Dave Meltzer of the Wrestling Observer weighs in on M-1’s decision to partner with Strikeforce in order to build their global brand and the UFC’s choice to stay out of network TV for now:
The idea of being able to create a war chest to allow M-1 Global to run a viable worldwide MMA brand through Emelianenko is not going to happen based on a percentage of profits on shows without strong PPV revenue, because the U.S. television market is not paying significant rights fees for product. That’s one of the reasons EliteXC fell even though it had good television deals. It’s the main reason UFC doesn’t have a network contract when every network is interested. If UFC is going to give up a PPV quality main event, they would want at least a decent percentage of what they are losing on the fight by not putting it on PPV, and up to this point, nobody has been willing to pay that.
Payout Perspective:
It’s hard to fathom the M-1 brand gaining much from Showtime or CBS exposure given not only the rights fees involved with North American television, but also the brand confusion that’s bound to exist on future Strikeforce cards (much like it did with Affliction cards).
Meltzer goes on to discuss a great deal more about the Fedor-Strikeforce agreement, and I highly encourage everyone to grab a subscription to the newsletter.
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If what Meltzer states is true – the main reason for the UFC’s hang-up on network television is the lack of a sufficient rights fee – it’s a terribly short-sighted decision. What the UFC forfeits in short-term PPV revenue is bound to be re-paid and grossly exceeded by a tidal wave of new interest in the brand as a whole. New interest will not only boost event-related revenues (PPV, live gate, live merchandise), but also that of other streams like from video games, the magazine, and the action figures.
The money forfeited by holding a PPV quality event on network television isn’t money lost – it’s money well-invested in the company’s future. Consider ESPN for example:
If everyone was impressed with ESPN’s coverage of UFC 100 and what it did for the event, imagine the impact of broader, sustained coverage from a network that actually had a financial stake in the outcome of the event. Further consider the trickle down effect that ESPN’s endorsement of the UFC would have in terms of media coverage from other outlets – the world’s number one sports network is the ultimate legitimizer.
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