Zuffa files objections to Plaintiffs’ Exhibit in Antitrust Lawsuit

June 17, 2019

Zuffa has filed an objection to Plaintiffs’ Exhibit List Documents.  The objection was filed this past Friday.

The parties in the UFC Antitrust Lawsuit have exchanged their exhibit lists according to the Court protocol in anticipation of August’s Court Hearing between experts.

Defendant Zuffa LLCs Object… by on Scribd

Zuffa objected to the use of 28 of Plaintiffs’ 771 exhibits.  The company listed 5 reasons for the objections:

  1. Documents from an unrelated litigation that are inherently unreliable and/or untimely;
  2. Documents generated by third parties that are inherently unreliable;
  3. A document that is irrelevant to Plaintiffs’ experts’ opinions and confuses the issues to be considered;
  4. Documents that are inadmissible on the basis of hearsay; and
  5. Materials that were not timely disclosed

One of the documents that Zuffa objects to relates to a report prepared for the Golden Boy-Al Haymon lawsuit that was filed back in 2015.

One of the documents that Zuffa takes issue with is an expert report from Geen Deetz with respect to his work in the Golden Boy lawsuit.  According to Zuffa, Plaintiffs’ expert economist, Dr. Andrew Zimbalist ignores the data produced by boxing promoter Golden Boy when opinion on revenue share paid to boxers.  Instead, he uses data from the Deetz Report.  That data, argues Zuffa, directly contradicts data produced by Golden Boy in this case, “which shows a drastically lower share of revenue paid to Golden Boy boxers.

The crux of the objection by Zuffa is that Dr. Zimbalist admitted that he could not independently verify the data produced in the Deetz report.  As a result, Zuffa argues that the expert opinion of Dr. Zimbalist is therefore unreliable because the data he premises his opinion on has not been verified as true.

Additionally, there were 11 other documents that Zuffa objected to from the Plaintiffs’ Exhibit List that Zuffa claims are unreliable and not verified by Plaintiffs’ expert.

On other evidentiary grounds, Zuffa argues three more documents lack foundation as to an explanation on how they were prepared or were once again made by third parties not related to this lawsuit.  This includes a presentation (“pitch deck”) prepared by a third party, Banco BTG Pactual S.A.  which relates to the company providing Zuffa the document as “considerations about a potential sale of a minority stake of its operations in Brazil.  Another is from Vinci Partners and is titled, “A View on a Zuffa’s Strategy Toward Brazil.”

Exhibit 14 by on Scribd

Exhibit 13 by on Scribd

There is also a “partial document” from Deutsche Bank regarding the international operations of the UFC.

Payout Perspective:

As we took a look at Plaintiffs’ objections to Zuffa’s Exhibit List, Zuffa takes its turn with its own objections.  A lot of what hangs in the balance with these documents is the legal admissibility of them.  The Federal Rules of Evidence govern these situations in which parties attempt to admit documents to use in support of their case.  However, not all evidence can be used.  There are proper ways to introduce documents and (as argued by Zuffa) certain arguments just cannot be used for lack of authenticity and/or unreliability.

The parties will get a chance to respond to each other’s objections.  MMA Payout will continue to follow.

New UFC Antitrust Lawsuit filings include Plaintiffs’ Objection to Use of Zuffa “Summary of Exhibits”

June 15, 2019

The parties in the UFC Antitrust Lawsuit have exchanged objections to exhibits previously submitted to each side.  The objections are part of the trial schedule and are lodged with the court to argue prior to the use at August’s hearing with the experts.

For context on the request, Plaintiffs included the email to Zuffa attorneys in which they inquire about the exhibits that they seek to now exclude.  Plaintiffs claim that the exhibits are “creating new metrics for analyzing the data (e.g., “Fighter Share Deviations,” Foreclosure Share Deviations,” etc.) or breaking down data in ways that neither Zuffa nor its experts has/have ever before done in this case.”

