SEC Files Order Against ProElite
March 22, 2012
On March 20th, the Security and Exchange Commission (SEC) issued an administrative release stating that ProElite was delinquent in its periodic filings with the Commission, having filed some but not all of the required periodic reports.
The release can be read below:
The order states the following:
“ ProElite, Inc. (“PELE”) (CIK No. 1015789) is a New Jersey corporation located in Los Angeles, California with a class of securities registered with the Commission pursuant to Exchange Act Section 12(g). PELE is delinquent in its periodic filings with the Commission, having filed some but not all of the required periodic reports. The most recent filings were a Form 10-Q for the period ended September 30, 2008 and a Form 10-K for the period ended December 30, 2008, both filed November 21, 2011. The Form 10-K reported a net loss of $55,567,437 for the prior twelve months. The last report previously filed was for the period ended June 30, 2008, which was filed on August 19, 2008. As of March 16, 2012, the common stock of PELE was quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. (“OTC Link”), had ten market makers, and was eligible for the “piggyback” exception of Exchange Act Rule 15c2-11(f)(3)”
Payout Perspective:
The SEC has requested for ProElite to file a response within 10 days from the day the order was issued. If PE fails to file an answer within the period granted, they could be deemed in default and the proceedings will determine the allegations against it to be true. The Administrative Law Judge will issue an initial decision no later than 120 days (around July/August of this year) regarding the allegations stated above.
In terms of ProElite and the SEC filing, Stratus Media Group (parent group of ProElite) CEO Paul Feller told MMAPayout that this “does not impact the daily operations of ProElite”, as it is a “total separate matter carried over from the old Pro Elite group.” He went on to state that “We’re doing all the necessary paperwork required to comply with the SEC and to lift the temporary hold placed on ProElite.” Feller expects a resolution to the matter in a “very short time frame”.
In terms of running the operation on a day-to-day basis, it is “business as usual” according ProElite Head of Fight Operations T.Jay Thompson. “We are thrilled to be where we are. We have a wonderful TV partner in HDNet and expect to continue that partnership and to grow with them under the new AXS TV brand, as they will further expand their reach into millions of homes.” ProElite is currently “re-fueling” and targeting a Summer date for their next event rumored to be held in California around June.
WWE Earnings disappoint for Q4
February 24, 2012
The WWE announced its Q4 2011 results on Thursday and the earnings were described as disappointing. WWE earnings were lower for the fifth straight quarter.
The main culprit for the poor performance of the company was its film division and television licensing decisions according to Vince McMahon. In addition, costs from starting the WWE Network were cited as reasons for the softening of its earnings.
With respect to its film division, McMahon indicated that the company would utilize different strategies to try to bolster the division’s profitability but if that did not work, the WWE would be out of the film business. The WWE lost $12.2 million in the Q4 alone due to film impairment charges.
The television licensing decisions were based on the WWE’s decision not to distribute two of its properties, WWE Superstars and NXT, which have been showing online.
Via WWE press release:
Revenues totaled $112.9 million as compared to $122.5 million in the prior year quarter. Operating loss was ($13.1) million as compared to Operating income of $14.4 million in the prior year quarter. Net loss was ($8.6) million, or ($0.12) per share, as compared to Net income of $8.1 million, or $0.11 per share, in the prior year quarter. Excluding the impact of film impairments and network related expenses in the current year quarter, Adjusted Operating income was $3.1 million as compared to $14.4 million in the prior year quarter. Adjusted Net income was $1.8 million, or $0.02 per share, as compared to $8.1 million, or $0.11 per share, in the prior year quarter.
The WWE spent $4 million in Q4 on the creation of the WWE Network. However, the position on rolling out the new network was uncertain.
On the positive side, McMahon said during the earnings call that live attendance was up 7% for the quarter. Yet, this may be due to the fact that there were 11 fewer events in the quarter.
The PPV revenues were up 2% from 2010’s Q4 and up 6% over 2011. However, this can be seen as the result of a strong Wrestlemania PPV which is likely due in part to the return of Dwayne “The Rock” Johnson.
(H/t: Seeking Alpha)
Payout Perspective:
While overall revenues were up from 2010, it was mainly due to the success of Wrestlemania 27. It also looks like the WWE may need to see a significant turnaround if it wants to remain in the movie business otherwise it may continue to see huge losses. The gloomy numbers may mean some downsizing of the WWE talent roster which traditionally comes after Wrestlemania.
