UFC 188: Payout Perspective

June 17, 2015

Welcome to another edition of Payout Perspective.  This time we take a look at UFC 188 taking place from Mexico City, Mexico.

Werdum Undisputed HW Champ

Fabricio Werdum defeated Cain Velasquez to earn the undisputed Heavyweight title.  It was a submission that ended the long-running win streak of Fedor Emelianenko.  It was another submission that ended the Heavyweight title reign of Cain Velasquez.  Werdum’s guillotine choke ended the night for Cain who seemed gassed despite continuing to come forward during the fight.  It was one final lunge at Velasquez that spelled his doom as it seemed that Werdum had a smile on his face as Cain attempted a takedown but was caught by Werdum.

It has been two years since Cain Velasquez had been in the Octagon. It probably was not rust from not fighting but the altitude of Mexico City that could have been the issue.  He spent two weeks in Mexico City but Werdum had been there for over a month.

Werdum could face Andre Arlovski or Stipe Miocic next.

ufc 188 poster

Alvarez escapes Gil

Eddie Alvarez scored a split decision over Gilbert Melendez in an exciting co-main event.  Despite having his left eye almost shut after round 1 due to a Gil elbow strike, Alvarez came back in rounds 2 and 3 to eke out the win.  It must have been a relief for Alvarez to finally get a W in the Octagon after his ordeal with Bellator and losing in his UFC debut last fall.

The decision could have gone either way and these two probably do not lose too much (Eddie #4, Gil #5) in the rankings after the fight.

Next up for Eddie Alvarez?  Possibly Benson Henderson since they were originally scheduled to fight earlier this year.  We could see this in South Korea in November.

Attendance and Gate

The event drew 21,036 which was 36 more than the UFC’s event last year in the same venue.  No gate was announced so we do not know if how many comps were provided.

Bonuses

Fabricio Werdum, Patrick Williams, Yair Rodriguez and Charles Rosa earned the $50,000 fight bonuses.  Werdum and Williams earned the Performances of the Night and Rodriguez and Rosa earned the Fight of the Night.

Promotion of the Fight

UFC Embeddeds provided some controversy as Werdum accused Cain of being a “Fake Mexican.”  Essentially, Cain is American first and not from Mexico.  It was an interesting accusation that reminded me of Oscar de la Hoya-Fernando Vargas from years past.  Of course with recent news events about identity, it would be topical if not for the fact that no one seemed to care.

Similar to UFC 180, Doritos advertised for this fight by having the fighters’ likenesses on Doritos bags.  It also offered a contest for fans to meet and greet UFC fighters.

Doritos bag (pic via Josh Sanchez twitter)
Sponsorships
The Octagon sponsors included MetroPCS, the movie Self/Less, Doritos, DraftKings, Bud Light, Cinemex, BetCris, UFC Mobile from EA Sports and Monster Energy Drink in the center.

BetCris is a Mexican online gambling company. Self/Less is a movie from Universal Studios. It received a little promo featuring Forrest Griffin.

Cain added Monster Energy Drink to his list of sponsors which included Affliction, Oak Grove Technologies and American Ethanol.

Notably, Werdum was sponsored by Reddot.

Odds and Ends

Alvarez’s Underground King shirt, originally made by Jaco, is already on sale (i.e., reduced in price) at the UFC.com store.

Two fights ending in the first round on the UFC Prelims meant a very short night of fights on tv. Speaking of which, it was on FX instead of FS1 due to scheduling conflicts.

UFC 188 was shown in select theatres once again. It would be interesting to know how many people actually went to theatres to watch it.

Is Henry Cejudo ready for Demetrious Johnson yet?

Conclusion

In looking at the success of this event perhaps we look at how it did in comparison to past June PPVs. Traditionally, June PPVs have been terrible. The average PPVs from 2012-2014 is 132,000 buys. Google Trends for UFC 188 showed interest from Mexico by mediocre interest from the United States. Still, one would think that it had to improve on last June’s PPV of 115,000. I have an optimistic estimate of 200,000 PPV buys.

Can UFC 188 break the June swoon for PPVs?