Exhibit to Plaintiffs’ … by on Scribd

Plaintiffs have objected to exhibits submitted by Zuffa which are “Summary of Exhibits.”  The argument relates to expert materials which they claim are “outside the scope of the record created by Zuffa’s economists during expert discovery.”  As explained by Plaintiffs, they are “undisclosed consultants” with new analyses and cannot form the basis of Zuffa’s expert presentation.

Plaintiffs argue that the exhibits that Zuffa would like to use include new information that they did not have possession of for their experts to render an analysis and opinion.  This would be untimely and not according to the evidentiary rules per Plaintiffs.  The reasoning behind this rule is to give each side a fair opportunity to evaluate the opposing expert’s position and prepare accordingly.  Plaintiffs contend that the information should have been provided in a “timely written report” but they did not provide the report to them per the rules of the Court. Plaintiff points to the expert discovery deadline on January 24, 2018.

Payout Perspective:

Zuffa also objected to certain exhibits provided by Plaintiffs for use and we will look at that in another post.  In this submission by Plaintiffs, they claim that Zuffa has attempted to submit new information to utilize at the hearing of the experts in late August.  Plaintiffs object because of the overarching belief that it is an unfair surprise in that they do not have an opportunity to rebut the new information.  Plaintiffs point to the expert deadline to submit reports as a reason why they are seeking to have these exhibits excluded.  If excluded by the Court, this could cause significant impact to Plaintiffs case.  Of course, its anticipated that Zuffa will argue that the information is not new expert testimony and just a summary of findings already provided to Plaintiffs.

UFC announces combined in conjunction with Shanghai Performance Institute opening

June 14, 2019

The UFC announced that it will launch UFC Academy Combine as a way to evaluate talent for a potential career in MMA. The inaugural combine will take place this Monday, June 17 and Tuesday, June 18th in Shanghai, China.

The combine coincides with the opening of the UFC Performance Institute in Shanghai.  According to a UFC press release, the UFC Academy Combine athletes will have the opportunity to receive a scholarship into the UFC Academy.  The academy is described as an “MMA talent development program created and managed” by the Performance Institute.

Via press release:

The inaugural UFC Academy Combine will be a two-day showcase in which a total of 72 individual metrics will be collected from the participating athletes. Each test will sit within one of 12 categories, including anthropometry; clinical evaluation; cognitive evaluation; grappling; striking; wrestling; alatic energy production; mechanical power; strength; lactic energy production; combat agility; and reaction/cognitive processing.

Payout Perspective:

This sounds like an event destined for UFC Fight Pass.  The WWE recently aired its own combine on its digital platform. This sounds similar.  Thus far, it does not look like it will be shown on the digital platform. But it will be a showcase for the new performance center and a great way to evaluate talent in the region as the UFC expands into the Chinese market.

Highest-Paid Athletes list yields McGregor and 5 boxers in top 100

June 13, 2019

Earlier this week Forbes.com put out its annual list of the World’s Highest-Paid Athletes.  There are a handful of boxers and one MMA fighter on the list.

As you might suspect, Conor McGregor was the lone MMA fighter to make the list.  He was the 21st highest paid fighter with $32 million in salary and $15 million in endorsements for a total of $47 million.  Notably, McGregor renewed his sponsorship deal with Reebok which pays him $5 million per year.  He also received a base salary of $3 million for his fight at UFC 229. It was the only one between June to June.

Canelo Alvarez was the highest paid boxer coming in on number 4 on the list.  Forbes has him down with a salary of $94 million and endorsement of $2 million. The salary is based on his two fights from June 2018 to June 2019.  The latest being a victory over Daniel Jacobs this past May.

Next on the list is Anthony Joshua as the heavyweight landed 13th on the list making $55 million overall with $45 million being purses and the other $10 million being endorsements.  Joshua suffered an upset loss to Andy Ruiz.  Despite the loss, Under Armour, a Joshua sponsor, said the defeat did not deter its promotion of the fighter.

Deontay Wilder comes in at number 56 earning $30.5 million overall with $30 million in purses and another $500,000 in sponsor deals.  He’s made $20 million from his last two fights despite turning down a bigger, more lucrative deal from DAZN.

