December 9, 2014
Welcome to another edition of Payout Perspective. This time we take a look at UFC 181 which took place at the Mandaly Bay Events Center in Las Vegas, Nevada
CM Punk signs with UFC
Usually we start off with the main events, and there were two very good ones, but the big news coming out of the PPV was the announcement that Phil Brooks (the artist formerly known as CM Punk – the WWE owns the trademark and we’re not sure if terms of his settlement included continued use of the name) has signed with the UFC. Brooks is 36 and has no formal experience in MMA unless you count his training in BJJ and Kempo. Recently, Brooks talked about a variety of health issues he had while in the WWE as well as the indication he has had a lot of concussions (12 or 13 per the Cabana podcast). The concussions do not even count the ones that were not medically recorded. We will definitely talk about this more but as it relates to business, this is a calculated risk for the UFC. It should bolster a UFC for the sheer curiosity from former WWE fans.
Lawler edges Hendricks for UFC title
Robbie Lawler started and finished the second fight with Johny Hendricks in a flurry. And it might have been the last flurry in the end that solidified the win for Lawler. Maybe Hendricks fell into the same trap of confidence as he did when it appeared that he had defeated GSP. Hendricks had turtled up in at least two rounds allowing Lawler to seemingly pound away at him. Even if the blows did not hurt, the appearance made it seem that Lawler had the advantage. In the end, Matt Hughes had the opportunity to put on the belt for the new champion.
Although a third fight would make sense, Rory MacDonald was in attendance and should be the next in line to challenge for the belt.
Showtime crisp in title defense
Anthony Pettis is good. That’s an understatement. Despite a shaky first round against Gilbert Melendez, Pettis took advantage of a shot from Gil and quickly secured a guillotine. He’s now subbed Benson Henderson and Gilbert Melendez with ease. It’s clear that Pettis is the tops of this division. Pettis is athletic and quick and if he avoids significant injuries (wrote this before news of his hand), he can be a force in the UFC.
Up next for Pettis should be Khabib Nurmogomedov who showed up at the press conference to ensure Showtime knew who he was.
Attendance and gate
MMA Junkie reports the attendance and gate at the Mandalay Bay Events Center in Las Vegas. The attendance announced post-event was 9,617 for a gate of $2.488 million. The last event at the Mandalay Bay was UFC 170 in February 2014 for Ronda Rousey-Sara McMann. That event drew 10, 217 for a gate of $1,555,870.
Promotion for the Fight
UFC Embedded was the main driver once again and offered some good background on Hendricks-Lawler and Pettis- Gil. It also covered the Pettis Wheaties box cover announcement and the Reebok uniform announcement. Hendricks’ sponsor, Bass Pro Shops, received some exposure as Johny was seen shopping for a rifle at the outdoor sporting goods store.
The UFC released Hendricks-Lawler I online which one must consider was one of the best fights of the year.
UFC 181 sported a comic book theme with the fight poster. A nice change from the usual face offs.
UFC 181 was slated for movie theaters once again.
In the Octagon were Wargaming.net, Alienware, Matefit.me, Fram, Musclepharm, Metro PCS, Harley Davidson, Air Force Reserve (a Robbie Lawler associated sponsor), Toyo Tires and Bud Light in the center.
Johny Hendricks had a new sponsor for the fight, Zak Products, an official NASCAR sponsor.
— Johny Hendricks (@JohnyHendricks) December 3, 2014
Hendricks and Pettis, already sponsored by Reebok, wore the brand into the Octagon. Perhaps the Pettis walkout shirt is a glimpse of what to expect from the brand in July.
Dynamic Fastener made its presence known in the Octagon. Hopefully, viewers will figure out what it does before it goes away in July.
Harley Davidson had a promotion where the winner of the Travis Browne-Brendan Schaub fight won a Harley. For those that didn’t watch, Browne won the motorcycle.
Odds and ends
Raquel Pennington-Ashlee Evans Smith ending was a cliffhanger of sorts since FS1 cut to commercial as Pennington had the choke on Smith and it was not clear what had happened. I recall the same thing happening with Dan Henderson-Shogun Rua.
Great wins for Todd Duffee and Josh Samman, the latter with a great headkick KO of Eddie Gordon. Gordon wore a legalize MMA shirt into the Octagon as he fights out of Matt Serra’s gym in New York.
