Billboard Rec Sports DVD Chart - 5/24

1. WWE: Twist Of Fate: The Matt & Jeff Hardy Story
2. UFC 80: Rapid Fire
3. WWE: Triple H: The King Of Kings
4. NFL: Super Bowl XLII Champions New York Giants
5. UFC: Best Of 2007
6. WWE: The Legacy Of Stone Cold Steve Austin
7. WWE: The Best Of Raw: 15th Anniversary 1993-2008
8. UFC 79: Nemesis
9. 2001 FedEx Orange Bowl National Championship
10. TNA: Against All Odds 2008

WrestleMania XXIV Breakdown

WWE's WrestleMania XXIV is currently estimated at 1,058,000 buys (667,000 North American buys). The event drew $23.8 million in pay-per-view revenue with an average world-wide price of $22.50, well below the $54.95 North American price tag. All told the event generated $31.3 million in total revenue with an after tax profit of $4.6 million. Other significant revenue sources included a $5.9 million gate and $1.6 million in merchandising sales.

SOURCE: Wrestling Observer Newsletter

Billboard Rec Sports DVD Chart - 5/17

1. WWE: Triple H: The King Of Kings
2. NFL: Super Bowl XLII Champions New York Giants
3. UFC: Best Of 2007
4. UFC 79: Nemesis
5. WWE: The Best Of Raw: 15th Anniversary 1993-2008
6. WWE: The Legacy Of Stone Cold Steve Austin
7. WWE: No Way Out 2008
8. 2001 FedEx Orange Bowl National Championship
9. TNA: Best Of TNA 2007
10. UFC: The Ultimate Fighter: Team Hughes Vs. Team Serra

News Wrap

• UFC Tackles Long Term Growth Issues - The last five pay-per-view events have produced three of the company's top ten events according to Dave Meltzer. UFC 79, 81, and 83 all drew between 525,000-650,000 buys and at $44.95. UFC 79 and 83 also produced the second and third largest gates in company history.
  
• Golden Boy Sticking to Boxing - Oscar de La Hoya recently said that Golden Boy will stick to boxing when asked about MMA.
  
• Viacom CEO Praises Iron Ring - Q1 profits for Viacom were up 33%. CEO Philippe Dauman said, "content creation is our central mission and our ongoing investments in programming are paying off as we see our television ratings continue to improve. Successful new programming across our networks during the first quarter included MTV's Randy Jackson Presents: America's Best Dance Crew, TV Land's High School Reunion and BET's Iron Ring among others, which joined new seasons of several proven audience favorites."
• Another Affliction Deal Falls Through - Negotiations with HDNet have reportedly fallen through. The promotion is now less than two months from its proposed first show and without a venue or television partner.
• UFC Targets Show for Latino Audience - El Octagono will debut on Galavision as the UFC attempts to expand MMA's demographic reach outside of 18-34 white males.
• WWE Q1 Results - Wrestlemania XXIV produced $31.3 million in revenue and $7.1 million in profits ($4.6 million net). The event drew 1,058,000 buys (including international).
  

Billboad Rec Sports DVD Chart - 5/10/08

1. WWE: Triple H: The King Of Kings
2. NFL: Super Bowl XLII Champions New York Giants
3. UFC 79: Nemesis
4. UFC: Best Of 2007
5. WWE: The Legacy Of Stone Cold Steve Austin
6. WWE: The Best Of Raw: 15th Anniversary 1993-2008
7. WWE: No Way Out 2008
8. 2001 FedEx Orange Bowl National Championship
9. UFC: The Ultimate Fighter: Team Hughes Vs. Team Serra
10. WWE: John Cena: My Life
    

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.”

Billboard Rec Sports DVD Chart 5/3/08

1. WWE: Triple H: The King Of Kings
2. NFL: Super Bowl XLII Champions New York Giants
3. WWE: The Legacy Of Stone Cold Steve Austin
4. UFC: Best Of 2007
5. WWE: The Best Of Raw: 15th Anniversary 1993-2008
6. WWE: No Way Out 2008
7. UFC: The Ultimate Fighter: Team Hughes Vs. Team Serra
8. UFC 79: Nemesis
9. WWE: John Cena: My Life
10. WWE: Undertaker 15-0

UFC 83 Review: Breaking Kayfabe

"kayfabe. n. the showbiz and stagecraft of professional wrestling, including the ring personas of professional wrestlers, especially when maintained in public; insider knowledge of professional wrestling." - definition from DoubleTongued.Org (emphasis added)

"We're buddies. We might have a drink together, so please don't do anything to this guy. He's a gentleman. He just said stuff to hype up the fight and I did as well." - George St. Pierre on Matt Serra after his dominant victory at UFC 83

The influence of pro wrestling on the MMA industry is undeniable. Many top executives from across the industry grew up watching WWE, or more appropriately the WWF as it was formerly known, and take many of their cues from Vince McMahon's promotional model. That model is fairly simple at its core: Take two characters. Create a conflict between them. Tell a story that makes people care what happens when they square off. Deliver a resolution. Repeat.