The other notable news coming out of the earnings call was McMahon’s description of the WWE Network as “potential creation” of the network. This is interesting considering the prior hype for the network which included commercials for it on Raw and the initial belief that it would roll out by Wrestlemania this year. It looks like the WWE wants to make sure it gets it right before unveiling it. However, its sunk $4.0 million alone this quarter into the creation of the network and has committed staff and other startups to this venture in prior quarters.
It will be interesting to see how the WWE will try to turn things around. Based on the great performance and impact last year’s Wrestlemania had on the WWE earnings, it will hope that this year’s Wrestlemania on April 1 will produce more of the same.
Pacquiao’s economic impact in Vegas
November 12, 2011
The NY Times reports on the economic impact Manny Pacquiao has on Las Vegas. Its a good read on how Pacquiao’s popularity has a trickle down economic affect on Vegas during fight weekend.
The third fight in the trilogy sold out within 2 weeks of tickets going on sale. Gross sales are expected at $11.8 million. The average ticket is more than 40 percent than that of the Mayweather-Ortiz fight. Of course, Ortiz was a relative no name so that may be one of the reasons for the disparity.
The Nevada Athletic Commission is also glad to see a Pacquiao fight.
Via NY Times:
The commission, (Keith) Kizer said, receives 6 percent of the gate, in addition to a $50,000 fee, good for $758,000, based on the projection. “One fight,” Kizer added, “basically covers our entire budget.”
The article presents some interesting details on how the Vegas travel industry has capitalized with different ethnic groups. For instance, the loyal Pacquiao fans brings high-end Asian gamblers to the Vegas tables. It also tries to book a Mexican fighter to fight during Cinquo de Mayo weekend.
Casinos made almost 29 percent more than usual when Pacquiao fought Shane Mosley this past spring. Pacquiao also has an impact on nongambling activities in Vegas where the average nongambling spending averaged $645.
More from the NYT:
By multiplying that (nongambling spending) average with the gate attendance, the visitors authority arrives at an “estimated nongaming economic impact” for each fight, usually in the range of $6 million to $12 million. When Pacquiao tangled with Erik Morales in November 2006 at the larger-capacity Thomas and Mack Center, the estimated nongambling economic impact was $12.9 million, the highest total in the past five years.
Payout Perspective:
It would be interesting to look at the Pacquiao affect compared to a UFC Vegas event. Of course, it was just this past January for UFC 125 where almost half the tickets were comped. Then again, Mayweather-Ortiz had its share of comps as well. Could the UFC ever have that much of an economic impact on Vegas with a megafight? Another question that arises is what will happen in the next couple years when Manny Pacquiao and Floyd Mayweather are retired and/or past their prime? Will Vegas look to the UFC as the premier “sport” event to center its tourism around or will we see a boxing superstar arise in the next couple years. Its definitely not a good sign for boxing when most of America does not know when the heavyweight champion is making title defenses. Or, where he is making them.
Certainly the nationalistic pride and international appeal of Manny Pacquiao has something to do with the boom in tourism during a fight week. Also, the fact Pacquiao only fights twice a year is another reason these events are heavily attended. For the UFC, we’re seeing a fight a month and the UFC has not established a true “must see” superstar; a fighter that people are willing to pay plane airfare, hotel and tickets to go see. In the coming years, we may see someone evolve into this for the UFC and it will be interesting see who it will be.
WWE announces third quarter earnings
November 5, 2011
The WWE announced its 3rd quarter earnings this past Thursday in a conference call hosted by WWE Chairman Vince McMahon and other WWE executives. Despite beating analysts expectations for Q3 earnings, net income for WWE fell to $10.6 million vs. $14.3 million in 2010.
The WWE announced that revenues totaled $108.5 million as opposed to $109.6 in 2010. A decline of 1%. Analysts expected adjusted net income of $0.15 per share. WWE announced its adjusted net income as $0.19 per share.
One of the bigger questions on the earnings call was the WWE Network announced to debut in 2012. Notably, there was no talk about the recent announcement that there would be a WWE channel on YouTube. So, it appears that the WWE will go forward with an over the air network in addition to its YouTube channel.
McMahon and other WWE executives were quite vague regarding the plans for the WWE Network. But here are some tidbits.
Via Seeking Alpha:
(McMahon) Capital expenditure is about $10 million to $15 million mostly in equipment and construction for our network. And we believe that, obviously we have finally turned the corner on where we are with our network, and we’ll soon be making a very big announcement as it relates to that.
So that we are generally speaking of where we are with the quarter this year. And notwithstanding that, again, we are taking advantage as we always do with all of our strategic opportunities as well as I’ve said before, including launch of the WWE Network, so with that we can achieve meaningful growth as far as that in other aspects of our company is concerned.
