ShowMoney talks UFC Antitrust Lawsuit and ONE business

November 14, 2018

Show Money is back once again as I discuss the business of MMA with Bloody Elbow’s John Nash and Paul Gift (also of Forbes).

This show’s topics includes the upcoming Motion for Summary Judgment in the UFC Antitrust Lawsuit and the business moves made by ONE Championship.

UFC Fight Night Denver draws 840,000 viewers on FS1

November 13, 2018

UFC Fight Night Denver drew 840,000 viewers on FS1 Saturday night according to Nielsen via ShowBuzz Daily.  The prelims which preceded the main telecast drew 565,000 viewers on FS1.

Both telecasts which honored the 25th Anniversary of the UFC were strong in comparison to normal Fight Night ratings on the network.  The main card featured Yair Rodriguez and the Korean Zombie in one of the best fights of 2018. Rodriguez KO’d KZ with 1 second left in the fight.

The telecast featured nostalgia with an homage to the first UFC event, the old logo and graphics.

The UFC post fight show drew 237,000 viewers on FS1.  The prefight show on FS1 drew 171,000 viewers.

Payout Perspective:

The 840,000 viewers are the highest rated Fight Night since May’s UFC Fight Night 129.  The Prelims also were high as it doubled viewers ship from the last 2 Fight Night Prelims.  Perhaps  the nostalgia of the 25th Anniversary led to the spike in viewership as the headliners are not considered draws as both were coming off of long layoffs.

White whittles down distributors draw on PPVs

November 12, 2018

This week’s Sports Business Journal features several articles on combat sports.  An interesting article on Dana White reveals that he’s negotiated down the PPV cut that many distributors receive for its PPVs.

According to the article, many outside distributors such as Comcast, Cox or DirecTV receive 50 percent of the PPV revenue from the UFC.  The distributors agree to air the PPVs and also advertise it through their specific means (i.e., digital, commercial ads) in addition to the UFC’s marketing.  In return, the industry standard was for the satellite and cable companies to receive half of the revenues for each event.

But, according to the SBJ article, White has negotiated this down “closer to 30 percent.” The deal is a coup for the UFC since it already receives 100% of the PPV rentals when customers purchase it on the UFC web site or UFC Fight Pass.

Payout Perspective:

The article, found in this week’s Sports Business Journal, talks about the UFC’s move to ESPN this January.  It also speaks about the Vegas headquarters expansion which will include a TV production facility and a min-arena to host fights.  The mini-arena will serve as home to White’s “Tuesday Night Contenders” series and “TUF” episodes.  He also hopes to add other combat sports to air on Fight Pass.  The move by White shows the company’s new business strategy where its attempting to do everything internally to save on costs.  With the UFC airing its own PPV, forging a deal with Amazon for PPVs, driving down the take for traditional distributors seemed imminent.  For the distributors, conceding to the UFC was likely due to the competition within the marketplace from the likes of Amazon and the UFC’s digital platform.  While the PPV buys are down, it still is a revenue stream for the distributors and its clear that there’s nothing that could replace it at this time.

UFC Denver attendance, gate and bonuses

November 11, 2018

UFC Fight Night 139 took place at the Pepsi Center in Denver, Colorado on Saturday night with an amazing main event as Yair Rodriguez knocked out the Korean Zombie with just 1 second left in the 5th round of their fight.  It was the celebration of the 25th Anniversary of the UFC and the fight was fitting for the occasion.

Rodriguez, who took the fight on short notice, won Performance of the Night and share the fight of the night with Chan Sung Jung.  KZ was ahead of the scorecard going into the final round but Rodriquez knocked him out with an uppercut elbow as time expired.  In addition, Donald Cerrone submitted Mike Perry with an armbar in the very first round of the co-main event.  Cerrone then brought his young son into the Octagon.

The event drew 11,426 for a live gate of $946,700 according to UFC officials post-fight.

Payout Perspective:

The last two fights of the evening were great to watch.  The throwback graphics from the 90s were a visual pleasure throughout the telecast.  Rodriguez put on a show throughout the fight with an array of unique attempts to takedown KZ.  But, living up to his name, KZ walked through most of Yair’s offense except for the last elbow.

Cejudo-Dillashaw set for Anaheim for UFC Flyweight title

November 10, 2018

Henry Cejudo will meet T.J. Dillashaw at UFC 233 in January at The Honda Center in Anaheim, California for the UFC Flyweight Title per ESPN.  Dillashaw, the bantamweight champion, is dropping down in weight to face Cejudo.