June 13, 2015

With UFC 188 set for Saturday, we shall see whether the event featuring Cain Velasquez and Fabricio Werdum improve upon June’s usual dismal PPV buy rates.

Based on the info compiled by MMA Payout:

2011 UFC 131, Vancouver, BC – Dos Santos vs. Carwin – 330,000

2012 UFC 147, Belo Horizonte, Brazil – W. Silva vs. Franklin – 140,000

2013 UFC 161, Winnipeg, Manitoba – Evans vs. Henderson – 140,000

2014 UFC 174, Vancouver, BC – Johnson vs. Bagautinov – 115,000

This year’s June event takes place from Mexico City, Mexico.  The card is stacked with Mexican and/or Mexican American fighters.

One would think that the return of Cain Velasquez as he takes on the interim Heavyweight Champion Fabricio Werdum would draw more than the 181,000 average for June PPV buys the past 4 years.  Moreover, Gilbert Melendez versus Eddie Alvarez is a real strong co-main event.  Yet, there seems to be a lack of buzz for the event.  Notably, despite a sellout in Mexico City last October, the PPV buy rate drew just 185,000.

Payout Perspective:

The last time a June PPV surpassed 500K buys was Chuck Liddell’s last UFC fight against Rich Franklin in 2010.  UFC 115 drew 525,000 PPV buys.  With the big July card up next, June’s PPVs seem to be overlooked.  This time, June’s PPV offers some big fights.  The question is whether fight fans will tune in to pay for it.

Mayweather, Pacquiao top annual list of highest paid athletes

June 11, 2015

Forbes announced its annual list of highest paid athletes.  As expected, boxer Floyd Mayweather, Jr. topped the list earning $300 million including endorsement deals.  His opponent, May 2nd, Manny Pacquiao landed second on the list.

Mayweather tallied $285 million in pay from June 2014 to June 2015.  He earned $100 million on fight night against Pacquiao but the revenue does not include PPV (which were an astronomical 4.4 million buys), gate ($73 million) and fight sponsorships ($13 million).  According to Forbes, the fight is expected to gross $600 million once the dust settles.  For his May fight, he also earned another $15 million in sponsorship money from Hublot, FanDuel and Burger King.  Mayweather’s earnings also include his September 2014 fight with Marcus Maidana.

Pacquiao landed second on the list earning $160 million.  The earnings include his November 2014 fight in Macau against Chris Algieri.  Pacquiao earned $125 million in pay from the Mayweather fight and $23 million from his Algieri fight.  He drew $148 in pay and drew $12 million in endorsements from a variety of sponsors including Nike, Foot Locker, Wonderful Pistachios, Nestle’s Butterfinger and a variety of Filipino sponsors.  Prior to the event, it was reported that Pacquiao would garner $2.25 million from sponsors on his trunks alone.

It’s the third time Mayweather has topped the list and his earnings set the record for athlete earnings in a year.  Tiger Woods earned $115 million in 2008 which was the previous record.

Wladimir Klitschko made the Forbes Top 100 paid athletes at #63 making $22.5 million.  There were no MMA fighters on the list.

Payout Perspective:

The list reflects the fact that boxing’s top stars command the most money.  Overall, the sport of boxing may not pay all of its fighters well, but the earning power of Mayweather and Pacquiao show that the sport is still a draw when there are big fights.  The money made by Mayweather this year is based on the split in revenue from the Pacquiao fight in which he controlled a dominant share of the money drawn from the event.  It’s unlikely we’ll see another athlete earn this much money in a 12 month span for a long time.

Will Mayweather-Pacquiao hurt UFC 187 PPV buys?

May 19, 2015

MMA Fighting posed the question as to how well will UFC 187 do this weekend in light of the big Mayweather-Pacquiao fight earlier this month.  Despite the steep PPV price of $90-$100, an estimated 4.4 million people paid to see the fight.  Now, will combat sports fans turn around and pay another $60 this weekend?

The question infers something about combat sports fans — they don’t have the money to buy both PPVs.  Granted, paying an extra $160 on your monthly cable bill does dent in a household’s leisure budget.  While many on social media like to trash the Mayweather-Pacquiao event for their own self-indulgence, it still did astronomical financial business.  And, based on the financial numbers, it was an event that many did not want to miss regardless of how much the PPV cost.

