HDNet Nearing Deal For IFL Assets

October 31, 2008

The rumored deal for HDNet’s purchase of the IFL’s assets takes another step towards being completed with news from the most recent filing from the IFL:

In connection with the Sale Motion, on September 19, 2008, IFLC and HDNet entered into an asset purchase agreement (the “Asset Purchase Agreement”), which contemplates the sale of substantially all of IFLC’s assets (the “Purchased Asset”) to HDNet for total consideration of $650,000 in cash and the assumption by HDNet of certain liabilities of IFLC. The Asset Purchase Agreement is subject to higher and better offers as set forth in the Sale Motion. The Court approved the Sale Motion on October 10, 2008.

On October 28, 2008, the Court held a hearing on the auction and sale of the Purchased Assets as contemplated by the Sale Motion and entered an order (“Sale Order”) authorizing IFLC to sell the Purchased Assets to HDNet for total consideration of $650,000 in cash and the assumption by HDNet of certain liabilities of IFLC, as set forth in the Asset Purchase Agreement.

The green light has been given for the purchase of assets, with closing on the deal expected soon. The deal seems to be foregone conclusion , but the contractual i’s need to be dotted and t’s need to be crossed. Once the deal is done, HDNet will be able to take advantage of the video library to add to it’s MMA offerings, as that looks to be the only plans behind the purchase.

HDNet Purchase of IFL Assets Possible

September 26, 2008

According to a recent filing by the IFL, HDNet LLC has offered to purchase the assets of the IFL for $650,000. The deal is pursuant to agreement from IFL shareholders on the deal and no further higher bids being placed.

The main item of value from the deal would be the video library, which clocks in at around 400 hours of various footage. The library would bolster the MMA offerings available on HDNet. There is an old business meme that states that content is king and that is what is driving this purchase. While the library isn’t first run material, it also doesn’t have the costs associated with first run or live material either (like the high cost of HD filming, salaries, union rules, satellite time, etc.).

The IFL does still have TV deals in place with FSN and a slew of international contracts, but with HDNet wanting the library for content for its own channel, it is doubtful anything will be done with these existing deals if the sale goes through.

As detailed in earlier financial filings, one of the remaining liabilities on the books for the IFL are the contracts that some of the coaches have with the fight group. If these contracts are assumed, HDNet has a range of properties (Inside MMA, color commentary on HDNet fight cards) through which to employ the coaches to receive some value for their money.

Pushing The Envelope On Marketing MMA Backfires

August 22, 2008

While coverage of mixed martial arts can seem ubiquitous at times, it is good to remember that that you are operating in a regulatory environment that isn’t always so friendly to the sport. Fox Sports World Canada recently found this out the hard way:

The Canadian Broadcast Standards Council today released its decision concerning a promotional spot for International Fight League (IFL) programming broadcast on Fox Sports World Canada, which aired around 7:00 pm. It included repeated images of bloody faces and provocative voice-overs highlighting the fighting. The CBSC concluded that the early evening broadcast contravened the Canadian Association of Broadcasters’ Violence Code.

In a somewhat head scratching decision, the Council found that showing the IFL itself before the 9PM window was permissible but the promo used to market the show was too adult in content and was acceptable only after the 9Pm safe harbor hour.

The regulatory environment here in the States is somewhat more amenable. Cable stations like FSN and Spike are exempt from broadcast standards acts imposed by the government, accounting for the sometimes wall to wall coverage on these mediums. Network television is a much more regulated environment, with CBS and NBC airing their MMA content only once in the safe harbor hours after 9PM. While MMA has received much greater acceptance over the past 2 to 3 years, it would be interesting to see the response if MMA were to be moved to an earlier time slot or placed in a week-end afternoon slot. Both are time periods where children would have greater access to the product.

Whither The IFL?

August 6, 2008

When the deal is finally closed on who claims the remains of the IFL, it looks like the only thing of note remaining may be a few desks and a decent size video library. The past week has seen a mass exodus of talent from the IFL. Roy Nelson to Affliction, Horodecki to free agency, Mayushenko to Affliction, Ryan Schultz to Japan, the Miller Bros to the UFC. With the exception of Wagney Fabiano, nearly all of the IFL’s belt holders have been dispersed across a wide range of organizations. If the rumored sale to the UFC is still in the works, one has to wonder why a number of younger talents like Horodecki and Schultz have been released from their IFL contracts when the UFC would be able to find a home for them in the WEC or UFC 155 division.

