MMA Universe

Earlier today, Josh Gross from ESPN.com broke the news that the Federal Trade Commission has closed a non-public investigation into the UFC’s purchase of Strikeforce as of last week.

ESPN reports:

Documents published on the FTC website dated January 25, confirm the FTC’s Bureau of Competition conducted an investigation to determine whether the $34 million acquisition of Explosion Entertainment, LLC, by UFC’s parent company, Zuffa LLC, violated Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
…
In closing letters issued to counsel for Zuffa and Explosion Entertainment, FTC secretary Donald S. Clark stated, “Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed.”

The full letter from the FTC is below (H/T: FightOpinion.com):

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary

January 25, 2012

Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036

Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136

Dear Mr. Axinn:

The Federal Trade Commission’s Bureau of Competition has been conducting a nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.

Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed. This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take such further action as the public interest may require.

By direction of the Commission.

Donald S. Clark
Secretary

Earlier today, Yahoo producer Dave Doyle announced that this was his last day as MMA/Boxing editor over at Yahoo! Sports.

Doyle stated the following message via social media website Twitter:

Today is my last as MMA/boxing editor at Yahoo! Sports. It’s been an awesome ride working with great folks. Thanks for everything.

Sources tell MMAPayout.com that the cutting back on non-mainstream sports by Yahoo was due to their tumultuous 2011, which saw Yahoo’s stock dip under $17 and saw gross revenues decline by over 20%. Along with Doyle – who had been with Yahoo since 2007 – another key member of Yahoo’s MMA team is long-time MMA and Pro Wrestling reporter Dave Meltzer, who has also been a part of Yahoo since it ramped up it’s MMA coverage in 2007. His contract is also up this week.  At this time, it is unsure whether Meltzer will be able to continue his affiliation with Yahoo Sports, as the struggling company tries to workout it’s budget for the new fiscal year.  Longtime Boxing and MMA reporter Kevin Iole and Cagewrite Blog members Steve Cofield & Maggie Hendricks are reported to be staying with the team.

Yahoo will now shift their coverage to more mainstream sports ( NFL, NBA, and MLB) instead of those that are more niche such as combat sports (MMA/Boxing), Golf, and NASCAR.  Rumors of a possible shakeup within Yahoo! Sports first began around the Summer last year. The dismal fiscal results in 2011 made sure those early rumblings came to fruition.

As for Yahoo’s 2011 fiscal results, Forbes stated the following:

“Even with gross revenues declining by over 20% in 2011, Yahoo’s Q4 2011 results were hardly a surprise, as the company completed a tumultuous year filled with leadership and investor squabbles. For now, CEO Scott Thompson has acknowledged that the company has to deliver more monetization on digital content in 2012, which is a must for Yahoo to stop its shrinking presence in the online ad space.”

Yahoo will now try to focus on it’s core business, which will include selling off foreign assets and letting non-performing Yahoo! properties go, as Yahoo’s CEO Thompson has stressed “effective allocation of capital” is a priority moving forward.

This isn’t the only mainstream sports media shake-up that has impacted MMA recently.  In November of 2011, AOL’sMMAFigthing.com was sold to Vox Media – parent company to SB Nation- as AOL struggled to compete with media giants Google and Facebook in the last few years, a problem Yahoo has also been facing.  A few days later, USA TODAY Sports Media Group (Gannett) made the announcement that they had acquired MMAJunkie.com, one of the biggest MMA media sites in the industry.

The New York District Attorney and Attorney General filed separate motions to dismiss two claims in Zuffa’s lawsuit in New York City. While the lawsuits seek to dismiss only a portion of the UFC complaint, it appears that the defendants are leaving open a motion to dismiss the entire complaint in total at a later date.

Courtesy of the Fight Lawyer, the two motions are below:

Attorney General’s Motion to Dismiss(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "http://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })();

District Attorney’s Motion to Dismiss(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "http://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })();

Payout Perspective:

The crux of both arguments appear to be that despite Zuffa’s claims, the fact remains that New York had a rational basis for enacting the ban at the time it was drafted. And based on this, the statute was not vague and overbroad as it relates to the due process and equal protection claims. They cite to case law which supports the theory that despite changes over the years that may, arguably, antiquate a statute’s purpose, under a rational basis review of a law, so long as there was a rational purpose for it at the time of its introduction it is valid.

Both motions argue that the proper forum for Zuffa’s claims is with the legislature and that if Zuffa wanted to enact change, it should direct its efforts to the legislature.

Via the District Attorney’s motion to dismiss:

…as a proper exercise of judicial restraint, federal courts must uphold a statute that was rational when enacted, even when post-enactment developments cast doubt on the wisdom, logic, or providence of prior legislative decisions

It also argues that legislatures are given “substantial latitude” when it comes to enacting laws under a rational basis review of the law as “imperfections and even inequality must be tolerated.”

The defendants’ motions are persuasive and could set the dominoes in line if the court grants the motion to dismiss Zuffa’s claims. As indicated in its motions, both parties contemplate a further motion to dismiss the rest of Zuffa’s claims if it is successful with this motion.

The UFC’s Executive Vice President and General Counsel Lawrence Epstein wrote an op-ed in Sunday’s Las Vegas Review Journal in defense of the UFC’s position in favor of SOPA. On the same day, the UFC web site was hacked in what is believed to be a response to the UFC’s position on the bill.

In addition to its support of the controversial SOPA bill, Epstein’s editorial argues in favor of the Protect IP Act (PIPA). A bill supported by Nevada Senator Harry Reid – a friend of the UFC.

