December 12, 2016
The Sports Business Journal’s John Ourand offered up predictions for 2017 in sports media. One of his predictions was how much and with what media outlet the UFC would sign with when its current media rights deal ends.
He predicts that the UFC would re-up with Fox for $300 million per year. The prediction is $150 million less than what the UFC had hoped. The UFC made it known that it would be seeking $450 million per year which is a substantial increase from the $115 million deal it signed in 2011.
As Ourand points out, the UFC will likely wait for regulatory approval of the AT&T-Time Warner deal in hopes that Turner Sports makes a run at a deal with the UFC. He dismisses the likes of NBC, CBS and ESPN as possible landing spots for the UFC. If the next deal is $300 million, it would more than double its 2011 deal but might impact the value of the company since a portion of the UFC was valued based on its anticipated media rights deal. Ourand points out that a deal with Fox will not be signed until 2018 so any news on a deal probably would not happen until this time next year.
December 6, 2016
WME-IMG’s Ari Emmanuel and Patrick Whitesell have made Sports Business Journal’s Most Influential People in Sports Business for 2016. Emmanuel and Whitesell are key members of the new ownership group for the UFC.
SBJ noted the ascension of these two (last year they were No. 12 on the list) but noted the following in choosing them so high on the list:
Whether you’re with them or against them, you can’t ignore their influence. Their vast access to talent and intellectual property, global reach and forays into content production and distribution give them a seat at the table of virtually every major sports negotiation.
Obviously, the acquisition of the UFC this past year was one of the major shakeups in the sports due to the $4 billion price tag. Despite the concern over the leveraged purchase by federal regulators, the purchase drew eyebrows from the sports and financial word.
Notably, Adam Silver tops the list at No. 1 followed by Bob Iger and John Skipper tied at No. 2, Roger Goodell at No. 3 followed by Emmanuel and Whitesell.
To put this ranking in perspective, they rank ahead of MLB Commissioner Rob Manfred (No. 5), Dallas Cowboys owner Jerry Jones (No. 8) and NHL Commissioner Gary Bettman (No. 10). With its latest acquisition, the UFC, it has a sports property that is still emerging and find itself with several looming issues ahead including the possibility of fighter unionization, the ongoing antitrust lawsuit as well as an upcoming media rights deal.
November 28, 2016
The Sports Business Journal reports that the UFC is angling to ask potential buyers for $450 million per year over 10 years in its next round of media rights fees. The company’s current deal, which ends at the end of 2018 is for $115 million for 7 years.
The article also states that the deal will seek to have the successful bidder to produce the UFC events. In the past, the UFC had produced its shows in-house. One of the under-the-radar things about Zuffa was the control of the brand for the UFC which included the production of the events. You might argue that it’s this control that gave it such a strong brand awareness which may have gone to the eventual sales price for the company.
Via Sports Business Journal:
The package the UFC will take to market will include the rights to four annual broadcast windows that Fox now holds, six annual cable events and weekly programming on Fox Sports 1, plus the UFC’s over-the-top Fight Pass service. It is not expected to include the UFC’s lucrative pay-per-view business, which will likely be retained by WME-IMG. But some media executives believe any winning bidder will have more of a say in what matches will be part of the UFC’s pay-per-view events. Whether a network will share in some of the PPV revenue is a deal point that will be negotiated, sources said.
Despite the retraction in spending by networks such as ESPN and the lukewarm ratings for Fox events this past year, the UFC is banking on the allure that its demo of young males with disposable income and the somewhat DVR-proof live sporting event will give it leverage in the new negotiations. But will the UFC be able to broker a 75% increase over its first media rights deal. The deal would include additional cost to the network that purchases the rights as it will need to provide production costs for the events. However, the article indicates that the network may have more influence on what events it may have. This might provide some incentive for potential buyers. I am surprised that Fight Pass will likely be included in the deal as there might have been opportunity to sell those rights on its own as is contemplated by the NBA’s LA Clippers.
November 21, 2016
The Sports Business Journal reports that Jeff Borris will not reveal the athletes and agents that have agreed to join advisory boards for a proposed committee that his Professional Fighters Association intends to form.
Borris stated that he does not believe that nothing will be gained from releasing the names of the people. Initially, Borris said he would introduce two advisory boards: one made up of MMA agents and the other with UFC fighters. He said he would like to have 4 agents and 9 fighters on the boards.
The Sports Business Journal writeup includes a quote from MMAFA’s Robert Maysey which applauds the effort but does not know if a union will be successful. The article does point out that if Borris is successful, the antitrust lawsuit filed in Nevada (Maysey is one of the plaintiff lawyers) would be moot as a unionized sports entity would have antitrust labor exemption.
Concealing the names of those on the advisory boards at this time makes sense as Borris likely weighed public relations versus possible retaliation for those named. At a point when Borris has the number of UFC fighters willing to sign up for the possibility of an NLRB election, we’ll probably see the names of the fighters and agents. But, at this time, there could be some (subtle) backlash from the UFC if the names are revealed. Also, fighters and agents might be weary as they will need to work with the UFC before an election.