IFL Taps Out

July 25, 2008

While it was long expected, official word came Thursday of the demise of the International Fight League. Joe Favorito, IFL’s Senior VP of communications, contacted the press with the final word. To Wit:

I apologize for this mass email but I wanted to take a second to let you know that as of July 31 my role at the IFL will be no more as the company goes into its final stage of being sold and/or closed down. We are very proud of what we did here in just over two years, building a brand from nothing into something that people in the industry and outside of the industry actually noticed, and I enjoyed working with so many different people and helped tell some great stories. At the end of the day sometimes the finances don’t make sense, but it certainly wasn’t for lack of trying. The good news is I think we have gotten all our good junior people placed in some great spots, so we are pretty proud of that. Even our interns landed in good places.

While he didn’t explicitly name the suitor, MMAPayout.com has reported earlier that the UFC was deep in negotiations to buy the IFL and since that time the UFC has purchased the contracts of the Miller brothers.

Brandweek succinctly made the case for the financial nosedive that precipitated the announcement:

Although financial figures were not disclosed, analysts put the IFL’s market value at $1 million at best. …… After an IPO stock offering in late 2006, analysts put IFL’s value at more than $500 million.

In late 2007, however, co-founder and CEO Gareb Shamus …..was moved to a role as consultant and was replaced by Jay Larkin, the IFL’s president and COO. This year, the IFL’s concept of having five-man teams and playoffs was scrapped in favor of “camp” alignments. IFL stock also dropped from a high of $12 per share to about 3 cents.

To paraphrase the old saying, The IFL made a small fortune in their time…… in that they took a big fortune and through mismanagement and bad decisions turned it into a small one. Jay Larkin made all the right financial move during his tenure as head of the IFL, but by that time the die had been cast.

If Larkin has a non-compete clause in his contract that would preclude him from any further role in MMA for an extended time period. Industry chatter prior to the UFC negotiations had EliteXC also being a suitor, with acquiring Larkin’s acumen at the executive level being seen as one positive for ProElite possibly making a deal, in addition to the tape library and fighter contracts.

Fight Biz Quote: Dana White

July 10, 2008

“I don’t like him,” White said of Atencio. “If I liked him, I’d probably lay off him. The guy has an attitude problem, and I’m going to fix it for him.”

–UFC Head Dana White on Affliction chief Tom Atencio, speaking to Yahoo.

Dana Had another quote worthy bit

“Every month it’s the new thing,” White said. “ ‘Ooooh, the IFL is going to take over the UFC,’ and all this (expletive). They had $800 million, and they had a network television deal. Their stock is at two cents, and they are gone …”

Hopefully that is just hyperbole taking over, because if Dana thinks the IFL ever had $800 million play with, I fear for the financial future of the UFC. There’s a difference between an inflated stock valuation (right after the 60 Minutes piece) and the actual money they had on hand from various stock issuances and capital raises.

Former IFL Stars Fill UFC Counter-Card

July 9, 2008

When the IFL first started-up, the UFC downplayed the significance of the league and its fighters. However, on July 19th, 3 former IFL fighters are hoping to make new homes for themselves under the UFC banner.

Competing on main card, in a televised bout is Reese Andy, who went 5-1 in the IFL, has an overall 7-1 record. Also on the card are IFL veterans Brad Blackburn and Rory Markham.

Blackburn’s most recent fight was a victory against Delson Heleno, a victory that surprised many, who thought Heleno got the better of the first two rounds. Blackburn’s classic third round, one-punch KO was supposed to catapult the middleweight into contention for Jay Hieron’s title, but the league’s moratorium on fights prevented that from happening.

For Rory Markham, a recent victory at Adrenaline helped him rebound from a surprising defeat to IFL draftee Brett Cooper in December, 2007. Markham is an explosive fighter who can easily end fight with one punch.

In short, these are three very talented fighters that the UFC has snatched up. However, they probably aren’t the best of the IFL bunch. The league still has its champions under contract, perhaps their most valuable asset as it looks to move forward.

Names that should spark the interest of other MMA organizations should include:

Wagnney Fabiano – among the most underrated fighters and most talented featherweights in MMA. Of his last five fights, all were victories and only one made it out of the first round.

Roy “Big Country” Nelson – his most notable opponents to date include Brad Imes, whom he defeated in a second round KO, and Ben Rothwell, to whom he lost a controversial decision. However, if Rothwell can land as spot on the main card at Affliction, Big Country shouldn’t be far behind.

Ryan “The Lion” Schultz – is a wrestler that prefers to knock people out. Despite a youthful appearance, Schultz is a true veteran of the sport with 30 fights to hpis credit. In addition to making headlines by defeating Chris Horodecki for the IFL lightweight championship, he is the only person to defeat the UFC’s Roger Huerta.

