SBJ survey looks at UFC growth, Fight Pass

November 29, 2014

The Sports Business Journal revealed its annual reader survey on various topics related to sports business.  This year included questions about the UFC, WWE and boxing.

In a survey related to over the top networks, readers indicated that the UFC is the “Fight sport” that will see the biggest growth over the next five years.  Of the 684 readers that responded, the UFC garnered 72% while boxing drew 17% and the WWE had 11%.

It also asked readers which over-the-top service was their favorite.  Of the 818 responses, NFL Now drew the most votes with only 11%, followed by 120 Sports with 9%, WWE Network with 4% and then UFC Fight Pass with just 1%.  Notably, 75% of the respondents stated it did not watch any of them.

On an unrelated, yet interesting note on digital league subscriptions, readers found MLB.tv (22% of the 818 respondents) their favorite followed by NFL Sunday Ticket (18%) with NHL GameCenter Live coming in third (14%).  This is interesting considering the NFL usually takes tops with its coverage.

Payout Perspective:

SBJ indicates it has a readership of over 54,000 with many business executives in sports reading the trade publication.  The UFC is periodically featured in the publication and the UFC and WWE both advertise in it.  Obviously, the survey is not based on anything other than the opinions of the readers.  Still, it’s an interesting viewpoint on the business from those that do not closely follow the UFC.  With the “growth” aspect, it’s clear that the UFC is moving into more global markets and are forging overseas television deals to advance its product.  The WWE is already global and it depends on what organization you look at when looking at boxing.  Certainly, Top Rank is trying to tap into the Chinese market.  As for the over the top networks, it appears that we are still in the “early adopter” stage for the platform.  The WWE has gone all in with its network but the UFC seems to be doing much better with Fight Pass despite the perception from the survey.

The Wrestling Post – 11.24.14

November 24, 2014

Welcome to another edition of The Wrestling Post.  In this post, TNA finds a new TV deal and New Japan comes to America.

TNA finds its Destination

Last week, TNA Wrestling announced a multi-year TV deal with Destination America. TNA ends it run with Spike TV at the end of the year.

Destination America, which launched in May 2012, is owned by Discovery Communications and is in almost 60 million households.  The question is will most people know they have the channel.  TNA Wrestling will move to Destination America in January 2015.

Via TNA press release:

“Our partnership in this uniquely entertaining franchise with TNA IMPACT WRESTLING provides a significant addition to Destination America’s programming strategy,” said Henry Schleiff, Group President of Destination America, Investigation Discovery, American Heroes Channel, Discovery Fit & Health and Discovery Family Channel. “The enduring, cross-generational enthusiasm of pro wrestling is felt by millions of fans around the country, from coast-to-coast and throughout the heartland.  We are delighted to bring this beloved American pastime to the one and only network dedicated to celebrating the unique spirit of the U.S., Destination America.”

Payout Take:   TNA goes from being in 98.7 million homes (Spike TV) to 60 million.  The good news is that it found a television home.  We shall see how it will do on its new home and how it will market itself so that viewers will want to find it.

New Japan to AXS TV

New for 2015.  New Japan Wrestling on American television.  AXS TV has acquired 13 episodes from New Japan Pro Wrestling and will air on Friday nights at 9pm ET/6pm PT according to a press release.

More from the press release:

“With this acquisition, AXS TV FIGHTS now offers one of the most diverse combat sports and sports entertainment programming line-ups on television,” said AXS TV FIGHTS CEO Andrew Simon. “There is a strong relationship and influence between professional wrestling and MMA, and with the addition of Josh Barnett and Mauro Ranallo as our commentators, we’re confident this new venture will be a crossover hit with wrestling and MMA fans alike.”AXS TV’s NJPW episodes were produced by and purchased from TV ASAHI CORPORATION.

NJPW will serve as the lead-in to the weekly Friday night live MMA, Muay Thai and/or kickboxing broadcasts.  Josh Barnett and Mauro Ranallo will provide commentary for the series.  It’s an interesting acquisition and will draw the eyes of many wrestling fans that have heard about NJPW but have never seen entire matches.

Wrestlemania XXX generates $142M for New Orleans per study

November 13, 2014

The WWE and New Orleans Mayor Mitch Landrieu announced on Wednesday that Wrestlemania XXX generated an economic impact for the region of $142.2 million for the New Orleans region.  The $142.2 million is a record for Wrestlemanias and is the third straight year the destination event has generated more than $100 million for the host city.

