UFC Mexico City bonuses

September 22, 2019

UFC Mexico City took place Saturday night with a Fight of the Night featuring strawweights Carla Esparza and Alexa Grasso.

The former inaugural women’s strawweight champion earned a majority decision in the entertaining fight that earned $50,000 for each.  Additionally, featherweight Steven Peterson’s spinning backfist of Martin Bravo earned him a Performance Bonus and maybe a KO of the year.  Also, Paul Craig earned a $50,000 bonus with a submission of Vinicius Moreira.

The main event of UFC Mexico City was disappointing after an incidental eye poke of Jeremy Stephens by Yair Rodriguez with just seconds into the first round of their fight.  Fans through objects including beer at the Octagon as they were dissatisfied with the stoppage.

BMF Belt being made; The Rock set to present winner

September 21, 2019

The BMF belt is a real thing as Dana White confirmed that the belt will be awarded to the winner of the Jorge Masvidal-Nate Diaz winner at UFC 244 on November 2nd.

White told TMZ Sports that the belt is being manufactured and will cost around $50,000 to make.  In addition, The Rock, Dwayne Johnson will present the belt to the winner on the night of the event.  Masvidal had pitched the idea of the former WWE and current movie star to present the belt to the winner.  The Rock was interested.

Payout Perspective:

Something out of nothing.  The BMF belt is now a thing as we’ve outlined the promotion’s applications to register the trademark.  This Thursday, it held a press conference to promote the event.  The price of the belt seems a little over the top and will receive scrutiny from those that are concerned with fighter pay.  The belt is a textbook definition of a made-up belt and its not clear whether this is just a ‘one and done’ event.

DAZN signs first U.S. distribution deal with Comcast

September 19, 2019

The Sports Business Daily reports that DAZN has signed with Comcast for the digital platform’s first U.S. distribution deal.  Those wishing to watch DAZN still must subscribe separately from their Comcast contract.

According to the report, DAZN will be available for Comcast internet customers that use the Xfinity Flex box for streaming apps as well as the Xfinity X1 set-top boxes.  The deal will begin October 5th with DAZN’s card featuring GGG and Sergiy Derevyanchenko.

A spokesperson for DAZN noted that it was the company’s first distribution agreement in North America but it would not be its last.  It also expects to attempt to replicate this model in other countries.

Payout Perspective:

The purpose of the strategy is to make DAZN easier and quicker to find to subscribe to and better to watch per DAZN.  With Comcast signing on, those that subscribe to cable will be able to watch the app as part of the cable company’s online offerings.  While the strategy is somewhat contrary to the purpose of having an online platform, it makes sense for the company to make an effort to broker distribution deals with such a robust lineup of content coming this fall.  Does the distribution strategy make sense for a company that wants customers to pay a monthly subscription in addition to its cable bill?  One might suspect that despite the cord cutters out there, there is a certain level of consumer willing to do both subscriptions and keep their regular cable/satellite.

UFC lends support to new Trump Administrative initiative for National Endowment for Youth Sports

September 19, 2019

The Sports Business Daily reports that the Trump Administration is rolling out a national youth sports strategy initiative which includes the UFC as one of its backers.  The National Fitness Foundation will oversee the initiative.  The program will be funded by a legacy endowment with a goal of raising $100M to provide grants intended to drive increased participation with a focus on underserved communities.

The focus will be on recruiting and training of coaches and volunteers, creation of safe places to play, a provision of quality equipment and strategies to increase participation among girls.  The National Endowment for Youth Sports, managed by the non-profit National Fitness Foundation will be tasked with awarding grants supporting the strategy with a lean toward helping underserved U.S. communities and girls as well as helping those children with disabilities.

Payout Perspective:

As a friend of the current administration, the UFC is involved in this initiative which appears to be a non-partisan attempt to help youth, highlighting underserved populations, through sports.  Zuffa has put its name on another initiative with the White House regarding combating the opioid epidemic.  NBC Sports Group’s Sport Engine was among the first to sign on in support of the endowment.  One might expect the UFC to do some sort of activation around its big MSG show.

