More Details on ESPN MMA Show

Sources tell MMAPayout.com that ESPN's online MMA magazine-style show will launch this Thursday. The program's launch was apparently delayed by the UFC's insistence that it be exclusive to the UFC. The conflict has apparently been resolved as Kenny Florian will be hosting the first two weeks of the program, however, it is unclear the extent of the company's involvement.

This isn't the first time the UFC has pushed for exclusivity, however, media companies appear to be increasingly willing to look beyond just the UFC to see if there is a broader MMA market.

ESPN to Launch Online MMA Series

According to a report in this morning's New York Times, ESPN will test the MMA waters this fall with a series appearing exclusively online and on mobile devices:

Like many of the broadcasters, ESPN intends to play up its new-media offerings along with what is coming on TV, outlining plans for original programming that will appear only online or on mobile devices. Those shows include “Mayne Street,” featuring Kenny Mayne, the “SportsCenter” anchor; “Eric’s Got Issues,” with Eric Kuselias; “P.O.V.,” which will compile and present video clips that are submitted to ESPN by viewers and fans; and a series about mixed martial arts.

“We have more digital originals than television originals,” said Ed Erhardt, president for ESPN customer marketing and sales, who described the digital shows as “a strategic asset to help broaden our relationship with fans.”

SEE: More Details on ESPN MMA Show

Top TV Execs Criticize CBS's Decision to Air MMA

The most high profile push back against EliteXC on CBS was launched this week by Sumner Redstone, the highly influential and respected chairman of CBS and Viacom. According to a report by the The Hollywood Reporter:

"Les usually asks my opinion," Sumner Redstone said Wednesday when asked about the four mixed-martial arts fights that will begin airing soon on CBS. This time, the Viacom and CBS chairman said, Moonves did not.

Redstone said the deal, struck with Elite Xtreme Combat, probably was a mistake, not because CBS won't turn a profit from it but because it is not "socially responsible" to air the typically bloody bouts on free, broadcast TV.

"I'm a lover not a fighter," Redstone said. "I don't like the sport."

The comments were made during a panel discussion on the sports industry at the Milken Institute Global Conference. Redstone and Moonves have had a rocky relationship in the past, so perhaps some of Redstone's criticism can be attribute to their personal conflict. However, Ed Goren, President of FOX Sports, was also critical of MMA on network television, telling the audience "we don't need money that badly."

It is important to note that the UFC's rumored negotiations with FOX are with the entertainment division and not Goren's sports division.

NY Times Feature on WWE

Tomorrow's edition of the New York Times features a piece on the success of the WWE called Better Days, and Even the Candidates, Are Coming to W.W.E. The article focuses on the company's recovery from last years Chris Benoit scandal. Key exert (including Dana White quote):

Awash in cash, W.W.E. is investing globally. It currently shows programs in 23 languages in more than 130 countries, and is now concentrating on expansion in Latin America, China, India, Australia and Japan.

“Here’s the formula we’ve been using very successfully,” said Linda McMahon, the chief executive “We first introduce our product into the marketplace via the television show. Once we’ve introduced our talent and our story lines via television, then we follow with live events and licensing and merchandising.”

Such success abroad has come at an opportune time for W.W.E, which still faces considerable challenges at home. While the presidential candidates’ appearance on “W.W.E. Monday Night Raw” may attest to wrestling’s cultural significance in the United States, the show’s television ratings are down slightly year over year and it lost viewers in the 18-to-34 age group. Analysts say W.W.E. lacks the charismatic and marketable stars it once had.

Until recently, its domestic pay-per-view revenues had been declining, in part because of competition from the Ultimate Fighting Championship, the leading brand in mixed martial arts.

But Dana White, president of the U.F.C., said: “People have been trying to count the W.W.E. out for years,” he said. “They’re a powerhouse.”

UFC on Network TV: Dana Says Deal Within 6 Months; FOX Rumored to be Frontrunner

Last week in an interview with the Canada's The Score, when asked about the UFC following EliteXC onto network television, UFC President Dana White said "we'll have a network television deal very soon." When pressed for a time frame, White said within six months.