Via WWE press release:

Over the past seven years, WrestleMania has generated more than half a billion dollars in cumulative economic impact for the cities that have hosted the event. WrestleMania 30 also generated approximately $24.3 million in federal, state and local taxes.

The WWE commissioned the study by Enigma Research Corporation to determine the economic impact.

More info from the press release:

-$142.2 million in direct, indirect and induced impact derived from spending by visitors to New Orleans for WrestleMania 30.
– 79% of fans that attended WrestleMania were from outside the greater New Orleans region and stayed an average of 3.7 nights.
– $22.5 million was spent on hotels and accommodations within the New Orleans region.
– The economic impact derived from WrestleMania Week was equal to the creation of 1,662 full-time jobs for the area.
– $10.7 million was spent by visitors to New Orleans at area restaurants.

Last year, it was reported that Wrestlemania 29 in New York/NewJersey drew $101.2 million in economic impact and $102.7 million for Wrestlemania 28 in Miami. In 2011, Wrestlemania 27 in Atlanta gave the region a $62 million economic boost.

Payout Take:  Even if we are to look at this cynically and conclude that the economic impact is inflated because the study was commissioned by the WWE and the release does not define “indirect and induced impact” the $142 million would peak the interest of future cities to solicit the WWE to hold the event.  Wrestlemania has become a destination event where WWE fans from all over the world come to the city that hosts the event.  So, to see the city’s tourism industry see a dramatic spike in revenue would not be unheard of.  For municipalities that are hurting economically, Wrestlemania would be a economic boost for the region.

The Wrestling Post: 11.04.14

November 4, 2014

Welcome to another edition of The Wrestling Post.  In this edition, we take a look at Total Divas ratings, a deal for Ring of Honor and WWE halts UK rollout of WWEN.

WWE Network halts UK launch

The WWE Network pulled the plug on its intended November 3rd launch in the United Kingdom because of WWE negotiations with TV operator SKY.  According to Dave Meltzer of the Wrestling Observer, the WWE and SKY were still in negotiations on the possibility of having the Network as a TV station as opposed to its “over the top” network offering.  At this point, the roll out of the Network is postponed indefinitely.

Payout Take:  The delay is an obvious disappointment for those in the UK although it was pointed out that many of the hardcore WWE fans in the UK likely have the network through their own ingenuity.  Still, pulling the plug from the launch is bad for short term PR.  One must think that the WWE had a deal with SKY which would have been more lucrative in the long term for it to make such a drastic change in schedule.

Triple HHH joins non-profit

Paul Levesque (aka Triple HHH) has joined the board of The Sports Legacy Institute Board of Directors.  The Institute is a non-profit dedicated to concussion education and research.  The organization was founded by former college football player and WWE wrestler Christopher Nowinski.  One might recall Nowinski from the PBS documentary, “League of Denial: The NFL’s Concussion Crisis.”  The WWE has donated heavily to the organization as it gave SLI $1.2 milloin to fund research that could lead to potential new treatments for Chronic Traumatic Encephalopathy (CTE).

Logo-Sports-Legacy-Institute2

Payout Take:  The election of Triple H comes after a recent filing by one of its former wrestlers, Billy Jack Haynes, citing that the WWE knew of the dangers of head injuries but did nothing to warn its wrestlers.  The WWE has denied the allegations set out by Haynes in the lawsuit.  As a publicly traded company, the WWE’s image is much more important and the election of Triple H to this non-profit is similar to those made by the NFL when it was sued by its former players regarding concussions.

Ring of Honor Wrestling (ROH) and Figures Toy Company announced a licensing agreement to develop market and manufacture a line of collectible figures and accessories based on the wrestlers and world of Ring of Honor Wrestling according to an ROH press release.  ROH is owned by the Sinclair Broadcast Group, Inc.

Payout Take: An interesting deal for the company as most, if not all, of its wrestlers is independent contractors (in the real sense and not the WWE-sense) as they take dates from other organizations.  Still, it appears that Sinclair believes that it has gained enough traction with the product to roll out action figures in time for the holiday season.  These probably will not get wide release and will only be in markets where ROH run shows.

Total Divas Season 3 (mid-season)

Last week’s Total Divas on the E! Network registered the second highest rating for Season 3 with an average viewership of 1,130,000.  Despite lower ratings, it will return with the second half of its third season in January 2015.