Manny Pacquiao and GGG round out the list landing at 92 and 95 respectively.  For Pacquiao, his descent from this list is interesting.  He has made $26 million this past year with $2 million of that coming from sponsorship deals.  GGG has made $25.5 million overall with $2.5 million of that from sponsorships.

Payout Perspective:

 The list is highlighted by 3 soccer players at the top followed by Alvarez.  This reflects the need to have international appeal if you want to be one of the world’s highest paid athletes.  It also shows the popularity of soccer.  As for the combat sports athletes on this list, its hard to envision another MMA fighter getting close to this list.  Certainly, Ronda Rousey made this list when she was active, but at this point, there is no dramatic star power outside of McGregor for the sport.

UFC 238 Payout Perspective

June 12, 2019

Welcome to another edition of Payout Perspective. This time we take a look at UFC 238 taking place at the United Center in Chicago, Illinois.

Cejudo dispatches Moraes and becomes double champ

Henry Cejudo recovered from a shaky first round to defeat Marlon Moraes with at TKO in the third round of the main event at UFC 238 to win the vacant UFC Bantamweight title. With the win, Cejudo holds the UFC Flyweight title and the Bantamweight title.

The fight showed Cejudo’s growth and maturity of an MMA fighter. The first round saw Moraes getting worked by Moraes with leg kicks. Cejudo seemed a little tentative in the first round but pressed Moraes in rounds 2 and 3 to get the victory.

Shevchenko leg kick KOs Eye

Valentina Shevchenko showed why she is the Flyweight champion. She almost submitted Jessica Eye with a Kimura in the first round, but used a perfectly timed leg kick to the head to knock Eye out. It was a very scary couple minutes as Eye lay on the mat unconscious.

The broadcast showed how Shevchenko set Eye up for the KO with leg kicks to the body drawing Eye’s guard low. Then, instead of a kick to the body Shevchenko went to the head as Eye braced for a body blow. A perfect setup.

Attendance, gate and bonuses

The event at the United Center drew 16,038 for a gate of over $2 million.  The bonuses went to Cejudo, Shevchenko, Ferguson and Cerrone.

Prefight Hype

UFC 238’s return to Chicago saw Henry Cejudo throwing out the first pitch at a Cubs game. He also showed up at a media luncheon with “bodyguards.” At the face offs during media week, Cejudo wore a costume to face off against Moraes. Shaun Al-Shatti explained it here:

Cejudo’s act may be just that to get him some publicity.  But, if he continues to improve and dominate opponents, he may be bringing a throne to his next fight face-off.

UFC Embedded was sponsored by Toyo Tires.

Sponsorships

Octagon sponsors included Toyo Tires, Motel 6, P3, Nemiroff, Modelo, Poker Stars, Devour, PariMatch, Monster, Hudson Shipping and Monster Energy in the middle.

Modelo had the fighter checkpoint.

Interestingly enough, no real signs of the UFC’s newest sponsor, Aurora Cannabis.

Despite his loss, Donald Cerrone is one of the few UFC fighters with his own Monster Energy sponsorship with

Ratings

The UFC Prelims on ESPN did its best since March scoring 964,000 viewers.  It served as a lead-in for Top Rank Boxing.  The UFC main card went up against the return of GGG on DAZN.

Odds and Ends

The Tony Ferguson-Donald Cerrone fight was everything you could have wanted until Cowboy blew his nose.  Ferguson looked sharp and if the fight have lasted longer, probably would have won a decision over Cerrone.  He should face the winner of Khabib-Dustin.

Tai Tuivasa was likely the star of the Embeddeds based on his outgoing personality.  However, he’s now lost two in a row as he lost a unanimous decision to Blagoy Ivanov.

There were some great performances on the undercards including Eddie Wineland, Calvin Kattar and Aljamain Sterling.

Sterling had a good week:

It was interesting to see Moraes get upset at a heckler at media day face offs.  It seemed over the top although you may believe that he was thrown off by it considering this was supposed to be media at the event.

Jessica Eye did not have a good start to fight week as she had problems with here airline.