The UFC's biggest business has followed that simple strategy to a tee whether it be Tito Ortiz v. Ken Shamrock, Chuck Liddell v. Tito Ortiz, Randy Couture v. Tim Sylvia, etc. The difference being, those "feuds" or "storylines" are real or at least real enough to be believed to be real by the general public. While everyone understands that "hyping up the fight" is part of the show, the conflicts aren't seen as fake.

The most simplistic explanation of the MMA-pro wrestling crossover is that those fans want to see real fights, but that is only part of the story. If that was the case then the biggest events would likely be those featuring the most competitive fights. Instead the UFC's two biggest pay-per-views in history featured what were believed to be uncompetitive fights. No one thought Shamrock had a chance against Ortiz and few gave Ortiz much of a chance against Liddell.

The fact is that real fights is only part of the equation and perhaps a smaller part than is widely assumed. The results suggest that it is authenticate conflicts that people want to see. That is not to discount the value of the fights themselves, which provide authenticate dispute resolution, but it does go a long way towards explaining why 785,000 will pay to watch a short one sided affair between Ortiz and Shamrock, but roughly half as many, of the same audience, will pay to watch Anderson Silva v. Dan Henderson, a battle of highly regard fighters with no real conflict.

It's also why I expect UFC 83 to do better than expected on pay-per-view. The fight garnered a lot of momentum thanks to the hype surrounding the seemingly real conflict between GSP and Serra. Saturday night fans went home happy with that conflict resolved, however, anyone paying close enough attention got the rug jerked out from the under them by St. Pierre's post fight comments.

As an isolated incident the incredibly brief and relatively unnoticed comment is nothing to get worked up about, but breaking kayfabe on a regular basis is not a good idea for industry. The magic of the hype only works if the audience is allowed to believe that these conflicts are real or at least based in reality. The audience is generally willing to look the other way after the payoff (or resolution) when the hated enemies shake hands and compliment each other, as with Ortiz-Shamrock, but that wink-wink "burying of the hatchet" is different from being outright told they've been had.

So while building the fight and blowing minor conflicts into outright "hatred" is just part of the business, it's part of the business better left unsaid.

Other notes from UFC 83:

• Edge Shaving Gel became the company's latest main stream sponsor with a prominent place on the octagon mat.
  
• Michael Bisbing looked impressive at 185 pounds and would appear to be on the fast track as a charismatic challenger to Anderson Silva's invincible aura.
• Kenny Florian was a stellar stand-in for Joe Rogan and could be in play as Randy Couture's replacement as the third man in the booth.
  

4/19 Rec Sports DVD Sales Chart

Billboard's Rec Sports DVD charts for 4/19:

1. WWE: Triple H: The King Of Kings
2. NFL: Super Bowl XLII Champions New York Giants
3. WWE: No Way Out 2008
4. UFC 79: Nemesis
5. UFC: Best Of 2007
6. WWE: The Legacy Of Stone Cold Steve Austin
7. WWE: The Best Of Raw: 15th Anniversary 1993-2008
8. WWE: John Cena: My Life
9. WWE: Undertaker 15-0
10. WWE: Royal Rumble 2008
    

WrestleMania 24 Early Returns

WWE presented its biggest event of the year two weeks ago in Miami. The 24th annual installment featured Floyd Mayweather v. Big Show, Ric Flair's retirement match, and a main event pitting arguably the company's three biggest stars against one another for the WWE title. The Wrestling Observer Newsletter reported the following early financial results:

• Reported Live Attendance: 74,635 (4th Largest crowd in company history).
  
• Paid Attendance: Approximately 64,000 (unofficial; would also be fourth best in company history).
• Live Gate: $5,854,590 (all-time record for the company; also breaks the North American MMA record of $5,397,300 for UFC 66: Liddell v. Ortiz II).
• Pay-per-view: No estimate available, but with a price tag of $54.95 it is expected to become the highest grossing pro wrestling event of all time barring a very disappointing number. The event is widely expected to top one million buys.
  