Through 10 episodes of the third season, it averages just over 1 million viewers.

Total Divas Season 3

Episode 1:  1,200,000

Episode 2:   974,000

Episode 3:  1,180,000

Episode 4:  999,000

Episode 5:  1,050,000

Episode 6:  888,000

Episode 7:  975,000

Episode 8:  826,000

Episode 9:  860,000

Episode10:  1,130,000

Payout Take:  Although there has been a decrease in viewership for this season, it has gone without the Kardashian lead-in most of the season.  It also has gone up against two WWE PPVs this season.  This season seems to have moved toward more storylines which have seeped into WWE programming.

Total Divas S3 halfway

WWE announces 731K total WWEN subs for 3rd Quarter

October 30, 2014

The WWE announced its 3rd Quarter ratings on Thursday as it reported a net loss of $5.9 million ($0.08 a share) compared to net income of $2.4 million ($0.03 a share) from the third quarter in 2013.  The big news is that the WWE Network has not picked up subscribers as projected and now a new strategy has been implemented.

First, the WWE Network subscription number which one may conclude has been disappointing so far.  This past quarter, it had just picked up a total of 31,000 subscribers total (including international subscribers). Eric Fisher of the Sports Business Journal (via twitter) indicated that it had a gross subscriber add of 286,000 to end up with the 31,000 number. As Fisher points out, lots of “churn” from people subscribing then dropping the network.  In its first quarter of offering the Network in Canada, it added just 28,000 subscribers.

Average Paid Subscribers (numbers from WWE Investor Relations)

2014

Q1 – N/A

Q2 – 665,000

Q3 – 723,000

YTD

Q1 – N/A

Q2 – 406,000

Q3 – 515,000

Perhaps as a direct result of this poor number, the WWE announced in an email to its subscribers that it will no longer require a 6 month commitment for those paying $9.99 per month as of the December billing period.

In addition, it now will be offering the Network for free to new subscribers for the entire month of November. You will see the new catchphrase/hashtag #FreeFreeFree everywhere.

In other segments of the business, from data from the WWE, the WWE is off of its 2013 earnings in domestic attendance, home entertainment ($718,000 vs. $429,000) and of course, PPV buys ($761,000 vs. $285,000 – which is due to Network).  Online merchandise was up and the International attendance average for this quarter has gone up in comparison to last year.

On the brighter side, the WWE stated in a press release that revenue from its “seven new key television agreements is expected to increase from approximately $130 million in 2014 to approximately $235 million in 2018, providing over $100 million of revenue growth subject to counterparty risks.”

Overall, the WWEN is up 68% from the prior year but the financial investment of $5.1 million due to lost PPV revenue and additional costs have impacted the initial gain.  The WWE hopes that availability in the UK will continue to grow the network but so far it does not seem to show growth with it overseas.

Payout Perspective:

At the time of this writing, WWE stock is down 6% to $12.48 in early morning trading.   This is before its earnings call scheduled for 8amPT/11amET.

The new strategies offered by WWE with its Network (no commitment/free to new subs in November) infer strong concern as it is way off its projections at this point.  Earlier this month, it announced that it would be adding “limited advertising” to the network which may reflect a pressing need to find some financial gains in lieu of subscribers.

It’s interesting to see the divergent paths UFC Fight Pass and the WWE Network have taken since both started.  While many thought that the WWE had the better platform at the beginning, it appears (from all reports) that the UFC Fight Pass is flourishing while the WWE news is discouraging.  Obviously, WWE is the only one that has to publicly report its numbers so we really don’t know the whole story for the UFC.  Still, this has been a rough year for the WWE.

Former wrestler files lawsuit against WWE regarding head injuries

October 27, 2014

A lawsuit filed last week in the U.S. District Court of Oregon by former professional wrestler William Albert Haynes III (aka “Billy Jack” Haynes) citing class action status related to “head injuries occurring in former and current WWE wrestlers” per the lawsuit.

Haynes wrestled in the WWE for only two years from 1986-1988.  Perhaps his most notable match was at Wrestlemania III.  Most of Haynes’ career was spent in the Pacific Northwest.