With such a pool of talent remaining, in addition to over 400 hours of fight footage, an IFL buyout remains an attractive option for a group looking to enter the MMA game, or expand their current offerings.

EliteXC To Las Vegas?

July 5, 2008

Nevada State Athletic Commission head Keith Kizer recently sat down with the Las Vegas Sun to discuss various boxing and MMA related issues. The biggest piece of news to come from the session was the possible debut of EliteXC in the Sin City.

EliteXC has recently filed a promoter’s application, which should be on a Commission meeting within the next 45 days. I know they really want to do a show in Nevada, and I think they would do well here.

Such a time frame for license approval could possibly make Vegas a possible venue for a third CBS network show, which at this time is rumored to be set for October. The UFC currently has no domestic UFC cards planned for the month of October, much less in the Vegas area. One key to drawing well for a Vegas show would be placing the card far enough away from UFC events so as not to hurt the gate figures.

Booking a show too close before or after a UFC show would adversely impact their ability to fill a venue. Whether Las Vegas would embrace EliteXC is up for the debate. With the lack of any professional athletic teams, the fight game is often seen as the home sport of Vegas, with the UFC being in essence the home team. EliteXC would have to come with a very strong card to sway the somewhat provincial Vegas crowd. The results of other promotions in the past have been mixed, with Pride drawing well in two shows but with the IFL drawing so poorly they abandoned the Vegas market all together.

Another bit of news to come out of the Kizer chat was his estimation that tonight’s Griffin-Jackson should be a top 5 gate historically for MMA in Vegas. Such a figure would mean that the UFC did very little comping of tickets for tonight’s show. The Lesnar vs Mir card drew similar numbers but the gate was lower due to the high number of comped tickets that were distributed for the show. UFC 81 suffered from coming just over a month after the UFC 79 card. Tonight’s card suffers a similar fate, coming about 6 weeks after the UFC 84 show, but this cards seems to have done much better at the box office.

The Vegas Sun gives a little insight into the hot ticket status of the card:” Stubhub.com still has a few available. Minimum price: $236. Want to be cageside? There’s some seats left for $1,400. Over on Craigslist.com the brokers are posting some upper-level seats for $165 a pop.”

A Tip of the hat to MMAMania on the find.

EliteXC To Amend Cage Rage Venues

July 4, 2008

Cage Rage co-promoter Chris Cordeiro spoke recently with Fighters Only Magazine about a switch in the company’s philosophy in choosing venues:

“Right now I know people are talking bad about Cage Rage because they are used to a little more glitz and glamour, but it’s a publicly owned company now so we have to be a little more accountable with the money we spend, that’s all there is to it,” he explained.

Cordeiro confirmed that Cage Rage will be using a smaller venue in the near future but revealed that the promotion will still be using Wembley Arena as well.

“We’re at Wembley again before the end of the year and we have some dates booked for next year,” he revealed.

Venue management is often overlooked but this is one area where promotions can get in over their head. While it is certainly an ego stroke to say you are playing the biggest venue in town, all too often the crowds aren’t justifying the price tag attached to renting the larger venues. Does the AFL really need to rent a 21,000 seat Phillips Arena when they are drawing around 3,300 folks? The IFL went down much the same path during it first year existence, playing places like the Los Angeles Forum without the crowds to fill them. The Cage Rage folks are being smart in saving the Wembley shows for their biggest gigs, giving those shows a higher profile and prestige level.

Art of War To Syndication

June 17, 2008

Sun Sports & Entertainment announced today an agreement with American Television Distribution (www.americantvd.com) to license a four show series of “ART OF WAR” Events (2-hour specials) into 40 of the top syndicated TV markets.

American Television Distribution, which currently licenses CHEATERS UNCENSORED, STAG and BILLIONAIRES CAR CLUB worldwide, will license the ART OF WAR name brand to local affiliates of FOX, ABC, NBC, CBS, MY TV,The CW, etc. across the United States scheduled for September 2008.

“ART OF WAR” features many popular MMA stars including: Pedro Rizzo, Jeff Monson, David Loiseau, Justin Eilers, Jeremy Horn and Alex Andrade. Those within the company feel the deal will raise the company’s profile as it looks to possibly relaunch its’ brand:

“Syndication will introduce the ART OF WAR brand to a broad audience across the country,” said Clyde Gentry III, Chief Operating Officer of SUN. “With the MMA space continuing to grow, it will give us an opportunity to increase our fan base.”

A deal like this gives truth to the old maxim that content is king. With the wealth of television and online avenues of distribution, there is always a need for product to move through those pipelines. On a similar note, however the IFL ends up, look to see their back catalog of fights for quite a while as someone will look to purchase the library and exploit it if the company goes under.

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