November 24, 2015
The Las Vegas Review Journal reports that the Federal Trade Commission has ended its second investigation of Zuffa without any findings of wrongdoing of the company’s business practices. Although the investigation has ended, the FTC indicated that it reserved the right to investigate the company again if it saw a need.
In a letter to Zuffa from the FTC, it indicated that the closing of the investigation should not be construed that a violation may not have occurred, just as the opening of the investigation should not be construed that a violation had occurred.
UFC’s Chief Legal Officer Kirk Hendrick issued a statement on the FTC’s decision:
“Earlier this year the FTC informed us that it was conducting a non-public investigation, which we believe was instigated by former fighters or their attorneys to bolster a civil action against UFC,” Hendrick added, “After meeting with the FTC, we are pleased that they have sent us a letter stating that no further action is warranted and the investigation is now closed. We maintain full confidence in our business practices and continue to believe that the plaintiffs’ allegations are meritless.”
The letter from the FTC, obtained by the Las Vegas Review Journal is below:
The FTC investigated Zuffa after it had acquired Strikeforce in 2011. The investigation came to close with no findings in early 2012. A Freedom of Information Act request for documents from that first investigation revealed little as to their investigation.
Although the reason for the second investigation was not made public one might conclude it was due in part to the antitrust lawsuit filed by former UFC fighters.
Good news for the UFC as it is clear of the investigation. Moreover, it need not dedicate legal resources for this. The FTC indicated that it may revisit the issue but one would think it is unlikely to occur unless something comes out of the antitrust case.
November 23, 2015
The Las Vegas Review-Journal reports on the UFC and its operations as a media organization. The write-up reflects the evolution of the UFC’s production to promote itself.
The article indicates that the company has 85 full-time employees including 15 at offices overseas that are dedicated to in-house production operations.
The UFC saves 35 percent of the costs as opposed to hiring an outside production company. Even if they were to hire someone, the UFC believed that no one understood its branding and advertising.
It also talks about the “Embedded” episodes which were geared toward the 18-25 demo. Notably, it reports that the Embedded series drew 38 million viewers during fight week for UFC 193.
The Rousey-Holm video which gained wide acclaim is an example of the UFC thinking of promoting itself outside of the box. With its digital consultant, the promo was produced and the company developed a strategy for its release. Four versions of the video were made. Ellen DeGeneres released the video featuring Rousey, while Golden Boy’s Oscar de la Hoya (focusing on Holm’s boxing bacground) released the Holm version.
UFC Fight Pass is also an example of the building out of the company’s media capabilities. Recently, an original show on Fight Pass featuring Dana White debuted on the online platform. It drew 1.1 million views.
The article captures the organization’s dedication to original content and controlling its own message. The UFC’s model for promotion is similar to that of the WWE in that it controls its product closely. Thus, even though it has the ability to hire outside companies to produce content, it does it themselves. It’s also interesting note that it is becoming more creative in how it disseminates its content. Notably, the Rousey-Holm trailers were exclusively provided to Ellen (the Rousey-focused promo) and Oscar De La Hoya (Holm-focused promo). As the UFC continues to evolve its media arm, we should see more targeted promotional campaigns for its product.
November 22, 2015
MMA Junkie reports the attendance and bonuses from Saturday night’s UFC Fight Night 78 on FS1.
The event drew 10,410 fans at the Monterrey Arena in Monterrey, Mexico. No live gate was announced. The event was lower than the two other events the company held in UFC. Both UFC 180 (21,000) and UFC 188 (21,036) were held in Mexico City and PPVs.
Bonuses were given to the main event, Neil Magny and Kelvin Gastelum, for Fight of the Night. Also Andre Fili and Polo Reyes earned Performances of the Night.
Diego Sanchez/Ricardo Lamas were shut out for the $50,000 bonuses but Magny/Gastelum was a very good fight on a night of not memorable fights. Fili and Reyes were not on the 3 hour main card. The attendance at the is said to be around 17,599 so the 10,410 is low for the arena but still very good for this type of card.
November 20, 2015
UFC 193 is on track to be the second-largest PPV in company history according to Lorenzo Fertitta. In speaking with Kevin Iole of Yahoo! Sports Fertitta indicated that it was currently tracking third but would finish behind only UFC 100.
UFC 100 drew 1.6 million viewers in July 2009. Fertitta confirmed that UFC 193 sold in “excess of one million on pay-per-view.” It appears that early PPV estimates have it around 1M-1.2M buys per Dave Meltzer.
