MMA Payout Exclusive: Interview with Robert Haydak, President of Alliance MMA

November 2, 2016

MMA Payout had the opportunity to speak with the President of Alliance MMA, Robert Haydak.  He talked about his company’s recent IPO, its business model and its future plans.

For those that do not know, the company went public on the NASDAQ stock exchange last month.  You can find investor information on the company here and our previous post on the company here.

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The company is not affiliated with Alliance MMA in Chula Vista, California although Haydak indicated that it is working with the gym’s Eric del Fierro to launch an MMA promotion in Southern California.

Alliance MMA intends to be “the NCAA to the NFL” according to Haydak.  Alliance MMA is currently comprised of 6 regional MMA promotions (referred to as “Target Companies” in its S-1) with the intent to become a feeder league for bigger promotions such as the UFC, Bellator MMA, OneFC and other promotions.  The promotions include Cage Fury Fighting Championships, Combat Games MMA, Hoosier Fight Club, Shogun Fights, Cagetix and V3 Fights.  It also has acquired Go Fight Live. The company acquired the promotions and the media libraries of “two prominent mixed martial arts” organizations.  According to its prospectus, the promotions have collectively “generated $2.4 million in gross revenue and $0.127 million in net income.”

1. Why did Alliance MMA decide to become publicly traded?

“One of our founding members, Joe Gamberale talked about this idea.  We had met 2 and a half years ago when we were looking at acquiring one of the competitors in the market.   Joe and I sat down and talked about building a footprint.  It was Joe’s vision that led to this.”

2.  Why go public instead of raising capital privately?

“We started the process over 2 years ago.  We initially considered a reverse triangular merger with other regional MMA promotions.  But more and more we reached out to regional promotions we found that we should go public.  We determined we could be qualified for the NASDAQ and do an IPO.”

3.  What background research did Alliance MMA do to make the decision to go public?

“It was several things.  We recognized that this was a similar industry to the WWE (World Wrestling Entertainment).  Vince McMahon acquired smaller shows in the country.  We saw a demand from regional promotions around the country.  And we believed that we could assist them in a variety of ways: marketing, medicals, business practices.  We started talking to and vetting different promotions.  We saw a clear opportunity to build Alliance MMA and make it into a feeder program (for bigger MMA organizations).”

4.  What is the allure of investing in Alliance MMA?

“MMA is the fastest-growing sport in the world.  If you take a look at Alliance MMA, it is the first major traded (MMA company) on the stock market.  You can look at our business model, look at our S-1 and look at what our plans are and we are creating a company that intends to be the NCAA to the NFL.”

5.  Can you explain how Alliance MMA will distribute its events?

“At this point, we (some of the MMA organizations of Alliance) have a traditional iPPV (internet pay-per-view) model.  We’ve already made a capital investment which includes an in-house production staff.  We have an executive producer.  We want to make sure that we want high quality.  The events are network ready shows that are run like a top-tier promotion. ”

According to Haydak, promotions in Alliance MMA do not have a subscription-based model at this time.

6.  What is the leadership of Alliance MMA?

“I’m on full-time.  I no longer have a vested interest in any other MMA promotion (Haydak was previously the CEO of Cage Fury Fighting Championships in New Jersey).  This is my sole focus.  Currently Alliance MMA has a board of directors 6.  This includes Renzo Gracie and Burt Watson.”

The corporate team includes CEO Paul Daner and Jon Price as CFO.  Price was formerly the CFO of MusclePharm.  The full list of Alliance MMA’s Board of Director’s can be found on its Investor Relations page.

7.  Is there concern about integrating the Target Companies? How will the acquisitions work and the structure of the companies?

“When we identified all of the promotions that are being acquired (all companies will be 100% acquired) we recognized that the people running them were the driving force.  Therefore, we have given them a minimum 3-year employment agreement.  We value their experience and their knowledge in the market so we are keeping the people in place.  It is a critical part of the business model.  We have a corporate team in place and will be providing them the resources to scale the business.”

8.  How popular is the regional MMA scene?

“We consider it the NCAA to the NFL.  College Football is more exciting than the NFL.  On the regional level (in MMA), lots of fighters have a desire to make it to the next level.  Every promotion has a long track record of success.”