Zuffa TMs BMF for future use

September 18, 2019

Last week Zuffa filed several trademarks with the United States Patent and Trademark Office for “BMF” and Bad Motherfucker in anticipation of its showdown in New York this November between Jorge Masvidal and Nick Diaz.

Diaz used the term during his post-fight interview at UFC 241 in which he called out Jorge Masvidal.  From there, the phrase and fight for the BMF belt became a thing.

Zuffa filed for the trademarks under Section 1(b) of the Trademark Act which the applicant intends to use the proposed mark but is not currently using it.  Of course, Zuffa intends to use the mark for UFC 244.

Zuffa filed for several uses of the term including Entertainment services, namely live stage shows and performances featuring sports and mixed martial arts, toy championship belts, toy mixed martial arts belts, jewelry, key chains and championship belts.

Additionally, it filed similar applications for Baddest Motherfucker.  Notably, the registration of this mark would not have happened but for a U.S. Supreme Court ruling which struck down portion of the Lanham Act precluding the registration of marks that were deemed “immoral or scandalous.”  Obviously, Motherfucker seems like an immoral or scandalous term.

Notably, there has been another application for Bad Motherfucker prior to Zuffa, but that application has been suspended.

Payout Perspective:

Some have questioned the UFC for securing these marks.  One of the reasons they did this was to ensure that another did not register the marks creating a legal issue.  Think how people used to squat on domain names.  There is also question that Donald Cerrone used the term before.  Well, that may be true but he never filed for the trademark.  And, if you ask if he has any rights, he’d have to prove that he created the term and it became so famous that he has a right to it.  Likely, a fruitless task which would only require Cerrone to payout a lot of money for no reason.

There are instances in which companies file for trademarks used by its independent contractors.  A day after Brock Lesnar coined the term “Suplex City” during a match at Wrestlemania,  The day after, WWE filed for the trademark and did well in selling merchandise with Lesnar’s phrase.

Thus comes the question of ownership.  Who owns “BMF” and “Baddest Motherfucker”?  Usually, under an employer/employee relationship, the employer would own the mark and its associated rights.  Diaz is an independent contractor as we are all well-aware.  The mark would belong to Diaz if there was a valid work-made-for-hire agreement or another written assignment agreement between the parties.  Assume there was no such thing.  In that case, in boils down to who filed for the trademark first.  Thus, that would be Zuffa.

 

The world of trademarks is an interesting thing and if you’d like to learn more or want to register something you can always talk to this guy. The application is still pending, so there is always a chance the application could get denied.  As far as timelines go, the November fight would have already passed before a decision would likely be made.

Endeavor announces plans to raise $712M in IPO per amended SEC filing

September 16, 2019

Endeavor Group Holdings, Inc., the parent company of Zuffa, announced on Monday that it plans to raise as much as $712.3 million.  In an amended filing with the SEC, it indicated that it will sell shares of common stock at $30 to $32 per share.

In addition to the 19.4 million shares of common stock it will sell, it is offering its underwriters the option to buy an additional 2.9 million shares.  There will be 4 classes of common stock.

According to the filing, CEO Ari Emmanuel, Executive Chairman Patrick Whitesell and Silver Lake Partners will hold a majority of the issued and outstanding Class Y common stock, Class X common stock and a majority of the combined voting power of common stock.

For the six months ending June 30th, the company recorded record revenue of $2.05 billion which is up from $1.5 billion in a year to year comparison from the previous time in 2018.  Per the Wall Street Journal, Endeavor attributes this to a 46.4% growth in revenue in its entertainment and sports segment.

Payout Perspective:

As if we didn’t know this, Zuffa’s revenues have increased year to year since the acquisition from the Fertittas.  The IPO has been delayed but when the company goes public expect more information about Zuffa’s contribution to the company’s revenues.

Gaethje leads bonus winners from UFC Fight Night Vancouver

September 14, 2019

UFC Fight Night 158 took place in Vancouver, British Columbia, Canada on Saturday night.  In the main event, Justin Gaethje stopped Donald Cerrone in the very first round.  Gaethje led the list of bonus winners.