• Total Revenue: Including gate, pay-per-view, and merchandise, Dave Meltzer estimated that the company could gross $61.5 million for the event.
  

Two interesting thoughts from the report for MMA:

1. When will we see the first major U.S. stadium show (excluding the disasterous K-1 show in the LA Coliseum)? The UFC loves the spectacle and there is nothing more spectacular than a well attended stadium show.
   
2. The power of recurring event branding has yet to be unleashed in MMA. The UFC has began establishing its December show as the biggest of the year, but hasn't chosen to do recurring branding for it or any of its events. When will MMA establish its Superbowl, World Series, Daytona 500, WrestleMania, etc.?

WWE No Way Out Draws 381,000 Buys

WWE is off to a hot start on pay-per-view in 2008. On the heels of drawing 561,000 for the Royal Rumble, the company drew 381,000 for No Way Out, up from around 200,000 last year. The company is averaging 431,000 buys per show heading into what could be a record setting WrestleMania.

Marshall's Law (Extended Version)

Yesterday MMAPayout.com featured an exert of an interview with Zuffa's Marshall Zelaznik. Bellow the interview is reprinted in full with the permission of Fighting Spirit Magazine. Specal thanks to Editor James Denton.

MARSHALL'S LAW

The head of the UFC’s UK division, Marshall Zelaznik, discusses expanding into Europe, taking cues from WWE, moving from Bravo to Setanta, Chuck Liddell fighting in London and a whole lot more…

FSM: First of all, tell us a little bit about your role and your responsibilities within the UFC.

Marshall Zelaznik: I’m the president of the UK division of the UFC’s parent company. We’re a British company, called Zuffa UK Limited, and I’m a director of that company, having relocated my family here. Our responsibilities in this office are to continue to push forward the UFC brand, to work on putting events together in the UK, and also to work with our TV partners and media outlets here.

Another element that a lot of people don’t know about is that we’re also responsible for the international deployment of the UFC beyond the UK and US. So when it comes to Asia or the Middle East or Continental Europe, we’re the ones out there talking to media partners and meeting with venues and putting UFC programming on television in those territories.

So those are the main objectives of this office, and then day-to-day a lot of our focus is getting the ticket sales together for events such as the O2 Arena in June, working on PR and dealing with foreign television rights holders, getting them all the information on our shows… so there’s a lot of administrative stuff behind the scenes that isn’t so sexy, but there’s a lot of sexy stuff that we get involved with as well!

FSM: You mentioned relocating to the UK from the US. How long have you been over here?

MZ: I joined the company in September 2006 after spending three years with a television and pay-per-view company in the States, called InDemand, which is how I got to know Dana White and Lorenzo Fertitta. My official start date was September 12 2006 and I was on a red-eye flight on September 11, of all days, flying to the UK to start my job.

So from my first day on the job in September 2006 I was here for a few weeks at a time, then back home for a week, just trying to get the office put together so we could hit the ground running last year, and I’ve been here permanently since January 2007.

FSM: As someone who’s still relatively new to the country, how have you found the difference between how British viewers consume television product as compared to Americans?

MZ: I think if you just look at sport, over here it’s football first and then it’s everything else. When I was in college in San Francisco, the American football team there is the 49ers and at the time they were winning every Superbowl and doing very well. And you would turn on the news there and there could have been a major assassination in the world, but the first story in San Francisco was always the 49ers.

It’s sort of that way here; if there’s a big story in the world of football, the news will open up with that. So I wasn’t quite ready for that. I always knew it was big, because I used to license European football in the States, but that was the one thing that really jumped out at me, and I always try to explain to my friends back home what it’s like here in terms of sport!

The other thing I’ve noticed is that TV consumption here, while there are some programmes that appear to be ‘appointment viewing’ – which means, “I’m going to be at home at eight o’clock on Sunday to watch Top Gear” – a lot of networks here ‘strip’ their programming. So if they like something, they give it to you every day and make sure you have it available to you, and then it might disappear for a while.

So the way they programme television here is a little bit different, and the appetite for sport and the way the news covers it is a bit different, certainly as it relates to football. But I don’t think there are that many significant differences in how viewers here consume television because if they like it, they want it, they can’t get enough of it. And we can see that on our website with the consistent traffic that our UK fans generate.

