Spike TV programming to support Bellator 131: Tito vs. Bonnar

October 15, 2014

Bellator announced shoulder programming on Spike TV to support November’s upcoming card featuring Tito Ortiz versus Stephan Bonnar.

The schedule is as follows via Bellator press release:

“Tito vs. Bonnar: Winner Take All

Premieres on Wednesday, November 12 at 11pm ET/PT

Before they battle it out in the cage, watch MMA light heavyweights, Tito Ortiz and Stephan Bonnar, sit down face-to-face and discuss their upcoming fight. Tension will be high as these two MMA greats discuss their keys to victory and their budding intense rivalry.

“Unrivaled: Tito Ortiz”

Premieres on Wednesday, November 12 at 11:30pm ET/PT

MMA icon Tito Ortiz clashes on November 15th with fellow legend Stephan Bonnar in the Bellator cage. “Unrivaled” investigates the scope and magnitude of this epic battle in this look back at the career roller-coaster ride of one of mixed martial arts most controversial pioneers, Tito Ortiz.  With the chip ever planted on his shoulder, Tito plans on showing the world just how brutal the Huntington Beach Bad Boy still is.  Love him or hate him, Tito Ortiz is truly unrivaled.

“Countdown to Ortiz vs. Bonnar”

Premieres on Friday, November 14 at 10:30pm ET/PT

Bellator’s stacked Nov 15th card will be previewed with an inside look at the heated rivalry between Tito Ortiz and Stephan Bonnar.  The show also breaks down the rematch between Lightweight World Champion Will Brooks and the man he beat, former champion Michael Chandler along with the highly anticipated clashes between King Mo and Tom DeBlass and Melvin Manhoef and Joe Schilling.

Payout Perspective:

The promotional shows leading up to events is nothing new as it helped Bellator 120 which centered around Rampage Jackson facing King Mo.  This set of programming hopes that viewers are still fans of Tito Ortiz as most of the features center around The Huntington Beach Bad Boy.  Bellator 131: Tito vs. Bonnar will air on SpikeTV and will need some help considering it goes up against UFC 180 that same night.

TV deals aid UFC financials in PPV decline

October 13, 2014

MMA Fighting reports that the UFC’s television deals are why the UFC has withstood down PPV numbers.  As previously reported by the Sports Business Journal and reflected in its latest S&P report, a combination of the television contracts and expansion overseas are seen as positive revenue drivers for the company.

In Dave Meltzer’s piece, he reports that a big PPV show that garners 1 million buys could generate between $22 million to $27 million for the company in one night.  Thus, the reason to keep PPV around.  Meltzer points out that Fox paid the UFC $2.2 million for UFC on Fox 11 this past April which he compares to a PPV with 85,000 buys.

It’s no surprise that television deals are the reason why there are more events on television.  One of the hopes is that these shows will reveal new stars.  As the SBJ article had questioned, there is a need for new UFC stars to carry the company on PPV.  The overall UFC PPV history which was listed in the SBJ article did not name a current UFC star until Lyoto Machida at number 7 on the list.  Similarly, the S&P report cites fighter injuries and juggling of matches as key reasons for the downgrade in the company’s credit rating.  It also noted a need for the company to develop fighters that appeal to its core demo.

Payout Perspective:

The inference from the information from the Meltzer article, the SBJ article and the S&P report is that the company could be at a turning point in its business model.  But, it has and still is a PPV driven company.  One need only look at how much the company can net with a big event as a primary reason why PPV will still be a part of the company’s business.  While the S&P report concludes that international expansion and television deals are stable revenue streams for the company, its PPV business is still a mainstay in its business model.  In fact, 2013 saw its PPV/live event revenue increase from 2012 per the S&P report.

It’s clear the UFC has mapped out a business model that currently works despite porous PPV numbers.  There are obvious concerns on the horizon as its television deals eventually plateau and/or the need to re-up with new deals.

Hughes gets own reality show

October 12, 2014

UFC Hall of Famer Matt Hughes will be featured on his own hunting show, entitled, “Uncaged with matt Hughes,” on the Sportsman Channel.  The show is an unscripted reality series which will follow Hughes as he goes on an African hunting expedition.