We expect our fourth quarter 2011 results will reflect $46 million in startup operating expense and $10 million to $15 million in capital expenditures for equipment and construction. This investment will provide space for additional staff and production equipment and allows for a redesign of enhanced interactive website to support a full range of network programs.
- McMahon indicated that the network would not partner with distributors. The network will be wholly owned by the WWE.
- WWE entered into a revolving credit agreement of $200 million based on favorable conditions in capital markets. Although the WWE indicated no plans to borrow at the time, it could utilize the agreement for the WWE network.
Other information:
- Q3 saw an impairment charge of $5.1 million coming from its film division
- PPV buys increased domestically by 3%, TV ratings were flat compared to Q2 and live attendance saw a 6% decline.
- Excluding the impact of the film impairments in the current quarter, Adjusted Operating income was $21.0 million as compared to $20.3 million in the prior year quarter. Adjusted Net income was $14.1 million, or $0.19 per share, as compared to $14.3 million, or $0.19 per share. (via WWE press release)
- Although the WWE announced a shift in its business strategy earlier this year. there are no threats of a takeover.
- Analysts actually take issue with the WWE’s creative team as it cites the lack of taking advantage of wrestler C.M. Punk’s anti-hero storyline. However, the return of The Rock to the WWE this quarter, it should help with ratings. McMahon addressed the fact that the WWE could address these “creative challenges”
WWE stock price was up to $10.70 but closed down slightly for the week at $10.58.
Zuffa Maintains “BB” Credit Rating, “Stable” is Key
November 3, 2011
Standard and Poor’s has maintained Zuffa’s credit rating at “BB” based on the belief that the company’s strong EBITDA margin and healthy cash flow are sustainable over the “near-to-intermediate term” as Zuffa continues to grow and benefit from it’s well-recognized (UFC) brand and dominant market position.
On the other hand, the following S&P concerns kept Zuffa’s credit rating from being upgraded:
- Risk of revenue and EBITDA volatility given the company’s primarily event-driven business model
- Vulnerability to changing consumer preferences and susceptibility to variability in discretionary spending
- Management’s aggressive financial policy
- Although the UFC has a strong fan-base, in order to maintain their advantage, they need to continue to develop fighters that appeal to the 18-34 demographic.
- Preserve current regulatory acceptance of the sport. Fatal injury or change to the rules and regulations governing the sport and legal status could have meaningful impact to the company’s business model and long-term viability.
Report Summary
- UFC’s seven year TV deal with Fox Sports Media Group, replacing Zuffa’s current deals with Spike TV and Versus, offers more stable and favorable economics over the term of the TV deal in hope of potentially reducing Zuffa’s dependency on the more-volatile event based revenue.
- Zuffa should be able to deliver more content and potentially expand it’s audience through the vast distribution FOX provides, thus exposing content to a higher potential viewership base.
- During the first half of 2011, revenue and EBITDA were down against the comparable period in 2010. Reasons given: One less PPV event, as well as significant fighter injuries which contributed to lower PPV buys.
- Despite a weak first half of 2011, the report expects Zuffa’s total debt to EBITDA and coverage measures to remain in line with the rating over the term.
- It is expected that Zuffa owners will continue to pursue moderate distributions over time as the company continues to grow, which will likely preclude any meaningful sustained improvement to Zuffa’s financial risk profile.
- Nearly 75% of Zuffa’s total revenue is event based. The majority is composed of PPV buys and ticket sales. Remaining 25% revenue is composed of live and taped television broadcasts, sponsorship, merchandising, licensing, and content distribution deals.
- Due to the FOX television deal, it is anticipated that TV broadcasting may become a larger source of revenue, as they see this revenue stream as less volatile than event based revenue.
- Zuffa has been successful in expanding sponsorships and merchandising, which improves stability and strengthens their business model.
- Zuffa’s expansion plans are seen as a positive due to the potential of growing revenue from a more diversified fan base and broadening the acceptance of MMA.
- UFC expansion into the UK several years ago was extremely volatile, and they have since taken a more cautious and measured approach in international expansion.
- Interestingly enough, the report points out that Zuffa could face increased labor costs in the future if fighters organize (union) and seek a higher share of revenue, which is the case for most major sports in the U.S.
- The acquisition of Strikeforce (along with the WEC) is believed to have strengthened the UFCs already dominant market position, as it continues to increase the number of fighters and title fights under the promotion.
- Liquidity: Zuffa has adequate sources to cover its needs over the next 12 to 18 months. Sources include cash flow generated from strong operations and it’s revolving credit.