FSM: Obviously in the States, the UFC model is geared towards PPV consumption, whereas here the viewer is less inclined to pay for content on an individual basis, but more agreeable to paying for subscription-based content. How have you reconciled that difference between the markets?

MZ: It’s funny that you mention that, because if you speak to television executives in America, which I was doing for three years, they’ll you that PPV is dying. They were saying that from the day I first started until the day I left. Yet every year in the States, PPV revenue keeps going up and up – be it PPV movies, video-on-demand or one-off events like UFC and WWE. But you’re right, there’s a big difference.

You don’t know what came first in this, the chicken or the egg, but the UFC in the States was a PPV product because no one else would touch it, so it had nowhere else to go. But the irony is that the programme that made the UFC the beast it is now was The Ultimate Fighter, which is on free television. So the paradigm has been completely switched here, because we have a lot of free television partners that want the UFC, which we didn’t have in the States, yet there isn’t a great outlet for PPV here in terms of consumers willing to buy.

Which in a sense leaves us to create our own future here. Like you said, we think people will have an appetite to pay monthly, because they’re going to get more product than a one-off show. They’re going to get better value for money, which is one of the reasons we went to Setanta and the subscription model, and we think we can deliver good product that way.

FSM: How sympathetic are Dana and the guys back in the States when you try to convey that difference – are they sympathetic to the change in trends or are they still, “Gotta drive the PPVs, gotta drive the PPVs”?

MZ: I’m lucky because I have some television experience, so if I have a reaction or a feeling in the TV sphere, their reaction is usually to say, “Okay, we understand.” But that doesn’t mean we don’t have some good discussions about the best things to do with the UFC brand in the UK – and I don’t subscribe yet to the fact that it isn’t a PPV product here. We’re still getting people used to the idea of paying for the UFC, because for years they’ve had it free on Bravo.

But by doing the UK events, which have a special appeal, I think over time that the UFC will become a PPV product in this market, and the revenue will be substantial. Ultimately the decisions we make here and back in the States are made by Dana and Lorenzo, but they’re more or less willing to take my recommendation on what I think is best for the product. So I’m lucky that way, but maybe not so lucky, because if the shit hits the fan, I’m the only guy there holding it! But I’m okay with that.

FSM: If you look at WWE, for the last 15 years PPV broadcasts have aired here as part of the standard subscription package. But in the last few years, pay delivery has gradually been introduced and WWE has moved shows towards that model. Initially fans were resistant but, gradually, it’s become accepted and you’ve got shows like WrestleMania and the Ricky Hatton fight doing big buyrates.

MZ: Definitely. You’ve got to develop a desire, because we’re in a generation now where people are used to paying for what they want. Think about ringtones and internet content; people are willing to pay for what they want, now. And what we’re trying to do is educate the fans so they have a better appreciation for the sport, and then when we decide that we’re going to be on PPV again, people say, “I have to have this!” They won’t be offended at having to pay for it because the culture these days is to pay for what you want, when you want it – it’s very much an on-demand culture.

FSM: Dana infamously said last year: “I don’t think there’s anything profitable about the European market right now. We’re getting our ass kicked over there… But for this sport to grow, we need to move out to Europe.” How does that relate to what you’re doing – are there strict targets or deadlines, or things that have to happen for this expansion to be considered a success, or is it more organic?

MZ: It’s really organic. If you were to read through all the emails and documents on my computer, you’d never find one that said, “Your revenue goals are X,” or “your ticket goals are Y.” This is a product that lives and breathes with every day. When we launched in the UK we had a business plan that, at the end of the year, looked nothing like what we actually did this past year, in terms of the kinds of shows we put on, how we marketed them and the fighters we expected to bring over.

We’d done some forward planning but, at the end of the day, we made decisions kind of from the hip, which ended up putting us in the situation that Dana refers to. But there’s no arguing with selling out events, breaking merchandise records, having good ratings on television, doing good numbers on PPV, having enough success that just about every significant network in the UK wanted to licence our rights.

So while the overall profits may not have met the desired goals, I think the amount of revenue we created in this office is about where we thought it would be – it’s just that we spent more money! And we did that because we could see the upside of the market pretty early, based on how UFC 70 tickets were going, so we started spending to make sure we hit it out of the park.

That was an investment that will come back in the next few years, but overall there are no targeted goals here – it’s kind of, you’ll know it when you see it. I’m so optimistic for this year in terms of the measurable things like ticket sales, merchandise sales, total revenue and profits for this office. So for me we’re ahead of targets, when you look at the five-year plan when I sat down with Dana and Frank and Lorenzo Fertitta, back when we were flirting about me taking this job.