UFC 189 was originally reported at hitting 1 million PPV buys but that estimate was scaled back to 825,000. The last time that a UFC PPV hit 1 million PPV buys was UFC 168 which featured Weidman-Silva II and Tate-Rousey II (via MMA Payout Blue Book).
Ronda Rousey’s last PPV fight at UFC 190 drew 900,000 viewers.
Notably, UFC 193 Google related searches hit 9 million and was the most search topic on Saturday and Sunday. It should be noted that the search experienced a slight dip on Friday but obviously surged ahead for Saturday.
In comparison, Mayweather-Pacquiao hit about 12 million google searches the weekend of their fight this past May.
Also to consider, UFC 193 Prelims on FS1 drew 1,394,000 viewers. It was the most-watched Prelim event on FS1 with Ronda Rousey on the PPV main event.
It’s clear that if these indicators are correct, UFC will have its best PPV year to date with UFC 194 probably adding to a huge year of PPV business for the company. It shows the attraction of Ronda Rousey. One should expect that a rematch will garner big PPV numbers again. The question will be whether Holly Holm can maintain the PPV momentum of Rousey.
November 19, 2015
MMA Junkie reports that Zuffa’s Standard and Poor’s business outlook has been elevated from “negative” to “stable” based on its success in its Pay Per View business in 2015. The company’s corporate credit rating remains the same at BB negative which is below investment grade.
Standard & Poor’s Financial Services publishes financial research and analysis on stocks and bonds as well as being one of the Big Three credit-rating agencies. It issues credit ratings for the debt of public and private companies. S&P serves as a resource to investors for a key measure of its success.
In October 2014, S&P downgraded Zuffa, LLC from BB to BB-as a result of “greater EBITDA volatility.” It had maintained a “BB rating” since December 2010. It was previously downgraded in November 2007 from BB to BB-. A couple weeks later, it downgraded the business outlook from “stable” to “negative.”
In October 2014, it identified Zuffa as having $535 million in credit with $60 million in “senior secured revolving credit facility due in 2018 and a $475 million senior secured term loan due 2020” per that S&P report.
Monday’s news is a good sign that the company is recovering from its dip in 2014. While a lot of the numbers are kept under wraps and we’re forced to cobble together how much the company makes, the PPV buys have rebounded from the past couple years on the strength of the first three PPVs of 2015 as well as July’s UFC 189 and Ronda Rousey’s fights at UFC 190 and 193. Also, the international expansion and the assumed proliferation of UFC Fight Pass have provided additional revenue streams for the company. Obviously, you have to offset these gains with its expenses which include the new anti-doping policy implemented with the help of USADA and three big legal battles it is currently involved in (the UFC antitrust lawsuit in Nevada, the appeal of the November 2011 lawsuit against New York and the new lawsuit against the state of New York filed this past September seeking a preliminary injunction to hold an event in New York in April).
Also, on the same day that this news came out, Bloody Elbow unveiled its third installment of its deep dive into UFC finances.
November 19, 2015
In light of the Holly Holm victory over Ronda Rousey on Saturday, one of Holm’s sponsors, Intel Pharma wished her congratulations. The company sells supplements containing substances banned by the World Anti-Doping Agency and federal law.
According to MMA Junkie, the company has offered products it claims contain prohormones and a steroid alternative known as Selective Androgen Receptor Modulators (SARMS). It appears on the WADA banned substance list.Anti-doping experts have sounded off against this business relationship as not looking good for the new champion. Holm’s manager, Lenny Fresquez, indicated that they were aware that the company sold products containing banned substance prior to signing the sponsorship deal. “Holly didn’t really use them so it’s not a big deal,” Fresquez told USA Today, “I’m sure she didn’t use any of them. She might have taken a picture with one.”
Fresquez indicated that the sponsorship deal was for just one-fight and they have not decided whether to extend the deal.
Intel Pharma CEO, Landon Suggs, stated that his company stopped producing and selling products with SARMs “no later than June” before the sponsorship deal with Holm. Suggs stated that it issued a recall for the products as well.
The company also updated its Facebook page on November 17th congratulating Holm. It had not updated the page since October 9th.
We, at Intel-Pharma, wanted to create an innovative supplement company that customers could trust to provide the best products and personal service in the industry. As a new company we have learned hard lessons along the way, but those same lessons have reinforced our initial stated mission, which is to be the most innovative sports supplement brand on the market. Long before UFC 193 was announced we were interested in partnering with Holly Holm’s to be one of our featured athletes because she shares our values of faith, family and hard work. That hard work is what was on display Saturday in Melbourne, Australia. There is no other “secret” to Holly’s success other than that hard work, along with an incredible team of coaches, sparring partners, family support, and just plain crazy athleticism. As unbelievable as it may have seemed to the greater population at large, Holly’s success was not a shock to those of us who knew of her talent long before Saturday. And we couldn’t be more thrilled for her that the world now knows what we always believed.