- Uses of liquidity include minimal capital spending needs, modest amortization, acquisitions, and distributions.
- Debt: Zuffa had only $1 million of availability under its $50 million revolving credit facility as of June 30, 2011, which expires in 2012. $425 million term loan due in 2015.
- Payments for taxes are primarily distributed directly to the owners and additional dividend payments are limited by a restricted payment basket under the credit facilities.
- The expectation is that owners will likely continue to pursue max allowable distributions under the credit agreement.
Zuffa Credit History
November 2007 – S&P Cuts Zuffa Rating, BB to BB-
July 2008 – Zuffa Rating Goes Negative to Stable
July 2009 – Cuban Now a Zuffa Bond Holder
October 2009 – S&P Re-Affirm BB-, Slide Recovery Rating Down
December 2010 – S&P Raises Zuffa Rating, BB- to BB
August 2011 – Zuffa Maintains “BB” Credit Rating
Payout Perspective
Typically, a rating of “BB” implies that Zuffa is less vulnerable in the near term, although it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which can result in failure to meet its financial commitments. On the other hand, it’s a credit rating of “stable”, which is not a bad place to be for a company who’s core business model is so volatile and can be affected by many market variables.
The international expansion efforts and the seven-year $100 million FOX TV deal help tremendously in bringing more stability into the UFC’s business model, but with that said, it still only accounts for 25% of their total revenue. In this regard, not much has changed since 2010 when Zuffa was able to match the event based revenue growth with the non-event based revenue growth, so we still have a 75-25 split in overall revenue. The hope here is that through the new TV deal, more mainstream exposure can come to the brand by creating more PPV draws, and opening the door for more stable revenue opportunities which can help offset the volatile nature of PPV based core business model.
The report points out that revenue and EBITDA for the first half of 2011 is down compared to the same period in 2010, though one less PPV was accounted for this year. The main reason given for the decline was injuries to UFC stars. The problem with solely blaming injuries and correlating it to revenue is that you hope next year won’t be as bad but as we are starting to see on a year-to-year basis, injuries are part of the sport. Fights and training camps take a toll on the fighters, so having a PPV star such as a GSP or Brock Lesnar can really only give you about 2 fights per year taking all the variables into account. Injuries is an unknown that cannot be controlled or correctly estimated beforehand, so it will be interesting to see how if injuries becomes a hot topic again in 2012, as it has been for the past 2 years.
If injuries is the main component of declining PPV buys, then that brings up another issue. It means that fans are only willing to pay to see fighters that they deem worthy of their hard-earned money. It also shifts the drawing power to the fighters instead of the UFC brand and product they offer. It means MMA may not be enough anymore to get anyone outside of the MMA hardcore fanbase to tune in, and I’m sure that’s something the UFC hopes to address with the exposure the FOX TV deal brings along with its vast distribution platforms.
There has also been a lot of talk this year about the UFC or MMA peaking or plateauing, and pointing out declining PPV buys and TV ratings as a quick and easy measuring stick. Oddly enough during a year when we’ve seen TV ratings decline or hit low points for the UFC and Bellator, both were able to sign TV deals with major media groups. UFC signs a huge TV deal with FOX that not only gets their full support and puts them on FOX, FX, and Fuel TV, but it can now be linked to FOX and become synonymous to other mainstream sports they televise. FOX has been heavily promoting the first UFC on FOX event on all their high viewership sport programming including MLB’s World Series and Sunday NFL games. Bellator was just purchased by Viacom and looks to be moving on to Spike in 2013 after only getting roughly 150-180K viewers on average per event on MTV2. Again, Spike re-iterates that they will be sticking with them even through hard times as they have done with other programming. They find themselves in a similar situation when the WWE left Spike and TNA was picked up as their replacement. After a few up and down years, TNA has been getting great ratings for Spike as of late, a formula they hope to reproduce with Bellator after the UFC leaves at the end of this year.
What we are seeing here is that these media groups believe MMA has a ton of potential left, but at this point, it makes more sense for these media groups to either own or sign a very intimate contract with a promotion rather than having a licensing fee agreement for MMA programming such as Showtime, Spike, Versus, and CBS have done in the past. Is more mainstream MMA content what we need for ratings and PPV buys to kick back up again or will it just add to the ever-growing free MMA content anyone can get from various TV and media channels? Will an adverse effect shift UFC’s business core to be more TV dependent in the next few years? Can you really sustain a PPV core model in the long run? I have a feeling these questions will be answered in the next 5 years, as the FOX and Spike TV deals run their course.