We’re ahead of the game right now and I’m very happy with the progress, and overall I think Dana and Frank and Lorenzo Fertitta are as well – otherwise we’d be all packing up and going home. Which isn’t going to happen, because my kid’s in school and I’m not taking him out!

FSM: Aside from the usual business barometers, how else do you measure the success of the UFC in this country, both as a brand and a young sport?

MZ: There’s really a lot of little pieces that make up the pie. The media acceptance is one of the more difficult ways to judge it – getting more stories in the periodicals and the daily news, and getting the news to cover us as an ‘official sport’. Once those things happen, that’s one of the best indicators of success – if we can start showing that we’re being accepted as a proper sport, that’s really what our goal is at the end of the day.

We’re lucky enough that we’re building a new sport here. It sounds kind of egotistical, but it really is; this is a new sport that’s being exposed to the world through the efforts of the UFC. In ten or twenty years, when this thing is bigger than it is now, I think all of us involved with it – who either reported on it early or were putting the shows together – will look back and say, “That was a big success, because look where it is now. It’s in every country – there’s a circuit of these shows going on, everyone wants to participate in it and no one can get enough.”

That’s the grand way to look at success, but for us I think it’s making sure that we’re perceived as a proper sport and that people will continue to buy tickets over time. We’re going to be in London again in June – are we going to be as successful as last time? All indications are that we will, but you never know. So it’s going to take a couple of years of having the success we’ve had, to know that we’ve been a success.

FSM: Getting acceptance from the press is an ongoing battle both here and in the US. How have you found the general reaction thus far from the mainstream media in the UK – does the “human cockfighting” mentality still pervade?

MZ: Well, anyone in the press or anywhere else that’s willing to close their mouth and open their eyes and ears can’t really argue with the statistics. But I do think the human cockfighting hangover still exists here, because every time you see a story written by a new journalist in a daily, inevitably that comment gets put in there – even though it was made in 1993.

I get it – it’s sensational. But I think the acceptance of the sport here is far behind where it is in the States. And we’re far from mainstream in the US, even though we have great success there. And while we have what I feel is great success here, we have more work to do and there’s a lot more education we can do. And that’s why we put our events throughout the region here, so that everybody in the media can get a chance to look at it, and our fans can see it up close and personal.

If you come to a show and you’re not a fan of it, that’s okay. It’s not for everybody – it’s just a matter of opinion and taste. But if you’re not a fan for the wrong reasons, then shame on you. Don’t dislike us because of some misconception, especially a comment that was made 15 years ago!

FSM: While it isn’t quite mainstream, the UFC has had extraordinary growth here. A big part of that has been the partnership with Bravo, which is an edgy, laddish, adult-focused channel. In July UFC programming moves to Setanta, which is a dedicated pure sports network. That’s a big step towards the legitimisation of the UFC.

MZ: It is, definitely. You asked about success, and part of our feeling about that deal was that it’s not just about money; it’s having people perceive us as a true sport. In the States we’re on Spike TV, which is very similar to what Bravo is; if we got a deal with a sports network in the US, it might do something to take us to the next level there. You never know, and we’re very happy with our relationship with Spike.

But here, we had Sky and we had Setanta and we had a couple of terrestrials all bidding for us. And it was flattering but, for me and for the group back home, the ability to be perceived with Setanta – which we felt was a hard-charging, young upstart – was a good fit for us, and it helps give us that sports legitimacy we’re looking for.

FSM: Okay, how big is it for the UK division to get Chuck Liddell fighting at UFC 85, on 7 June at the O2 Arena?

MZ: For us it’s massive and, for me, I’ve just got a huge smile on my face. I have a six-year-old son and he’s always wanted a chance to meet “The Iceman”, but because we’re here now and not in the States, it’s harder for me to get him the opportunity. So when I told him a few weeks ago that, “Hey, The Iceman is coming!” he was just so jakked! But for me as a fan, and as someone who’s pushing and shepherding the UFC brand, to be able to have arguably the biggest MMA star come and help us in our endeavour – I just couldn’t ask for anything more.

FSM: There was huge interest in the rumour that Brock Lesnar would be on that card, though his next fight is against Mark Coleman in August. But that interest and the WWE parallels we discussed earlier are representative of the crossover between pro wrestling and mixed martial arts. There seems to be a natural progression with many wrestling fans transitioning into MMA fans – what’s your take on that cross-pollination?