Although there is no precedent for a boxing event affecting a UFC PPV, the article uses the Mayweather-Canelo Alvarez fight in September 2013 as an example in how UFC PPVs were affected.  The price point for the “The One” was $75 HD which was the most for a boxing PPV until this May.  The next three UFC PPVs did alright business but could have done better.

Via MMA Payout Blue Book:

UFC 165 – 09/21/13 Jones vs. Gustafsson – 310K PPV buys

UFC 166 – 10/19/13 Velasquez vs. JDS III – 330K PPV buys

UFC 167 – 11/16/13 GSP vs. Hendricks – 630K PPV buys

It was not until December 2013’s big card at UFC 168 (Rousey-Tate, Silva-Weidman II) that the UFC bounced back.  The end of year card drew over 1 million PPV buys.  Notably, it was the last time a UFC hit 1 million buys and it was the first PPV increase in some time ($55 to $60).

Still, the question is whether boxing will hurt the UFC.  There are various factors which may be contributing, or independent of the buy rate for this weekend’s UFC.  Boxing does skew an older audience and it does perform well along ethnic lines.  Also, do not discount the Mayweather-Pacquiao fight as a “once in a lifetime” thing even if it may have occurred too late for fight purists.  Frankly, the fight was for the casual fight fan because they know the two fighters and have been waiting to see the fight for so long.  In addition, the unique partnership between HBO/Showtime to drive the event helped.  It initiated its satellite and cable distributors to actively solicit those subscribers into purchasing the event (i.e., it offered assistance to subscribers to order the event prior to the day of it.).

Payout Perspective:

So does the big numbers for Mayweather-Pacquiao mean the casual combat sports fan will be checking out of UFC 187?

Regardless of what we may think of the UFC fan, it does skew younger than the boxing audience and based on surveys, within the demo, these fans have money to spend.  Will it hurt the PPV buy rate for this weekend?  I would suggest that you might look at the last trends for Memorial Day weekend.

What used to be a big weekend for the UFC has turned into a mediocre one.   In the past 4 years, only 2012’s JDS-Mir garnered over 500K PPV buys.

2015 – UFC 187 – Johnson-Cormier ?

2014 – UFC 173 – Barao-Dillashaw 215,000

2013 – UFC 160 – Velasquez-Bigfoot II 380,000

2012 – UFC 146 – JDS-Mir 560,000

2011 – UFC 130 – Rampage-Hamill 325,000

The double main event should help sell this weekend’s PPV.  Johnson-Cormier and Weidman-Belfort are both title matches that should bring some interest.  While it’s hard to gage whether Chris Weidman is a PPV draw, he has made enough appearances on FOX/FS1 for people to know him.  The absence of Jon Jones may have hurt PPV sales but taking him off the card was likely best for long-term business.  The two title fights and the lack of boxing this weekend should help get this PPV up to over 500,000 PPV buys.  We shall see.

Report: Buy rates for UFC 185 and UFC 186

May 14, 2015

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

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

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

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

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

UFC 185

Payout Perspective:

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

Mayweather-Pacquiao destroys PPV, gate records

May 12, 2015

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

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

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

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

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

Payout Perspective:

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

Dish Network ditches UFC 186

April 23, 2015

MMA Junkie reports that satellite provider Dish Network will not be offering UFC 186 this Saturday and thus prohibiting its approximately 14 million subscribers from ordering the pay per view.

The UFC issued a statement regarding the situation.  The statement in part reads:

Due to contractual issues, DISH Network will not be offering UFC 186: Johnson vs. Horiguchi on Pay-Per-View this Saturday.  While all other providers in the U.S. have come to an agreement on renewal terms, DISH Network has elected not to renew its distribution agreement with UFC.

Via MMA Junkie:

The industry leader signed a multi-year deal with Dish that ended on Jan. 31, though an extension was inked for March’s UFC 185, according to a person familiar with the UFC’s agreement. The person requested anonymity because he was not authorized to speak publicly on the matter.

