Lyoto Machida caught by USADA, fight with Hendo off of UFC on Fox 19

April 13, 2016

USADA notified the UFC on Wednesday that Lyoto Machida declared using a banned substance during an out-of-competition sample collection last week.  As a result, his fight with Dan Henderson scheduled for UFC on Fox 19 this Saturday on Fox has been taken off the card.

Machida stated that he was unaware that the substance was prohibited in and out of competition.

The UFC released a statement on the former light heavyweight champion.

The UFC organization was made aware today by the U.S. Anti-Doping Agency  (USADA), the independent administrator of the UFC Anti-Doping Policy, that Lyoto Machida declared the usage of a banned substance during an out-of-competition sample collection last week. Machida stated that he was unaware that the substance was prohibited both in and out of competition and, in accordance with the UFC Anti-Doping Policy, his disclosure of usage will be taken into consideration by USADA during any potential results management and adjudication process.

Payout Perspective:

Unlike other findings, it appears that Machida let USADA know of the substance (not yet known) that he was taking.  The disclosure may help with any potential penalty that might occur as a result of the finding.  Machida, 37, may face a 2-year suspension which could be the end of his UFC career.  Of course, it does appear Machida was up front with the usage of the banned substance so that might mitigate the potential penalty.  As for removing the fight, there was no choice especially since it was going to be one of the televised bouts on Fox.  It definitely is disappointing news.

WWE touts #FreeWrestlemania to attract new viewers to Network

April 3, 2016

The WWE’s annual biggest event of the year is today as Wrestlemania 32 takes place at AT&T Stadium in Dallas, Texas.  This year, the WWE Network is offering a free month including this today’s event.   The strategy seems to be contrary to WWE’s goal for profit but at least one analyst believes its a positive calculated risk.

Interesting enough, in 2013 pre-WWE Network, the WWE raised its PPV price point to $70.  In 2016, you can access the WWE Network for free and watch the company’s biggest day of the year.

The ability to watch Wrestlemania for free through its Network is not a secret, in fact the WWE has been aggressively marketing it on social media using the #FreeWrestlemania and #WhatAreYouWaitingFor hashtag.

In a post by Brandon Ross, on the BTIG web site, he evaluates the WWE’s risk of giving away the event for free and how it might impact the company’s business.

First off, for those not familiar, the WWE offers its Network for $9.99 per month.  However, it continually runs a promotion in which new subscribers may access the network for free for one month with the hope that the subscribers likes what they see and continue on with the network.  Also, now former subscribers (previously purchased the network and want to re-up) can access a free month if they have never previously taken advantage of the free month promotion.  There has been criticism about this program since it is fairly easy to take advantage of the system by basically using a new email address.  The article indicates that the WWE has tightened its authentication system to prevent this from happening.

Despite the distinct possibility that the WWE would be losing profits from its Network by giving away Wrestlemania, Ross believes that it is a “smart, calculated risk” for three reasons.  First, he likes the idea of free trials as it’s a way for a potential subscriber to “test drive” the product.  Second, most of the U.S. fans have tried the network and those that have previously subscribed to the WWE and are coming back are paying.  Third, in international markets the WWE advertises the network via social media and the company should leverage its presence to promote the network to international fans.

While there are inherent issues with a free trial for a month, the WWE reported strong conversion rates in its first two trials.  It has not reported conversion rates since the first two but the inference here is that if the “free month” was not successful in converting subscribers then it would not continue with the promotion.

The question of “churn” is always a question with the network.  Chris Harrington has done an excellent job in following the quarterly churn.  In its quarterly calls, WWE has announced a total subscriber number but the number has to be analyzed a bit to determine the amount of new subscribers versus those that discontinued their subscription.  Ross indicates that while it is unknown whether the WWE will announce its total subscribers, paid subscribers or both that they will be interested in the total number (free and paid).  The total number, according to Ross, will provide insight into the “longer-term opportunity of the network” as opposed to the paid subscriber number.  Ross estimates that the Network should hit over 1.8 million subscribers when looking at free and paid combined for Wrestlemania.

