier-Johnson heading the card.

Mayweather-Pacquiao destroys PPV, gate records

May 12, 2015

Yahoo! Sports reports that the official PPV buys for the May 2nd fight between Floyd Mayweather and Manny Pacquiao drew an astronomical 4.4 million PPV buys that equates to more than $400 million in revenue.  The numbers shatter the old PPV buy rate record set by Mayweather and Oscar De La Hoya in 2007 and the revenue record set by Mayweather and Canelo Alvarez in 2013.

The live gate for the event also drew more than $72 million which also did better than the previous record set by Mayweather-Alvarez.  According to the NSAC, Mayweather-Pacquiao drew 16,219 for a gate of $72,198,500.  May-Alvarez drew 16,146 for a little over $20 million.

The PPV outdid the 2.2 million PPV buys set by Mayweather-De La Hoya in 2007.

Kevin Iole’s Yahoo! article also indicates that May-Pac sold more than 46,000 closed-circuit seats in Clark County, Nevada which pushed total revenue to more than $500 million.

Mayweather Promotions CEO Leonard Ellerbe attributed Mayweather’s star power as well as social media as well as the mainstream media push.  Of course, Pacquiao’s presence probably assisted in the interest in the fight too.

Payout Perspective:

It’s clear that despite some negativity surrounding the fight did not diminish any of those wanting to purchase the PPV or watch the fight in person or closed-circuit.  Social and mainstream media probably helped with the promotion of the fight but the pro-active nature of the cable and satellite distributors to push subscribers to purchase the PPV ahead of time also helped with the buy rate.  The revenue records were likely considering the $100 PPV price point for HD or $90 for SD.  Also, the high ticket prices and lack of comps were also factors for the record-setting gate.

UFC reveals Reebok pay structure to its fighters

May 6, 2015

The UFC has issued its pay structure for its Reebok sponsorship deal which goes into effect in July.  UFC fighter Cody Gibson tweeted a photo of what appears to be a letter with the pay structure listed.  The lowest tier for fighters with 1-5 fights is $2,500.

The next tier for fighters with 6-10 fights is $5,000, 11 to 15 fights get $10,000, 16 to 20 fights gets $15,000 and fighters with 21 fights or more in the UFC get $20,000.

Fighters with 1 to 5 bouts will receive $2,500 per fight; 6 to 10 bouts get $5,000; 11 to 15 bouts get $10,000; 16 to 20 bouts get $15,000; and 21 bouts and above get $20,000.  As it previously indicated, title fights would receive more.  Challengers will receive $30,000 and Champions will receive $40,0000.

How does this compare to what UFC fighters once made through sponsorships?  Take the case of Brendan Schaub who indicated that he made twice as much from sponsors than he did from the UFC.  If we are to assume this is true, he would have made over $60,000 from sponsors.  Based on this structure, he would receive $10,000 as he would fall into the 11 to 15 fight tier based on his 11 fights in the UFC.

Recently, the UFC announced a change to the payment structure as it moved from a pay structure based on media rankings to one based on the number of fights with Zuffa.  The new Reebok sponsorship deal has drawn criticism from fighters and managers.  It will go into effect in July with UFC 189.

Payout Perspective:

At this point, the UFC has yet to comment publicly (the letter received by Gibson was sent to all contracted fighters) on the payment structure and its rationale.  It’s clear that this is a hit for some (if not most) fighters that had deals with sponsors that it will now lose due to the Reebok deal.  Schaub indicated he was losing 6 sponsors.  Probably the same for many established fighters in the UFC.  We will see what the fallout will be in the coming days.

Mayweather-Pacquiao Perspective

May 3, 2015

Welcome to a special edition of Payout Perspective.  This time we take a look at what was dubbed as the “Fight of the Century” at the MGM Grand in Las Vegas, Nevada as Floyd Mayweather took on Manny Pacquiao.