MS: I’m a believer in that, as I think all of us in the UFC are. I think there comes a point when a majority of WWE fans, as they get older, while they may continue to be WWE fans, they want something maybe a little more real. And they’ll ‘graduate’, which is one of the terms we use, to the UFC from WWE.

For us it’s great. Those fans are loyal – the WWE fan is a loyal, hardcore fan. And they know all the ins and outs of the wrestlers they like – what they’re doing, what their background story is, and they love the nuance of the sport and the entertainment factor. And so those are the kinds of fans that, for all the same reasons, are the core fans of the UFC – they can follow their fighters, they can see how they’re progressing as they get older, and they see how good they really are.

The other thing that’s good is that WWE fans are consumers in the biggest sense of the word – they’ll reach into their pocket to get their product, be it pay-per-view, merchandise or whatever. So for us, because we’re driven by a similar model, they’ve graduated to us and that means they’re used to paying for it on television, they’re used to looking online for information, they’re used to buying a t-shirt, so there isn’t a whole lot of re-education that has to happen.

So I do believe that there’s something to the WWE fan graduating to the UFC. But we’re lucky because we know that we’ll not only get some of the matriculating WWE fans, we have the ability to draw other sports fans – certainly combat sports fans and likely boxing fans.

FSM: Another parallel would be WWE’s long relationship with the international market – Europe and the UK in particular. Not only have overseas territories become as valuable, day-to-day, as the US market, when business is down domestically WWE has relied on its international business to compensate.

MZ: And it’s not just in sport and sports entertainment – it’s just about every product. Whether it’s Coca Cola or Kleenex, they all rely on these different markets, sort of a diversification of their US stock portfolio. Dana, Lorenzo and Frank are smart guys – they know that in order to be secure, they need to be pulling from every possible market, because inevitably you’ll have a downturn somewhere.

You’re right, WWE has mastered this, and we’d be crazy if we weren’t looking at that company’s success. And having worked with WWE when I was in PPV, they’re trailblazers in this field. Obviously our product is a little different, and we can pull from a wider demo, but Europe and the success WWE has had here is definitely on our mind, and we’d love to obtain that kind of success.

FSM: What other territories are you looking at in the near future?

MZ: Germany is high on the list, as is Italy, and of course France with its recent legalisation of MMA – those are the big three. Holland would make great sense for us with its great K-1 history, and then we’re looking at moving into Eastern Europe is part of our strategy, as well as the Middle East. But in the short term it’s Germany, Italy and France that are our top three targets.

FSM: A big part of your UK success has been Michael Bisping. If he hadn’t done so well on The Ultimate Fighter or in his first fight at UFC 66, would this expansion have been possible without him?

MZ: While he was ultimately a big part of it, I know from having been in the discussions that no one ever said, “Let’s go into the UK because we have Michael Bisping. And I think our instincts were right, because when we held UFC 62 in Belfast, the applause that Forrest Griffin got and the way he was received really confirmed that our fans here want to see the UFC fighters.

This is what’s unique, and Dana always says it: in boxing you’ll have such nationalism for a fighter that comes from your country, but the UFC – and again, it’s similar to WWE – they want to see the big stars and the best fighters. So not having Bisping probably wouldn’t have affected our rollout here – his success certainly made it a lot easier, but it was by no means the reason we came here. Of course, we’re lucky that he is the fighter he is and we’re glad we can rely on him!

FSM: Finally, There was talk last year of doing a season of TUF in the UK or possibly having some sort of UK-based TV magazine show. Has there been any movement in that direction, and where do you see the UFC here in a year or two’s time?

MZ: A TV product isn’t on the front burner right now, but it’s definitely something that we expect to do. It won’t happen this year, but my suspicion is that sometime in 2009, something like that will happen. Whether it’s a TUF or a UK Fight Night series, something is going to break so that we have what would truly be perceived as a UK product, as opposed to a product made in the US that can be exported to the UK.

In a couple of years? My belief is that we’ll be running four to six shows in the UK. We’ll be out in Europe running a couple or more shows a year. And, most importantly, that we’ll become an accepted part of the landscape of the UK sports scene.

Zuffa Executive Speaks Out on International Expansion and Pro Wrestling Crossover

Fighting Spirit Magazine has a very candid interview with Marshall Zelaznik, President of Zuffa's United Kingdom division, Zuffa UK Limited. In addition to overseeing the company's UK expansion, Zelaznik is also responsible for extending the UFC brand internationally. The interview is one of the most revealing and candid ever given by a Zuffa executive. The interview is now available in its entirety on MMAPayout.com.