September 3, 2016
A new study per the Sports & Fitness Industry Association’s annual State of the Industry Report places mixed martial arts as a rising fitness activity among the U.S. population.
According to the study, more than 72% of Americans (6 and older) were active in at least one sport or activity in 2015. The nationwide online survey taken in 2015 by 32,658 Americans gages athletic participation habits.
Over a three-year participation range, “MMA for competition” was third in growth activity among U.S participants. Per the study it had grown 72.3% with 749,000 participating in 2012 and then 1,290,000 participating I 2015. According to the survey “MMA for fitness” was 13th on the list with 1,789,000 in 2012 and 2,498,000 in 2015.
“Boxing for competition” came in 7th on the list.
The number 1 sport/fitness activity in 2015: Stand up paddling followed by adventure racing and then MMA for competition. Fourth was Triathlon (nontraditional/offroad) followed by Rugby.
The key here is the activity habits of Americans as opposed to their favorite sport. Thus, these are the fitness activities of the people taking the survey. Although no definition in the article “MMA for competition” means and actual training in the sport of MMA (striking, grapping) as opposed to “MMA for fitness” (I tend to think this is a non-contact kickboxing class). Why the popularity in MMA? Perhaps the fitness benefits of the activity. Participating in MMA is a calorie burner which mainly younger people are interested in trying.
February 29, 2016
Harley Davidson has renewed its sponsorship deal with the UFC according to the Sports Business Journal (subscription required). While no terms were disclosed, the agreement is being reported as being a multi-year deal.
The motorcycle maker has been a mainstay with the UFC since 2007 and it is the third time that Harley Davidson has renewed with the UFC.
The article notes that the UFC does not designate differing levels for each sponsor but customizes its partnerships. The two sides have worked for several months on the new deal which includes “new components.” The new deal with the UFC includes showcasing Harley Davidson across multiple UFC platforms as well as sponsoring the arrival of fighters on PPV and other broadcasts. It also includes the presentation of a UFC fight to be held on a U.S. military base.
In a unique move by the two sides, the sponsor deal will include showing UFC PPV events to motorcycle customers at 600 Harley Davidson dealerships across the country. The dealerships will receive the PPVs at a discounted rate.
The news of the renewal comes at an appropriate time as UFC 196 will air this weekend. The most notable part of the sponsorship is the ability for Harley Davidson to show UFC PPVs at its dealerships. One would think that this move would help promote sales for Harley Davidson as customers could feasibly come in for the fights and leave with a new motorcycle. Also, the sponsorship at a UFC base helps promote the Harley brand to many U.S. service men and women. This deal appears to be most beneficial to the Harley brand while continuing an existing relationship with the UFC.
November 26, 2015
The Sports Business Journal reports (subscription required) that UFC sponsors Bud Light and Monster Energy Drink will roll out major national promotional campaigns for UFC 200 starting early 2016.
Monster Energy drink, the current sponsor of the center of the octagon, will kick off a national promotional campaign in January in approximately 45,000 retail outlets. The “Win a trip to UFC 200” promotion will be supported by digital and social campaigns as well as promoted on PPV broadcasts.
But Light, the prior sponsor of the center of the octagon, will start a “Road to UFC 200 Sweepstakes” in approximately 5,400 Circle K Stores with displays within the stores.
The promotions will run for three months and feature Ronda Rousey in their displays/materials. The Bud Light promotion will also include Conor McGregor.
The promotions make it clear that it does not promise Rousey or McGregor at UFC 200 although it’s likely that one or both will be on the card. The campaigns focus on the historical mark of UFC 200. The article notes that sponsors that use sports properties in national retail promotions like long lead times and recognizable athletes. It points out that the nature of combat sports makes this uneasy. Rousey is the prime example. Despite losing at UFC 193, she will still spearhead the campaign. No word if Holm would be a late replacement although it might be hard to do so at this late date. If McGregor were to lose in December, the campaign would start off flat as it would feature two fighters coming off losses.
May 1, 2015
There are reasons why Al Haymon never speaks, one of those may be to prevent the threat of litigation. A recent article about Haymon’s Premier Boxing Champions may bring on an antitrust lawsuit involving rival Golden Boy Promotions as chief plaintiff.
A recent Sports Business Journal article featured Haymon’s PBC and went over how funding was structured. Although Haymon did not provide comment for the article, factual information in it allegedly strengthened the argument that Haymon’s business model for PBC violates portions of the Muhammad Ali Boxing Reform Act.
A draft of the Complaint has been viewed by SI.com and it appears that Golden Boy Promotions is seeking a temporary restraining order and then a permanent injunction against his business practices that violate state and federal laws. It also requests monetary damages against Haymon.
The claim is that Haymon is using his monopoly as a boxing manager to create another monopoly for promoting TV fights.
Golden Boy is hush on if and when this lawsuit may be filed.