The lawsuit spells out the dangers of the professional wrestling business amplified by embedded photos in its lawsuit as well as YouTube links.  Essentially, WWE allowed its wrestlers to perform dangerous stunts, some of which include taking shots to the head causing head injuries.  The claim made by Haynes’ lawyers is that these head injuries cause traumatic brain injuries (i.e., concussions) and chronic traumatic encephalopathy (“CTE”).

photos of WWE wrestlers CM Punk and Rob Van Dam getting stitches after a match

photos of WWE wrestlers CM Punk and Rob Van Dam getting stitches after a match

Vince McMahon swinging a chair makes the case for Haynes that WWE allowed head shots.

Vince McMahon swinging a chair makes the case for Haynes that WWE allowed head shots.

A section of the lawsuit includes: “WWE is a Fake Sport with Real Consequences to Its Wrestlers.”  It also cites the numerous matches which include the use of chairs, chains, ladders and tables.  It also details different wrestling moves which involve potential trauma to the head including the “Brain Buster,” “Bulldog,” and “Facebreaker.”  They also bring up the case of a 13 year old that killed his 5 year old sister while performing a move he saw from the WWE.

Haynes vs. WWE

The lawsuit accuses the WWE of not protecting its wrestlers from brain damage.  Essentially, Haynes and his attorneys accuse the WWE of doing little, if anything, to protect its wrestlers.  It also claims to denying or concealing injuries of its wrestlers.

The claims in the lawsuit include:

-Fraudulent Concealment and Failure to Disclose or Warn

-Negligent Misrepresentation

-Declaratory and Injunctive Relief

-Negligence

-Medical Monitoring –this claim requests that the WWE establish a trust to pay for medical monitoring of all wrestlers as frequent as medically necessary and would pay to develop and research other methods to reduce risks

-Strict Liability for Abnormally Dangerous Activities

In addition to the requests under “Medical Monitoring,” it is requesting that the court grant it class action status and designating the attorneys as Class counsel.  It also is seeking actual, compensatory and punitive damages as well as attorney fees.

In response to the lawsuit, the WWE’s Senior Vice President of Marketing and Communications provided a brief statement: “Billy Jack Haynes performed for WWE from 1986-1988.  His filed lawsuit alleges that WWE concealed medical information and evidence on concussions during that time, which is impossible since the condition now called chronic traumatic encephalopathy (CTE) had not been discovered.  WWE was well ahead of sports organizations in implementing concussion management procedures and policies as a precautionary measure as the science and research on this issue immerged.  Current WWE procedures include ImPACT testing for brain function, annual educational seminars and the strict prohibition of deliberate and direct shots to the head.” (H/t :  wrestling-online.com)

Payout Perspective:

I grew up watching Haynes wrestle in the Pacific Northwest mainly in a Portland, Oregon based promotion.  He had a very brief stint with the WWE.  This is a lawsuit that shall be interesting to follow and see whether or not the court grants Haynes class action status.  For those wondering, the essential elements a court determines when deciding whether or not a lawsuit may receive class action certification are:

-Commonality:  One or more legal or factual claims common to the entire class.

-Adequacy:  The parties in the class must adequately protect the interests of the class.

-Numerosity:  The class must be large enough that individual lawsuits would be impractical.

-Typicality:  The claims or defenses must be typical of the plaintiffs.

The four elements commonly are remembered (mainly by bar exam takers) as CANT.  It will be interesting to see whether or not the law firm can attain enough members willing to be a part of this lawsuit.  Certainly there are enough wrestlers out there that could establish a sufficient amount of plaintiffs.  However, how many are willing to come forward?  On his own, Haynes may not have a strong case considering he only spent two years with the company and much of his time wrestling was on the regional circuit where he could have been subjected to similar risks and injuries.  Thus, his case may not be as strong as someone who may have spent 20 years with the company.

This will be an interesting case that the UFC should take note of for future consideration.  While the ways that the participants attainhead trauma are different, there are still issues related to MMA fighter safety and blows to the head that might be a part of future legal claims.

Jim Ross opines on future of Fight Pass/WWEN

October 20, 2014

Former WWE color commentator Jim Ross had some interesting comments about the future of UFC Fight Pass as he seemed rather bullish on the future of the over the top model.  The comments come at a time when online services seem to be on the rise…or maybe on the decline depending on what you read.

In an interview with Bloody Elbow, Ross was quoted that the shift for companies such as the UFC and WWE to digital networks is a thing of the future.  Despite the rocky starts for each, he believes that it is a “genius-like maneuver.”

With last week’s announcements that HBO and CBS were offering online services and ESPN providing a streaming-only service for NBA content the week before, it’s apparent that over the top (OTT) network offerings are the growing trend.  But, is there enough of a market for them? Although the model seems to be geared toward cord cutters, it would seem that the addition of so many subscription services would negate any savings from cancelling a traditional cable package? Would it impact ad revenue?