FULL INTERVIEW: Marshall's Law (Extended Version)

Billboard DVD Chart

Billboard Recreational Sports DVD Sales Chart for this week:

1. NFL: Super Bowl XLII Champions New York Giants
2. WWE: The Legacy Of Stone Cold Steve Austin
3. WWE: Royal Rumble 2008
4. WWE: The Best Of Raw: 15th Anniversary 1993-2008
5. WWE: John Cena: My Life
6. UFC 78: Validation
7. WWE: The Shawn Michaels Story: Heartbreak & Triumph
8. WWE: Rey Mysterio: The Biggest Little Man
9. NFL: Favre 4 Ever
10. UFC 76: Knockout

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.

UFC Films?

Variety recently ran a major feature on the UFC in Hollywood touting the potential of MMA fighters to crossover as movie stars. The piece includes an interesting item concerning the UFC's interest in making feature films:

And investors have approached UFC's execs about forming a film division that would produce pics that star the league's fighters. WWE has a similar arm that's pumped out three pics so far and is readying its fourth.

UFC's owners wouldn't be opposed to producing movies. They've already talked with Michael Bay's Platinum Dunes shingle about developing projects that would star its athletes.

WWE's Film division has produced mixed results with weak returns at the box office, but strong DVD sales. With several other less risky revenue streams yet to be tapped, I would imagine that a full blown film division on par with WWE is a remote possibility at this juncture. However, a high profile partnership with a Hollywood studio would be a feather in the company's hat, both with the media and as a selling point for its star fighters.

WWE Royal Rumble Buy Rate

Preliminary pay-per-view estimates for WWE Royal Rumble 2008 project 561,000 buys according to a report released by the company last week. The number represents a roughly 10% increase over last year's event which drew 508,000 buys. In 2006 the event posted 575,000 buys.

The Royal Rumble is traditionally one of WWE's four biggest events of the year, along with Wrestlemania, Summer Slam, and Survivor Series.

Mayweather Lands $20 Million WWE Deal

Floyd Mayweather has signed with the WWE for a match against The Big Show at Wrestlemania. The deal is reportedly worth $20 million.

WWE has made celebrity involvement at Wrestlemania an almost annual tradition. Last year's event did record business thanks in large part to a celebrity angle involving Donald Trump. It will be interesting to see what Mayweather means to WWE on pay-per-view.

Birds of a Feather: Zuffa's Future in Light of WWE's 2007 Financial Results

World Wrestling Entertainment probably deserves more attention in the MMA industry than it receives. The company is the Zuffa's closest corporate comparable, not to mention growing evidence that suggests pro wrestling, not boxing, is MMA's true competition. Furthermore, Dana White is an admitted admirer of Vince McMahon and the similarities between the company's promotional models is undeniable. In many ways WWE is what Zuffa aspires to be.

This month WWE announced its results from the fourth quarter and full year of 2007. The headline number was an all-time record $485 million in full year revenue. That number represents a 17% increase over 2006.

The company posted a EBITDA of $77.8 million, up from $74.3 million last year. Excluding the $15.7 million loss the company took on a feature film, EBITDA would have been $93.5 million, a 26% increase over last year. For comparison, Zuffa is believed to have grossed $190 million in 2006, with an EBITDA of $76 million.

In looking at WWE's finances, compared with what we know about Zuffa's, it's interesting to see just how diversified WWE has become, which is perhaps an indication of where Zuffa's future lies. The company began, much like Zuffa, as primarily a live events and pay-per-view company, however, today those two sources account for only roughly 40% of its total revenues, compared to 75% for Zuffa.

Consumer products and digital media were WWE's growth leaders with each posting its own 24% increase in revenue over last year. Live and televised event revenue was up 8% with much of the increase attributable to increased international touring. Pay-per-view was relatively flat at $94.3 million compared to $93.6 million last year. That number includes Wrestlemania 23 which drew 1.2 million total buys and over 750,000 domestic buys.

The most obvious under developed revenue streams for Zuffa are in the area of merchandising and licensing. Zuffa appears to be moving in that direction with a video game in development and the mass mailing of a merchandise catalog last fall. However, it will be interesting to see how the company handles what may become a difficult situation moving forward as it tries to develop its merchandise business. Unlike WWE where performers get a cut of merchandise sales, Zuffa pays no merchandise royalties to its fighters per the exclusive ancillary rights clause in the standard Zuffa contract. That played a significant role in Randy Couture's dispute with the company and will become an increasingly sensitive issue as merchandise revenue accelerates.