Via MMA Junkie:

According to the show’s official website, the series is “an unscripted reality show based on the life and hunting adventures of nine-time UFC welterweight champion, Matt Hughes. The show gives the audience an unprecedented look inside Matt’s life beyond the octagon as a husband, father and hunter. … The series is shown as it happens, with no acting or excessive recreates.”

The Sportsman’s Channel is available to approximately 35 million homes.

Payout Perspective:

The WWE’s Shawn Michaels has a similar hunting show although Hughes’ show appears to be just a one-off which covers his African hunting trip.  The show is a look at the post-fight life of a UFC star.  If nothing else, it exposes folks to the outside world of Matt Hughes and gets to know his hobbies outside of his fighting life.

Top Rank hopes for growth in China

October 11, 2014

The Sports Business Journal’featured an interesting article on Top Rank’s attempts to make inroads in China.

The article (subscription recommended) focuses on the boxing promotion’s efforts to gain momentum into China which is described as the world’s fastest-growing economy.  While Manny Pacquiao will make his second appearance in Macau later this year, it takes a glimpse of how the promotion is trying to build an audience with a Chinese audience.

Notably, Top Rank, in partnership with a Chinese sports marketing firm, debuted a weekly tv show on 10 regional sports channels within the country giving it wide distribution in the country. “Fists of Power,” which features fights from the Top Rank library and live events promoted by the company acts as a promotional tool for the company.

Top Rank held its first event this past August in mainland China.  Although not big, and perhaps just breaking even on its endeavor, the long-term goal is to become a mainstay in the country. The event was aired live and on delay on state-sponsored channels which has the potential to reach more than 1 billion households.

Payout Perspective:

Expansion internationally seems like the most logical step for promotions such as the UFC and Top Rank.  The obvious reason is the opening of a new audience.  The relative strength of its economy and the sheer size of the population make China a great growth opportunity. Top Rank follows the same playbook as the UFC does with its TUF series.  Allow people to see its product on television for free hoping that it entices them to patronize the promotion.  Despite Manny Pacquiao’s decline in popularity stateside, Top Rank hopes his appearances in Macau open up the Chinese market. From there, it hopes that the proliferation of local talent (e.g. former Olympic gold medalist Zou Shiming) will propel the promotion in the country.

Standard & Poor’s downgrades Zuffa, LLC from BB to BB-

October 10, 2014

Standard & Poor’s has downgraded Zuffa, LLC’s credit rating from a “BB” to a “BB-“ this week as a result of what it calls “greater EBITDA volatility.”  However, the analyst report states that the outlook for company is stable.

Standard & Poor’s issues credit ratings for the debt of public and private companies.  It is one of several credit-rating agencies that has been designated a nationally recognized statistical rating organization by the Securities and Exchange Commission.

In its overview, S&P concluded that Zuffa “will experience a 30% decline in EBITDA (Earnings Before Income Tax, Depreciation and Amortization) in 2014 and greater EBITDA volatility over time than we previously had anticipated.”  Despite the gloomy outlook, it stated that Zuffa’s outlook is stable and 2015 will be a recovery year for the company.  This is based on the belief that injured fighters return and PPV buys and ticket prices increase.

For those wondering, as I have in the past, EBITDA is an accounting measure calculated using a company’s net earnings, before interest expenses, taxes, depreciation and amortization are subtracted as a proxy for a company’s current operating profitability.

The report identifies Zuffa having $535 million in credit with $60 million in “senior secured revolving credit facility due 2018 and a $475 million senior secured term loan due 2020.”

Zuffa’s credit rating had maintained a “BB rating” since December 2010.  It was previously downgraded in November 2007 from BB to BB-.

Other notes:

- In 2013, the revenues for Zuffa were split 58% event-based (i.e., PPV and ticket sales) and 42% from TV, sponsorships, merchandising, licensing and content distribution agreements.

We note that last year’s S&P report had the company’s 2012 revenue at 55% event-based (including PPV and live gate) with the other 45% dedicated to TV revenue, sponsorships, merchandise, licensing and content distribution agreements.  Thus, a slight increase in revenue geared toward events rather than other streams.  This is interesting considering the report finds the broadcast deals to be a more stable revenue provider than PPVs and live event gates.

