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.

Analysis of Reported Zuffa Acquisition of the IFL

July 21, 2008

Last week MMAPayout.com published a report from HDNet’s Inside MMA that the IFL is expected to eventually be purchased by the UFC. While the IFL is attractive acquisition target because of its potentially undervalued assets, namely its roster of talented young fighters and a 400+ hour video library. However, it does not have much to offer the UFC that it does not already have.

The UFC is already stocked with a majority of the sport’s A-level fighters and has enough B and C level talent to make a plenty of compelling match-ups. Nor does it need the IFL’s stock of fight footage. With over 80 PPVs, 7 seasons of cables most popular MMA reality show and the occasional “free” SPIKE TV fight night, the UFC easily has the deepest archive of quality fights.

It seems that the company’s primary motivation in purchasing the IFL is to keep the company out of the hands of one of its competitors, such as EliteXC who was rumored to have strong interest in the company. This wouldn’t be the first time the company has purchased other promotions for purely competitive reasons, it previously purchased the WEC in order to block a competitor from a deal with the Versus Network and reportedly purchased Pride at least in part to keep it out of potential rivals hands.

The UFC’s gain may be best understood in terms of EliteXC’s loss. The acquisition of the IFL by ProElite would greatly bolster its talented, but thin roster, while the tape library would add more hours to one of the largest MMA libraries in the world thanks to the company’s M&A binge last year.

With a reported asking price of between $750,000 and $1 million, purchasing the IFL is a small price to pay for Zuffa to block its competitors, particularly when it can pick up several talented fighters and the footage to promote them in the process.

Ironic Twists Abound on Countdown to Silva-Irvin

July 19, 2008

Tonight’s UFC event was scheduled for the sole purpose of counter programming Affliction’s promotional debut. In light of that fact, and the UFC’s aggressive posture towards competitors in general, there was a touch of irony to the Countdown to Silva vs Irvin on Spike which featured not one, but two of the company’s acknowledged promotional rivals.

First, EliteXC Light Heavyweight Prospect and Anderson Silva protege Rafael Feijao was interviewed and featured prominently on the show. Feijao will be in action next week at EliteXC Unfinished Business on CBS and is widely considered the company’s choice for its first EXC Light Heavyweight Champion. This was a surprising development for an organization that ignored Robbie Lawler as an assistant coach for an entire season of the Ultimate Fighter because he was under contract to EliteXC.

Unless the company has had an abrupt change of heart and decided to start promoting its competition, I suspect that the creative oversight for the Countdown shows is not as stringent as the company’s live event broadcasts where anyone not under UFC contract is carefully ignored for the most part. This wasn’t the first time that something slipped past the Countdown “censors,” previously Georges St. Pierre managed to wear Affliction gear on the Countdown to UFC 83 despite a ban on the apparel label.

But that wasn’t the only strange twist of the show.

Footage of Reese Andy fighting in the IFL also aired, although no mention was made of the organization by name. That is sure to raise eyebrows in light of recent reports that the UFC is close to acquiring the IFL (despite the potentially difficult shareholder approval process that awaits any deal). Regardless of how or why permission was asked and given regarding the footage, it was a note worthy event, particularly in light of the nasty legal dispute that took place between the companies in the not too distant past.

    In keeping with the unusual occurrences theme, the program was also replayed on the Versus network. This isn’t unprecedented, but does go to show you how serious the company is about delivering a knockout blow to its competition tonight.

    UPDATE: Inside MMA Reports UFC to Buy IFL

    July 17, 2008

    HDNet’s Inside MMA reports that the IFL will be bought by the UFC, according to a senior producer of the show. MMAPayout.com has confirmed that talks between the IFL and UFC are taking place.

    UPDATE: Inside MMA has learned that the UFC is in the process of acquiring the IFL. The news was shared with MMAPayout.com this morning by a senior producer of the show (EDITOR’S NOTE: The language of the original report has been changed to more clearly reflect this fact, my apologies for any confusion). MMAPayout.com was then able to independently confirm that the companies are engaged in negotiations concerning a potential acquisiton.

    Sam Caplan has more details at 5OuncesofPain.com.

    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.

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