Payout Perspective:

The WWE will make its quarterly earnings call on October 30th and we will see how much of a dent it has made in its goal of 1 million subscribers to its OTT WWE Network.  You may recall it made a meager increase in its goal last quarter.  The last report this summer indicated that it had added just 33,000 subscribers for approximately 700,000 total subscribers.  Even with the addition of an international market, it is unlikely that the 1 million goal could be met. This should be something that other OTT subscription services should take notice.

On the other hand, all reports suggest that the UFC Fight Pass is doing well (although no numbers have been revealed).  But, unlike the WWE, it keeps its PPVs separate from the network.  Fight Pass is geared for the hardcore fan and it would be hard to argue that it takes away from the UFC’s PPV buy rate.  While Fight Pass offers an extensive fight library and live fights from overseas, most of the marquee names and match-ups remain on PPV.

So, will digital networks like the WWE Network and UFC Fight Pass thrive in the future?  Perhaps for the young, cost-conscious consumer that is savvy enough to deal with the online world but do not want to be tied down with a traditional cable package.  But, it’s unlikely to take over.

WWE announces ads on network

October 13, 2014

The WWE announced today that it is beginning to run limited video advertisents on its WWE Network.  The subscription-based over the top network is seeking additional ways to monetize the product and the ads are a way that my aid the lagging subscriber numbers.

An email was sent to WWE subscribers today advising of the ads.  It gave specifics:

• No commercial breaks during scheduled programming
• Limited advertising between shows
• Occasional advertising before our video-on-demand content

Ad Age reports that Pepsi, Mattel and Kmart are signed on for the display of ads on the WWE Network.  The report indicates that media buyers are questioning the placement of ads on the network.  While the ads may reach an audience of young males, there is skepticism about the growth of subscribers leaving some potential advertisers wondering if it would be more prudent to advertise on the WWE’s network shows.

Payout Take:

The ad announcement will be interesting to see in terms of its success and how many advertisers decide to sign on with the network.  Certainly, ads would be something that UFC Fight Pass might entertain in the future.  But, there may be concern that advertisers would annoy subscribers.

The Wrestling Post – 09.21.14

September 21, 2014

Welcome to another edition of The Wrestling Post.  In this post we’ll catch up on Total Divas ratings and the WWE brokers a new television deal in Latin America.

Total Divas Ratings –Season 3, episode 2

The second episode of the third season of Total Divas did just 974,000 viewers with a 0.5 rating.  It’s a decrease from the debut episode for the third season which drew 1.2 million viewers.

Payout Take:  Without a Kardashians lead-in on the E! Network, Total Divas is finding it hard to grab its own audience.  It also doesn’t help that it is up against the NFL and other must see Sunday night television.  Don’t expect a huge uptick this Sunday as it goes up against a WWE live event on the network.

WWE and Fox Sports Latin America announce 5 year pact

Earlier this week, the WWE announced a deal with Fox Sports Latin America.  The 5 year deal includes Fox Sports Premium platforms across all of Latin America which will make WWE programming available in 56 million homes.  The deal begins October 6th with WWE airing Monday Night Raw across the Fox networks.

Payout Take:  The move into countries like Mexico, Brazil, Argentina, Columbia and Venezuela will help with its global footprint.  It will also help with the future proliferation of the WWE Network.

Total Divas Season 3 Ep 1 posts 1.2M viewers

September 9, 2014

Television By Numbers reports that the debut of the third season of Total Divas on the E! network scored an average viewership of 1.2 million viewers with a 0.6 rating in the adults 18-49 demo.

Total Divas went up against the seventh season of HBO’s Boardwalk Empire which scored 2.37 million viewers and was shown in the same time slot as the WWE reality show about its women wrestlers.

The ratings are Live plus Same Day Viewing.

The season premiere was up 15% versus the season 2 premiere according to an E! press release.

Payout Perspective:

Strong ratings considering it did not have Keeping Up With the Kardashians as a lead-in.  It also did well considering it went up against Boardwalk Empire and Sunday Night NFL Football on NBC.  The WWE is starting to infuse Total Divas storylines with its WWE programming storylines which allows for crossover viewership.  Can we see more males tuning into Total Divas due to the crossover with Raw and Smackdown?

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