Overall, Epstein’s piece attempts to find common themes that the reader would agree with (stealing is bad, it hurts the economy and hurts American businesses) before coming to his point  that the UFC is against piracy of its PPVs. The piece uses the UFC as an example of a U.S. success story.

Via the Las Vegas Review Journal:

The UFC itself is an example of American innovation. The Fertitta brothers, who are Las Vegas natives, along with their friend, Dana White, co-founded today’s UFC by rescuing a dying company from bankruptcy. They cleaned up the sport by inviting clear, enforceable regulation of fighting events, put their own livelihoods on the line and created a new market (with thousands of jobs) where none existed prior. That is exactly the kind of entrepreneurial engine that our country needs, especially now.

The op-ed also indicates that the UFC “contributes more than $300 million” to the economy. It also argues that there must be a rule of law to regulate online sites from stealing from businesses like the UFC.

Payout Perspective:

The timing of the op-ed piece is interesting considering the SOPA boycott occurred earlier this  past week. As a result, a scheduled vote on SOPA this week has been put off. The UFC’s position on SOPA is of no surprise as Lorenzo Fertitta sent a letter of support to the bill’s sponsor last November. The WWE was another company in favor of the legislation.

Still, the placement of the editorial is interesting considering the timing. But the actual intent of the piece lacks persuasiveness. A better use of the editorial would be to acknowledge the strong opposition but assert the reasons why SOPA protects intellectual property rights of many companies including the UFC. It does get into its position a little. But mostly we get a broad American values editorial which carries no weight. While there are certain political lines that the UFC is trying to straddle with its position, it could have asserted its support of the controversial legislation while carving out its reasons. Since a big portion of the UFC’s target audience are those that would support a protest of SOPA, it would make sense for the UFC to explain itself in better detail.

As some believe, Sunday’s “hacking” of UFC.com could have been a result of the UFC’s position. While the UFC will be concerned from an online security perspective, it should also look at it from a PR perspective. For the UFC, this may not be as easy as it seems. The UFC has been aggressive in its stance against illegal streaming and distribution of its fights. In supporting SOPA and PIPA, it sees legislation that can assist in its fight against online piracy. But, opposition to the laws, which include many young, internet savvy individuals – the same people that likely follow Dana White and many other UFC fighters on twitter, utilize social media and embrace the online community oppose the restrictions that would come with the proposed laws. We will see how SOPA and PIPA will evolve and if the UFC will continue to support it.

Welcome to another edition of Payout Perspective. This week we look at the UFC’s return to Brazil in which Jose Aldo defended his featherweight title against Chad Mendes.

Aldo finishes Mendes and celebrates in crowd

Jose Aldo’s explosive power was on display as a knee coming out of a clench ended Chad Mendes’ title shot. After the fight, Aldo ran into the crowd which provided a great moment albeit a gasp for UFC security.

Realistically, Aldo’s security breach is much ado about nothing. He knew that he had the crowd behind him and he wanted to celebrate with his fans. Sure, someone could have done harm to him, but as I stated, he knew his audience. If someone wanted to do harm to him, they could have done so on the walkout. While the trampling of fans may have occurred, it seems as risky as when fans storm the court or field as they do in football or basketball. Do fans feel concerned when a Green Bay Packer does a “Lambeau Leap” after a touchdown? Yet, this was a “teachable moment” for UFC security for next time. It was awkward seeing Aldo trying to shake UFC security as he was trying to celebrate. Even Reed Harris tried to step in to direct Aldo back to the cage.

For Aldo, he’s cleaned out the Featherweight division. It will be interesting to see what he’ll do next. A possible superfight with Frankie Edgar (or Ben Henderson) would be a great matchup and something that could be promoted as a battle of current division champs.

Belfort chokes out Johnson

What a bad trip for Anthony Johnson. A failed weight-cut, losing a portion of his show purse, a first round submission and Johnson returns to the United States without a job. Johnson weighed in on Friday at 197 pounds for his middleweight fight. That means he was 11 pounds over (considering the 1 pound allowance). Belfort, understandably would agree to take the fight if Johnson weighed no more than 205 pounds on Saturday. If Johnson didn’t make it, it certainly would have killed the top end of the PPV. Fortunately, he made weight Saturday.

Still, making Dana White sweat the night before whether one of his fighters would make weight was the likely nail in the coffin for Johnson’s UFC career.

Johnson has had past problems with cutting weight. He definitely is a chiseled athlete, but an athlete that should fight at 205.

For Belfort, its another step back toward Anderson Silva’s title.

Attendance and Gate

According to the Wrestling Observer (subscription required), the attendance at the HSBC Arena garnered 10,605 paid fans for a gate of $2.8 million. The arena is said to hold 14,000 so we may extrapolate the number of comps assuming the arena was at capacity.

In Brazil, UFC 142 was seen on Globo, its top-rated network. Although the three live fights were shown between 12:45am to 2:00am, it garnered 23 million viewers (Wrestling Observer).

Bonuses

MMA Junkie reports that the bonuses were worth $65,000 each. Edson Barboza won KO of the night for his spectacular spinning heel kick of Terry Etim. Barboza and Etim also won Fight of the Night. The leg lock machine, Rousimar Palhares won for submission of the night.

UFC Prelims on FX

This was the first time that the UFC Prelims appeared on FX and it received an 880,000 viewer average. The ratings were lower compared to its regular showings on Spike TV. We will try to update you with the UFC 142 Countdown rating  on Fuel.