Payout Take:

The WWE’s strategy to allow the possibility of fans to access the Network to watch Wrestlemania for free is a risk as Ross identifies.  In comparison, the UFC allows a 7 day free trial for its Fight Pass digital platform.  However, returning subscribers that have cancelled Fight Pass and want to renew do not have the opportunity for the free trial again.  The shorter time frame to sample the product plus the tighter restrictions seems like the better strategy to capture the maximum amount of potential revenue for its platform.  Although no numbers are available, it appears that Fight Pass is doing better than the WWE.  This could be attributable to the broad availability (domestic and international) of Fight Pass.  UFC is coming off one of its most successful days for Fight Pass with UFC Fight Night 84 from London.  Again, no numbers since the UFC is private, but you may infer that the company picked up a lot of subscribers for the event.  Also, Fight Pass offers three distinct tiers to subscribe with the less expensive tier being an up-front payment for 12 months.  So, instead of the WWE’s model of paying while you go, the UFC will get the money first even if you tail off from watching.

The WWE actually embraces the opportunity to promote a free Wrestlemania.  One would believe that it is hoping that its vast social media assets will appeal to the international markets that have yet had the opportunity to watch the network.  Also, you would think that its conversion rates are acceptable at this point that it is willing to give away the most-watched event of the year for the company.

We will see how the numbers turn out.

OSP steps in against Jones for interim belt at 197

April 2, 2016

Ovince St. Pierre will replace the injured Daniel Cormier and will face Jon Jones at UFC 197 for the “interim” Light Heavyweight title.  Dana White made the announcement on ESPN on Saturday afternoon.

The news that Cormier was injured surfaced on Friday night and the UFC was quick to replace the current Light Heavyweight champion instead of taking Jones off of the April 23rd card.

OSP is the #6 ranked Light Heavyweight in the UFC.

Payout Perspective:

This is an interesting matchup and one that saves a PPV from Demetrious Johnson having to headline another PPV.  Nothing against Johnson, but the numbers reflect that Johnson is not a PPV draw.  Maybe the bigger question with the fight announcement here is why is this for the interim light heavyweight championship?  Is this to appease Jones?  Cormier’s injury should not have him away for too long and OSP challenging for the title does not seem right.

Cormier out of UFC 197 with injury

April 1, 2016

Multiple sources have reported that Daniel Cormier is injured and will be out of UFC 197 against Jon Jones.  Although reported on April 1st, it appears that this news is not a joke.

With the Cormier-Jones fight out for UFC 197, it appears that Demetrious Johnson-Henry Cejudo should be the headliner.

The UFC has not provided an official response to the news of Cormier’s injury.

BJPenn.com first reported the news.

Payout Perspective:

Obviously, the news breaking on BJPenn and on twitter, one had to think this was an April Fool’s Day joke.  But, it was not.  Earlier this week we were all worried whether Jon Jones would make it to UFC 197.  It was actually Cormier who had never needed to pull out of a fight until now.  We will see if Jones will still fight or wait until Cormier is ready.

Jon Jones arrested for violating probation

March 29, 2016

TMZ Sports reports that Jon Jones was taken into custody by police in Albuquerque, New Mexico for a violation of his probation.  Jones was cited for drag racing last week and a judge had issued a warrant for his arrest as a result.

TMZ reports that Jones turned himself in to the Abuquerque police department on Tuesday morning.  The terms of Jones’ probation last month required

EAG Sports, the management company representing Jones issued a statement per TMZ:

“Jon and his team are taking this very seriously and we will let the legal process play out.”

“We are confident he will be released once he has an opportunity to explain to the judge the facts in this case.”

Payout Perspective:

There are reasons why professional teams, and even in college, there is a “security detail” for some players.  It’s the ability to protect your investment and ensure that the player does not get into trouble.  Perhaps the UFC attempted to help Jones and he denied their request.  But, it’s clear that Jones was out late and got into trouble.  Whether or not it was his fault, whether or not he will be vindicated in court does not matter.  The legal ramifications might impact next month’s showdown with Daniel Cormier.  Then again, it may not (see Adrien Broner, although his case has a different set of circumstances).  What it does do is bring into question Jones’ decision making and those that help him and manage his career.  With Jones on probation and an imminent return to the UFC, there needed to be someone to ensure that Jones did not run afoul of the law.  Not only is Jones’ career in question, but a big business PPV next month.  We will see how this plays out.

New York Assembly passes MMA bill

March 22, 2016

The New York State Assembly passed legislation that would legalize mixed martial arts in the state.  The bill now needs the signature of the governor for New York to be the final state to legalize MMA.

The passage comes after years and years of lobbying efforts, two lawsuits and an appeal that was set to occur next month.