The broadcast crew is using more technology in explaining a lot of the strategy and moves going on in the Octagon.  A prime example saw Daniel Cormier go step-by-step explaining how Shevchenko was able to get a clear headkick over Eye.

Is this good or bad?

UFC 238 google searches drew over 500,000 for Saturday and another 500,000 on Sunday.  Tony Ferguson had 100,000 himself on Saturday night

Conclusion

UFC 238 was a very entertaining show.  It went up against Top Rank Boxing on ESPN and the return of GGG on DAZN.   But the prelim ratings were up which may equate to a better PPV buy rate.  Reports indicate that the buys since going to ESPN+ have been lower than when on satellite and cable providers.

UFC 235 (pre-ESPN+ only PPVs):  520K-650K

UFC 236:  >100K buys

UFC 237:  ~70K buys

With that being reported, its hard to think that UFC 238 did better than UFC 236 although one might be generous and state that the buys were likely around 100,000.

UFC 238 Prelims draw 964,000 viewers

June 11, 2019

The UFC 238 Prelims drew 964,000 viewers on ESPN Saturday night per Nielsen via ShowBuzz Daily.  It was the best rating for a PPV Prelims since UFC 235.

The PPV prelims aired on ESPN prior to the UFC 238 Prelims on ESPN +.  The feature bout of the prelims saw Tatiana Suarez defeat Nina Ansaroff in a competitive fight between strawweights.  Also, Aljamain Sterling defeated Pedro Munhoz in a bantamweight contender matchup.

The event drew 489,000 viewers in the A18-49 demo and a 0.63 share.

UFC PPV Prelims ratings 2019

UFC 234:  1.339M

UFC 235:  1.480M

UFC 236:  893,000

UFC 237:  813,000

UFC 238:  964,000

The prelims actually served as a lead-in to Top Rank Boxing on ESPN.  It’s the second straight PPV that the prelims have led to boxing on the network.

Payout Perspective:

The ratings reflect a nice uptick in viewership which may mean more PPV purchases.  This time around the prelims seemed stacked more competitive fights and fighters the casual fan may know.  This is also another evening where ESPN dedicated to combat sports which is interesting to see.

The Athletic expands to combat sports, will fans subscribe?

June 10, 2019

The Athletic unveiled another vertical in its ever-expanding sports journalism business with coverage in combat sports.  The expansion gives the sport greater coverage but will the company’s foray into combat sports be rewarded with an uptick in subscribers.

Last week MMA coverage was introduced with MMA writing veterans brought on to write about the sport.  Today, Lance Pugmire, Mike Coppinger and Rafe Bartholemew announced that they are moving to The Athletic to write about boxing.  Pugmire wrote for The Los Angeles Times, Coppinger, for The Ring, and Barthomew a former writer for Grantland.  Notably, I interviewed Rafe back in 2010 about his first book at basketball in the Phillipines.

The expansion into covering MMA amd boxing was foreseeable.  Memorial Day weekend saw the unveiling of the company’s expansion into motorsports.  It also started to cover the WNBA when the season began in late May. With the company’s core business based on subscribers, robust content plus good writing, they are banking on an audience of hardcore sports fans that want a little more than the box score.

The Athletic has disrupted traditional sports journalism.  The standard business model for web sites with content is based on the selling of ads.  But The Athletic is solely based on subscribers as their main revenue source.

It hired away some of the biggest writers in the industry from other outlets and started a focus the localizing of journalism which hone in on certain cities and their teams as the writers gave a more detailed look at the teams including more features.

The startup was a creation of the Summer 2016 class coming of the Y Combinator – think summer camp for young entrepreneurs where they learn how to cultivate their ideas and most importantly, meet investors.

The company premised its business plan on the belief that there is still demand for “truly local content, written by sportswriters” with established credentials and contacts in the industry they cover according to a NY Times interview.  It started in Chicago where they hired the top sportswriters full-time and gave them a quota of writing quality, original content each day.

