With Pacquiao fight Saturday, ongoing question of whether PPVs are sustainable

November 22, 2014

With Manny Pacquiao returning to PPV Saturday night, the standard question of whether PPVs are worth it surfaced.

In a Newsday column published this week, there are quotes from both boxing and UFC executives which address the question of PPV as a viable platform. The conclusion appears to be that it takes a big event for people to purchase PPV.  This is something most of us already knew.  The column acknowledges that with the internet and social media, there are more ways to follow a PPV card without purchasing it.  Also, more people are content with highlights they may be able to obtain legally online.

UFC exec Marshall Zelaznik is quoted in the piece and stated that it’s up to the UFC to “figure out how to create and develop content that will make people not want to miss it.”  He went on to say that the UFC has to do “the right job to respect the consumer, to give them something that’s valuable and worth paying for.”

Dana White recently acknowledged this year’s PPV buy rates have been low and Floyd Mayweather’s PPV reputation has been affected with the underwhelming business done under the Showtime banner (except of course for The One).  Still, one big PPV event can mean a major windfall for the company.

On Saturday night, Manny Pacquiao is on PPV once again against an unknown in Chris Algieri.  Conspicuously, there has been little done in terms of promoting the fight.  Unless it has gone under the radar, there are no Tecate promotions and $25 rebates this time around.  The usual three rounds of HBO 24/7 has been limited to just one.  Even the replays of past Pacquiao fights have been limited on HBO and the Audience Network as Bradley-Pacquiao II is replayed.  Additionally, Algieri-Provodnikov has been replayed.

Payout Perspective:

There’s nothing new in the column related to the current state of PPV except the quotes from the execs.  It’s clear that the challenges of getting fans to buy PPVs are getting harder considering the amount of content out there, social media and the ability to see highlights that will satisfy one’s need to watch the event.  Are there too many PPVs?  Boxing has added several PPVs to the mix this year which may sway your mind about that question.  Certainly, many MMA fans have their opinion on the UFC PPVs.  As for Saturday’s event featuring Pacquiao, it will be interesting to see how many Pacquiao die hards will pay the $70 to watch.

Senator Reid denies parts of SOPA attached to NSA reform bill at request of UFC

November 22, 2014

Tech news web site Techdirt reported earlier this week that Nevada Senator Harry Reid is attempting to attach a portion of the Stop Online Piracy Act to the USA Freedom Act as a favor to the UFC.  Although the bill did  not pass, there has been some criticism of Reid for “coat-tailing.”

Essentially, Reid attempted to include portions of the SOPA bill which would lead to criminal consequences for copyright infringers.

The UFC were strong proponents of SOPA.  The bill allowed U.S. law enforcement to combat online copyright infringement.  Other companies including the WWE, were in favor of this bill.

The USA Freedom Act  essentially addressed surveillance of individual’s phone records as well as the bulk collection of Americans’ metadata.  The bill arose after Edward Snowden revealed that the NSA was collecting telephone metadata.  The bill fell in the Senate this week.

Senator Reid’s office responded to the Techdirt story indicating that the inference that the Nevada senator attempted a surreptitious amendment for his UFC constituents was not true.  Techdirt responded to the response saying Senator Reid’s office was incorrect.

Payout Perspective:

It is no secret that Senator Reid and the UFC are friendly.  The senator is also a fan of Manny Pacquiao and in the past, Pacquiao has supported his campaigns for reelection.  Politicians befriending companies/athletes seeking influence and vice versa is ingrained in American politics.  The addition to include portions of the SOPA bill is nothing out of the ordinary as well (even though it was likely out of context based on the rest of the legislation) and while the truth may be inclusion of these portions of SOPA was done at the request of the UFC (and maybe other companies that were proponents of the SOPA bill), there does not appear to be any real wrongdoing here despite the inference that there was (e.g.,  The Daily Beast).  As many who follow politics know, things of this nature occur with little fanfare.  The only part that is of note is that it was the UFC.

UFC and Fathom Events to show more PPVs in movie theaters

November 21, 2014

The UFC and Fathom Events are teaming up once again to show UFC’s PPVs in movie theaters.  A joint press release announced that UFC 181 will be the latest to be shown in theaters with additional PPV events in 2015 to be jointly shown via PPV and also in nearly 500 select movie theaters across the U.S.

UFC 182: Jones vs. Cormier, UFC 183: Silva vs. Diaz and UFC 184:  Weidman vs. Belfort will also appear in local theaters.  The latest PPVs to movie theaters were announced at the UFC’s #TheTimeisNow launch.

Promo poster at Bellevue, WA theater

Promo poster at Bellevue, WA theater

It appears that the move, which restarted with UFC 180, will be a constant throughout the first two months of 2015.

Payout Perspective:

Here, there are at least 6 movie theaters within the Seattle area that will be showing it. Tickets are $15.  The latest move appears to be a way for eyes to see its events and also an attempt to garner some additional revenue from sagging PPV buy rates.  Based on the latest S&P move to downgrade Zuffa’s outlook to negative, it looks like the UFC is trying to turn around its financial outlook any way it can in the first quarter of 2015 to avoid another credit downgrade.  It would seem that putting the PPVs in theaters siphons away potential PPV buyers.  Then again, with the downward trend in UFC PPVs, this is an option for fans on the fence of buying an event.