9.  With the recent downsizing at the UFC, do you think the plan of becoming a feeder league is still feasible?

“We don’t look at it that way at all. There are other promotions out there.  We want to be complimentary with these guys (i.e., major promotions).  We are acutely aware of our position.  We believe that the appetite for MMA is still growing. “

10.  How will you handle fighters that will leave for major promotions?

“Currently, several of the promotions (i.e., Target Companies) have several fighters under contract.  We (Cage Fury) had 50 plus fighters under contract.  All contracts have out clauses.  We release them (if they are called up to a major promotion).  It doesn’t matter if it’s the day before their scheduled fight.”

11.  Is there interest from sponsors? Have you approached companies regarding sponsorships?

“Absolutely.  In 2017, when we’re up and running, we’ll be putting on 125 events in various major markets throughout the US and overseas.  Sponsors are looking for visibility and brand recognition whether it comes from people in attendance, media or network deals in place.  There are different levels of sponsors including national and regional and a combination thereof.”

12. Have you been in contact with any networks regarding distribution?

“Alliance MMA is actively engaged in conversations with a number of different networks. Currently, we have agreements in place with CBS Sports, Comcast Network in Chicago and the Mid-Atlantic region. We are very confident with the amount of high quality events that we will be producing in 2017, that several networks will see value in a partnership with Alliance MMA.”

Jones attorney requests for expedited USADA arbitration decision

November 1, 2016

The USADA arbitration of Jon Jones was completed on Monday at a law office in California after 10 hours before a panel of 3 arbitrators per MMA Fighting.  Jones’ attorney, Howard Jacobs, is seeking an expedited decision prior to Jones’ disciplinary hearing before the Nevada Athletic Commission on November 10th.

Per the Arbitration rules in the UFC Anti-Doping Policy, the arbitration panel has up to 30 days to render a written decision.  Thus, the panel could feasibly issue a decision at the end of November and after the NSAC hears Jones’ case.

Jones’s out-of-competition USADA drug test came back positive for clomiphene and Letrozol.  The findings prevented him from competing in the main event at UFC 200.  Jones maintains that he did not knowingly ingest the banned substances.  Jacobs maintains that the product(s) Jones used was contaminated with the banned substances.  He also stated that USADA had tested the product and had come to the same conclusion.

There is no word as to details of what transpired at the arbitration and its likely we will not hear about it until either a decision is issued and/or Jones appears before the commissioners in Nevada on November 10th.

Payout Perspective:

If a decision is not issued prior to the hearing on November 10th, the NSAC will be interesting on how it might rule without any guidance.  If the USADA panel decides in favor of a one year ban, then Nevada might infer that the evidence weighed against Jones’ argument that he did not know the contents were contaminated with banned substances.  Of course, if the panel issues a favorable ruling with a modest ban (say 6 months) retroactive to the date of his positive test, then Nevada might follow suit and we could see Jones available to fight in the UFC in the first quarter of 2017.  Jacobs seemed happy with how things went so USADA might issue a ruling prior to November 10th.

Show Money Episode 13 talks GSP contract, Zuffa purchase and WSOF woes

October 27, 2016

It’s another episode of Show Money with Bloody Elbow’s Paul Gift and John Nash.  In this episode, we talk GSP’s contract dispute, the WME purchase and WSOF’s troubles.

 

Over a year later, Judge Boulware publishes opinion in Zuffa’s Motion to Dismiss

October 24, 2016

Judge Richard Boulware has filed his Order on Zuffa’s Motion to Dismiss Plaintiffs’ Amended Complaint in the antitrust lawsuit venued in Nevada.  The hearing was on September 25, 2015.  The order was finally entered on October 19, 2016.

Talk about a backlog of work for a federal judge.  But, from my understanding, this is typical for federal courts.

As we know, the judge denied Zuffa’s Motion to Dismiss although the written order was signed and dated over a year later by Judge Boulware.

The opinion denying the Motion to Dismiss is below:

Order on Zuffa’s Motion to Dismiss by JASONCRUZ206 on Scribd

Some notable issues in the Order.

Zuffa had the burden to prove that the Plaintiffs had no case since they brought the motion.  Under the Federal Rules of Civil Procedure, a court may dismiss a complaint as a matter of law (1) for lack of a cognizable legal theory or (2) insufficient facts under a cognizable claim.  The standard under Federal Rule 12(b)(6), it may dismiss a complaint for failing to state a claim upon which relief can be granted.