The legislation came to the State Assembly for vote and after over 2 hours of assembly members having their chance to speak, the bill passed.

The green in the twitter picture indicates “Yes” votes.

The UFC issued a press release immediately after passage and will hold a press conference at 4:30pm PT Tuesday.

From the UFC press release:

UFC® Chairman and Chief Executive Officer Lorenzo Fertitta applauded the overwhelming, bipartisan New York State Assembly passage of legislation to legalize and regulate professional mixed martial arts (MMA) in New York. The passage of A.2604-C, sponsored by Assembly Majority Leader Joseph Morelle and 72 other Assembly sponsors, means the bill has now passed both houses and will be sent to Governor Andrew Cuomo for his approval.

Lorenzo Fertitta thanked all in Albany that helped in the effort.

“This has been a long time coming and on behalf of our New York UFC athletes and fans, I want to offer heartfelt thanks to Speaker Heastie, Majority Leader Morelle and all the Members of the Assembly – Democrats and Republicans – who voted for this bill.”

Payout Perspective:

Perhaps the UFC press conference will reveal a date for the UFC to head to New York.  Bellator and other promotions will be able to hold events in New York as well.  The UFC indicated that it would hold an event in the state by the fall but maybe that could be moved forward depending on when the state will be able to establish its protocols for regulating MMA.

Matt Mitrione signs with Bellator MMA

March 14, 2016

Former UFC heavyweight Matt Mitrione has signed a multi-fight contract with Bellator MMA.  Mitrione made the announcement on Ariel Helwani’s “MMA Hour.”  Bellator confirmed the signing in a press release Monday.

Mitrione indicated that Bellator’s offer was not countered by the UFC.

Via Bellator press release:

“There comes a time in every athlete’s life, where the scenarios change and the landscape has eroded from what made you fall in love with it initially,” said Mitrione. “It has become that time for me. After a mutually beneficial free agency period, I’ve decided to move my career to Bellator. I’ve enjoyed almost every second of my career and unlike most that switch organizations due to being cut or no longer being able to perform at the sports highest levels, I am bringing a body and skillset that are only getting better and I cannot wait to test my abilities against the best Bellator has to offer.”

Mittrione Signs on with BMMA

The press release also takes a jab at the UFC outfitting policy:

Prior to his last fight with his former promotion, Mitrione was forced to participate in a media session barefoot, as his shoes didn’t adhere to the strict company uniform policy. He will have no such problems at Bellator, where he is free to secure his own sponsors and keep his feet warm with the footwear of his choosing.

The reference relates to Mitrione having to take off his Air Jordans for open workouts.  Mitrione has been critical of the Reebok sponsorship deal.

The signing is the latest grab by the Viacom-owned company.  Earlier this year, it signed Benson Henderson.  Last year, it signed former UFC fighters Phil Davis and Josh Koscheck.  Recently released UFC welterweight Jake Ellenberger may be the next signee to the Bellator roster.

According to his MMA Fighitng interview, Mitrione will be making six figures per fight which is more than what he made with the UFC.

Payout Perspective:

It’s clear that we are seeing more fighters willing to fight out their contract with the UFC rather than renew prior to heading into free agency.  Last week, Mitrione said he had received an offer from Bellator and also another from ONE FC although the UFC was still in the mix.  Clearly, Mitrione was offered a better deal and if he is receiving six figures and an opportunity to do broadcasting with Bellator Kickboxing, the offer is opening more doors for him as far as post-fight career.  We shall see if more fighters will test the market and if the UFC will respond.

UFC 196: Payout Perspective

March 7, 2016

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 196 which took place at the MGM Grand Garden Arena.  In the main event, Conor McGregor took on Nate Diaz.

Diaz chokes out McGregor

Despite being a late replacement, Nate Diaz used his length and superior jiu jitsu skills to end the mystique of Conor McGregor with a second round tap out of the featherweight champion.  The fight was back and forth in the first round with McGregor making the best of the exchanges.  However, Diaz’s boxing skills took over in round 2 as he touched up McGregor who seemed to gas out.  This became apparent once McGregor attempted to take Diaz down.  Once it was to the ground, Diaz secured a rear-naked choke and McGregor tapped quickly.