One would think that Holm will not continue the relationship with Intel Pharma since winning the women’s title from Rousey. Certainly, her win should open up more doors for sponsor opportunities. Also, the price for her name probably went up with the win. Her accomplishment should not be sullied by this association despite how innocuous it might be. The fact is that the company is associated with banned substances that Holm, as champion, should not be associated with even if Holm never took the product.
November 17, 2015
The UFC 193 Prelims drew its second best rating this year averaging 1,394,000 viewers on FS1 Saturday night per Sports TV Ratings. In addition, the pre-show and post-fight show on FS1 drew big ratings.
The UFC pre-fight show from 4:35pm-5:00pm PT drew 576,000 viewers on FS1. It was the second-highest pre-fight show rating on FS1. The post-fight show started late on FS1 due to a double OT Pac 12 game. Still, it pulled off the highest rating for a post-fight show on FS1 with 490,000 viewers.
UFC Prelim ratings when Ronda Rousey is in main event
UFC 157 – 1,267,000
UFC 170 – 936,000
UFC 168 – 1,500,000* (co-main with Chris Weidman)
UFC 175 – 1,000,000* (co-main with Chris Weidman)
UFC 184 – 1,205,000
UFC 190 – 1,322,000
UFC 193 – 1,394,000
The UFC Prelim average for 2015 thus far is 998,000 viewers. Notably, if you were to take out the 3 PPVs in which Rousey fought, it would drop down to 885,000 viewers.
UPDATED: The UFC 193 prelims drew 885,000 viewers in the Adult 18-49 demographic, the most-ever for a UFC Prelim on the network. The prelims peaked at 1,776,000 viewers in the last quarter hour (6:30pm-6:45pm PT)
The UFC 193 weigh-ins drew 161,000 viewers per Sports TV Ratings.
The post-fight show also did well although I am trying to confirm the viewership rating. Will keep you updated.
The post-fight show’s ratings were high due to the news of the upset. Still, the overrun by the college football game may have detracted more viewers from tuning in. The post-fight show did start on FS2.
One can probably deduce that the reason for the strong ratings are due to Ronda Rousey being in the main event of the PPV. In fact, televised UFC Prelims in which Rousey has been in the main event have drawn an average of 1.225M viewers (not counting UFC 168 and 175). Including the events where she was the co-main event with Chris Weidman it goes up slightly to 1.232M viewers. Notably, only once has a PPV prelim drawn less than 1 million viewers.
It’s clear that Ronda Rousey is a huge draw for the UFC. Even on televised UFC Prelims where she is not fighting, the ratings go up. It will be interesting to see if Holly Holm will be able to draw this much attention.
November 16, 2015
Judge Kimba Wood has granted the state of New York an extension of time to respond to Zuffa’s Motion for Preliminary Injunction which would allow a UFC event scheduled for April 23, 2016 at Madison Square Garden. In response, attorneys for Zuffa have expressed concern that the delay may impact the event.
In a letter submitted on November 6th, John Schwartz, Special Litigation Counsel for New York, indicated that due to health issues experienced by his wife, he could not respond to the motion which opposition was due on Friday, November 13th. It was noted that the second extension was not anticipated. Schwartz also indicated that he did not believe Zuffa would be prejudiced by this delay. New York will now have until December 4, 2016 to respond to Zuffa’s motion and Zuffa will have until December 14, 2016 to file a reply.
Judge Wood granted the request filed by counsel for New York last week.
In a letter dated November 7th, Jamie Levitt, attorney for Zuffa “reminded” the court that this was the second extension request to respond to Zuffa’s lawsuit filed on September 28th The first was stipulated by the parties on October 9th. The second, granted by Judge Wood, is due to an illness of the wife of the attorney heading the litigation for this case. Levitt expressed the concern that the delay in the decision of the Preliminary Injunction may impact the April 23, 2016 event scheduled for UFC.
“The briefing schedule [for the Preliminary Injunction] was carefully negotiated by the parties to ensure that despite Defendants’ [first] extension, the Court would have sufficient time to consider and rule on Plaintiff’s motion by January 2016,” wrote Levitt. “A ruling after January 2016 would not provide the UFC and MSG sufficient time to finalize and then market the scheduled April event.”