The court looked at the main arguments set forth by Zuffa in its opinion.

  1. Strong Competition v. Antitrust Violation

This argument was quickly dismissed by the court.  Essentially Zuffa argued that its business practices are examples of “strong competition” whereas Plaintiffs argue that Zuffa’s conduct “has foreclosed competition and thereby enhanced and maintained the UFC’s monopoly power in the Relevant Output Market and monopsony power in the Relevant Input Market.”  For purposes of meeting the threshold to satisfy a motion to dismiss, the Court sided with Plaintiffs.

  1. Properly Defined Relevant Markets

The court looked at whether the plaintiffs properly defined a “relevant market.”  Plaintiffs identified two relevant markets: 1) live Elite Professional MMA bouts (Relevant Output Market), and…live Elite Professional MMA Fighter services (the ‘Relevant Input Market’).  Zuffa claimed that these definitions were made solely for the purpose of litigation and that they were vague and subjective.

However, the Court sides with the Plaintiffs for purposes of this motion to dismiss.  The Court noted that the validity of the ‘relevant market’ is typically a factually element and not a legal element.  Remember, here the Court is looking at whether the lawsuit can be dismissed as a matter of law.  As the court notes the market may survive an initial scrutiny under the motion to dismiss, but may not under a motion for summary judgment or at trial.  But, the Court found that the Plaintiffs’ relevant market is sufficient for “Section 2” antitrust purposes

  1. Specificity of Anticompetitive Conduct

Zuffa argued that exclusive dealing arrangements are common, procompetitive and a part of sports and entertainment, Plaintiffs failed to allege specific facts showing that the exclusive arrangements foreclosed competition in either the input or output market and the UFC has no duty to deal with competitors.

The Court did not address the last argument (dealing with competitors) as it did not construe the complaint that it had to deal with competitors.

The Court does side with Plaintiffs in finding that its allegations that exclusive dealing arrangements are a part of the anticompetitive scheme.  It also dismisses the argument that Plaintiffs’ claims are a “monopoly broth” – the term given to the use of various allegations to satisfy an antitrust scheme.

  1. Ancillary Rights and Reduced Competition

The Court looked at the rights issue related to fighters signing off on their likenesses for purposes of Zuffa using for things such as video games.  Here, the Court utilized the same analysis as it did with the exclusive dealing contracts in finding that Plaintiffs pled sufficient facts to show an anti-competitive scheme.  Once again, the Court is not ruling on the actual evidence, but whether the Complaint states a sufficient amount of facts.

Payout Perspective:

The Motion to Dismiss should not be taken as a commentary on the strengths or weaknesses of Plaintiffs’ Complaint as a whole.  It is only a ruling on whether or not the Complaint was sufficient to past standards required by the rules under 12(b)(6) of the Federal Rules of Civil Procedure.  It was Zuffa’s burden to carry in order to prove that the Complaint could not pat muster.  The Judge, weighing the evidence in light of the rules, determined that the Plaintiffs had pled a sufficient amount for the case to go forward.  If this case goes to trial, the Plaintiffs would have to prove the claims in its Complaint.  Zuffa will likely bring a Motion for Summary Judgment after the discovery stage ends.  Essentially, it is similar to the Motion to Dismiss but would argue that none of the facts would support the claims and as a result, the lawsuit should be dismissed prior to trial.  Of course, discovery is ongoing so we shall see if there are facts that have been uncovered which would strengthen either party’s case.

GSP declares himself a free agent

October 17, 2016

Georges St.-Pierre is a free agent according to the former UFC welterweight titleholder in an interview on The MMA Hour.

Rumors of GSP’s imminent return were strong but according to GSP his lawyer terminated his UFC contract after the UFC failed to offer him a fight.

GSP’s last fight was in November 2013 at UFC 167 against Johny Hendricks.  GSP has remained active despite not being in the Octagon.  According to the interview via MMA Fighting, GSP was offered Robbie Lawler but Lawler is taking time off from fighting after losing his title in July.

Payout Perspective:

Obviously, there are two sides to each story and we will have to see if the UFC confirms that St. Pierre is indeed released from his UFC contract.  If so, this would be big news for other organizations such as Bellator.  GSP is a popular fighter despite being away from active competition since 2013.  His return to MMA would spark interest with any promotion he might land with in the near future.  Now let’s hope this does not get pulled into litigation which might keep GSP from returning.