TUF 20 Episode 9: 381,000 viewers

November 20, 2014

MMA Payout has learned via a Nielsen source that Wednesday night’s 9th episode of TUF 20 drew a rating of 381,000 viewers. The rating represents the lowest-rated episode of the season.

In the fight of the episode, Randa Markos defeated Felice Herrig via armbar.

TUF 20 Episode 9

Last season’s TUF 19 had two episodes below 400Kviewers.  Wednesday night’s episode represents a new low.

UPDATED:  According to Nielsen source, the late night replay airing 10pm/1am drew an additional 122,000 viewers for the episode.

Payout Perspective:

The actual show started 8 or so minutes late as there was overrun from college basketball (Oklahoma-Creighton).  It was the coach’s challenge episode which usually is very entertaining.  This time around was not as good since the UFC decided to hold off on a physical challenge due to Anthony Pettis’ knee injury.  The episode was the lowest of the season and brought down the season average to 509,000 viewers.

Standard & Poor’s revises Zuffa outlook to negative

November 20, 2014

The Standard & Poor’s Ratings Service has revised Zuffa, LLC’s financial outlook to negative from stable on weaker operating performance.  It has indicated that it anticipates a 40% decline in EBITDA in 2014 and credit measures will weaken due to the decline.

In a press release disseminated by S&P, it stated that the negative rating reflects its “belief that Zuffa’s operating performance will deteriorate significantly in 2014, resulting in very weak leverage in the high-5x area.”

In addition to the change to the negative outlook it is affirming its “BB-“corporate credit rating.  The “BB-“ credit rating was assessed last month.  The concern for Zuffa is that a negative outlook may mean that S&P may lower Zuffa’s “BB-“ rating.

More from the press release:

“The negative outlook revision reflects our updated forecast for 2014 EBITDA to decline approximately 40% (compared to a decline of 30% previously), primarily due to a change to a marquee fight card in the fourth quarter of 2014 as a result of another fighter injury causing anticipated pay per view (PPV)  buys and event ticket prices to decline further, as well as higher remarketing expenses for the event, and additional costs related to the company’s international expansion,” said Standard & Poor’s credit analyst Stephen Pagano.

S&P now expects Zuffa’s cash flow/debt leverage to increase to the “high-5x area at the end of 2014.”  In its October 2014 report, it had predicted Zuffa to be in the 3 range.  The cash flow/leverage is based on a scale of 1-6 with 1 being minimally leveraged to 6 being highly leveraged.  Zuffa is now pegged as 5 whereas S&P had forecasted it being a 3.

Payout Perspective:

Obvious bad news for Zuffa as the change in outlook is based on Cain Velasquez’s injury forcing him to drop out of UFC 180.  It ties in directly to the assumption that the PPV buy rate will be low once again – an issue that Dana White recently acknowledged.  What the change in outlook to negative means is that it will increase the cost of borrowing by Zuffa.  As the company falls deeper into debt, its ability to obtain credit will get harder.  The forecast painted by S&P reflects the fact that it no longer believes that the company will be able to turn it around this year or next to address its debt obligations.

With the new lower, negative outlook on its debt, Zuffa will have a lot of pressure to forge new television pacts overseas and push the profitability of Fight Pass.  We may also see initiatives like a formal drug testing policy put off if costs are too high.  We will also see if Zuffa attempts to address the issue of fighter injuries which causes the instability and uncertainty of events.

MMA Payout will keep you posted.

TUF 20 Episode 8 numbers up to 840,000 viewers

November 19, 2014

MMA Payout has learned from a Nielsen source that last week’s TUF 20 episode 8 drew an additional 262,00 viewers in Live +3 ratings.  Episode 8 total viewership including adjusted average is now at 840,000 viewers.

TUF 20 Episode 8 DVR

Payout Perspective:

The average viewership after the adjusted ratings is at 812,000 viewers. After the 8th episode, the average boost in viewers from the Live rating to the DVR rating is down slightly at 287,000.

WSOF 15: 161,000 viewers

November 19, 2014

MMA Payout has learned from a Nielsen source that the World Series of Fighting 15 Saturday night on drew 179,000 viewers on NBC Sports Network up against stiff competition from both the UFC and Bellator.

The main event featured David Branch defeating Yushin Okami via TKO.  In the semi-main event, Justin Gaethje defeated Melvin Guillard via split decision.

WSOF 15

Payout Perspective:

Once again a WSOF event occurs on the same day as another event by a major MMA organization.  On Saturday, it went up against Bellator and the UFC.  The 179,000 viewers is the lowest WSOF rating since WSOF 7 (which drew just 94,000 on tape delay), yet fair considering that both Bellator and UFC had fights on during its event.  The previous low was WSOF 6 which drew just 161,000 viewers.

UFC 180 Prelims: 624,000 viewers

November 19, 2014

MMA Payout has learned form a Nielsen source that the UFC 180 Prelims on FS1 Saturday drew an average of 624,000 viewers for its two hour show between 8:00-10:00pm (5:00-7:00pm).