Levitt explains that the MSG licensing agreement and the sanctioning of the event cannot be easily rescheduled. There was no indication of when another date might be secured for MSG.
This is a delicate situation since it involves a personal health issue. Zuffa had no grounds to oppose this request without looking totally heartless. It would be clear that the court would have granted this request. The unexpected delay may definitely impact an event in April if the court does not decide by the beginning of the year. With the holidays upcoming, it is hard to say when a ruling might occur. The Levitt letter puts the court on notice of the injury it may suffer if a decision is not made soon. While New York argues that moving the date to another time would resolve the issue, it’s clear the UFC has banked on this date. MMA Payout will keep you posted.
November 16, 2015
Welcome to another edition of Payout Perspective. In this edition, we take a look at the happenings taken place down under in Melbourne, Australia as Holly Holm upset Ronda Rousey to win the women’s bantamweight title.
Holm, game plan takes out Rousey
No one would have thought this would have been the ending. But, a headkick knocked out Ronda Rousey and the aura of invincibility was over. Holly Holm, who hovered around an 8-1 to 12-1 underdog depending on where you looked, outclassed Ronda Rousey at UFC 193. Holm’s game plan trumped Rousey’s athletic ability. Moreover, Rousey’s boxing was exposed and it was clear that she was exhausted at the end of Round 1.
For Holm, it was the culmination of a long-term plan that had her and her trainers preparing for Rousey even before she was in the UFC. Her management fought tooth and nail with UFC management in negotiating her signing with the company. Turns out it was worth it.
As for Rousey, her loss seemed to satiate the thirst of every Rousey hater. Everyone was quick to tweet with glee her loss and KO. As is with most MMA fighters that gain more popularity than the others, MMA “fans” began to despise Rousey. The good news for them is that she lost and MMA fans will turn their attention to Conor McGregor in December silently hoping for him to lose as many have those tweets ready for their timeline.
Joanna Champion still Champ
It was not a dominant performance, but Joanna Jedrzejcyzk retained her 115 pound title with a unanimous decision over Valerie Letourneau. Letourneau came down 20 pounds to fight at 115 pounds and you have to think that it might have played a factor. Overall, it was an entertaining fight with Joanna retaining her title.
Attendance and Gate
It was a record setting night for the UFC as the announced attendance was 56,214 with a gate of $6.8 million (U.S.). It did better than UFC 129 which drew 55,724 in Toronto. However, the gate did not exceed the 55,724.
As Darren Rovell tweeted, there were many comps for the event although the UFC no longer reports on the number.
This was a little curious as Holly Holm, Ronda Rousey and Kyle Noke earned the $50,000 bonuses. Holm won for both Fight of the Night and Performance of the Night. Noke earned a Performance of the Night Bonus. Rousey drew a Fight of the Night bonus although you might argue that she didn’t deserve it for her part in the fight. Certainly, there were other fighters (e.g., Ben Nguyen) that could have received a Performance of the Night Bonus instead of Rousey receiving one for FOTN.
Promotion of the Fight
Ronda Rousey went on Good Morning America in late August to announce her fight with Holly Holm. Originally scheduled for January 2nd, the event was moved up in part to replace the main event of UFC 193 as well as attempt to set a new UFC attendance (and gate) record at Ethiad Stadium.
Perhaps the best video promotion for a UFC event was produced for UFC 193. It debuted on Ellen’s web site which featured a younger Ronda Rousey learning martial arts with the underlying message that women could do anything.
— Ellen DeGeneres (@TheEllenShow) October 2, 2015
A lengthier feature was shown after the UFC 193 PPV.
You might recall Dana White announced in a phone interview Rousey-Holm was moved from January 2nd to November 14th on a Friday night on ESPN. The date was moved up due to the usual injury issues.
The event was a reward for the province as a law which prohibited cagefighting was lifted. With opposition still abound in the area, the attendance at the event (albeit with some comped seats) was still strong. USA Today reported on the “stir” in Australia with opposition to the sport of MMA. Rousey spoke with local media about the controversy.
UFC Embedded, the video series, aired on Fox the Saturday before the fight. Usually, it’s online but with a Rousey fight, it seemed to demand more visibility. Also, Ruby Rose was the narrator for the series.
Rousey was also on the front page of the NY Times Sunday Styles Section in October. This was one of several media obligations which catered to women. It will be interesting to see if Holly Holm can continue this trend and appeal.