Mayweather takes care of Pac Man

It was the likeliest of outcomes despite the wagering line drawing down as many bet with their hearts and not with their heads.  Mayweather muted Pacquiao’s flurries with well-calculated right hands to counter his attacks.  It was a comfortable decision for Mayweather amid many voicing their displeasure for a variety of reasons.  Of course, we could have done without the Pacquiao excuse of injury despite the fact it may have been the truth.

The unholy alliance of Showtime/HBO and Mayweather/Arum will likely never come to pass again.  Yet, the mission was accomplished. Without an official tally, one need only eyeball the dollar amounts with egregious amounts of zeros to know that the fight between Floyd Mayweather and Manny Pacquiao was the highest grossing boxing event in its history.

Attendance and Gate

The goal was $74 million and with the astronomical prices for seats and the decree that there would be no comps, it likely made it.  Even Pacquiao paid $3-$4 million for tickets for his hefty entourage to attend.

Purses

With the 60-40 split of the fight purse, Floyd Mayweather should take in $180 million.  Pacquiao will pocket $120 million.  As we reported, the amount of gross revenue favored the winner between $160-$180 million with 51-49 split.

Promotion of the Fight

The unique co-promotion between rivals was to the benefit of fight fans from one perspective.  It saw a week with past fights from Floyd Mayweather and Manny Pacquiao on cable television.  CBS Sports Network replayed most of Mayweather’s fights under his current Showtime contract and it aired the one Pacquiao fight he did with Showtime – a battle with Shane Mosley.

With the co-promotion, both networks worked with distributors in pro-actively targeting satellite and cable customers that had order past PPVs to pre-order this event.  Essentially, making sure that their customers ordered Mayweather-Pacquiao.  The question is how many people actually pay for the PPVs a day or two ahead of the event?  Yet, it appears that the strategy worked.

Although there was no full blown HBO 24/7 or Showtime All Access 360, both networks aired shows to promote the fight.

The Pac-May press conference did better ratings-wise than the second episode of TUF last Wednesday.

Of course, there were tons of media, both sports and mainstream, too numerous to mention.

Sponsors

Pacquiao’s camp reported that he would receive over $2 million in sponsorship money from ad space on his trunks.  The sponsors included Wonderful Pistachio, Smart Communications, Nike and Butterfinger.  Butterfinger leveraged its sponsorship with a social media campaign which included tweets specifically from Pacquiao.  He also had a deal with Samsung which was a reason why Freddie Roach took a selfie with Manny during the walk-out.

Mayweather, who usually has little if any sponsors aside from his TMT clothing brand, had luxury watch-maker Hublot and Fan Duel on his trunks.  He also wore Reeboks. Also of note was the Burger King walking out with Mayweather.

Freddie Roach forged a sponsorship with Geico.  In addition, Buboy Fernandez, Pacquiao’s second, wore a ton of sponsors on his shirt including the use of long sleeves to include the SoCal Mitsubishi sponsors.

Odds and ends

The dual use of ring announcers and the mixed broadcast team was unique and awkward at the same time.

The replay will be aired at the same time on Showtime and HBO on Saturday night May 9th.  It will be interesting to see the ratings for each network.

What are we to make of the Michelle Beadle and Rachel Nichols credential-gate? The fact that Beadle continues her own story by doubling down with stating she no longer supports WWE because Triple H is a fan of Mayweather one must wonder how much Beadle was a fan of WWE. Why was she unaware that Triple H once walked down to the ring with Mayweather and that he was involved in Wrestlemania?

Jimmy Kimmel dressed as Justin Bieber > Burger King dressed as Burger King.

For the first time, fans were charged $10 to attend the weigh-ins and even those were being sold for more on the secondary market.

HBO Sports confirmed that the fight was delayed “about 45 minutes” to help fix PPV issues.

Seems like the first weekend in May (with boxing, Kentucky Derby and NBA and NHL Playoffs) is bound to be the best Saturday of the year in sports.