MMAPayout.com has learned that FOX is now widely believed to be the leading candidate to become the UFC's network television partner. Earlier this month White met with FOX executives in Los Angeles. While a deal with FOX is not believed to be imminent, industry sources have told MMAPayout.com that they believe the companies are making progress toward a deal.

In February MMAPayout.com reported that the network was rumored to have made a bid to buy the UFC during a round of negotiations earlier this year.

Last month MMAPayout.com reported that the UFC was involved in "extensive" discussions with ESPN. Sources tell MMAPayout.com, that the network has not made a decision on whether or not to get involved in MMA.

It should be noted that this is an unconfirmed report. As a result, it should be considered rumor or informed speculation at best. It also bears mentioning that the situation is fluid and can change quickly.

Sports Business Journal Offers MMA Industry Reality Check

The following article was originally published in the April 21 edition of Street & Smith's Sports Business Journal and is republished here with permission. Thanks to Dan Kaplan and Richard Weiss.

Filings Show 2 MMA Groups Financially Bloodied

By Daniel Kaplan

Two key players in the mixed martial arts industry may soon go down for the count, underscoring the significant financial volatility in the sport despite its tremendous hype.

International Fight League and ProElite Inc., the latter of which made waves in February by signing the first MMA broadcast contract, warned in securities filings last week that they may run out of money later this year. Both also cautioned they could have accounting irregularities that resulted in inaccurate financial reports.

“You have got maybe some 20 MMA groups around the world, and every single one of them is struggling,” said Jay Larkin, IFL’s chief executive. “In the last three or four months, 10 have either reorganized, folded, changed names or completely gone out of business. That is a very heavy casualty rate for a sport that is supposed to be the greatest thing since the NBA.”

IFL is looking to align with a media concern or another MMA outfit, Larkin said, though the three-year-old company also is confident of raising additional equity. The MMA industry must consolidate to survive, Larkin said.

MMA combines boxing, judo and other hand-to-hand combat disciplines.

The dominant company in the conversation is Ultimate Fighting Championship, the Zuffa Corp.-owned outfit that dominates MMA but does not release financial results. UFC, which has previously dismissed rumors in the MMA world that it is looking for a buyer, declined to comment for this story.

Standard & Poor’s in November downgraded Zuffa’s $350 million of debt, citing weak pay-per-view buys and poor results in England.

IFL, which has lost $31 million since its inception in 2005, said in its annual 10-K filing last week that it “will likely have a cash shortage which would disrupt our operations, have a material adverse effect on our financial condition or business prospects and could result in us being unable to continue our operations.”

ProElite, which lost $27 million in 2007 on $5.3 million in revenue, similarly disclosed in its 10-K filing that “our auditors have expressed substantial doubt about our ability to continue as a going concern.”

A ProElite spokesman, in an e-mail, said “The company is optimistic about its financial position improving.”

Later in its report, IFL stated, “Our auditors have identified a material weakness in our disclosure controls and procedures … due to insufficient resources in the accounting and finance departments.

“There is more than a remote likelihood that a material misstatement of the consolidated financial statements would not have been prevented or detected.”

ProElite also reported it has identified internal accounting control problems.

In 2007, IFL reported revenue of $5.7 million and a loss of $21.3 million. The company is cutting the number of events it stages from 13 last year to six or seven this year. Commissioner Kurt Otto, who earned $250,000 in 2007, was let go on March 31 and instead will be paid $10,000 per event as a consultant.

UFC is broadcast on Spike, while IFL has deals with Fox Sports Net and MyNetwork. ProElite, which recently signed renowned fighter Kimbo Slice, announced in February a broadcast package with CBS.

Ultimate Cash Machine: UFC on the Cover of Forbes

Zuffa, parent company of the UFC, is the subject of the cover story of the May 5th editor of highly respected and influential Forbes magazine. The piece is now available online at Forbes.com.