Zuffa also has the potential for substantial growth of its television rights fees, especially if the company is able to establish a successful live weekly format scheduled to debut in 2010. WWE took in $92 million in television rights fees last year, principally for four hours of original weekly programming. In contrast, the UFC is believed to receive roughly $33 million per year in television rights fees from Spike for two seasons of the Ultimate Fighter, four live events, and a handful of new episodes of Unleashed under the terms of its recent contract extension.

Diversifying its revenue streams is particularly important for Zuffa because there doesn't seem to be much room for significant growth on pay-per-view, at least not domestically. It's hard to imagine the company can do much better than the 500,000 per show it averaged in 2006. In fact, many believe that is is unlikely to be able to merely sustain those numbers. Pay-per-view in the United States at this point is simply not a growth business.

Buys for typical shows should flatten out at best over the long term while there is room for growth on the mega shows (with two million looking like the ceiling base on Oscar De La Hoya's last fight). The realities of domestic pay-per-view are likely a big factor in the company's international push. WWE has already developed a very strong international pay-per-view business.

Like WWE, new media and international expansion are also key growth areas. For Zuffa, international expansion still seems a bit premature given that by White's own admission the company has only scratched the surface of its potential in the United States. However, it is becoming obvious that part of the company's urgency regarding international expansion relates to its major new media initiative with Yahoo!. White has consistently associated the two together in public, including in last week's announcement of Yahoo! as the UFC's online pay-per-view distributor.

As discussed before, internet pay-per-view has the potential to change the entire industry, a subject worthy of a discussion all its own.

The comparison between WWE and Zuffa takes on even more significance given a recent report in the Wrestling Observer Newsletter that WWE is at least investigating the possibility of entering the MMA space. This is not a new development, however, it has taken on increased scrutiny in light of rumors that the UFC may be for sale. The company has flirted with MMA before including a meeting with Dream Stage Entertainment about purchasing Pride last year and being solicited by Dana White in 2004 when the Fertitta's were considering selling the UFC.

It is interesting to consider the value of Zuffa in light of the recent sale rumors and the closely comparable relationship between the two companies. WWE has a market cap of $1.28 billion, roughly 16.4 times its 2007 EBITDA. Therefore, using Zuffa's reported 2006 EBITDA of $76 million, Zuffa would be valued at roughly $1.25 billion.

However, it should be noted that 2006 represented the company's best year and all indications are that 2007's EBITDA, and thus value, was significantly lower, perhaps as much as 50% lower. The company has also secured a $350 million secured credit facility since that time, which must be factored into valuation.

Perhaps most importantly, it remains to be seen whether or not Zuffa's current business model, the one that closely resembles the WWE, can be maintained going forward. Most within the industry believe that a model more closely resembling boxing is inevitable and there are growing signs that the company's current promotional model is under attack.

If true, Zuffa's window to become the WWE of MMA may be closing before it was ever really opened.

New Players, Familiar Faces

Several new players, with familiar faces, have either talked about or announced MMA plans in the last month. Some of the efforts look/have the potential to be more formidable than others. A quick rundown:

• YAMMA PIT FIGHTING - is Bob Meyrowtiz's long rumored project. Promises a new fighting surface with a focus on tournaments and "masters" fights. Seems ten years too late and ten times over the top.
  
• GOLDEN BOY PROMOTIONS - is reportedly exploring the space. Could be a major player thanks to its close ties to HBO and the sports establishment.
  
• AFFLICTION - the owners of the clothing line are reportedly in the process of putting together a promotion. Shot an Affliction "advertising campaign" featuring a Couture-Fedor stare down that resulted in a subsequent sponsorship ban by the UFC.
  
• DREAM - will replace Heros as K-1's MMA brand. Is a joint effort between K-1 and the former Dream Stage Entertainment staff that was ultimately laid off following Zuffa's purchcase of Pride. Looks like Japan's new premier MMA brand, however, the market's glory days appear to be behind it.
  
• WORLD WRESTLING ENTERTAINMENT - Perhaps the most interesting of the potential entrants. Had discussions about acquiring Pride last year and has came up as a potential buyer of the UFC in the Zuffa sale rumors. Dave Meltzer reported in this week's Wrestling Observer Newsletter that the company has recently started another round of information gathering on the MMA industry.