The fight surprised some considering that many UFC flyweights were let go by the promotion with the news that it was shuttering the division.  Demetrious Johnson, the former UFC flyweight champion, was “traded” to ONE Championship for Ben Askren.  Cejudo defeated Johnson for the title in Los Angeles this past August.

The flyweight division has been criticized for its lack of delivering ratings despite the high volume of action its fighters provide.

Dillashaw will seek to be the sixth “champ champ.”

Payout Perspective:

It appears that this fight will be the swan song for the division with the winner retiring the belt and division.  Unless the 125 division continues in the UFC, I’m not sure why this fight shouldn’t happen at 135 pound for Dillashaw’s belt.  It’s unfortunate that a lot of fighters will be out of the promotion, but perhaps another promotion such as ONE can pick them up.

 

TUF 28 Episode 9 draws 119,000 viewers on FS1

November 8, 2018

The Ultimate Fighter 28 Episode 9 drew 119,000 viewers on FS1 per Nielsen via ShowBuzz Daily.  It is the lowest-rated episode of the season and likely the series since it came to Fox.

Live + SD
Episode 1 186,000
Episode 2 195,000
Episode 3 183,000
Episode 4 205,000
Episode 5 174,000
Episode 6 173,000
Episode 7 128,000
Episode 8 147,000
Episode 9 119,000

The fight of the telecast saw Justin Frazier stop Michel Batista to move on to the heavyweight finals.  The telecast also showed the ongoing saga with Maurice Greene’s drinking problems in the house.

Payout Perspective:

This series is becoming more of DVR show that something that people watch live.  The 119,000 viewers is a big drop from the week prior.  One would think that the show ratings would ramp going into the finals but that has not been the case.

Miesha Tate joins ONE Championship as Vice President

November 8, 2018

Miesha Tate has been named a Vice President of ONE Championship according to the company on Thursday morning.

Tate, the former UFC women’s bantamweight champion, is moving to Singapore. In a press release, Tate stated the following:  “I am thrilled to join ONE Championship as a Vice President.   I truly believe in its mission of unleashing real-life superheroes who ignite the world with hope, strength, dreams, and inspiration. I’m honored to bring my experience as a World Champion and to help inspire the next generation of athletes. And of course, I am excited to relocate to my new home, Singapore, and travel throughout Asia!”

This is another big move by ONE Championship which signed former UFC lightweight champion Eddie Alvarez and “traded” for former UFC flyweight champion Demetrious Johnson.

Payout Perspective:

It’s clear that ONE Championship is making some big moves with an eye toward expanding its reach to North America.  Whether it is through an eventual television deal in North America, events in North America or just hiring former UFC stars to entice fans to watch its product, ONE is spending some money to do something big in 2019.

 

UFC 230: Payout Perspective

November 7, 2018

Welcome to another edition of Payout Perspective.  This time around we take a look at UFC 230 at Madison Square Garden where Daniel Cormier took care of Derrick Lewis.

Double Champ takes care of Derrick Lewis

Daniel Cormier made easy work of Derrick Lewis using wrestling to negate Lewis’ KO power. DC easily tapped out Lewis in the 2nd round.

DC now sets his sights on Brock Lesnar with just one fight left on his contract.  However, you’d have to think that if Jon Jones pops up on the radar, that will be a fight to make.

As for Lewis, I would suspect he take some time off before getting back in the Octagon.  Two fights within a month is hard for any MMA fighter including a heavyweight like Lewis.

Jacare KOs Chris Weidman

Jacare Souza is a superior grappler, yet showed some flashy hands and dropped Chris Weidman in the final round.  The fight went back and forth and won Fight of the Night.  But Souza showed some strong combinations which stunned Weidman throughout the course of the fight and one to the former champ’s temple which put him down for good.

After this fight, Souza should be on the short list of fighters awaiting the winner of the Kelvin Gastelum-Robert Whittaker fight and perhaps he finally gets his title shot.

Attendance, gate and bonuses

UFC 230 drew 18,201 for a gate of $2,8471,718.16.  The bonuses of the night went to Chris Weidman and Jacare Souza for Fight of the Night and Israel Adesanya and Jared Cannonier for Performances of the Night. Each earned $50,000 bonuses.

According to secondary ticket seller SeatGeek, it was the second highest ticket for a UFC New York event outside of UFC 205.

Promotion of the Fight

Daniel Cormier joined the FOX NFL crew during halftime of Thursday night’s Raiders-49ers game to promote UFC 230.

He also did the intro on Fox Sports for his Saints.