- There’s an expectation that debt to EBITDA will increase to the high-4x area compared to the low 3x area previously.

We should also note that there was no mention of how Fight Pass impacts its revenue unless you consider it falls under content distribution agreements.

Payout Perspective:

There’s nothing earth-shattering in the report despite the downgrade in credit rating.  The silver lining for Zuffa is the S&P report believes that 2015 should be a recovery year dependent on key fighters coming back which the report suggests will mean higher PPV buys and gates.  The report lists the international expansion and the broadcast deals as positives for the company and even suggests a more stable form of revenue than the PPV model.  Still, the company is based on its events and fighters and the report indicates that injuries and juggling of events due to key injuries to fighters is directly related to the downturn in its business.  I should also note that the report never suggests that there is an oversaturation of the product that contributes to its current business climate.  One might argue that fighter injuries/juggling of events is related to too many events too close together but the report does not address this possibility.

It is ironic that there are reports that the UFC office in China is closing when the S&P report identifies international expansion as a key to produce additional revenue for the company.  Also, the report stresses the need for more fighters that will appeal to its core youth demo the same week that the Sports Business Journal comes out with a report that the company is in search for more stars.

What a week for the UFC.  The UFC’s credit rating is downgraded, Cung Le will appeal the UFC’s suspension which could reveal a rather shaky drug testing policy, the UFC reportedly closes its office in China and a former UFC fighter live-tweets a standoff with a SWAT team.  What a week.

UFC 180 will be shown in movie theaters

October 10, 2014

The UFC will once again partner with Fathom Events to bring a UFC PPV to movie theaters.  UFC 180 will be shown in movie theaters on Saturday, November 15th.

As announced via the UFC Facebook page, the UFC is hyping up this event by giving people additional ways to find it.

Post by UFC.

Payout Perspective:

In Seattle, these UFC movie events are usually shown in 1 or 2 theaters in the suburbs.  However, a brief glance at possible places to watch UFC 180 in movie theaters shows 4 areas around the city with tickets ranging from $15-$18 depending on where you go ($13 for kids).   With the event selling out, one would think the UFC wants as many people to watch the event and see the atmosphere in Mexico City.  While this may detract from PPV buys, it was likely that the buy rate was going to be marginal considering the focus on the Latin American/Mexican audience.

Le expected to appeal suspension

October 9, 2014

ESPN reports that Cung Le is expected to appeal his one-year UFC suspension for testing positive for elevated levels of human grown hormone (hGH).  The appeal provides a unique scenario in which a UFC fighter will appeal a drug suspension to the UFC acting in the capacity of regulatory authority.

Dana White confirmed that Le has a right to file an appeal which will be overseen by a third-party arbitrator.  The arbitration will be through the American Arbitration Association which is standard for many contracts where there are arbitration clauses.

White states in the article that a WADA-certified lab was not used to collect the blood samples for the August 23rd fight card in Macau because the drug testing was decided upon that week.  Le’s manager notes that there was a WADA-approved lab in Beijing, China but was not used.  A Hong Kong contracted lab was utilized instead.

No date has been set for the arbitration.

Payout Perspective:

A look at a standard UFC contract indicates that a fighter may appeal to a regulatory body and/or commission that oversee drug testing.  However, we presume that the UFC was not named as an entity a fighter could appeal to as the ESPN piece initially indicated that Le’s appeal was “breaking news.”  If Le’s contract with the UFC had language that he could appeal his drug suspension to whatever entity was regulating the drug tests, it would not really be breaking news.  This poses the question of what the UFC should do in the future with more international cards on the horizon yet know concrete policy in place on how to address testing and the potential for appeals of the process.

Le’s appeal will be an interesting case considering the points raised by Le’s manager in response to the positive drug test.  Initially thought as damage control, it appears that Le might have raised viable case against the test results. In the end, it points to a problem for the UFC.

Royce Gracie signed by Bellator as Promotional Brand Ambassador

October 8, 2014

Bellator MMA announced on Wednesday that UFC Hall of Famer has become a Promotional Brand Ambassador for the company via press release.