Sponsorships

The Octagon included MetroPCS, Xyience, Burger King, Bony Acai, Manguinhos Refinaria, and IntegraMedica with Bud Light in the center of the Octagon. In addition to these sponsors, the UFC advertised its upcoming video game UFC Undisputed in the Octagon.

Burger King also ran a promotion with Anderson Silva in which he would have lunch with a fan that won a contest for what the Spider should do to celebrate 1 million twitter followers. The Burger King sponsorship has only been in Brazil but we shall see if the relationship will extend to the United States.

KMart is back with the UFC as it placed a voiceover at the beginning of the first round of each fight for its new promotion offering $10 off for UFC 143. It was a nice form of brand activation as its logo and the promotion reminded viewers at the beginning of each first round on the PPV.

MMA Junkie reported on soccer clubs getting into the sponsorship of UFC fighters in Brazil. The UFC was said to be cautious about the newfound sponsor money due to the intense rivalries between the clubs.

Along with his normal pre-fight sponsor banner, Belfort had another banner in honor of his kidnapped sister. He also spoke about the rash of kidnappings in Brazil at the post-fight press conference.

Silva also participated in the UFC’s #Hunt4UFC promo where he gave out tickets to lucky fans.

It will be interesting to see how much value the Brazilian sponsors such as IntegraMedica and Manguinhos will bring to the UFC and vice versa.

Odds and ends

-Another set of fights which ended with first round stoppages. UFC 134’s main events all ended in the first round and the same occurred for UFC 142.

-Aldo’s crowd surf and Barboza’s heel kick were featured on Deadspin right after the fights. Barboza’s heel kick made number 3 on ESPN’s top plays of Saturday night.

-No word whether there were any glitches with the XBox Live platform as many of those shut out of UFC 141 were given 142 for free.

-For you pro wrestling fans, Aldo’s run in the crowd, reminded me of DDP of WCW fame heading into the crowd after a match.

-Mike Pyle embraced the “heel” role in his victory over Brazilian Ricardo Funch as he egged on the crowd after his victory.

Conclusion

UFC 142 was a success from the perspective of its further ties with its Brazilian fan base. There were many PR events during the week including UFC fighters taking surf lessons and open workouts. No doubt the UFC has reengaged with the fans and it bodes well for local viewership of the first international Ultimate Fighter held in the country this year. But, the U.S. buy rate will not reflect the same as it ran opposite the NFL Playoffs. In addition to the playoffs, the fact that this card catered to Brazilian fans meant less known names to the U.S. fan base which will affect the final buy rate results. We also have the factor that a lighter weight division was at the top of the card which has meant (in recent history) a lower buy rate.

The UFC released its response to ESPN’s feature on fighter pay. Dana White introduced ESPN’s full-length interview of Lorenzo Fertitta and called ESPN’s story “a piece of trash.”

The response video is what the UFC calls the unedited version of Fertitta’s interview which implies that ESPN edited its story to fit with what it wanted to portray. In the UFC’s response, Fertitta points out that some of the boxers featured on ESPN’s Friday Night Fights received $275 and that the UFC pays its lower tier fighters much more than that.

Seems like a good comparison but for the fact that the UFC and boxing structures are different. Also, ESPN’s role in its Friday Night Fights is not the same as the UFC’s.

Bad Left Hook sets us straight:

First of all, ESPN is not a fight promoter. This is an enormous difference. For a UFC card on FX, the UFC is pretty much in control of everything. ESPN just airs fights. They have the right to turn down a proposed fight, but that’s about it. Everything is really up to the promoters of the actual fight card.

Fertitta claims, and I’m sure he’s telling the truth, that someone fought on Friday Night Fights in a four-round bout for $275. What Fertitta doesn’t reveal — or perhaps does not actually know — is that anyone in a four-round fight that winds up on the broadcast, on TV, was positioned in a swing fight that was going to air only if there was time remaining in the two-hour time slot. There are no four-round fights purposely scheduled to air on ESPN’s series. A four-round fight is the lowest level of professional boxing, and frankly to call the majority of four-round bouts “professional boxing” is kind of a stretch; the fighters don’t often resemble what we’re used to seeing on TV, even from the middle-of-the-pack guys that get on ESPN or HBO or Showtime. It’s kind of like comparing high school football to the NFL most of the time.

Additionally, Scott Christ reiterates the sentiments I have had when the UFC-Fox deal became a reality:

UFC wants to play with the big boys in sports now. That means attention from big boy sports media, and that inevitably leads to criticism and a realistic assessment of their product and their business. The rah-rah days are dying, and it’s because of White’s ambition as much as anything else. He’s brought them here. Now they have to accept where they’re at and what comes along with that standing.

How much Zuffa revenue goes to fighters is another issue in the fighter pay debate. Dave Metzler points out that without the financial information the percentage of revenue going to fighters is a moving target:

In an attempt to use figures based on Zuffa’s percentage of an 800,000-buy show, which is the rough industry estimate on UFC 141, the $3.1 million live gate, using listed fighter pay, announced bonuses, estimates of unannounced bonuses, and percentages of pay–per-view revenue built into the main eventers’ contracts, give you a very rough figure of 28 percent going to talent. However, for the Jan. 7, Strikeforce show in Las Vegas, with a very small gate figure and a full roster of fighters to pay, that figure could easily have been in the range of 50 percent.