The prelims on Saturday peaked in the 9:45-10pm quarter hour (6:45-7pm west coast) with 771,000 total viewers (Live + SD) according to Nielsen.

UFC 180 Prelims ratings

UFC PPV Prelims since August 2013 (FS1 unless specified)

UFC 164                             809,000

UFC 165                             722,000

UFC 166                             628,000

UFC 167                             998,000

UFC 168                          1,554,000

UFC 169                             933,000

UFC 170                             936,000

UFC 171                             305,000 (FS2)

UFC 172                             750,000

UFC 173                             697,000

UFC 174                             784,000 (FX)

UFC 175                             1,000,000

UFC 177                             436,000

UFC 178                             698,000

UFC 179                             536,000

UFC 180                           624,000

Payout Perspective:

The UFC Prelims provided some very good action but a lot of names we did not know and thus it was one of the reasons it likely fell to Bellator.  The prelims did feature the Fight of the Night as well as a submission and an ear almost falling off (Leslie Smith).  UFC 180 did improve upon prelim rating for UFC 179.  The current average of UFC Prelims for 2014 is at 699,000.

Bellator 131 produces big ratings on SpikeTV

November 18, 2014

Bellator 131 on Saturday night drew a record 1.8 million viewers and peaked at 2 million during the Tito Ortiz-Stephan Bonnar fight per a Spike TV press release. The average for the overall event drew 1.24 million viewers.

Via Spike TV press release:

Bellator 131 knocked out the competition on Saturday, November 15 with record ratings for the emerging MMA franchise under new president Scott Coker. The Bellator 131 main event between Tito Ortiz and Stephan Bonnar (11:50pm-12:16am) drew 1.8 million viewers, peaking at 2 million, making it the most-watched and highest–rated MMA fight on cable in 2014.

The Ortiz-Bonnar fight ranks as 2nd highest-rated MMA fight telecast in all of television with Men 18-34 and Men 18-49, including broadcast, in 2014. Also, Ortiz-Bonnar ranked #2 in its timeslot in all of cable with Men 18-34 and Men 18-49.

Bellator 131 ratings breakdown:

Bellator 131 – Ortiz vs. Bonnar – 11:50p
1.8 million viewers

Bellator 131 – 10:11p
1.3 million viewers

Bellator 131 – 9p
994,000 viewers

Overall, the entire fight card (9:00-12:16) delivered 1,241,299 viewers, a record for Bellator MMA on Spike TV.

UPDATED:  More breakdown of ratings from Bellator’s big night:

King Mo-Joe Vedepo fight which started the show drew an average of 1.1M viewers (Bell in R1 9:13pm)

Mike Richman KOs Nam Phan was next and drew 1.1M viewers (Bell in R1 9:50pm *Note that the UFC 180 Prelims on FS1 peaked during this quarter hour at 771K average viewers Live +SD)

Joe Schilling KO of Melvin Manhoef drew 1.6M viewers (Bell in R1 10:11pm)

AJ Matthews KO of Kyle Bolt drew 1.3M viewers (Bell in R1 10:30pm)

Will Brooks TKO of Michael Chandler drew an average of 1.3M viewers (Bell in R1 10:59pm)

Tito Ortiz split decision of Stephan Bonnar drew 1.9M viewers (up from initial press release.  Bell in R1 was at 11:50pm)

Payout Perspective:

The event did well on social media as well per the release as it was the most tweeted Bellator event in Spike history. Despite how “pro wrestling” the Ortiz-Bonnar lead-up was, it worked. Spike and Bellator heavily promoted this event and it drew. The release obviously buried the real news which most folks want to know which was the overall viewership of the entire event – 1.24 million.  Its interesting to see the updated ratings per fight as you can the audience remained over 1 million for the fights.

It was a good night for Bellator as it was the clear winner of the night where the UFC and WSOF were options for MMA fans.

MMA Payout will have more on this. Stay tuned.

UFC does not produce at “The Time is Now”

November 17, 2014

The UFC hyped up a big announcement for Monday afternoon.  However, the news came as a disappointment to most as the UFC released its 2015 calendar with Dana White making a subtle reference that the big announcement did not get done in time.

It was disappointing that there was no follow up (at least from when I was listening) on what that announcement would have been.  Instead, we were treated to a general press conference with many of the fighters that will be in upcoming fights on the stage.

One had to think there was going to be more as Ronda Rousey took over the E! Network’s Instagram account to promote the event.


The list of UFC events for 2015 is below:

2015-ufc-schedule

In the end, most of the press conference shed little light on anything new although there were several entertaining moments.  Most of those included Conor McGregor or Nick Diaz.

Payout Perspective:

One has to think that there was more than just a general schedule announcement today but White spoke the truth when he stated it (whatever “it” was) didn’t happen in time for the press conference.  Why would Ronda Rousey take over the Instagram account for the E! Network if it was just announcing a schedule? The UFC is not the NFL. Further, Bellator jumped the UFC with its announcement of its 2015 first quarter of events with its Saturday announcement. We did get an online press conference. But, in the end, the UFC failed to deliver.  

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