For those wondering, the PPV buy record is 2.48 million (Oscar de la Hoya-Mayweather) and PPV revenue record is $150 million (Canelo-Mayweather).  These numbers will fall with ease.

Conclusion

For all of the hype and promotion, this was one event that was too big to fail.  Even though PPV distributors experienced some technical difficulties last night, the overarching issue was that people were trying to get in and order the $100(HD) PPV.  We should see this fight eclipse PPV records.

But do you think it goes over 4 million PPV buys as Kevin Iole predicts?

Despite the last minute decrease in prices and hotel rooms in Vegas, this event drew immense attention and the casual viewer was willing to pay the steep price to see it even though they were not keen on heading to Vegas.  I would tend to think this event drew near 4 million PPV buys but would not be surprised if the reports of surpassing 4 million were true.

Golden Boy eyes potential antitrust lawsuit against Haymon, PBC

May 1, 2015

There are reasons why Al Haymon never speaks, one of those may be to prevent the threat of litigation.  A recent article about Haymon’s Premier Boxing Champions may bring on an antitrust lawsuit involving rival Golden Boy Promotions as chief plaintiff.

A recent Sports Business Journal article featured Haymon’s PBC and went over how funding was structured.  Although Haymon did not provide comment for the article, factual information in it allegedly strengthened the argument that Haymon’s business model for PBC violates portions of the Muhammad Ali Boxing Reform Act.

A draft of the Complaint has been viewed by SI.com and it appears that Golden Boy Promotions is seeking a temporary restraining order and then a permanent injunction against his business practices that violate state and federal laws.  It also requests monetary damages against Haymon.

The claim is that Haymon is using his monopoly as a boxing manager to create another monopoly for promoting TV fights.

Golden Boy is hush on if and when this lawsuit may be filed.

Notably, the SI article includes a letter dated April 28, 2015, from the Association of Boxing Commissions (“ABC”) to the Department of Justice in which it claims that Haymon is in violation of the Ali Act.  Essentially, through his controlled companies Haymon is acting as manager and promoter which the ABC claims to be a violation of the “Firewall provision” of the Ali Act (specifically section 5(b) of the Act).  ABC also calls into question the contracts Haymon fighters must sign.  Essentially, ABC believes that they are in “restraint of trade” and “contrary to public policy” as the contracts exceed 12 months.  A footnote in the letter notes that UFC, Bellator and other MMA promotions have this contractual model.  It also notes that MMA is not covered by the Ali Act.

Payout Perspective:

This will be an interesting lawsuit and with the Zuffa antitrust lawsuit ongoing, we can see some major waves happening in the business of combat sports.  Haymon’s boxing business model is unique and received much scrutiny by rival promoters.  There have been attempts in the past to sue Haymon but those were summarily dismissed and/or settled.  If Haymon and PBC are sued, we may see some interesting information divulged from the factual discovery process in the lawsuit.  It could also overturn the current wealth of boxing on multiple networks by PBC.  MMA Payout will keep you posted.

WWE Q1 2015 results

April 30, 2015

The WWE announced its results for the first quarter of 2015.  In a release from the company, it stated that revenues increased 40% to $176.2 million which is the highest quarterly revenue in WWE history.  The results exceeded analyst expectations for the company.

After five consecutive quarters in the red, it’s the first quarter where the WWE has shown a positive operating income.  As for the WWE Network, it reached 1.3 million total subscribers, a benchmark it announced the day after Wrestlemania.  The WWE reports that its average of network subscribers is at 927,000 at the end of the first quarter.  Again, the network’s free promotion, which was February this quarter, contributed to the Network’s growth as 154,000 subscribers converted from free to paid subscribers.

For its quarter ending March 31, 2015, it reported net income of $9.8 million ($0.13 per share) as compared to a net loss of $8.0 million ($0.11 per share) in the first quarter last year.