Metzler goes on to assert that pro wrestling, not boxing, is a closer business model to the UFC:

The closest business model to UFC is that of World Wrestling Entertainment, which is believed to pay in the range of 13-15 percent of its total revenue to its performers. While some will argue WWE is a form of performance art and not a real athletic competition – and thus the performers don’t deserve as much money – the dollars WWE derives from its performers, who take a legitimate physical pounding, is every bit as green as those which UFC makes.

Payout Perspective:

I think the UFC response (minus Dana White’s usual pleasantries to opposition) is compelling but it obviously has some flaws. From a purely PR standpoint, its a good response to the ESPN piece. What would have helped the UFC in its response is if the UFC had some up and coming fighters state how much they are paid and agree that its great. Realistically, I think the UFC could have done this because I’m sure some fighters are just glad they are getting a shot.  Having Serra, Liddell and Griffin talk is fine but they are all “company men”; well-established, past champions of the UFC.

If you didn’t read Metzler or Christ’s great piece over on Bad Left Hook, most people exposed to this debate would look at the UFC response and say, “Hey, that’s true. What about boxing’s pay?” But, its hard to compare the UFC to other sports league due to the difference in business models. The fact remains that with success comes scrutiny. ESPN, like every other TV investigative show, likely had an agenda when interviewing Fertitta. That does not necessarily mean ESPN is bad or “hates the sport.” But, it means that the UFC should be aware of the issues it now faces with more exposure.

ESPN examined the question of fighter pay in an article published earlier this week as well as a piece on its investigative show, “Outside the Lines.” OTL ran Sunday morning as it discussed issues of fighter wages and whether the UFC is a monopoly.

Dana White has denounced the article and promised a response. As MMA Fighting points out, White will likely point out factual errors with the piece but some of those errors deal with the fact that Zuffa, as a private company, does not have to disclose financial information which would reveal how much revenue Zuffa generates. The number could show how much it shares with its fighters. The OTL feature compares revenues of other leagues (NBA, NFL and NHL) with the percentage it shares with its players. However, that information is not publicly known for the UFC.

The article specifically looks at fighter pay in the UFC. No other organizations are featured in the piece to compare or contrast. Notably, the piece takes issue with the relatively low pay that entry-level UFC fighters receive – $6,000 a fight. On the other hand, Georges St. Pierre and Anderson Silva make millions per fight with GSP making between $4-$5 per fight. Its not clear whether this amount is the base or (more likely) after inclusion of sponsor, bonus and PPV cuts.

The ESPN article also interviews an unnamed UFC Figher which revealed the following:

“Training expenses in an average year can run $22,000, and that’s with no travel. For a typical fight, you and your corner man share a room. You fly in on Tuesday and leave Sunday and get a $50 per day per diem. If you bring anybody extra, they take it out of your show money.”

He also indicated that locker room bonuses range from $5,000 to $10,000 although most are $5,000. These are the bonuses that are not included in the  salary payroll or 3 bonus categories.

The article shows the difficulty in covering a very sensitive subject. In the ESPN and OTL feature, no UFC fighters would publicly comment with their name. As one fighter put it, “It would be the end of my career.” While ESPN does speak with a “Fighter X” no names are attached so Zuffa could still dismiss the claims made. Also, Ken Shamrock and Ricco Rodriguez have had past troubles with the UFC. Zuffa could easily claim their opinions are merely ones of spurned former employees.

Another issue to point out is that entry-level fighters still have training expenses such as gym, trainers, nutritional supplements and travel. These things are usually covered for top tier guys by sponsors or are written into their contracts.

Some interesting notes from ESPN’s interview of Lorenzo Fertitta:

• Since 2005, the first year the UFC became profitable, the company has paid more than $250 million to its fighters.
• 39 UFC fighters have become millionaires as a result of their earnings from the company.
• 29 fighters on the current roster receive a cut of pay-per-view profits.
• Since 2005, fighter pay has grown at twice the rate of revenue growth

MMA Payout will have more on the issue later this week. The story shows the great divide between entry-level fighters and the main event fighters. Its interesting that the question of a fighter union is not discussed more. Of course, if any fighter tried to put together an effort to unionize, they would be blackballed.

There is the argument that Zuffa is like any other private company. Entry-level workers start out with less pay while the best workers make the most. The company can decide how much (or how little) the worker is paid and what type of pay raise or bonus they may receive. The worker can take it or leave it.

With the UFC trying to move into the mainstream, we’ll see if this issue receives more scrutiny.

The Fight Lawyer reports on the latest from the Zuffa lawsuit in New York. Notably, the New York AG and the New York DA will file a motion to dismiss on the issues of due process and equal protection but the First Amendment issue will not be contested in the motion.

On January 5, 2012 a status conference was held:

Minute Entry for proceedings held before Judge Kimba M. Wood: Status Conference held on 1/5/2012.  Defendants will submit a limited motion to dismiss addressing only the issue of whether due process and equal protection analysis requires the Court to determine whether there was a rational basis for the law at issue only at the time it was passed, or whether the Court must determine whether there is a rational basis for the law at present (in other words, whether the Court should take into account a change in factual circumstances that makes the law no longer rational, even if it had a rational basis at the time of passage). Defendants’ motion is due 1/27/12. Plaintiffs’ reply is due 2/17/12.Defendants’ response is due 3/2/12. (js) Modified on 1/9/2012 (tro). (Entered: 01/06/2012)

Payout Perspective:

It will be interesting to see the arguments in the motion. The minute entry appears a little confusing upon first read considering the court will consider whether a law can become constitutionally irrational. But, it appears that the Court will decide whether the MMA Ban is rational now based on the current state of MMA or whether it was rational when the law was introduced in 1997.  A breakdown of the due process and equal protection claims are 3, 4 and 5 in the lawsuit addressed here.