Rousey returns at UFC 207 against Nunes

October 12, 2016

Dana White announced on the Colin Cowherd show on FS1 that Ronda Rousey will make her return to the Octagon on Friday, December 30th at UFC 207 to take on women’s bantamweight champ Amanda Nunes.

It will be over a year since Rousey fought in the Octagon since she dropped her title to Holly Holm last November.  Since the loss, Holm lost in her first title defense to Miesha Tate and Tate dropped the title to Nunes this past July at UFC 200.

Payout Perspective:

This will be an interesting fight at we will see if the Rousey star is still big enough to carry a PPV.  The show will be on Friday since New Year’s Eve falls on a Saturday this year.  The last time this happened was at UFC 141 with Brock Lesnar headlining against Alistair Overeem.  Overeem defeated Lesnar and the show did 535,000 buys which is low considering Lesnar was on the card.  You might expect that this card may do much more with Rousey’s return.  Moreover, I would guess that there would be another title fight on the card to boost the promotion for this end of the year card.

On another note, the announcement on FS1 as opposed to ESPN which might be seen as a sign of future announcements.

UFC 204: Payout Perspective

October 10, 2016

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 204 from Manchester, England which pitted Michael Bisping defending his UFC middleweight title against Dan Henderson.

Bisping outlasts Hendo

The rematch was 7 years in the making and despite the time in between fights, everyone knew the backstory from UFC 100.  Hendo hit an “H Bomb” that knocked out Bisping and then landed on the Brit with another shot while he was on the ground.  This was the story that sold the fight otherwise the matchmaking never made sense aside from Bisping wanting to avenge a loss.

The fight itself was great.  Hendo almost recreated his KO of Bisping in round 1 and picked his spots which stung Bisping and bloodied his eyes.  However, Bisping’s excellent cardio kept him in the fight and staying on top of the 46-year-old appeared to be the critical factor in the decision.

A matchup with Jacare Souza seems like the most logical matchup for Bisping but we’ll see what happens next.

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Mousasi stops Belfort

Vitor Belfort’s days as a top-level fighter are over as Gegard Mousasi had little difficulty with the former champion.  Belfort looked much different in terms of body composition than previous fights and for a black belt did not handle being mounted too well.

Mousasi called out Anderson Silva in his post-fight interview in what you can call a “resume builder” for the middleweight.

Attendance and Gate

The event took place at the Manchester Arena in Manchester, England and drew 16,000 for a live gate of $1.96 million.  The attendance was impressive considering the event took place in the middle of the night to accommodate American PPV.

The attendance and gate come in second to UFC 105 held at the same arena.  That event which featured Randy Couture-Brandon Vera drew 16,693 for a $2 million gate.

Bonuses

$50,000 bonuses went to Hendo-Bisping for Fight of the Night and Iuri Alcantara and Jimi Manuwa for Performances of the Night.  Mike Perry and Danny Roberts and Stefan Struve could have won bonuses too.

Promotion of the Fight

The UFC did its usual promotional events for the fight.  As seen on the Embedded series, Dan Henderson visited the Manchester City Football Club.  Bisping is a fan of Manchester United, the rival club.

Sponsorships

Monster Energy Drink, UFC Fight Pass and Bud Light were thenotable mainstay sponsors for the night.  In addition, video game Gears of War 4 and “What Now?” the upcoming Kevin Hart comedy also had signage in the Octagon.  Also,  Twinzz.com, a European hat maker was also in the Octagon.  IconicFaceOff.com which features a Conor McGregor commercial on its web site was also on the mat.   Also, UFC 205 signage including it’s “Can’t Wait” tag was in the Octagon.

Odds and ends

UFC 204 had 500,000 plus searches on Friday in the US.  I couldn’t find the number of US searches for Saturday for UFC 204 which might be an oversight or the fact that there were other searches more popular than the event.  However, in the UK UFC 204 registered 200,000 plus searches on Saturday

The post-fight show usually on FS1 was switched to FS2 due to college football.

Brian Stann served as the color commentator in place of Joe Rogan and was fantastic.

The trailer for UFC 205 were shown during the telecast.