Perhaps the most notable early hires once it expanded past Chicago was the San Jose Mercury’s Tim Kawakami and veteran baseball writer Ken Rosenthal.  It also hired Seth Davis and Stewart Mandel.  Both known for their knowledge of college basketball and football respectively.

At a time when journalism was thought to be dead, The Athletic has shown it is not.  In a 2016 TechCrunch article, Alex Mather, co-founder of the company, said that 80% of readers view every article that is produced and subscribers spend an average of 90 minutes a week reading the content.  You can conclude that there is a base of fans that still want to read about the sports they follow and are willing to pay.

In addition to the written content, one of its main selling points is the quick load times for articles which, in a ‘right now’ society, is helpful.

Another aspect of The Athletic is that writers are incentivized to promote their work and build subscribers via social media as pay is tied toward the number of subscribers that they recruit.

Access is another linchpin for The Athletic.  With hiring established sportswriters, it gained instant credibility with teams and athletes.  NBA and MLB broadcasts refer to The Athletic articles all of the time.  Reporting on sporting events and interviewing players is just one component of The Athletic’s writing.  Long-form articles with intense detail and storytelling are a tell-tale characteristic of the web site.  This part of the web site has allowed them to be more creative and less-driven by press releases and/or PR pitches than with other sites demanding clicks.

Another facet of The Athletic that is pleasing to readers is no ads.  No sponsored content or banner ads that detract from the site.  Readers are asked at the end of the article if they find the content, “Awesome,” “Solid,” or “Meh,” which one might assume will factor into future content.

With the written content, it was only time before podcasts came along.  There are several podcasts on its platform and one might suspect MMA podcasts in the near future.

The Athletic has been a success since its launch.  As of late last year, it had over 100,000 paid subscribers with 60% under the age of 34 and a 90 percent retention rate for those retaining their subscription past the initial introductory offer.

Will this work for the MMA audience that have been accustomed to twitter for its news and looking on social media for the latest dust-ups between fighters?  Moreover, a fan base which is very supportive of fighters getting paid more and a union or association to combat the perceived injustices.  Yet, openly admitting to not wanting to spend money on PPVs and going through illegal streams to watch instead.  Paying $60 per year for stories up against web sites without a paywall seems to be a hard sell to MMA fans.  Alex Mather stated in a TechCrunch article that the $60 price is a “meaningful price, but not prohibitive.”

Of course, there is still backlash, by the MMA fan that doesn’t feel like they should spend money for writing.  It’s not a unique argument, but, as pointed out by Ben Fowlkes below, there is a price for writing:

In the TechCrunch interview, Mather differentiated The Athletic from others online as it being more original content as opposed to aggregated content.  With the advent of online content, there has been a demand for journalists to churn out blog posts in addition to stories for the daily paper.  The Athletic still demands daily original content, but there is also more feature material which could only live online without the parameters of a normal print paper or magazine.

The Athletic is the creation of co-founders Alex Mather and Adam Hansmann.   The two were co-workers at Strava – the subscription-based fitness company.  There has been a total of 6 rounds of venture funding.  Two seed rounds and three additional funding rounds.  According to Crunchbase, the initial seed round in 2017 drew 2.3 million.   A series A round saw it get $5.4 million.  A series B round raised another $20 million.  In October 2018, it drew another $61.8 million and the latest round in May 2019 saw it get another $21.7 million.  In total, it has raised approximately $89.5 million.

The company was valued at around $200 million after its October 2018 round and its likely more now after this latest round.

The Series C round this past fall was based on the possibility of diving into audio and video.  It also looks like there are rumblings that The Athletic will be expanding into the UK soon.

Eric Stromberg of Bedrock Capital, who met Mather and Hansmann at the Y-Combinator, and is an early investor in The Athletic stated that there were two things that they focus on when looking into investing a subscription business:  retention and a positive flywheel.

Retention seems self-explanatory in that there must be retention of customers after an introductory price is made.  The Athletic usually offers introductory offers to entice those interested.  It’s the retention to the usual price point is what matters to investors.