Cormier did a lot of media.  He appeared on the Complex YouTube channel and played Connect 4 with Tony Mui.

As seen on Embedded, Derrick Lewis did a promotion at a Houston Rocket’s game and even sank a free throw to win money for his charity.

Sponsorships

The big sponsorship news for UFC 230 was the fast food wars that took over as DC and Lewis previously sparred over Popeyes Chicken.  The southern-based chicken restaurant forged a deal with Lewis.  In response, Carl’s Jr. came to the double champ’s corner.  It was an example of how sponsorships can happen organically.  Obviously, this may not happen for every UFC fighter but due to the visibility of the event and the social media followers for each, a sponsor’s deal became viable.

Embedded was sponsored by Air Force Reserves.

Motel 6 was also a sponsor of the co-main event.

Chris Weidman had a Monster patch on his walkout shirt and shorts which may indicate he has an individual sponsor with the company.

In addition, Cormier drew individual sponsor deals with Monster Energy Drinks and Nemiroff Vodka.

Inside the Octagon, Nemiroff Vodka, Modelo, Hospital for Special Surgery, Toyo Tires, the video game EA UFC 3, Metro PCS, Monster and convenience store Circle K shared an Octagon corner, Body Armor, P3 and Monster Energy had the center of the Octagon.

Modelo had the Fighter Prep Point.

Modelo also introduced its “Fighting Spirit” award of sorts to Daniel Cormier.

P3 had sponsorship space on the shoulder of the fighter’s walkout shirt.

EA UFC 3 was featured once again in pre-fight promos.

Toyo Tires also sponsored the Backstage Interviews.  This one included Megan Olivi speaking with Daniel Cormier.

Ratings

UFC PPV Prelims on FS1: 205,000

UFC Prelims: 635,000

UFC PPV Post-Fight Show on FS1: 188,000

Odds and ends

UFC 230 drew over 1 million searches which is above average and bodes well for the PPV buys.

Paul Felder did an excellent job as color commentator along with Joe Rogan and Jon Anik on the PPV.

The Last Stylebender has one of the best nicknames in the MMA game and is someone to watch.

Outside of the octagon, Ben Askren was the darling of UFC 230.

Notice that the gloves have the 25th anniversary logo on them instead of the usual UFC logo.

Lando Vannata-Matt Frevola draw should have won the FOTN honors.

The Jon Jones-Daniel Cormier rivalry remains alive despite the fact both sides say its over.

Conclusion

I was surprised by the amount of promotion for this event.  Granted, it was the UFC’s annual November show at MSG, but the main event did not look all too competitive on paper.  The event did have some good exposure with Cormier on Thursday Night Football’s halftime and the fast food wars with Derrick Lewis.  I would think this event does above average for a UFC PPV. One might expect a buy rate in the 375K-400K range.

UFC 230 Prelims draw 635,000 viewers

November 6, 2018

The UFC 230 Prelims drew 635,000 viewers according to Nielsen via ShowBuzz Daily.  It drew 342,000 viewers in the A18-49 demo.

The event featured Sijara Eubanks as she took on Roxanne Modafferri.  Eubanks, who was to headline the show, defeated Modafferi via decision.  However, she will forfeit 20% of her purse due to missing weight.

The telecast also featured the return of Lyman Good as he disposed of Ben Saunders in the first round.  It also saw a very bloody Julio Arce lose a split decision to Sheymon Moraes.

The event was significantly less than October’s UFC 229 but better than September’s UFC 228.

Payout Perspective:

The ratings are somewhat low as UFC 230 went up against the LSU-Alabama game on CBS.  Aside from UFC 228, the lowest rated PPV prelims since this past Saturday was UFC 224 in May.

Zuffa Reply Brief in support of dismissing antitrust lawsuit takes aim at Plaintiffs’ claims

November 5, 2018

On Friday, Zuffa filed its Reply in Support of its Motion for Summary Judgment in dismissing all claims against it by former fighters in the antitrust lawsuit.

In its Reply Brief, it argues that Plaintiffs have now changed its theory of liability since its original claims are no longer viable.  Zuffa argues that Plaintiffs have failed to define relevant markets and in turn have not proven its monopsony and monopoly claims.

In a more of a procedural argument, Zuffa argues that Plaintiffs failure to rebut certain Statement of Undisputed Facts in its Motion and are therefore admitted as true.  Alternatively, Zuffa states Plaintiffs have failed to raise any genuine factual disputes in its counterstatement of facts.