The article represents yet another mainstream breakthrough for MMA in general and the UFC in particular. The feature is very flattering and well worth reading in its entirety, however, the most interesting quotes concern the potential sale of the company. MMAPayout.com reported on rumors that the company was for sale earlier this year.

According the article the Fertittas "field pleas from private equity and media firms to sell UFC," with offers they claim exceeded $1 billion. The piece notes that price would be "rich in comparison with the $1.4 billion market value for publicly traded World Wrestling Entertainment, which has almost double the revenue" (SEE: Bird of a Feather: Zuffa's Future in Light of WWE's 2007 Financial Results).

Later in the article, when asked if he wants the Fertittas to cash out while the price is high, Dana White responded, "absolutely not. I love what I do and think we are just scratching the surface with this sport." The article states that "neither brother seems inclined to sell, either," with Frank Fertitta saying, "I'm sure we could find something to do if we did, but we're having too much fun."

At first blush, the article seems to have a certain "thou doth protest too much" element to it as it pertains to rumors that the company is for sale. The piece places Zuffa's value at $1 billion plus, projects $250 million in gross sales for the company this year, and estimates that the UFC controls 90% of the MMA industry.

Other interesting items in the piece:

• UFC 81 is said to have grossed $25 million, including 500,000 pay-per-view buys.
  
• The piece says the the UFC's pay-per-view events often draw 3 million 18-49 year old males (assuming six people watch at each purchasing household).
• Mark Cuban argues that the UFC is vulnerable because it is "completely dependent on pay-per-view." Cuban believes that fans will become increasingly less inclined to pay for events with HDNet and CBS offering live events for free. White responded: "I'm flattered that Frank, Lorenzo and I have made this business look so easy. But CBS doesn't understand the fight business, and Mark Cuban doesn't know anything about the fight business, either. All he's concerned with is drawing subscribers to HDNet so he can sell out to Time Warner or Comcast."
• White believes MMA will reach $1 billion in sales as an industry within five years.
• The piece states that most of the company's 275 fighters take home at least $100,000 a year for three or four fights each. Chuck Liddell and Quinton Jackson are said to make several million dollars per year including endorsements from companies including Dell and Nike.

Everlast Announces Partnership with Couture

Today Everlast announced a partnership with Randy Couture. The deal represents another step for MMA into the mainstream of the American sports industry. Everlast is one of the largest and best known brands in sports equipment. From the press release:

This long-term partnership marks the commitment of Everlast to become the premiere brand in the fastest growing sport of Mixed Martial Arts. The partnership with Couture allows him to exclusively wear Everlast fight shorts, fight gloves, training equipment and training apparel. In addition, Everlast will be the exclusive equipment and apparel sponsor of Xtreme Couture Gyms, in all locations. Together, Everlast and Couture will collaborate on a co-branded line of MMA equipment that will set the standard for equipment and apparel in MMA. Additionally, the partnership will work on developing grassroots programs to teach the youth, and create fitness clinics and retail concept shops.

Missouri Asked to Ban 'Cage Fighting' by Kids

Last's appearance of MMA for Kids on the Drudge Report has caused stir in Missouri where legislators are now seeking to ban children from MMA competition. Developing...

Dana Goes Mainstream

NOTE: The following story appears to have been pulled as the original link is no longer valid, click here for a cached version of the page.

According to ESPN the Magazine's Ryan Hockensmith, UFC President Dana White is about to go mainstream with a feature in Rolling Stone and the cover of Men's Fitness. From Hockensmith's blog at ESPN.com:

I sat down with UFC president Dana White for lunch last week. Over the past couple years, I've spent a lot of time with the UFC president. Love him or hate him, he's never dull.

A few months ago, Rolling Stone sent a reporter to spend time with White, and got the full Dana-White-in- Vegas treatment. He's been very candid about his alcohol troubles and going sober 15 years ago, but he's also been candid about flopping off the wagon now and then. And Rolling Stone caught him in the midst of a four-month bender of drinking and over-eating.