As the Fight Lawyer commented in his post, its a limited motion and there is no mention of the First Amendment claim.

One has to wonder whether the defendants believed that Zufffa’s First Amendment claim would survive a motion to dismiss at this point or whether its strategy is to prevail on its limited motion first prior to addressing the other claims in the lawsuit.

The lawsuit filed by Golden Glory against Alistair Overeem in Clark County, Nevada last week included the Golden Glory-Overeem contract.

As The Fight Lawyer points out, this lawsuit is not the same as Overeem’s lawsuit filed in Los Angeles in November. A summary of that lawsuit is here. However, both lawsuits relate to the contract dispute the UFC Heavyweight had with his former gym.

The contract attached to the Nevada lawsuit is interesting insight into the terms and conditions Knockout Investments (KOI) and Golden Glory (GG) had with Overeem. An initial impression is that it was not drafted by an attorney and has certain clauses which seem one-sided and unenforceable. Yet, we presume that Overeem signed the contract with knowledge of its terms.

Here are some interesting tidbits from the Nevada lawsuit:

- The 2007 contract with Overeem was set for 5 years. KOI/GG would receive 30% of essentially everything made by the fighter.

- In paragraph 34 of the Complaint, it states that Overeem receives $2.00 per view for views over $500,000 in the United States, Canada and online. Later in the Complaint, it claims that Lorenzo Fertitta told Overeem that the $1 million signing bonus was Overeem’s and that KOI/GG was “ripping him off.”

- The terms of the UFC contract also includes a $1 million “signing bonus” paid over the first 3 fights of Overeem’s contract. Overeem’s contract guarantees the first 3 fights and could “potentially” cover 8 fights. Here, it appears that the UFC has the option to pick up the additional 5 fights.

- In addition to the UFC-Zuffa contract, the Complaint indicates that there is a separate Merchandise Rights Agreement. No known value was stated although its believed to be in excess of $100,000.

- Overeem made $50,000 from sponsorships from his June 2011 fight with Fabricio Werdum. Of which, KOI/GG demand 30% or $11,000. In addition, Overeem did not pay KOI/GG its cut of Overeem’s fight purse for the Strikeforce fight. Basically, Overeem was paid for his June Strikeforce fight and withheld payment to KOI/GG because he believed that his then managers owed him money.

- Article 10 of the contract includes a monetary penalty for violation of the contract. A $10,000 penalty plus a $5,000 per day penalty for each day the contract is in violation. It also states that the fine “can’t be lowered by any legal authority.”

Here is a further explanation of the Nevada lawsuit from F4WOnline (subscription required):

Knock Out Investments claimed that due to Overeem’s existing five-year contract with them that was signed in 2007, they are entitled to 30%. 30% of [Overeem’s] pay between all the money he got for UFC 141 is $684,000, so they are fighting for a huge chunk of change. They also alleged Overeem never paid them their 30% from the 6/18 fight with Fabricio Werdum. Overeem had already, in November, filed suit against Knock Out Investments, claiming they owed him $151,000 prior to the Werdum fight based on fights he already had, and asked for a court order stating that due to that, his contract should be null and void. Prior to the Werdum fight, almost all of Overeem’s fight money, whether it was from Japan or previously with Strikeforce, was sent to Knock Out Investments and then after they got paid and took their cut, they paid their fighters. Zuffa, after purchasing Strikeforce, refused to continue that practice, stating that they were going to pay fighters and not management teams. At one point Zuffa even fired all of the Golden Glory fighters, including Overeem, because Golden Glory made the demand that they wanted the money to be paid to them. After firing a number of fighters, Overeem included, Golden Glory relented and agreed to let Zuffa pay the fighters. By that time Overeem had been fired and removed from the Strikeforce tournament, and at the time nobody knew the future of Strikeforce and Overeem would have been far more valuable on the UFC side.

“The reality is that a fighter is paid within 24 hours of the bout,” wrote Knock Out Investments attorney Roderick Lindblom. “Given past failure to pay management and training fees, there is serious concern on my client’s part that Mr. Overeem will simply walkaway with the money.”

An explanation of what occurred regarding the failure to recoup UFC 141’s payment is here. Essentially, a surety bond needed for garnishment after the order was issued was never secured.
Payout Perspective:

One has to wonder why Overeem agreed to some of the terms of the contract and whether he had his own legal counsel look over the contract. Notably, Overeem was granted a $1 million signing bonuses (spread over the course of 3 UFC fights) after he was released from Strikeforce. What interests most people with the terms of Overeem’s Zuffa-UFC contract is the PPV points he received for UFC 141. Its rare that the general public get to see the portion fighters receive for PPVs. One might assume that Brock Lesnar received more of a portion of the PPV revenue due to his status with the company.

Welcome to another edition of Payout Perspective. This time we look at a special Friday night event from the MGM Grand in Las Vegas, Nevada which featured Brock Lesnar versus Alistair Overeem.

Overeem kicks Lesnar into retirement

There’s a reason why Lesnar went off as the underdog in Vegas. It was uncertain how Lesnar would do considering he came back from diverticulitis once again. The fight was a no contest for Overeem as one kick to the gut and Lesnar was done for the night.