There was some foreshadowing about 181 by Dana White on the Jim Rome Show.
Another interesting question in light of the Reebok deal.
— UFCONFOX (@UFCONFOX) December 6, 2014
Urijah Faber took what is becoming a normal spot as the final bout on the UFC Prelims. It’s interesting that he’s becoming a mainstay in this position but according to Dave Meltzer he chooses to be on FS1 rather than PPV because more people watch. It makes sense considering he is a name, can draw viewers to the FS1 prelims and is a good bridge to the PPV telecast.
Interesting that they dropped the lights for Pettis-Gil but not for Hendricks-Lawler.
The production for the promos for UFC 182 and UFC 183 were great and showed more of a entertainment edge to them.
A good read on referee Mark Smith, who is a retired Air Force pilot. Only coincidence that Air Force Reserves was a sponsor on the Octagon mat.
UFC 181 was one of the best cards of the year. From the Prelims to the main event, it came through with action fights, KOs, submissions and a surprise announcement. Does that mean it will cash in with PPV buys? Google searches were high on the search terms UFC and CM Punk in the U.S. as both were trending 3rd and 6th respectively with over 100K searches each. While this does not necessarily equate to buys (e.g. Manny Pacquiao registered over 500K searches yet scored a reported 300K PPV buys), we should see UFC 181 doing well and above this year’s PPV average. Look for somewhere between the 400-500K range.
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.
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).
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
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.
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)
Q1 – N/A
Q2 – 665,000
Q3 – 723,000
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.
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.
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”).
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.
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
-Declaratory and Injunctive Relief
-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)
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.
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?
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.
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.
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.
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.
September 4, 2014
Former WWE broadcaster Jim Ross and Chael Sonnen will be calling the live PPV telecast of Battlegrounds MMA from Tulsa, Oklahoma on October 3rd. The PPV is $19.95 in the U.S. and Canada.
Via BattleGrounds MMA press release:
Two consummate performers in WWE Hall of Famer Jim Ross and recently retired UFC superstar Chael Sonnen have teamed up to form what is bound to be one of the most memorable commentary teams in sports entertainment history, and will call the world-class Mixed Martial Arts (MMA) action on the LIVE pay-per-view telecast of BattleGrounds MMA: ‘O.N.E.’ from BOK Center in Tulsa, Oka. on Friday, October 3.
Headlined by the first one-night, eight-man tournament in Tulsa since UFC 4 in 1994, BattleGrounds MMA: ‘O.N.E.’ will award its welterweight (170 pounds) winner a grand prize of $50,000.
BattleGrounds MMA ‘O.N.E.’ will be distributed at a price point of $19.95 in the United States and Canada by Integrated Sports Media for live viewing, beginning at10 p.m. EST/7 p.m. PST on October 3 on both cable and satellite pay-per-view carriers iN DEMAND, DirecTV, DISH and Avail-TVN in the United States and Bell TV in Canada. A pre-show will begin at 9 p.m. EST/6 p.m. PST.
“As a longtime fan of MMA, to be asked to call the fights for the BattleGrounds MMA event is amazingly exciting for me,” said Ross, a 2007 WWE Hall of Fame inductee. From commentator to referee to executive and even occasional wrestler, Ross has played a multitude of roles for the world’s leading professional wrestling league.
“I’ve broadcast NFL and XFL games,” continued Ross, “FOX Sports boxing and WWE action, but MMA is a new adventure and one that I’m enormously excited about contributing to. To launch this phase of my broadcasting career in my home state, and with Chael Sonnen at cageside makes it an ideal opportunity and a bucket list experience.
“This is going to be a TV event that any MMA fan won’t want to miss,” said Sonnen, who recently retired from the sport that he competed in as a professional since 1997. A three-time UFC championship challenger, Sonnen fought his last 11 career bouts inside The Octagon and enjoyed a stint as an analyst for FOX Sports Network. “I am thrilled to be working with a legend like Jim Ross and, together, we are going to make the BattleGrounds MMA event one of the most exciting extravaganzas in combat sports history.”
The card features a one night tournament featuring eight welterweights including former UFC fighters Cody McKenzie, Brock Larson and Luigi Fiorvanti. Obviously the selling point is Ross and Sonnen as the announce team rather than the actual card. It will be interesting to see how many buys this drums up for the organization. One has to think that this has to be a “break even” situation for the company in hopes of future success.
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.
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.