"I was a real slob," White says.

Interestingly enough, Men's Fitness contacted him about a possible cover story and photo shoot a month ago. White was apprehensive. "Like I said, I looked like a slob," he says.

He asked for a month to prepare. Now, he says he's dropped almost 20 pounds and is set to pose for the cover—possibly shirtless. White has become militant about training and dieting. At lunch, he had some crazy meal specially delivered. I say "some crazy meal" because I have no idea what he was eating. It looked way too healthy to actually be edible.

Can't wait to see those dueling stories hit around the same time. It just shows how complicated White is. He admits he's not even sure who the real Dana White is sometimes.

Strikeforce-NBC Deal Officially Announced

After months of speculation the long rumored Strikeforce-NBC deal was finally announced today. MMAPayout.com became the first media outlet to report the potential deal on January 15. "Strikeforce on NBC" will premiere the night of April 12 from 2-2:30 AM EST.

Drudge Report: MMA For Kids

This morning the Drudge Report is prominently featuring a story titled "Ultimate Fights Expand to Include Kids" from the AP.

Crossover Appeal?: Mayweather-WWE & Silva-Jones

Crossover is the current buzzword in sports management. For today's athletes competitive accomplishments are merely a means to an end. Building a brand, reaching new audiences, and crossing over into the mainstream of American culture is the name of the game. As Matt Walker, agent for Randy Couture and Gina Carano, told FIGHT! Magazine, "most of these athletes at the end of the day want to take the celebrity that they’ve built on the field or through their sports and translate that into other opportunities whether that is business, entertainment, or whatever they may want to do.”

Cases in point: Floyd Mayweather and Anderson Silva. Mayweather is currently engaged in a month long tour of duty with WWE, culminating at Wrestlemania on March 30 in a match with the Big Show, while Silva has made news in recent weeks by challenging Roy Jones Jr to a boxing match. But all crossover opportunities are not created equally.

A $20 million appearance fee was floated by WWE and Mayweather's management as the original justification for Mayweather's WWE deal, but it has now become clear that his actual compensation is probably much closer to $2 million plus a pay-per-view bonus. The only remaining rationale is his manager's stated goal of exposing the boxer to WWE's audience of roughly 5 million viewers each week.

Thus far the mainstream buzz generated by the angle has been low with most of the exposure ambivalent at best. Furthermore, according to a recent marketing study cited in the Wrestling Observer Newsletter, only the Jerry Springer show has a more negative image among advertisers than pro wrestling. Therefore it would appear that any benefit gained from WWE would be more than offset by the negative effect on Mayweather's brand of being associated with professional wrestling.

Mayweather's profile has never been higher coming off high profile fights with Oscar de La Hoya and Ricky Hatton, including valuable exposure on the critically acclaimed 24/7 promotional vehicle, as well as a spin on the last season of ABC's Dancing With the Stars. On the heels of that type of mainstream exposure, professional wrestling seems like a step back, particularly with mainstream sponsors.

Silva's challenge of Jones Jr. on the other hand, while certainly risky and perhaps bordering on quixotic, has a tremendous potential upside for Silva and MMA. The first high profile meeting of a martial artist and boxer, whether in the cage or ring, is going to draw significant mainstream interest. Such a contest would legitimize MMA in the mainstream by elevating Silva to the same stature as a legendary boxer.

If Silva were to beat Jones at his own game it would establish MMA as a legitimate sport and mixed martial artists as skilled athletes instead of bar room brawlers in the eyes of the mainstream media. Even in a close defeat, with Silva demonstrating competence in a secondary discipline, Silva and MMA as a whole would be elevated.

The greatest risk of course is an embarrassing loss, particularly a knockout, which would be seized by the established media to paint MMA as boxing's inferior unskilled cousin. That storyline would prove irresistible, despite the obvious fact that boxing is not MMA and Silva is not a boxer by trade. Furthermore, a convincing loss would hurt Silva's air of invincibility, the one thing he has going for him as a draw right now.