A Dish Network rep confirmed the impasse with the UFC and that it would not offer the pay per view to its subscribers.  It did indicate that the two sides were in negotiations for further events.

Payout Perspective:

According to this Broadcasting & Cable article in which Dish inked a deal to carry the Weather Channel, Dish Network is a notoriously difficult negotiator.  Of course, the UFC probably is seeking a bigger percentage of the PPV revenue.  At this point, it has some leverage in a new deal since it had a big first quarter of 2015 with its PPVs and Dish has lost PPV revenue due to the WWE Network.  You may also argue that due to the bigger cut HBO/Showtime is taking from PPV revenues from distributors, Dish is not seeing returns via PPVs.   Thus, the UFC is seeking a better contract.  Of course, UFC 186 is one of the weakest cards (on paper) despite the return of Rampage Jackson to the card.  We will see if the two sides will be able to come to an agreement by UFC 187 which looks to be a big show.

System set in payouts for Mayweather-Pacquiao

April 18, 2015

The New York Times reported on the unusual need for a central system to be used for the logistical payouts for Manny Pacquiao and Floyd Mayweather with respect to the long-awaited fight coming May 2nd.

The article primarily relies on quotes from Pacquiao promoter Bob Arum with respect to how the gross revenues will be divided between the two fighters and other ancillary entities.

For Pacquiao, he is on the wrong-end of a 60-40 revenue split but should clear over $100 million when all is said and done. Of course, the IRS will take its share from Pacquiao (and Mayweather we assume) right off the top.

Rival networks, HBO and Showtime are co-producing and co-distributing the PPV event. They have dueling shoulder programs on its respective networks and in a unique production agreement, each of the networks’ broadcast teams will participate in the event (including dueling ring announcers). The two sides have created a central accounting system to ensure what one might believe is “integrity” in splitting the revenues from what should be the biggest event in boxing history (at least from a gross profits standpoint).

The central system will distribute the revenue in accordance with the contracts of the two fighters.

All revenue from the fight would be put into the central accounting system. This would include foreign broadcast rights, closed-circuit income, ticket sales, sponsorships, merchandise sales, etc. The estimate of these monies per the NYT is at $130 million. In addition, PPV revenue which could gross $300 million also goes into this pot.

Most of the PPV revenue will go to the fighters minus 15% (7.5% each for HBO and Showtime). You may recall that HBO and Showtime were in vigorous negotiations with the satellite and cable companies regarding the PPV distribution for the event.

A “wrinkle” pointed out by Arum is that the winner of the fight will receive a 51-49 percent split for revenue between $160 million and $180 million. Thus, ideally the winner will receive $10.2 million while the loser gets $9.8 million. The amount over $180 million reverts to the 60-40 split in favor of Mayweather.

Payout Perspective:

Despite the lofty price point for this PPV, it is believed it should break the PPV record. Similarly, the $72 million gate at the MGM will break a record as well. One might assume the same for international rights, closed-circuit money, sponsorships and merchandise. It’s clear that the logistics for splitting up the revenues required a central system (we assume with necessary checks, balances and protocols).

Court opinion in Bellator-Rampage lawsuit made available

April 9, 2015

A copy of the court opinion by Judge Karen Suter which granted Bellator MMA’s injunction in its lawsuit against Rampage Jackson was made public.

After oral argument on April 2nd, the Court issued its opinion on April 7th.  MMA Fighting provides a copy of the lawsuit here.

The court made it abundantly clear that it was not deciding the merits of the case and specifically that it was not deciding whether the contract between Bellator and Rampage was breached.  However, it made clear that Bellator had proved its case

Although the Court referred to several cases involving boxers that sign promotional agreements and then seek additional help from other promoters, the Court distinguished this case based on the exclusivity of Bellator’s agreement with Rampage.  It sided with Bellator in its argument that it was likely that Rampage breached its contract despite the arguments raised.

As previously stated, the Court found “clear and convincing” of the following on behalf of Bellator.  The four factors in determining a preliminary injunction are as follows:

  1. A substantial likelihood of success on the merits of the case;
  2. There is a substantial threat of irreparable damage or injury if the injunction is not granted;
  3. The “balance of harms” (threatened injury) weighs in favor of the party seeking the preliminary injunction;
  4. Granting an injunction would serve the public interest.