It’s not realistic to expect that the UFC will outdo itself year-after-year, but it will be interesting to see how it can push itself off a potential stagnant stage and onto that next level as they have shown in the past with the Spike TV deal (TUF), the acquisition of PRIDE/WFA/WEC, and now signing the major FOX TV deal.
MMAPAYOUT QUICK THOUGHTS:
- Zuffa has significantly drained their revolver, which makes you wonder what kind of burn rate/overhead they have.
-The other interesting tidbit is Zuffa’s dividend distribution policy. On one hand, some people think its smart/prudent to protect your gains/investment. On the other hand, some people say if you really believe in this company long term and its a business your going to keep, why would you cash out all the money instead of putting it back into the company.
Report: Wrestlemania gave Atlanta $62 million economic boost
October 24, 2011
The Atlanta Business Chronicle reports that this year’s Wrestlemania brought a $62 million economic impact to the area according to an economic research study by the WWE. This is a record for the WWE and a $17 million increase in economic impact from last year’s Wrestlemania in Glendale/Phoenix, Arizona.
This year’s Wrestlemania, which featured the return of Dwayne “The Rock” Johnson, garnered almost $8 million in taxes for the area. A portion of the impact relates to the increase in out of state visitors staying in the area for the event.
Darren Rovell also tweeted that the WWE’s impact equated to 621 full-time jobs in Atlanta.
Payout Perspective:
The study is being released a week before the WWE announces its earnings for the third quarter. So, maybe a bit of public relations by the WWE. The reported financial impact on Atlanta is similar to the boon Toronto received for UFC 129 and is good news prior to its earnings call. Obviously, one may argue the economic impact report is skewed since the study was done by a Stamford, Connecticut firm (where WWE headquarters is located) likely commissioned by the WWE. But, it shows the importance of the live event is to the UFC and WWE. Both have added to the live experience through Expos at big events which allow consumers more access and touchpoints to its brands.
McMahon denies any ties with UFC in company earnings call
August 6, 2011
WWE announced its 2nd quarter earnings on Thursday as it beat analyst expectations. In its earnings call, Vince McMahon dismissed any partnership with the UFC for a television network.The question came as a result of Dana White’s recent visit to WWE headquarters. White was vague about the reason for his visit while McMahon indicated that the UFC head’s visit was purely social.
The second quarter ended June 30th and included this year’s Wrestlemania, which contributed to the financial success for the company this quarter. Among the other findings:
- Wrestlemania was big for the WWE this year as it offset some of its losses (mostly in its home video sales unit). Its likely that the return of the Rock was the single factor behind that.
- The WWE All-Stars video game was another key positive for the WWE revenue as sales of the game have been strong.
- July’s WWE PPV “Money in the Bank” was 20% above its initial projections. The CM Punk factor probably contributed to the numbers. McMahon indicated that overall PPV revenue for the WWE is on the upswing.
- RAW TV ratings are up 3% from 2010. The WWE will begin a one hour WWE program prior to RAW which McMahon believes will contribute to revenue.
- Although live event attendance is down for 2011, there are positive signs of fans coming back.
McMahon spoke about the WWE Network (via Seeking Alpha):
From a content strategy, finally we’re rolling out the WWE Network after all these many years. In terms of putting it all together, we have I think the most compelling startup network in the history, which is saying a great deal, because I understand what other networks have started out as, we have an extraordinary leverage with all the content distributors.
And again, we’re finally rolling that out. And with meetings coming up actually this week and next, so we’re very proud of that. And we think again that’s going to be a significant bottomline number to us going forward.
McMahon was asked about whether he cared about the potential of the UFC having its own television network (via Seeking Alpha):
No, frankly I think they fell on their butt recently, trying to do network with NBCU Comcast. I don’t know if it makes any sense for them. I can’t speak to that, but it makes a great deal of sense for us. Again, they’re totally different than we are. We are in the entertainment business, which gives us formal leverage as far as networks are concerned.
He also dismissed any partnership with the UFC as he distinguished the UFC as sports and the WWE as entertainment. This mantra was stated both times when questioned about the UFC and it was said during the WWE’s feature on Bloomberg TV.
Most analysts list the WWE stock as most list it as a hold.
For those interested, the transcript of the earnings call is here.
Payout Perspective:
The WWE’s earnings announcement came on the worst financial day since 2008. Its easy to see that the addition of The Rock at Wrestlemania and its new WWE All-Star game, which features new and old WWE wrestlers, were big reasons for its earnings success this quarter. Also, RAW ratings continue to impress. It was interesting to note that while McMahon may respect the UFC, there is no way that it partners with the UFC on a network.