Via Bellator Press Release:

Known simply as the pioneer of mixed martial arts, Royce Gracie is widely considered the most influential and important figure the sport has seen. Engaging in some of the most memorable fights in MMA history during his time with the UFC and PRIDE Fighting Championships, Gracie has now joined Bellator as an official brand ambassador for the Viacom-owned promotion.

“I have known Scott [Coker] for a long time and have always respected him as not only a promoter but as a martial artist who has always treated fighters with respect and truly understands their value,” Gracie said. “Bellator and Viacom want to give fans exciting fights and enable fighters to continue to grow and most importantly provide for their family, and it’s something I want to be a part of. UFC has done a great job over the past twenty years in building this sport and taking it globally and I’m glad to have been part of that, but Bellator is a growing organization I am honored to be a part of, and with the dedicated and talented people already associated with the company, we can further the growth of mixed marital arts as a sport worldwide.”

Gracie will immediately be involved with Bellator including promotion for Bellator 131, which is headlined by a light heavyweight showdown between Tito Ortiz and Stephan Bonnar, along with a Lightweight Title fight between Michael Chandler and Will Brooks on November 15. Moving forward Gracie will host seminars, be involved in autograph and promotional appearances, as well as aiding in the International expansion of Bellator around the world. Bellator and Gracie will also be involved in a co-branded merchandise line that will debut in 2015.

Gracie named as brand ambassador

Payout Perspective:

It does not sound like there will be ill will between Gracie and the UFC as there was with Randy Couture’s departure.  Of course, we have not heard from Dana White.  Still, Gracie was not an active part of the UFC promotional machine.  The addition of Gracie means more for Bellator than it does for the UFC to lose him as a potential ambassador. The deal for Gracie sounds promising assuming his compensation is tied to his appearances as well as receiving a portion of the merchandise sales from co-branded merchandise.

TUF 20 Episode 4 Live +3: 813,000 viewers

October 8, 2014

MMA Payout has learned that the adjusted viewership for last Wednesday’s TUF 20 Episode 4 drew an additional 236,000 viewers an ended with 813,000 total viewers reflecting an increase of 41%.

Episode 1 – 536,000 viewers; 831,000 viewers

Episode 2 – 574,000 viewers; 946,000 viewers

Episode 3 – 433,000 viewers; 791,000 viewers

Episode 4 – 577,000 viewers; 813,000 viewers

TUF 20 Episode 4 DVR

Payout Perspective:

This was the lowest increase in adjusted viewership from DVRs of this season. The average increase from live to live+3 is 315,000 viewers which is much more than Bellator has seen in adjusted viewership. The live + 3 average is 845,000.

UFC Fight Night 54 on FX: 413K, but last hour does well on FS1

October 7, 2014

MMA Payout has learned that Saturday night’s UFC Fight Night 54 which aired on multiple Fox networks due to MLB baseball drew a final overnight viewership number of 1,267,000 in the last hour of the event if you include viewership on both FX and FS1.

The event was simulcast on both stations as FX aired the complete UFC Fight Night card from Halifax while FS1 aired the last hour after the Washington Nationals-San Francisco Giants extra, extra inning game.

Broken down, the 3 hour and 2 minute main card on FX received an overall viewership of 413,000 and scored 0.20 in the overall adults 18-49 demo, 0.28 in the males 18-49 and 0.27 in the males 18-34.  When the fights were switched onto FS1, there was a boost in viewership as that block received 799,000 viewers and scored 0.50 in the adults 18-49 demo, 0.71 in males 18-49 and 0.56 in males 18-34.

In addition, the prelims for UFC Fight Night 54 received a viewership of 102,000 in the 2 hour block on Fox Sports 2.

Payout Perspective:

I would say that we’d have to throw out the ratings for this night as MLB took it over on FS1.  Still, to have 799,000 viewers tune into the last hour of the event likely meant a residual amount of people stayed and watched the fights.  One would think that a great deal of the 413,000 viewers on FX were UFC fans (and not just people too lazy to turn their channel) that found the event after it was moved.  The DVR numbers may not do much here since many people that wanted to watch the fights on FS1 wound up with a lot of baseball.

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