It was very interesting how some in the media spun the loss to applaud McGregor into doing something most would never try.  ESPN’s Chael Sonnen stated that McGregor’s star was brighter after the loss.  It’s clear that the UFC does not want to lose the luster of a fighter that earned them two straight attendance and gate records in 2015 and has helped resurrect its PPV business.  McGregor still can be a dominant fighter in the lower weight classes.  But, any dreams of winning titles in 3 or 4 divisions is over.

For Diaz, his career should take off.  He should receive a “money fight” next with either a top welterweight or maybe even a title shot at 155.

Tate chokes out Holm for title

According to the scorecards going into Round 5, Holly Holm led Miesha Tate 38-37 after winning 3 rounds but losing Round 2, 10-8 on all of the scorecards.  Tate knew that she had to win Round 5 and try to submit Holm.  She secured a takedown and was able to get Holm’s back and sink in the rear-naked choke.  Holm attempted to fight it off but eventually went unconscious to the choke.

The loss showed Holm’s inability to defend a rear-naked choke.  The deficiency in her jiu jitsu should be worked on before Holm returns to the octagon.  Based on how great this fight was, I do not think anyone would be mad if we saw this fight at UFC 200.

For Tate, you have to be happy for her.  She was contemplating retirement and was likely never going to get a shot at the bantamweight title so long as Ronda Rousey was the champion.  Due to Holm’s upset in November, it opened the door and Tate walked right through it.  Of course, Ronda Rousey is likely waiting for her this fall if she survives her first title defense.

Attendance and Gate

UFC 196 drew 14,697 for a gate of $8.1 million according to the post-fight press conference.  Another impressive outing in Vegas with McGregor as the headliner.  It was the least attended of the three but was a higher rate than UFC 189’s $7.2 million.

Bonuses

The bonuses went to McGregor, Diaz (x2) and Tate.  Each earned an additional $50,000 per bonus which means Diaz drew $100,000 for Fight of the Night and Performance Bonus of the Night.

Unfortunately, the performances of Teruto Ishihara and Vitor Miranda did not get them extra money.

Salaries

Conor McGregor became the first UFC fighter to make a reported $1 million.  Despite the fact that he stated in a CNBC interview he would make over 10 times that amount, it is mere speculation.  In addition, Holly Holm and Nate Diaz both earned $500,000.  Diaz made an additional $100,000 for his double bonus.  Miesha Tate was the only one of the four to make less than $100,000 without a bonus ($46K/$46K).  Of course, with Tate’s Performance bonus she made $150,000.

Diego Sanchez was the only other fighter to make more than $100,000 at UFC 196.  The rest of the payouts can be found here.

Promotion of the Fight

For a show that had its main event fall out within two weeks before, the UFC did an excellent job in putting together a compelling fight.  The press conference between McGregor and Diaz at the UFC Gym in Torrance was great as over 20K tuned into YouTube to watch it live.  Now, over 2.9M have viewed the pre-fight presser.  I’m sure not as many saw his brother and GSP in the infamous “wolf tickets” presser but it was as entertaining, if not more entertaining.

The Embedded episodes, sponsored by the new UFC video game, featured McGregor and also caught up with Diaz.  It also followed Holm and Tate.

On the Jim Rome Show, Dana White promoted the fight and stated he did not like the Holm-Tate fight for the specific result that occurred.  Holm-Rousey II was the fight the UFC wanted.  If that happens, there will not be as much build for it since both will have a loss.

Conor McGregor appeared on the cover of Sports Illustrated.  Obviously, the jinx was in effect.  Fanatics (a company McGregor has a sponsorship deal with) and UFC.com.

CNBC did an interview with McGregor and Diaz in which Diaz walked off.  Frankly I would have too.  It attempted to be cute and informative but ended up just being condescending and stupid.

Sponsors

MetroPCS, 7-11, Monster Energy Drink, Harley Davidson, Toyo Tires, the movie Hardcore Harry, Bud Light.  Monster had the center of the Octagon.

McGregor wore a Monster Energy Drink patch on his Reebok shorts.

The fight clock and prep point were sponsored by EA UFC 2.

Notably, Harley Davidson renewed its sponsorship agreement with the UFC as they announced it at the beginning of fight week.  One of the unique parts of the new deal was viewing parties at Harley Davidson dealerships across the country.  During the FS1 prelims, it showed a live viewing party at a Harley Davidson dealership in San Diego.  UFC fighter Ricardo Lamas made an appearance at the viewing party.

Odds and ends

The weigh-ins revealed a new camera view on the scale which is a “go-pro” look at the fighter on the scale.  Maybe it is to get the anxious look on a fighter’s face looking to make weight.