McMahon made some interesting comments about the UFC as he questioned whether a network would be the right direction for its business. He noted the UFC “falling on its butt” with “trying to do network with NBCU Comcast.” An interesting take and we will see what will happen with the UFC’s next television deal. With the news of the UFC-Fox Latin America television distribution agreement, there is speculation that Fox may be the new leader for the UFC television deal. Stay tuned.
Payout Spotlight: ProElite VP of Fight Operations T. Jay Thompson – Part 2
July 14, 2011
In part two of MMAPayout’s interview with ProElite’s Vice President of Fight Operations T. Jay Thompson, he spoke to us about some of the smaller details regarding the August 27 event, the differences between the old ProElite and the new, plus his thoughts on Rich Chou, Kimbo Slice, Dana White, Women’s MMA, promoting MMA for the past 15 years, and being a huge MMA fan.
MP: What type of cage/ring will ProElite use on August 27? Are you a fan of the ring or the cage?
Thompson: We will be using a standard circular cage, similar to what was used in EliteXC. I am a big fan of the ring but I believe that era of MMA has passed. The ring was great back in PRIDE and in Japan, but those times have passed. As for the cage, I’m a big fan of the smaller cages, so I’m hoping that we can make it a bit smaller in the future because they create exciting fights.
MP: How do you feel about co-promotion?
Thompson: I am all for co-promotion. Not only did I host the first co-promotional sanctioned event for Shooto in the U.S., but I was fortunate enough to work with several Japanese promotions and I was able to bring fighters like Rumina Sato stateside, which was a proud moment for me.
MP: How do you feel about working with ProElite again after your first stint. It appeared that MMA fans were waiting for the more experienced MMA promoters under the banner to take over the direction of ProElite last time around, but it never happened. How does your position in ProElite differ this time around?
Thompson: I had nothing to do with decision making the first time around. It’s no secret that Gary Shaw and I didn’t see eye to eye. It was an extremely frustrating situation. Like I said before, this time around I will be working with Rich Chou, and as a team, our goal is to place ProElite in a position to capitalize.
MP: Speaking of Rich Chou, were you surprised that he was let go after Zuffa purchased Strikeforce and can you talk about what his acquisition means for ProElite?
Thompson: I’m excited to work with Rich again. I’ve worked with Rich for a long time now and he is a hard worker and not many people realize this, but he does a lot more than just the matchmaking. He will be a valuable asset for us… but am I surprised that Zuffa let him go? No. Zuffa’s entire company is filled with excellent employees and he was just another for them. So no, I am not surprised at all.
MP: If Strikeforce ends up being absorbed by the UFC and Women’s MMA needs a new home, do you see ProElite becoming a home to them the same way that Strikeforce was able to capitalize on the female fighters they acquired from EliteXC?
Thompson: First of all, I am a big fan of Women’s MMA. Like I said before, we are talking to anyone that’s available. We’ve already scheduled Sara McMann, a U.S. Olympic medalist, to our first event, so they will have a place in the promotion.
MP: Did you watch the recent fight between Sheila Bird and Kim Couture. What did you think of that fight? Is Bird the type of fighter that you would be interested in signing?
Thompson: The officiating was terrible, but I was thrilled to see a win via leg-scissor choke. You can ask anyone that trains out of my garage, that is my favorite choke and I’ve been practicing it for years. As for Sheila, of course we would be interested in signing any top prospect. You have to realize that I am a huge MMA fan, just like you guys. I go to the UG, read the websites, and watch the fights on Youtube just like everyone else. I try to catch as many fights as I can and keep an eye on up-and-coming talent.
MP: Kimbo Slice was heavily featured in EliteXC during the initial run. Would ProElite be opposed to signing someone like a Kimbo Slice, Dave Bautista, or Bobby Lashley?
Thompson: There were many decisions I did not agree with that ProElite made, but signing Kimbo Slice was not one of them. I am a big Kimbo Slice fan and I don’t have a problem with fighters who bring new eyeballs to the sport. Kimbo Slice was a big part of why ProElite and CBS still hold the record for highest rating on a major network for MMA. As for Bobby Lashley, I am a bit disappointed in his progression in MMA. I was rooting for him and hoping he would have had more of an impact on the sport by now. In terms of signing any of them, I would not rule anything out.
MP: Now that you are the VP of Fight Operations for ProElite, what do you think you can bring to the table this time around that you weren’t able to last time?