Notably, the SI article includes a letter dated April 28, 2015, from the Association of Boxing Commissions (“ABC”) to the Department of Justice in which it claims that Haymon is in violation of the Ali Act. Essentially, through his controlled companies Haymon is acting as manager and promoter which the ABC claims to be a violation of the “Firewall provision” of the Ali Act (specifically section 5(b) of the Act). ABC also calls into question the contracts Haymon fighters must sign. Essentially, ABC believes that they are in “restraint of trade” and “contrary to public policy” as the contracts exceed 12 months. A footnote in the letter notes that UFC, Bellator and other MMA promotions have this contractual model. It also notes that MMA is not covered by the Ali Act.
This will be an interesting lawsuit and with the Zuffa antitrust lawsuit ongoing, we can see some major waves happening in the business of combat sports. Haymon’s boxing business model is unique and received much scrutiny by rival promoters. There have been attempts in the past to sue Haymon but those were summarily dismissed and/or settled. If Haymon and PBC are sued, we may see some interesting information divulged from the factual discovery process in the lawsuit. It could also overturn the current wealth of boxing on multiple networks by PBC. MMA Payout will keep you posted.
April 22, 2015
In light of Zuffa’s announcement that it has changed the policy through which it will compensate fighters under the Reebok sponsorship deal, a manager of UFC fighters has spoken out about the deal and the sponsorship landscape. Oren Hodak of KO Reps who represents Johny Hendricks, Ovince St. Pierre and Joe Lauzon among others has expressed his opinion on the problems with the current state of MMA sponsorship.
“The current problem in the MMA landscape is the managers/agents that are in the business. They aren’t working hard enough or smart enough going after non endemic brands. They are simply seeing a logo on another fighter and then contacting that company. Or even more pathetic is agents calling another agent to help them out with a deal,” Hodak told MMA Payout. Hodak holds a Master’s degree in Sports Marketing and worked in the sports industry for several years before opening up his MMA management company.
“KOreps has had great success giving companies such as Reebok, Bass Pro, Smart Stop Self Storage, Instaloans and most recently Parts-express.com their first real taste of Octagon exposure in addition to partnering with fighters outside of the cage,” stated Hodak. “Sure, the sponsor tax takes money out of budgets from your core MMA clothing and supplement companies but there are plenty more companies out there with a sports marketing budget. Over the years the UFC has slowly raised the sponsor tax and added numerous categories to the non-approved list, giving fighters less and less opportunity. In turn, managers have an excuse as to why they aren’t producing and UFC has fighters openly complaining about sponsorship money.”
On Monday, the Sports Business Journal reported that the UFC had changed the way it would pay its fighters through the Reebok sponsorship deal which goes into effect in July. Instead of relying on media rankings, it would base the sponsorship pay on the number of fights an individual has had under Zuffa. This would include fights in Strikeforce and WEC after both were acquired by Zuffa. The change in the policy was said to be based on speaking with a number of fighters and managers.
“Some fighters may come out ahead with this new deal but I believe the fighters with professionally qualified sports management behind them will not,” Hodak added, “We have already heard from numerous fighters losing deals because they can’t utilize the valuable fight night impressions surrounding tv viewership.”
It’s clear that despite the change in payment structure, the UFC-Reebok deal will still affect the bottom line of many fighters. Hodak points out an issue he sees as a manager of fighters. It’s an interesting viewpoint and a constructive critique on the nature of the business. It also calls into question the management practice of some in the industry. Not only will the sponsorship landscape change in the UFC, but the management of fighters may change too. We shall see how this plays out in the UFC after the Reebok deal is put into place this summer.
April 6, 2015
In its latest issue, Lorenzo Fertitta spoke with the Sports Business Journal (subscription required) on the UFC taking a tougher stance on drugs. Fertitta shed some light on the need for a new policy after the spate of failed drug tests.
While there was nothing in the article that added on to what the UFC has already said about its new policy on drug testing, Fertitta talked about being more proactive about the issue in asking what the UFC could do rather than what the commissions could do.
In the SBJ article Fertitta is quoted as saying: “We needed to stop having academic debates on the legalities of our contracts and just go do this.” He added, “You get hung up in a conference room with a slew of lawyers. We could debate this for years to come and never get anywhere. We’ve always run this business for the long term, so we’re going to do this.”
The UFC will pay for additional tests for its fighters and will advocate for a 2 year suspension for any fighter who tests positive for a banned substance. He indicated that the UFC will “advocate rather than act” at this point due to the current employment contracts of its independent contractors.
However, Fertitta intimated that future contracts would reflect the stiffer penalties for drug violations. These contracts would also include an appeal and arbitration process for suspended fighters.
The UFC will implement its new drug policy on July 1, 2015.
Fertitta takes a shot at lawyers although in the article he indicates that there are complex legal issues to implement its new policy when it comes to an appeal and arbitration process. Thus, he needs them. We saw the issues the UFC had when it came to the appeal process with Cung Le and the new appeal/arbitration policy will be interesting if the suspensions are longer than what commissions require. Obviously, the new contracts will pose a question for fighters. Sure, the drug policy is a good thing to adhere to fairness, but how much of an independent contractor’s rights are being given up?