Classy speech by Lesnar at the end of the fight. It was the right thing to do as his last two fights have been very disappointing. For Overeem, JDS is next in what should be one of the bigger cards of 2012.

Diaz boxes out Cowboy

A lot of trash talk before made this co-main event something to watch. Indeed it was the most interesting match of the night. Diaz used the “stockton slap” as the Cowboy just stood in front of him in the first round. Cerrone used some leg sweeps to score some points but did little actual damage to Diaz.

An impressive outing for Diaz as he’s moving up in the lightweight division albeit he came in at 157 pounds.

Hendricks knocks out Fitch

Johnny Hendricks left hand was lethal as he flirted with the UFC’s fastest KO record with a knockout of Jon Fitch. A disappointing end for Fitch who was coming back from shoulder surgery. The stoppage was warranted as Fitch went limp and Hendricks was right on top to deliver more punishment if he the fight wasn’t stop.

Hendricks puts himself in line for a title shot. He’s not in the express line to a shot but is definitely someone that should be taking a step forward in the next year.

Attendance and Gate

MMA Junkie reports that UFC 141 drew a reported 12,158 fans for a reported $3.1 million gate. The figures, as custom, were given by Dana White at the post-fight press conference. The numbers fall well short of the top 5 draws in MGM Grand history but it did much better than last year’s UFC 125.

Bonuses

The bonuses were $75,000 each and went to Johnny Hendricks, Nate Diaz and Donald Cerrone. Hendricks was the obvious choice for KO of the night while Diaz and Cerrone earned fight of the night honors. There were no submissions so no sub of the night.

Countdown to UFC 141 debuted on Fuel TV a week before the event and garnered a poor 15,000 viewers. Hopefully, the January 1st UFC marathon helped with marketing of the network as the new place for the UFC.

Salaries were released earlier than normal by the Nevada State Athletic Commission because lawyers for Golden Glory obtained an order to garnish the salary of Alistair Overeem. Of no surprise, Brock Lesnar topped the list. Overeem was set to earn $385K but was asked to garnish roughly 30%. However, it was revealed Monday that no bond was posted to garnish the salary as required by Nevada law. So, Overeem was able to receive all of his earnings. This will make the litigation between Overeem and Golden Glory much more contentious.

Sponsorships

Clothing brand RYU and wireless service provider MetroPCS became sponsors of the UFC this month. RYU was a sponsor to the “backstage camera” and MetroPCS had signage in the Octagon. RYU also sponsored Jon Fitch. Unfortunately for Fitch, the RYU walkout shirt was seen much more than on his shorts as the fight lasted just 12 seconds.

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With the addition of MetroPCS and Gina Carano’s new movie, “Haywire,” the regular sponsors (SafeAuto, TapouT, Harley Davidson, Toyo Tires, Bud Light) were in the Octagon. Speaking of Haywire, Carano was in attendance and was interviewed about the movie.

Harley Davidson pumped up its Hometown Throwdown contest again.

MusclePharm had a special graphic shown during the tale of the tape before Overeem and Lesnar.

The Cowboy has used his hat to put sponsors on each side of the hat in the past and now he’s used under the brim. Way to use the real estate. Maybe that’s why he got so upset that Diaz flicked it off his head.

Jimy Hettes had sponsors AzadWatch.com and Palooka.com as sponsors. I noticed these two sponsors since they were on the back of his fight shorts and maintained dominant position on Nam Pham most of their match. Good placement for the two sponsors.

It was announced prior to UFC 141, that Lesnar signed an endorsement deal with Everlast. I wonder what impact his retirement will have on the deal?

Post-UFC 141 Headlines

Lesnar retires, what now?

With the retirement of Brock Lesnar, the UFC lost its top PPV draw. A Lesnar card meant 1 million PPV buys was a certainty. With his departure, and the absence of GSP for most of the year and Anderson Silva out until at least June, the UFC is in a precarious PPV position as its lost its top three stars for the first half of 2012. Jon Jones could be the next PPV breakout star.

But, perhaps as when teams go without its star, it makes the rest of the team stronger and better. This can be a time that the UFC can build up its existing stars (Jones, Edgar, Diaz). Of course, Rashad Evans is another top PPV draw but will be on the Fox broadcast on January 28th. His next fight (fingers crossed) will likely be the long-awaited bout with Jon Jones sometime this summer (maybe Memorial Day weekend). What will the PPV buys look like in the first half of the year?

Young fighters impress

Jimy Hettes and Alexander Gustafsson made statements in their fights on the main card of the PPV. Hettes was impressive in his fight with Nam Phan and Gustafsson took care of the Vladimir Matyushenko. Both of these guys look to be moving up the ranks of their respective divisions.

Odds and ends

-Why no Joe Rogan post-fight interview for Jimy Hettes? He deserved some mic time.

-After Diaz flipped Cerrone’s cowboy hat earlier in the week, Diaz gave Cerrone his beanie after their fight. It looked like Diaz wanted Cerrone to give him his cowboy hat kind of like an exchange of opponent jerseys in soccer.

-The last live event on Spike occurred with little or no mention that the UFC-Spike relationship was ending. Of course, if you are Spike, you are still showing the UFC library so why mention it.

-I was in Canada last week and noticed Rogers giving a top 5 of Lesnar’s greatest fights. It was interesting to me that the number 1 moment was his win over Frank Mir and they showed his infamous rant after the fight (“going to have a Coors Light because Bud doesn’t pay me” and “get on his wife” comments). That’s something they would not play in the US anymore.