Thompson: My strong-point is not only discovering and developing new talent, but reviving already established talent. I was able to do it for Robbie Lawler, Frank Trigg, and Jason Miller, and it’s something that I look forward to doing again in ProElite.
MP: What is your vision of ProElite in the near future and where would you like them to be in 5 years?
Thompson: Our goal is to become the number two promotion in MMA in five years and be profitable. If we could do that, we would be in a great position to capitalize on opportunities. As for ProElite, I hope it becomes a mixture of all my previous promotions (ICON Sports, SuperBrawl, etc). We want to put on exciting and entertaining fights for our fans.
MP: What type of reaction has ProElite received from the fans and MMA sponsors since announcing the company’s return?
Thompson: We are getting a great deal of support from MMA fans and those involved on the business side of the sport, so that’s great to see. I was and still root for Strikeforce, so it’s good to see others do the same for us.
MP: In a recent interview, Dana White said “T. Jay [Thompson] has been involved in some great fights — SuperBrawl — I would call him an early pioneer of the sport. Good for him” regarding ProElite being resurrected. What is your reaction to that comment?
Thompson: Actually, it makes me think that I’m doing something wrong. Joking aside, I am a huge Dana White fan, and we are just a small blip on the radar, so it could all change in the future.
***
MMAPayout was also able to briefly catch-up with ProElite new hire Rich Chou. Chou insisted that he was “very blessed” to have many opportunities presented to him after he was let go by Zuffa, and is now just trying to find a way to transition his life into working for ProElite. Chou now finds himself frequently flying between San Jose, Los Angeles, and Hawaii. He also points out that he has been extremely busy preparing for the August 27 show in Hawaii, and hasn’t had much of a chance to settle down.
Chou along with T. Jay Thompson and a couple of Stratus Media Group executives currently make up the team for ProElite, a vast contrast of how the original company was managed. “I am very blessed with the opportunities that were available to me after Strikeforce” said Chou. “I think MMA promotions realized what type of work I can put in and the success the companies I’ve worked with have had in the past. I’m looking forward to working with T.Jay and putting on great fights for the fans.”
Payout Spotlight: ProElite VP of Fight Operations T. Jay Thompson – Part 1
July 11, 2011
MMAPayout had the opportunity to interview Vice President of Fight Operations for ProElite T. Jay Thompson. He spoke to us about the August 27 event, his goals for the promotion, and what we can expect from ProElite going forward.
ProElite hosted it’s first MMA event, which was televised on Showtime, back in February of 2007. In total, ProElite was able to produce 21 MMA events before it closed it’s doors in October of 2008, as it accumulated a debt of $55 million in the span of less than 24 months of operations.
With EliteXC’s previous failure and Strikeforce’s purchase by Zuffa earlier this year, despite both having historic network television deals and a number of MMA stars on it’s roster, begs the question: Can a viable competitor emerge? Can the market sustain another national promotion over the long-term? T. Jay Thompson believes becoming a profitable number two promotion is the initial goal this time around for ProElite.
MP: What will the name of the MMA promotion be under ProElite and does ProElite still have rights to EliteXC, Cage Rage, etc?
Thompson: We will be using ProElite as the name of the promotion, as the ProElite name still has value and brand equity. We still own part of the rights and library to EliteXC and Strikeforce owns others after the asset purchase, but we still have the rights to other promotions such as Cage Rage and ICON for example.
MP: So far, the rumors are Kala Hose vs Drew McFedries, Raquel Pa’aluhi vs Sara McMann, Jake Huen vs Mark Ellis, Andrei Arlovski, and Kendall Grove all possibly participating in the upcoming August 27 event taking place at the Blaisdell Arena in Hawaii. Can you confirm any of these fights? Will there be an emphasis in Women’s MMA?
Thompson: There will be an announcement this week but all I can say is that you guys have done a very good job. Those fights sound very plausible. I can tell you that we signed the first American woman in history to receive a silver medal in women’s wrestling at the 2004 Summer Olympics in Sara McMann and she will be taking on Raquel Pa’aluhi, who comes from a great Hawaiian MMA background. Whether male or female fighters, we are talking to anyone that’s available and that make sense for us and what markets we go into.
MP: How will MMA fans be able to watch the August 27 event? Are there any concerns about running the show on the same day as the monumental UFC 134: Silva vs Okami taking place in Brazil?
Thompson: The event will be available for fans most likely by streaming from a major MMA website. We are hoping for a TV deal to be in place, but realistically, it will most likely be streamed from Hawaii at 7PM local, which means it will air just after UFC 134 at 10PM on the west coast. We are not trying to compete with the UFC, and just like a fighter coming back from a long layoff, we have to work out the kinks and ring rust. We hope to do that in the first couple of shows.