Appealing to their apparel sponsor, one of the Embedded showed a picture of a young Michael Bisping wearing a Reebok sweatshirt.  Also, an episode showed Hendo picking out a cup for the fight.

The PPV ended early due to the early stoppages in the first 4 main card fights and the telecast filled it with the Brad Pickett-Iuri Alcintara fight.

Conclusion

Since this fight did not occur in the U.S., it seems that there was less buzz for it.  Then again, if you did not like the main event, there was not much for the casual viewer.  While the Bisping-Hendo fight brought some history and curiosity I don’t think Bisping is a PPV draw unless he’s fighting a name brand opponent.  Hendo is great but he is not a PPV draw.  UFC 199 featuring Rockhold-Bisping drew 320,000 buys.  But, with this happening during college football season, the PPV will likely do 275,000 PPV buys.

Celebrities invest in UFC

September 30, 2016

The Wall Street Journal reports that celebrities will hold an ownership interest in the UFC.  23 celebrities including Ben Affleck, Adam Levine and Serena and Venus Williams are investing in the company.

Per the WSJ, it’s the “most significant business move” since the sale of the UFC this past July.  Terms of the celebrity investments weren’t disclosed.  WME-IMG purchased the UFC for a reported $4 billion.  According to the article, Ari Emmanuel sought out the celebrities he knew to be fans of the sport and who would be willing to market the sport and influence their fans that it is more than a niche sport.

The news comes at the beginning of the hype for the company’s debut in New York November 5th.

Updated, per Darren Rovell, here is a list of those celebrities that invested in the UFC.  Each paid $250K.

Payout Perspective:

The news should not be of a surprise to anyone considering the entity that purchased the UFC this past summer.  Certainly the investment is a part of each celebrity’s financial portfolio so I would opine that this is not 50 Cent investing in Vitamin Water.  Yet, we are seeing the leverage that the new owners have in promoting and extending the reach of the UFC brand.

UFC 203 PPV buys estimated between 425K-475K

September 19, 2016

MMA Fighting reports that UFC 203 early projections have it between 425,000-475,000 PPV buys.  The numbers would make it the best UFC PPV not featuring Conor McGregor or UFC 200 which brings up the question of whether the CM Punk experiment helped boost the buy rate.

The event’s main event featured Stipe Miocic defending his UFC heavyweight title in his hometown against Alistair Overeem.  But most people were intrigued by CM Punk’s debut against Mickey Gall.

Dave Meltzer of MMA Fighting opined that Punk probably brought in an additional 125,000-225,000 extra buys or between $3.75 million and $6.75 million.  This estimate is based on UFC 198’s PPV buy rate which registered slightly under 300,000 PPV buys.

Maybe not a good comparison, but UFC 118 which featured James Toney taking on Randy Couture drew 535,000 PPV buys.  Of course, that event featured Penn-Edgar II at a time that The Prodigy was still a very popular fighter.

Payout Perspective:

One must conclude that the uniqueness of CM Punk’s debut attributed to the buy rate.  While Miocic-Overeem is a good match-up for most hardcore MMA fans, the casual viewer was likely intrigued by the Punk debut.  Does this mean Punk should come back or was this just a one-hit wonder?  We now know Punk’s skills and I would suggest that most casual fans would now pass on Punk’s second fight.  But, the Punk experiment does seem to have paid off for the UFC.

Chael Sonnen signs with Bellator MMA

September 15, 2016

Chael Sonnen is returning to MMA as part of Bellator per an announcement late Thursday. Sonnen, 39, is signing a multi-year, multi-fight contract with the company.

The Bellator press release stated that Sonnen will compete in the 205 pound division although he states in the release that he is not limiting himself to just one division.  Sonnen’s last fight was against Rashad Evans at UFC 167 in November 2013.  He lost via TKO in the first round.

A press conference is set for Friday.

Payout Perspective:

Murmurs of a comeback occurred when Sonnen indicated that his name went back in the USADA testing pool  as he was tested twice under UFC anti-doping policy.  Sonnen can still sell a fight and he is another pickup from the UFC that Bellator hopes can still draw ratings.  Certainly, Bellator’s tentpole events featuring Tito Ortiz, Stephan Bonnar, Ken Shamrock and Kimbo Slice reflect the fact that older fighters can still be attractions.

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