PPV issues

This was the first time that XBox users could purchase a UFC events through its XBox Live platform. As a promotion for this, XBox gave away 30,000 free PPV passes to watch the event.  Unfortunately, technical difficulties destroyed the opportunity for anyone to access the UFC on XBox. To make amends, the UFC promised all that purchased the event on XBox, it would be able to see another UFC event for free. The problem with this, is that consumers are now weary of this method of watching the PPV and less likely to use this platform. We see that there are some glitches in the system and the UFC must fix them, restore trust and address this PR problem as well.

In addition to the XBox problem, I received notice that Rogers in Ontario, Canada had technical difficulties as well. People that purchased the PPV were refunded money as the cable operator acknowledged the problems.

These problems do not bode well for the overall viewership of the PPV. Even with Lesnar at the top of the card, the final number could have been better but for these issues.

The number one business story of the year was the UFC-Fox deal as mixed martial arts entered the mainstream with its 7 year, $90 million television rights deal.

The deal was an upgrade from its $35 million a year deal with Spike TV. The longtime relationship between the UFC-Spike relationship deteriorated this year with passive aggressive moves. Spike debuted UFC 132’s Countdown show during the middle of the day instead of its usual primetime placement. It also counterprogrammed UFC’s live Versus card in June with a marathon featuring main eventer (at the time) Nate Marquardt. And, of course, there is the issue of the UFC library rights.

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Fox immediately marketed the UFC’s November 12th debut with promos during MLB and NFL games. It also ran its UFC Primetime show on an NFL Sunday to encouraging ratings.

The UFC on Fox Payout Perspective details the huge ratings Fox received for the 1 hour program which featured approximately 1 minute of actual fight action. It was the most watched UFC event ever.

FOX TV Rating Breakdown (Quarterly):

- UFC on FOX (9:00 pm-9:15 pm): 5.25 million viewers

-UFC on FOX (9:15 pm-9:30 pm): 5.48 million viewers

-UFC on FOX (9:30 pm-9:45 pm): 7.09 million viewers

-UFC on FOX (9:45 pm-10:00 pm): 4.88 million viewers

- Overall: Average of 5.7M viewers watched the fight live or via DVR playback within the same day. (Nielsen)

Via UFC press release:

The hour-long UFC on FOX premiere scored a 3.1/5 household rating/share, with 5.7 million viewers making it the most-watched UFC event ever and the most-watched professional fight of any kind on any network since 2003 when 7.0 million tuned in to watch Lewis-Klitschko on HBO.  Velasquez-dos Santo is also the highest-rated and most-watched professional fight of any kind on a broadcast network for OSCAR DE LA HOYA’S FIGHT NIGHT on FOX. (4.3/6, 5.9 million viewers) in 1998.

FOXSports.com, one of the world’s leading sports web sites with almost 30 million unique visitors monthly, also delivered substantial viewing for UFC-related video.  On Saturday, FOXSports.com tallied an impressive 257,000 total live streams for the nine undercard matches, while all UFC content during and around the event generated over 1 million streams.  Other than Super Bowl-related content, this was the biggest video event in FOXSports.com history.

The number of live streams on FOXSports.com is notable as its not usual that we see these numbers for the UFC Facebook streams. It shows the impressive numbers the UFC put up on multiple platforms.

In addition to Fox and online, Fuel TV and Fox Deportes had solid ratings for the UFC’s debut. Spike TV also put up huge numbers as it played past UFC fights of JDS and Cain opposite UFC on Fox.

We will see how the UFC-Fox relationship does in its first full year. UFC on Fox 2 is set for January 28th and Spike TV is set to counter as well. It will be interesting to see how the UFC will do on Fuel and FX. We’ve already seen a potential problem with Fuel TV as the UFC 141 Countdown show only garnered 15,000 viewers for its debut. Hopefully for Fuel TV, its January 1 UFC marathon will raise awareness that it is the new home for UFC programming.

The second biggest business story of the year shook the state of MMA. In March, Zuffa purchased its biggest rival, Strikeforce.

It was reported that the purchase price was $40 million which included some debt repayment by Zuffa for Strikeforce. The deal occurred as Silicon Valley Sports and Entertainment, main financial backer of Strikeforce, wanted to refocus its business on its NHL, the San Jose Sharks and other business. It is also believed that it may be trying to acquire an NBA team to San Jose.

Excellent coverage of the purchase is here and here is the text of the official Zuffa press release. Prior to Zuffa’s purchase, MMAPayout learned that there were other bidders for Strikeforce but Zuffa came up with the biggest monetary deal.

Prior to the purchase, Strikeforce was in the midst of its Heavyweight Grand Prix which was supposed to create interest in what was arguably the best divsion in the sport. Surely, Strikeforce execs were hoping for a Fedor-Overeem Final. Fedor’s upset loss to Bigfoot Silva made the GP less appealing. And, a futile effort to hold a card in Japan for its HW Grand Prix caused a delay in the tournament.

From the start, Zuffa stated that UFC and Strikeforce would operate separately although Zuffa execs (you know who) would provide input on its show starting with its April 9th show. The constant talking point was “Business as usual.”