In the octagon, we had a couple international UFC sponsors as well as the usual mainstays. Unibet, Xbox’s Tomb Raider, DraftKings, Wargaming.net, Bud Light, the upcoming film, “Creed,” Bud Light, Reebok and Monster Energy Drink had the center. Unibet had the fighter prep point. Holly Holm was sponsored by Unibet and announced a new deal with GRRRL Clothing.
Odds and Ends
Since it always comes back to gambling. The betting line on Holm in Vegas and the aftermath:
Donald Trump weighed in on Ronda Rousey tweeting that he was glad that she lost because she is not a nice person. I didn’t know they knew each other.
EA Sports announced that Rousey would be on the cover of its latest UFC game coming out this spring. Was it a video game cover curse?
Should we read into the fact that Ronda’s mother was not at the fight a sign of discontent with her? It is a long plane ride to Australia for sure, but her mother has already been there for her fights.
Rousey’s hang up during a UFC 193 Conference Call was an act of unprofessionalism despite the question asking about Travis Browne. Even worse, the excuse that her “phone died” just insults everyone’s intelligence. You mean, the UFC and/or Rousey’s management could not have given her a phone to finish the call?
At the end of Episode 3 of the Embedded series, Rousey uses an analogy about being bankrupt. All the while, it shows her hitting mitts with Edmund. His bankruptcy filing occurred this summer and comes to a head this month. This issue had not been a problem in the past, but with the news surfacing now, it all makes it more of a deal.
Letourneau was informed by USADA that Hector Lombard could not corner her for her fight as Lombard’s participation would have violated the new anti-doping policy. Lombard, who admitted to using PEDs earlier this year would fall under the “prohibited association” rule of the UFC anti-doping policy.
Lenny Fresquez, the agent/manager for Holly Holm, won six figures betting on her client. There’s something that seems unsettling with a manager that is already making off of her client for representation to bet money on her client. Sure, it’s legal and acceptable, but is there a conflict of interest?
Notably, Fresquez said that Holm has 2 more fights under her existing contract.
FS1 could not carry the post-fight show until late due to the Pac-12 game between Utah and Arizona going to double OT. Most of the post-fight was on FS2.
The PPV went over the 3 hour mark which is a rarity.
It was interesting that not much was made of the fact that one of the biggest cards in UFC history and it was headline by two women’s title fights.
In anticipation of a Rousey “vine” like finish, the UFC sent out a reminder to media outlets that you would be in violation of Zuffa’s copyright of the PPV. It appeared as though the Huffington Post Sports twitter feed was allowed to post the finish (as it did). Still, others posted the finish online. In protection of its copyright (and in order for people to buy the PPV), the UFC wanted to deter people from posting their videos.
Certainly a Rousey-Holm rematch seems ripe for July’s UFC 200.
It was interesting that despite Ronda Rousey google searches hitting 500,000 on Friday, there was a slight downturn (note: in the link the google trends embedded link is constantly changing over time which I think is pretty cool) in searches right around the time after the weigh-ins. But, the searches jumped back up on Saturday afternoon. What does this mean about PPV buys? Who really knows? But, if we are to look into the past history of Rousey fights, one might think this still does well. I would predict 750,000 PPV buys.
November 15, 2015
UFC 193 drew a record 56,214 for a gate of $6.8 million (U.S.). In addition, Holly Holm was the big winner earning 2 fight bonuses in her upset victory over Ronda Rousey.
The UFC announced the record-setting attendance at its post-fight press conference. The gate is second to UFC 129 which pulled in $11 million. The 56,214 narrowly beats the gate for UFC 129 as that event which featured GSP-Jake Shields drew 55,724.
The bonuses were awarded to Holm and Rousey for Fight of the Night. Holm and Kyle Noke earned Performances of the Night. All earned the $50K bonus.
Darren Rovell tweeted out a picture earlier in the night of comped tickets indicating that many people had them. There were many photo posts on social media showing many empty seats in the upper bowl of the stadium.
Strange to see how many tickets to UFC event tonight posted on social media are comped tickets pic.twitter.com/yeU0TRq2uV
— Darren Rovell (@darrenrovell) November 15, 2015
It’s not uncommon to comp tickets for big events. The UFC used to announce the number of comped tickets it handed out for each event but has not done this in some time. We will probably never know how many tickets were comped for tonight but the announced gate is undoubtedly impressive.
As for the bonuses, Holm deserved the double bump for her performance. There were several other great performances tonight on the prelims which could have earned bonuses as well. Still, tonight was Holm’s night as she dethroned the champ.