A positive flywheel is based on the premise that the more you build your subscriber base, the more you build your revenue base.  This provides the opportunity to reinvest the capital into hiring writers, expansion and technology.  Stromberg stated, “[w]hen this flywheel is working it’s actually quite hard to put a ceiling on the business.”

It would seem that The Athletic’s business model is working and the expansion into other sports will yield more fans to subscribe.  But the question of how much fans will be willing to spend becomes something dependent on the consumer.  Right now, things are looking great in the industry of combat sports as there are fights on multiple platforms and every weekend there’s an event to cover or write about.  The area of combat sports is not devoid of characters or notable stories.  This will keep the hardcore fans intrigued.  On a personal note, I think that boxing has a rich history that there would be a lot of stories to choose from.  Since MMA is relatively new, there’s only so much to pull from in comparison to boxing.  Yet, with the expansion of the subscription model where fans are paying for ESPN+ and DAZN and PPVs will there be a breaking point for paying out money for content that can be culled from the internet.  We shall see, but as of now the plan is working for The Athletic.

 

UFC 238 attendance, gate and bonuses

June 9, 2019

UFC 238 drew 16,038 fans for a gate of $2,034,387.49.  The attendance and gate were announced post-event.  The event took place at the United Center in Chicago in what is becoming the annual event taking place in the city.

UFC 225 last June drew 18,177 for a gate of $2.55 million.    The event featured Robert Whittaker taking on Yoel Romero for the middleweight title.

Saturday night’s event had two title fights as well as Donald Cerrone taking on Tony Ferguson.

The bonus winners for Saturday night were Henry Cejudo, Valentina Shevchenko, Tony Ferguson and Donald Cerrone.  Ferguson and Cerrone earned FOTN while Cejudo and Shevchenko won Performance bonuses for their respective stoppages.

Payout Perspective:

A good night of fights and Henry Cejudo showed that despite the antics, he is one of the elite fighters in the sport.  Shevchenko showed that she may have the 125 title for a while with the vicious KO of Jessica Eye.

UFC Fight Night Stockholm Prelims this past Saturday draws 257K

June 7, 2019

UFC Fight Night Stockholm Prelims last Saturday on ESPN2 drew 257,000 viewers according to Nielsen via ShowBuzz Daily.  The event took place on Saturday morning in North America.

The three hour prelims featured welterweights Sergey Khandozhko as he defeated Rostem Akman via decision.  Also, Lina Lansberg defeated Tonya Evinger in a bantamweight matchup.  The featured event, which aired on ESPN+ featured Anthony Smith against hometown favorite Alexander Gustafsson.  Smith silenced the crowd when he submitted Gustafsson in round 4 of their light heavyweight matchup.

Earlier this year, UFC on ESPN + 7 Prelims from St. Petersburg, Russia drew 232,000 viewers.  It also was a Saturday morning telecast on ESPN2.  In February 2019, UFC Fight Night on ESPN +3 drew 271,000 viewers for an early morning North American start from Prague.

Payout Perspective:

 The televised portion of this event happened Saturday morning on the west coast which likely contributed to the low ratings.  Of course, it was the prelims.  This past Saturday’s event is about the average for these Saturday morning telecasts.

PFL 3 Prelims on ESPN2 draw 113,000 viewers

June 7, 2019

The Professional Fighters’ League prelims which aired on ESPN2 on Thursday afternoon/evening drew 113,000 viewers per Nielsen via ShowBuzz Daily.

The event was the precursor to the third event of the second season for the PFL.  The prelims saw Emiliano Sordi get a 2nd round KO against Vinny Magalhaes in a light heavyweight matchup.  Also, Viktor Nemkov defeated Rakim Cleveland via unanimous decision.

Prelims for second season of PFL on ESPN

PFL 1: 137,000

PFL2:  120,000

PFL 3:  113,000

Payout Perspective:

The ratings are low but as a prelim event, its hardly any surprise for the ratings.  The event went up against the NHL Stanley Cup airing on NBC at about the same time too.  These events are ones that can get the PFL name out there on cable but the eventual hope is that fans gravitate to subscribe on ESPN+

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