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.

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.

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?

The Wrestling Post: Lucha Libre reality show created by maker of Survivor

August 28, 2014

Variety reports that Mark Burnett, the creator of the reality show, “Survivor,” has a new show which follows Lucha Libre wrestlers which will air on the El Rey Network.  “Lucha Underground,” is an hour long show which will feature five Luchadores from the AAA promotion in Mexico.

According to TV By The Numbers which has the original press release, shooting for the show begins in Los Angeles next week with a premiere date of October 8th.

The El Rey Network is owned by NBCUniversal and targets Latino audiences.  It is available on Comcast, DirecTV and Time Warner Cable.

Payout Take:  If you recall, Mark Burnett created “The Contender,” a short-lived reality show about boxers trying to make it.  Although not widely distributed, this should be an interesting show to give a chance.  It definitely caters to the Latino audience as Lucha Libre is popular in Mexico as the Variety article cites that Lucha Libre draws over 85% of Mexican television viewers.

The Wrestling Post – 08.13.14

August 13, 2014

Welcome to another edition of The Wrestling Post where we write about the WWE Network launching overseas and the news that tickets demand are lowest in four years for Summerslam.

WWE Network launches overseas

The official launch of the international over the top network went live this week as it was made available in 170 countries outside of the United States.  The hope is that it will pick up much needed subscribers after meager additions after the company’s second quarter.  In addition, in order to entice fans that do not want a longer commitment, it is offering two other tiers of subscription.

Via WWE press release:

The U.S. English language version of WWE Network is now available, on an over-the-top basis, in more than 170 countries and territories, including Australia, New Zealand, Hong Kong, Singapore, Mexico, Spain, and the Nordics, among others. The network is expected to be live in the U.K. by this October and plans for the network in Italy, UAE, Germany, Japan, India, China, Thailand and Malaysia will be communicated at a later date.

For $9.99 (U.S. dollars) per month with a six month commitment, fans have access to 24/7 programming, all 12 live WWE pay-per-view events, and the most comprehensive video-on-demand library. In addition, subscribers can now choose a monthly offering at $12.99 (U.S. dollars) with no commitment and the ability to cancel at any time. The $12.99 price point is a change from the previously announced $19.99 monthly plan and allows WWE to offer an option with no commitment that we believe better reflects the variety of economies that exist internationally.

Payout Take:  We will see how many subscribers latch on to the WWE Network.  Overseas growth had been key in the past for WWE traditional businesses.  Certainly, the WWE hopes that proves the same with its network.

Summerslam Ticket prices lowest in 4 years

In addition to the WWE Network subscriber disappointment, tickets for this Sunday’s big event, Summerslam, ticket demand for this year rivals that of UFC 174.

Via Forbes.com:

According to TiqIQ, the average price for SummerSlam is currently $205.99 with a get-in price of $67, both lows since 2011. Last year the average price was $213.71 with a get-in price of $71. Neither year come close to the peak from 2011 and 2012, which had average prices of $248.31 and $249.64, respectively, with a get-in price of $75.

Payout Take:  Take it for what it’s worth as the article was written by the CEO of TiqIQ and he sources his own company for the ticket information.  Summerslam 2014 is likely not as bad as UFC 174, but if we assume that the ticket demand is down from last year, it reflects a bad spate for the WWE.  Even with Brock Lesnar-John Cena in the main event, the interest appears to be off for this year if we are basing it on the ticket demand.  Due to cost-cutting measures from the expenses incurred from the WWE Network, the WWE did away with its mini-exhibition, Axxess, during Summerslam although it will have a scaled down version.

SBJ reports on WWE Network for OTT feature

August 10, 2014

The Sports Business Journal (subscription required) reported on the WWE’s launch of its network as part of its feature last week on Over The Top (OTT) networks.  The article compliments another within the same issue which talks about the new platform in general.

The article on the WWE reports on the tumultuous time it has had with the launch of the network.  Upon the announcement in January, there was much anticipation.  But, after the initial numbers came out coupled with the general disappointment  the rights fees deal caused the stock to drop and momentum to stop.

The WWE did receive some interesting information from the first few months from subscribers.  Despite being off on its projections, the subscribers that have the network are very satisfied with the network.  Many utilize the network at least once a week.  Also, Xbox and Playstation are the two platforms used by most subscribers.  This last part of information would suggest that a younger demo has purchased the network and maybe not as many older viewers (those that one would presume would subscribe for the older content) have the network.

Payout Perspective:

The overarching theme about OTT is the direct competition it has with traditional platforms.  At this point, OTT does not offer live sports with the exception of the WWE Network.  No big revelation in the article about the WWE.  Although the number of subscribers did not hit its target, the users that have it like it. What may be lacking is the older demo that the WWE thought would have been brought in by the vast WWE library.

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