Tristan Connelly and Michael Pereira won fight of the night although Connelly received both bonuses after Pereira missed weight.  Misha Cirkunov earned a Performance Bonus for his Peruvian Necktie Submission over Jimmy Crute.

Payout Perspective:

An unfortunate time to miss weight for Pereira as not only he was docked money off of his purse but he did not receive his bonus money.  Gaethje looked impressive with his stoppage of Cerrone.

Report: Zuffa obtains new loan, 2nd Quarter earnings over $700M

September 11, 2019

Reuters reports that Zuffa will be adding a $465M loan to its existing $1.875 billion loan as the company has benefited from its media rights deal with ESPN.  Per Moody’s, revenues as of the second quarter of 2019 have the company clearing over $700 million.

The boon for the UFC comes from its expanded media rights deal with  ESPN which began in May 2018 and expanded in March 2019 with the digital platform being the exclusive provider of UFC PPVs.

The add-on loan will be tacked on to the Zuffa’s existing $1.875 billion term loan B that is set to mature in 2026.  The additional money will provide the company with additional cash flow.  Moody’s reports that “$80 million of cash from the balance sheet are expected to be used to fully redeem the preferred equity outstanding and pay transaction related expenses.”  It also shows investors that the company is moving in the right direction.  With UFC 242 this past Saturday, there are continued talks of the company holding more events in the region which is fertile ground for the promotion.

According to the report, the UFC will have roughly 70% of contractually-fixed pro forma revenue from its media rights deal this year which is up from an earlier forecasted 40%.

Goldman Sachs will be underwriting the latest loan and will be offering the same terms as the original debt.  Per the report, “325bp over Libor, with a 1% Libor floor, and a discount of 99.5-99.75 cents.”

According to a Moody’s report, the additional loan will not affect the existing loan’s B2 rating.

Payout Perspective:

The UFC partnering with Disney-owned ESPN has been the right move for the company as the revenues for the promotion are up.  For ESPN, having the UFC on its digital platform has helped with content and boosted its subscriber base.  The additional loan and its rating reflect the credibility of the company and its ability to obtain favorable debt based on the prospects of its business.

Judge advises parties in UFC Antitrust lawsuit to file additional briefing to determine class certification issue

September 10, 2019

Judge Richard Boulware issued a Minute Order on Tuesday advising both parties that he would like additional briefing due this Thursday night.  The brief appears to be the final arguments prior to his decision on class certification.

According to the order, Judge Boulware is allowing the parties to file one supplemental brief of 15 pages “for the Motion to Certify Class and the parties’ submission should include all citations to the record or expert reports expressly requested by the Court.”  The order went on to state that the parties had until Thursday night at 10pm to file the briefs.  Additionally, for plaintiffs, they
“must explicitly identify in their brief all theories of liability upon which they seek to proceed regarding class certification, including monopoly and monopsony theories.”

Payout Perspective:

It seems as though we are nearing the end of the presentation of evidence in determining class certification.  The court will hear two more experts this week and based on this piece of news, we may not expect Joe Silva to testify.  He was scheduled to testify during the first week of evidentiary hearings but was unable to attend.  The request for briefing was intimated during the first week of evidentiary hearings and it could be interpreted  We now may see this boiling down to a decision from Judge Boulware on class certification.

UFC 242 Prelims on FX draws just 222,000 viewers

September 10, 2019

The UFC 242 Prelims on FX drew just 222,000 viewers on Saturday morning per Nielsen via ShowBuzz Daily.  The event aired early due to the event being held in Abu Dhabi.

Usually on ESPN, the telecast moved to FX to accommodate College Football on the ESPN networks.  The Prelims did air on ESPN+ in addition to FX.

The feature bout of the Prelims saw Joanne Calderwood defeat Andrea Lee via split decision.  In addition, the telecast saw two stoppages with Ottman Azaitar knocking out Teemu Packalen with a vicious punch that sent Finnish fighter down to the canvas face first.  Also Sarah Moras was able to stop Liana Jojua in round 3.

Payout Perspective:

Even though the UFC did its best to tell its fans, the move to FX from ESPN hurt the ratings for this telecast although one might expect that the PPV sales on ESPN+ were good.  The early start time likely hurt the broadcast as well.

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