The calculus of a potential Silva-Jones boxing match will ultimately be weighed by Dana White, not Anderson Silva. Even if Jones agrees to the bout, the final decision rests with White per Zuffa's standard exclusivity contract clause which covers boxing and professional wrestling in addition to MMA. The proposition is high risk, high reward, which just happens to be White's business philosophy in a nut shell.

Never Back Down Box Office Results

Never Back Down opened in theaters last weekend grossing $8.6 million. The film opened better than expected Friday night at $3.24 million, but was off those numbers by 4% on Saturday, falling to forth place for the night. The film still managed to finish third place at the box office for the weekend, trailing only big budget films Horton Hears a Who ($44 million gross) and 10,000 B.C. ($16.7 million gross).

The film had a $20 million production budget according to BoxOfficeMojo.com.

MMA at IMG's World Congress of Sports

MMA is in the conversation in a major way for the first time at IMG's World Congress of Sports. Some quotes from the convention floor:

• "The key is to know your consumer and follow your consumer. We've seen a study that shows a young male can identify 10 UFC fighters, but not 10 players on the (St. Louis) Rams." - Tony Ponturo, Vice President of Global Media and Sports Marketing at Anheuser-Busch, on why his company has become involved in the sport.
• "It's a phenomena. It's great to see there's room in this industry for a new sport." - MLS Commissioner Don Garber welcoming the idea of MMA becoming a major force in the sports industry.
• "If we're going to invest in something that (offends) her, we're going to lose an important consumer who really has some pull." - Beatriz Perez, Senior Vice President of Integrated Marketing for Coca-Cola North America, cautioning that MMA advertisers have to be "very cognizant" of the potential reaction of certain sizable portions of their consumer base, particularly mothers.
• Jeffrey Pollack, Head of Harrah's Sports and CEO of the World Series of Poker, called MMA an "awesome phenomena" that Harrah's plans to get involved with.
  

2007's Top Sports Marketers

Street & Smith's SportsBusiness Journal recently released its list of the top sports marketers of 2007. New UFC sponsor Anheuser-Busch regained the top spot after being bumped by Chevrolet in 2006 for the first time since Nielsen began tracking spending in 1994. However, spending by the top two was actually down 36% and 13.6% for Anheuser-Busch and Chevrolet respectively. The complete list:

1. Anheuser-Busch, $218.2 million
2. Chevrolet, $173.2 million
3. AT&T Mobile, $172 million
4. Ford, $139.5 million
5. Verizon, $139.2 million
6. Sprint-Nextel, $137.5 million
7. Toyota, $134.8 million
8. Nissan, $99.8 million
9. Coors, $89.5 million
10. DirecTV, $85.4 million

The UFC may be well positioned to add other members of the list in near term, particularly a car manufacturer and wireless provider, especially given the current business climate. This week at IMG's World Congress of Sports, the sports industry was touted as the place to be during the pending recession. Beatriz Perez, Senior Vice President of Integrated Marketing for Coca-Cola North America, said "this is the time for sponsors to be turning toward sports."

The UFC was touted by Anheuser-Busch's Tony Ponturo, VP of Global Media and Sports Marketing because of its buzz around the water cooler, but Perez responded that MMA is not right for her company's brands. However, Sources tell MMAPayout.com that Gatorade and Mountain Dew, both Pepsi brands, have expressed interest in MMA.

Fertittas Join Cuban As Certified Billionaires in MMA Industry

Frank Fertitta III and Lorenzo Fertitta, owners of Zuffa, parent company of the UFC, cracked Forbes' List of the World's Billionaires for the first time this year. The brothers each check in at #897 (of 1062) with an estimated net worth of $1.3 billion each.