Speaking of “go-pro” cameras, the cutmen wore them as they were also sponsored.  The question should be whether the cutmen get a “cut” of the sponsorship money.  Remember Stitch.

5 million google searches for UFC 196 on Saturday night.  On Friday, there were 100,000 searches and Nate Diaz had another 100,000 for Diaz on Thursday.

On a night that Tate wins the title, Ronda Rousey garnered 100,000 google searches.

UFC Fight Pass offered 20% off to fans wanted to purchase the PPV on its digital platform.  This may be a test for the future as the company would receive a greater part of the gross revenue from PPV purchase.  Even with a discount, the UFC probably cleared more than sharing with a PPV distributor.

Fight Pass offer

Tom Lawlor wore a fake McGregor tattoo at weigh-ins.

Since I’m from Seattle, this is great.  I understand most of the rest of the world it probably means Tate is trying to be a heel.

NAnyone else notice McGregor steal a lyric from Jay-Z at the end of the first Embedded, “I’m not a business man…I’m a business…man.”

It did not go unnoticed that Royce Gracie (who just fought in Bellator) made an appearance on Embedded as he met McGregor.

Speaking of the Embedded series, will McGregor command a full rental mansion in Vegas when he returns for UFC 200 or will he have more of a scaled back Penthouse suite?

Not sure EA intended for its cover to have two fighters coming off of losses when the video game debuts.

Conclusion

The UFC gambled with both McGregor and Holm. While this may be a short-term gain for the company, it could be a long-term worry. The substitution of Nate Diaz proved to be the right replacement but the wrong result. With Tate winning the belt, it means a possible Rousey-Tate III. But it also negates a Holm-Rousey II which could have proved to be big business if Holm remained undefeated until Rousey returned. But for UFC 196, the amount of press and buzz for this event makes me think we see another McGregor fight drawing close to 1 million PPV buys. With the loss, can he continue to draw these numbers past. We will see.

UFC 196 attendance, gate and bonuses

March 5, 2016

UFC 196 drew an attendance of 14,697 for a gate of 8.1 million viewers.  The bonuses went to Conor McGregor, Nate Diaz and Miesha Tate.

McGregor and Diaz drew Fight of the Night.  Diaz earned another Performance Bonus for his rear-naked choke of McGregor.  Tate earned her Performance Bonus for here RNC of Holly Holm.

The 14,697 attendance and gate of $8.1 million.  Attendance is the lowest of the last three UFC events featuring McGregor.

UFC 194: 16,516, $10.1 million

UFC 189: 16,019, $7.2 million

The numbers were announced at the post-fight press conference.

Payout Perspective:

It was an entertaining night of fights with the two biggest on the card delivering upsets.  The attendance figure and gate should be expected as it is hard to keep going back to Vegas for cards.  Of course, they’ll be back next month.  There were certainly other fighters with some great performances but the top two fights were the best and delivered the best finishes tonight.

Disclosed pay for UFC 196: McGregor $1M, Diaz $500K

March 4, 2016

Conor McGregor will make at least $1 million Saturday night at UFC 196 as disclosed by the Nevada State Athletic Commission.  Nate Diaz is scheduled to make $500,000.

In addition, per an ESPN report by Brett Okamoto, Holly Holm will make $500,000 and Miesha Tate will make $46,000 to show and $46,000 to win.

McGregor’s $1 million payday is the largest commission disclosed payday in UFC history.  Fighters do make more than the reported payouts from the commission, but this is the first time that a UFC fighter will make $1 million from the outset.

McGregor boasted in a CNBC interview that he would make over $10 million for this fight.  While this may still be true, it will likely come in the form of bonuses, sponsors, PPV upside and other forms of revenue.

Anderson Silva made $800,000 ($600K show, $200K win bonus) at UFC 183 which was the previous high.

Payout Perspective:

As you may conclude, the $500,000 is the most Diaz will make in his UFC career.  Maybe $500,000 is the benchmark for fill-in challengers as Anthony Johnson made $500,000 at UFC 187 for taking the Daniel Cormier fight.  Holm’s $500,000 is much more than any disclosed pay than Rousey.  Obviously, Rousey made more than what is being disclosed but it’s interesting to note Holm’s upfront money.  Even if she does not receive additional compensation, it’s a very good payday for just her fourth fight in the UFC.

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