Some interesting points from the 25 page ruling.

  • The Court emphasized the exclusivity of the contract between Bellator and Jackson. It also stressed the fame and notoriety of Jackson as evidence that Bellator would suffer injury if Jackson were allowed to participate at UFC 186.
  • The Court did not buy the argument that Bellator breached its contract since it did not provide Rampage or his management with PPV summary report. The Court indicated Bellator had substantially complied with the information and that not providing the PPV summary was not a material breach of the contract.
  • Rampage’s claim that his fights were not adequately promoted by Bellator and the need to obtain the PPV summary was necessary fell flat. The Court ruled that there was no marketing provision setting a certain amount of money that was required to promote his fights.  Even without producing the summary report for PPV, there would be no breach since the actual compensation Rampage received was not in dispute.  Furthermore, the Court opined that Rampage offered no rationale for why Bellator would not want to market and promote one of the company’s top stars.
  • The Court sided with Bellator with its argument that if Rampage were allowed to fight at UFC 186, it would harm Bellator more than just monetarily, but from a reputation and brand standpoint. Bellator argued that the “MMA community” would denigrate Bellator if Rampage were allowed to leave for the UFC.  Moreover, Bellator argued that denying the injunction would be a sign to other fighters and their managers that they could just “ignore their contracts” and leave for perceived better opportunities.  Bellator also argued that if Rampage were to leave, Bellator would have lost out on the time and money it had invested in promoting him.
  • The opinion also notes that on December 4, 2014 Scott Coker claims to have notified the UFC that Rampage was still under contract while negotiations by Rampage to the UFC were ongoing. This seems to call into question how much the UFC knew about the Bellator-Rampage contract dispute.  It also calls into question the UFC’s decision to sign him and then put him on a card prior to a legal determination.

Payout Perspective:

In the end, Rampage and his legal team may win this court battle, but the first big decision out of this case falls in Bellator’s favor.  The Court opinion preventing him to fight at UFC 186 is not a good indicator of things to come.  Certainly, the Court made it clear it was not ruling on whether a breach occurred, but the threshold for proving a preliminary injunction is warranted is high (“clear and convincing” as opposed to “more likely than not”).  We will see what Rampage’s legal team decides on whether it will appeal the decision.

Another issue that was raised in passing was the knowledge that the UFC may have known about the contract issues with Bellator.  There could have been potential legal action between Bellator and UFC regarding interference with a contract but it seems as though Bellator did not want to pick that fight just yet.

MMA Payout will keep you posted on this.

May-Pac PPV will cost $99

April 1, 2015

The Wall Street Journal is reporting that May 2nd’s long-awaited PPV fight between Manny Pacquiao and Floyd Mayweather, Jr. will have a price point of $99 HD and $89 SD.  It will be the highest priced PPV ever.

The previous high for a sport PPV was “The One” which featured Mayweather fighting Canelo Alvarez.  The event which drew a record $152 million in PPV also had the highest price point, $74.95 HD ($64.95 SD) for a PPV prior to next month’s event.

HBO and Showtime are handling the negotiations with pay-TV distributors and had sought an advantageous split on behalf of Mayweather and Pacquiao.  With a normal split of 50/50 for PPVs, HBO and Showtime were looking for a 70/30 split of the PPV revenue.  Of course, pay-TV distributors balked at the proposal.

The key distributors involved are iN Demand and DirecTV. The other distributors that the networks must reach agreements with are Dish Network and Vubiquity, the entity that handles negotiations for AT&T and others.

The WSJ report indicates that distributors will concede a split in the favor of the networks but not as much as the 70% proposal.

Estimates claim that the PPV could garner 3 million PPV buys which may almost double the previous PPV record.

Payout Perspective:

It’s unlikely that $100 will deter many wanting to see this fight.  Although the price is steep for a fight that many believe should have happened years ago, it is still an attraction that is unique and features the best known boxers in the sport.  It was no surprise that HBO and Showtime sought a bigger piece of the pie in these negotiations as both are trying to maximize the revenues as they have agreed to partner in this event.

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