The brothers are listed as self made billionaires from casinos and the UFC. The bio:

Father, Frank Fertitta Jr., got start as a dealer for Stardust Casino in Las Vegas. Saw need for casinos aimed at Sin City locals; opened 5,000-square-foot, 100-slot facility away from Strip simply dubbed The Casino 1976. Expanded to include sports book, restaurant, buffet, bingo hall, more gaming; renamed Bingo Palace. Public 1993. With brother [Frank/Lorenzo] and Colony Capital's Tom Barrack, took company private for $9 billion in cash and assumed debt last year. Purchased professional mixed martial arts league Ultimate Fighting Championship 2001; spent $40 million to improve operations, image. Mass appeal came in 2004 with reality TV show The Ultimate Fighter. Stages monthly pay-per-view events; each averages $30 million in revenue.

Mark Cuban, owner of HDNet Fights, checks in at#446 with an estimated net worth of $2.6 billion. Cuban is also listed as a self made billionaire from the technology industry. His bio:

Former bartender launched early Internet audio and video portal Broadcast.com with Indiana University buddy Todd Wagner. Sold to Yahoo in 1999 for $5.7 billion. Used proceeds to buy pro basketball's Dallas Mavericks from Ross Perot in 2000 for $285 million; team has been to playoffs every season since. Famous for courtside antics; has accumulated $1.5 million in fines for mouthing off to NBA referees. Vying to buy pro baseball's Chicago Cubs from Tribune Co. Building media empire: owns film production, distribution, theater firms. Spends spare time writing blog. Recently competed on ABC's Dancing with the Stars.

Jackson to be Featured in Nike Commercial

In another mainstream breakthrough for the sport of MMA, Sherdog.com reports that UFC Light Heavyweight Champion Quinton "Rampage" Jackson is set to film a Nike commercial this weekend. Jackson will be joined in the commercial by LeBron James among other star athletes according to the report. The spot is titled "Human Chain" with a theme of overcoming.

Together with last week's EliteXC-CBS and UFC-Budweiser announcements, the report is the latest piece of evidence of MMA's growing mainstream acceptance, particularly by corporate America.

Randy Couture became the first mixed martial-artist to be featured in a Nike spot in 1996.

Rovell on UFC-Budweiser Deal

MMAPayout.com reader and CNBC personality Darren Rovell is one the preeminent analysts in sports business. In the past he has been critical of the UFC for its failure to land blue chip sponsors, but now with Anheuser-Busch on board, on the heels of Harley Davidson, Rovell is ready to proclaim the UFC as the next boxing:

The bottom line is UFC fans are, at the very least, prospective Harley Davidson riders and Bud drinkers. And the reality is that the UFC provides more annual buzz than boxing does. So it's fitting that Bud Light will first appear in the Octagon in Las Vegas, where boxing has made its name. Mark this date down: May 24. Because of this deal, the UFC finally becomes the next boxing on that date.

Friday morning, Squawk Box on CNBC featured Tony Ponturo, Vice President of Global Media and Sports Marketing for Anheuser-Busch, discussing the deal. Video of the interview is available here.

Liddell Cracks NYT Best Seller List

Chuck Liddell's memoir, Iceman, is number nine on the New York Times Best Seller List for Hardcover Nonfiction. This is the book's second week on the list, it debuted at number nine last week.

"MMA is the new big realm in publishing right now," Gersh Literary Agent Margaret O'Connor recently told FIGHT! Magazine (SEE: MMA Goes Hollywood). "The sport is becoming part of the cultural zeitgeist, it's infused in popular culture. It's not a direction comparison, but seven or eight years ago there was this huge flurry of books on the personalities of the WWE. This is like the next wave."

O'Connor is currently working on books with Randy Couture, Sean Sherk, and Rich Franklin.

“It’s opening up a whole new arena in publishing. It’s very exciting," O'Connor said. "This reaches a part of the market that doesn’t typically buy books, males 18-34. They usually go out and buy DVDs and Xbox games, but like with Randy Couture’s book, this is the one book that they will buy. So this is appealing to that part of the market, they’re looking for something that speaks to them.”