Zuffa argues that Plaintiffs’ Opposition to its Motion for Summary Judgment relies heavily on Dana White’s puffery.  But, as Zuffa argues, “strong statements praising your own business and demeaning your competitors are evidence of competition, not an antitrust case.”

This past September, Plaintiffs filed its Opposition Brief to Zuffa’s Motion for Summary Judgment.  The main argument by Plaintiffs is that the UFC is the “major league” of MMA and it has done so through anticompetitive behavior.  Plaintiffs claim that Zuffa used its market leverage to extend exclusivity over its fighters through coercion, intimidation and other means of forcible persuasion.  The claim is that the evidence supplied shows Zuffa abused its market power.

Zuffa claims that Plaintiffs have provided a new category for fighters: “marquee,” citing marquee fighters as the most important input for MMA promoters and that Zuffa violated the antitrust laws by preventing competitors from having a “critical mass” of the fighters.  Zuffa argues that this theory of the need to have a “critical mass” of “marquee” fighter does not appear in its Amended Complaint nor is there discussion of this theory in its discovery responses.  Moreover, Zuffa argues that Plaintiffs fail to define this term.

Moreover, Zuffa states that the relevant markets in which Plaintiffs allege Zuffa has power over have not been properly identified.  Zuffa notes that Plaintiffs failed to provide an evaluation of the “marquee” query and that their expert, Dr. Hal Singer, does not include the Significant Non-transitory Decrease in Price test.  Zuffa also takes issue with the lack of defining an output market for a monopoly claim.  This is due in part to its assertion that Dr. Singer failed to properly conduct a SSNIP test.  Zuffa cites to Singer’s admission that he did not test whether cable networks, broadcast networks and sponsors (the output market according to Dr. Singer) would switch to sports entertainment.

Zuffa also states that Plaintiffs cannot dispute that other promotions are viable competitors of the UFC.  They cannot dispute the testimony of the promoters which claim that the UFC has not been an obstacle to them signing fighters.  In this argument, they negate the testimony of Kurt Otto and Jeremy Lappen because they promoted MMA events before the class period and before Plaintiffs claim Zuffa had monopsony power which deems their testimony irrelevant for purposes of this lawsuit.

One of the other claims asserted by Zuffa in its Reply is that the Plaintiffs cannot show relevant direct evidence of lower compensation as a result of the claimed monopsony power.  Zuffa argues that Plaintiff cannot solely rely on their expert’s reports alleging the correlation.  Here, Zuffa argues that the practical market facts do not show that the company suppressed compensation due to its share of the market.  Zuffa also argues that Plaintiffs’ are making a “predatory hiring” claim as Plaintiffs describe a marketplace where the UFC retains fighters it does not need in order to keep them away from other promotions.  But, Zuffa argues it simply offered fighters more money.  This would seemingly fly in the face of Plaintiffs claim that wages were suppressed.

Furthermore, Zuffa states that Plaintiffs have failed to show its foreclosure theory based on the UFC’s use of exclusive contracts.  Basically, despite the inference, Plaintiffs cannot show intent that the contracts foreclosed competition.

These are the main arguments asserted in Zuffa’s Reply Brief which rebuts Plaintiffs’ Opposition and supports the promotion’s contention that the Plaintiffs’ lawsuit contains no general issues of material facts and as a result must be dismissed.  The strongest arguments in my opinion seem to be the argument that other promotions do not appear to be harmed by Zuffa’s business practices.  Plaintiffs point out how the purported scheme may still impact other MMA competitors.

It is clear that Plaintiffs do not respond to Zuffa’s Statement of Undisputed Facts (“SUF”) in its Opposition.  Rather, they introduce their Counterstatement.  Procedurally Plaintiffs should have responded to Zuffa’s SUF.  If you do not, the statements are admitted as true.  Plaintiffs will likely argue that their Counterstatements are equivalent to a denial or rebuttal.  It would be up to the Court to determine this.  I would think that Plaintiffs would have been extra cautious with this filing and would have ensured that they would not deem anything admitted if they did not respond.  Notwithstanding this argument, the Court will need to decide this Motion.

Both sides have made strong arguments for why this case should go forward or be dismissed.  The question is whether there are material facts still to be decided with the lawsuit as it is currently framed for it to go forward to trial.  Zuffa makes strong arguments stating why it should be dismissed and premise Plaintiffs theories based on unverified assertions and a moving target of theories.  Plaintiffs maintain its basic argument that Zuffa’s market power dictated the rest of the industry and through its strategies, was able to suppress fighter rights and wages.

MMA Payout will keep you posted.

Reply Brief by on Scribd

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