According to Chief Strategy & Financial Officer George Barrios the positive financial results were “driven primarily by the escalation of our [WWE] television rights fees and the expansion of the WWE Network subscribers.”

The WWE indicated that it will implement a five-part strategy the rest of 2015 for the Network.  This includes 1) creating new content; 2) implementing high impact customer acquisition and retention programs; 3) introducing new features; 4) expanding distribution platforms, and 5) entering new geographies.

As for the rest of WWE business, each division, except WWE Studios ($1.5M vs. $4.3M) is up over this quarter last year.  The total net revenues for this quarter were $176.2 as compared to $125.6 at the end of the quarter for 2014.  The Network segment, which includes revenue generated from Network and PPV increased $19.2 million from the prior year quarter.  The Network alone generated $28.6 million in revenue based on an average of 927,000 paid subscribers.

At the time of this writing, WWE stock is down slightly at $14.16 per share.

Payout Perspective:

A good quarter for the WWE.  Beating the analyst expectations is a good achievement by the company.  Wrestlemania was the likely key driver here especially when you look at the number of converted free to paid subscribers going into March, which was Wrestlemania month.  Of course, we do not know how many dropped the network in April.  We will see if the WWE can continue its positive momentum and see if its strategy for the network continues to net subscribers.

Reebok ends Jon Jones sponsorship deal

April 29, 2015

Darren Rovell reports that Reebok has terminated the contract of Jon Jones.  The news comes on the heels of his suspension from the UFC on Tuesday.

Jones had an individual sponsorship agreement with the soon-to-be official clothier of the UFC.  He was featured in a commercial for the brand which debuted during NBA games last month.  A link on the Reebok web page which featured Jon Jones is no longer valid.  Also, a tweet from Reebok last week promoting Jon Jones with an Instagram pic/video no longer works.

A representative for Reebok told TMZ Sports, “In light of recent events, we have made the decision to terminate our contract with Jon Jones, effective immediately.”

Payout Perspective:

The decision by Reebok to pull Jones’ individual sponsorship deal was a likely result of his indefinite suspension and actions this past weekend.  Like the UFC, it had stuck with Jones despite the positive showing that he had used cocaine, but the latest episode was too much for the brand that becomes the official sponsor of the UFC in July.  It’s an obvious hit for Jones and also one for Reebok as it had invested in Jones as well.  Certainly, the brand can shift to another UFC star but it would be of no surprise if Jones was to be a main driver for Reebok.

Jones stripped of title, suspended indefinitely

April 28, 2015

The UFC announced Tuesday night that it has stripped Light Heavyweight Jon Jones of his title and suspended him indefinitely. Daniel Cormier has stepped in to face Anthony Johnson for the now vacated title at UFC 187.

The discipline to Jones comes after his hit and run accident in New Mexico this weekend. Jones fled the scene. An arrest warrant was issued for Jones after it was discovered that one of the individual’s involved, a pregnant woman, suffered a broken arm. Jones turned himself in and bail of $2,500 was posted shortly after his incarceration.

Dana White, Lorenzo Fertitta and Lawrence Epstein met with Jones after his first court appearance. The announcement to strip Jones of the title was announced the same day as the meeting.

Cormier was scheduled to meet Ryan Bader in New Orleans as part of a UFC Fight Night in June. No replacement for Bader has been announced.

Payout Perspective:

For the cynical, one might suggest that a strong first quarter of 2015 helped Zuffa make this decision. UFC 187 still has a strong card and if Jones were kept on the card, his legal matters would have been a distraction in lead-up to the event. In the end it was the correct decision for the organization to make. It seems a little odd to praise the UFC for doing what it should be doing, but we have seen prior examples of inconsistent discipline. While Zuffa could have indicated that it would wait until the facts came out, enough was enough. It slapped Jones on the wrist with a $25,000 fine for violating the Athlete Code of Conduct for using cocaine prior to UFC 182 and it had to do something more this time around.

MMA Payout will keep you posted.

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