MP: Does ProElite have any major sponsors lined up for the August 27 event?
Thompson: We are currently not aligned with any major sponsors. As for the event, nothing is official just yet, but we aren’t expecting many major sponsors for the first event.
MP: ProElite CEO Paul Feller has mentioned before that a lot of what PE will do in the future depends on what happens with Strikeforce on Showtime and UFC/Bellator on Spike TV. Is the goal to eventually land a TV deal with one of those big outlets?
Thompson: My job is to put ProElite in a position to capitalize on any opportunities that present themselves in the future. So we won’t rule anything out at this point. Stratus Media has talented people and many have worked in/with the TV industry, so we feel pretty confident we will be on a TV outlet by our second event.
MP: When will the second event take place and how many events are you planning for 2011?
Thompson: The second event will take place in November, which is when we believe we will have a TV deal in place. That means we will have 2 shows in 2011, then ramp up for 2012.
MP: How will ProElite be funded and operated this time around? It was well documented that the website, offices, employee salaries, etc were above and beyond what they should have been in terms of spending.
Thompson: ProElite will be ran lean and mean this time around. It was frustrating watching PE burn through money and there was nothing I could do. It’s a reason why we are only holding two events this year. We want to analyze and make decisions that make sense for the company and our shareholders.
MP: Will Hawaii be the home-base of ProElite, similar to what San Jose was for Strikeforce?
Thompson: We want to host about 2-3 shows in Hawaii every year but I wouldn’t say we have a home-base. Remember that our offices are located in California, so we will see. Our goal is to go into markets that make the most sense.
MP: Is running MMA events out of Hawaii a concern, considering the MMA tax after the sport was regulated there a few years ago?
Thompson: Hawaii gets 4% on the gate, 4% on PPV revenue, but it is capped at $50K, so it’s no different if we hosted the event in California or New Jersey. Dana White made those comments back when the UFC was looking into putting on an event in Hawaii, but those regulations have been modified since. I wouldn’t be surprised if the UFC came to Hawaii soon and ran a show from Aloha Stadium.
***
Part 2 of the interview will discuss the differences between the old ProElite and what Thompson envisions this time around. Also, his thoughts on Rich Chou, Dana White, Women’s MMA, being a promoter in MMA for the past 15 years, and being a huge MMA fan.
CNBC’s “Fistful Of Dollars” Features the UFC
April 28, 2011
Darren Rovell of CNBC interviewed Lorenzo Fertitta on the “Fistful of Dollars” segment that featured the UFC growing from a 2 million dollar purchase to a 1 billion dollar brand. The segment also touched on the Bud Light sponsorship, UFC 129 success, and when they plan to cash out and sell.
Payout Perspective:
The interview touched on some very key points, but points nonetheless that we have heard before and that the UFC believes are important to stress to the public and their fanbase. Here are some of the highlights from the segment:
- In 2001, Frank and Lorenzo Fertitta along with their training parter Dana White bought the UFC for 2 million dollars, have since turned it to a billion dollar brand.
- Points out that 53,000 tickets were sold to their “129th” event in a matter of hours.
- Lorenzo is expecting UFC 129: GSP vs Shields to sell “lots of PPV’s”.
- Lorenza said they are starting to weave on to the mainstream but they have a long way to go and grow domestically and international.
- They claim Lorenzo and Frank own 45% of the UFC each, and White owns 10% … but we know that isn’t the case after the Abu Dhabi based Flash Entertainment purchased a 10% stake of the company, dropping Lorenzo and Frank to 40.5% of the company each and Dana White to 9%.
- Estimated that the UFC sold around 9 million PPV’s in 2010.
- UFC key sponsors listed in the interview were: Anheuser-Busch, U.S. Armed Services & Burger King.
- Average ticket price for a UFC event is $276, tickets usually priced between $50-$1,000.
- Anheuser-Busch resigning with the UFC shows how valuable the 18-34 male demographic is to them, will make the UFC a significant part of their sponsorship efforts.
- When Lorenzo was asked about any plans to cash-out on the UFC, he stated that he and his partners feel there is a ton more to accomplish in the sport still.
- They highlight that the first UFC Gym opened in 2009, they have a total of 3 at the moment. They also sell branded gym equipment.
- For Ancillary Revenue, they list Gyms, DVD’s, Video Games, and Collectibles.
- The UFC is in 147 countries/territories, 500 million homes worldwide, not including current deals they are working on in China, India, and other big markets.