But, that’s not the case as we’ve seen numerous Strikeforce fighters move over to the UFC. Notably, Strikeforce welterweight champ Nick Diaz. Other fighters such as UFC 141’s main eventer Alistair Overeem came over to the UFC after time fighting in Strikeforce. In addition, some Strikeforce staff were let go and replaced by Zuffa employees. Finally, Scott Coker has lost a lot of power in the new regime as it appears from interviews that he no longer has any say with the direction of Strikeforce.

Recently, Strikeforce and Showtime agreed to renew its television contract which was somewhat of a surprise considering the fact that many believed that Strikeforce would be consumed by the UFC.

It will be interesting to see the Strikeforce product in 2012. How will it compete, or complement the UFC product? Who is the face of Strikeforce? Certainly, a Gilbert Melendez and Mo Lawal would have fit in nicely with the UFC creating interesting fights. But, it appears that they will be in Strikeforce for at least the next year.

Links to MMAPayout coverage regarding the Zuffa-Strikeforce purchase can be found here:

- Zuffa Purchases Strikeforce, Agrees to Blockbuster MMA Deal

- Mystery Strikeforce Third Bidder, Early Signs Of Sale, & UFC Purchase Notes

- Exploring Why SVSE Walked Away from Strikeforce & MMA

This year Zuffa offered its 400 fighters in the UFC and Strikeforce health insurance beginning this past June. Zuffa is paying the premiums for all of its fighters under contract.

The accident-insurance coverage covers up to $50,000 (annually) of medical costs for each fighter. Its an unprecedented move to cover fighters and its a sign that the organization is moving in the right direction if it wanted to be thought of as a major league sport.

So far, fighters have taken advantage of the health insurance without any issues. Cub Swanson became the first fighter to utilize the health insurance one day after it went into effect.

While insurance may not be the most exciting business story of the year, it is one of the more important ones for the fighters covered.  A fighter’s health is very important from the business side of things as we know from this year’s constant reshuffling of main events. Insurance may alleviate some of the concern for the mid to low tier fighter that is concerned about what happens if they are hurt while training for a fight. While the $50K may not cover a serious surgery or procedure, it still helps with the  financial burden placed on fighters that likely fought without insurance prior to Zuffa’s coverage.  In a related story, this week, Combat Sports Insurance announced an accident-related insurance policy that would allow any pro MMA fighter to receive insurance for just “a little over $20  month.”

Injuries have plagued 2011 as many of the UFC’s top stars have had to postpone or delay fights this year.

GSP, Brock Lesnar, Jon Jones, Frankie Edgar, Gray Maynard and Rashad Evans are just a sample of the fighters that were scratched from PPV cards due to injury. This does not even touch upon the number of fighters on the undercards that have been shuffled due to injury.

Lorenzo Fertitta acknowledged this fact in a recent LA Times interview.

Via the LA Times:

…but our biggest issue lately has been 11 of our last 14 main events have fallen out and required replacement fighters. It’s like there’s been a hex over us. So it’s been a challenge to run the business how we’ve planned to.

Fetitta indicated that if the UFC gets a run of of good health (and is able to book the fighters and fights it can), then the business will take off.

Injuries haven’t helped with the PPV buys for the UFC. This year we saw a decrease in PPV numbers and only two shows (UFC 126 and UFC 129) reached 500K PPV buys. In 2010, 11 PPVs scored 500K or better.

If the Brock Lesnar factor holds true, UFC 141 would be the only UFC PPV this year to go over 1 million PPV buys.

At the beginning of the year, Dave Metzler believed that 2011 would be a rebuilding year for PPVs. But, he cited the need to build up the bantamweight and featherweight divisions and building new stars as reasons for smaller PPV numbers. Jon Jones is a new star that the UFC hopes to build into a PPV attraction. However, the PPV numbers do not reflect the bantamweight, featherweight or lightweights gaining traction as main eventers. As an example, the third fight between Frankie Edgar and Gray Maynard at UFC 136 received only 225K PPV buys.

It will be interesting to see how 2012 will fare on the injury front. We already know Anderson Silva will not be available until mid-2012. This will delay a guaranteed PPV draw, a potential rematch with Chael Sonnen. Also, GSP will be out until late 2012 and the division will have an interim champion in the meantime.

We will see if the UFC tries to push Jon Jones to the forefront as a PPV draw. Also, how will the UFC utilize the flyweight division. And, will the lighter weight divisions draw. We shall see at UFC 142 as Jose Aldo fights Chad Mendes in the main event.

Of course another factor in addressing the PPV buys is PPV fatigue. There will be 16 PPVs this year with a PPV almost a bimonthly happening. Its hard for a fan to pay over $100 bucks a month in PPVs in addition to their normal cable/satellite bill. Couple the economic factor with the injuries to main events, and its a combination which likely led to the lower numbers.

Photo via LA Times

The Culinary Workers Union Local 226 became one of the biggest opponents of the UFC in 2011. It has helped opposed the legalization of professional MMA in New York state and has requested that the Federal Trade Commission investigate Zuffa for possible antitrust investigations.

In late August, the union sent a letter to the FTC requesting that it look into Zuffa’s acquisition of several of its competitors:

The letter goes on to point out that since 2001, Zuffa has acquired four of its key rivals (Pride Fighting Championship, World Extreme Cagefighting, the World Fighting Alliance, and most recently Strikeforce earlier this year.  They also state that through some independent research performed in 2008, Zuffa controls 80-90% of the mixed martial arts market.

Specifically, the letter points out that Zuffa has preserved and strengthened its dominance in the market through their unwillingness to co-promote events as well as anti-competitive contractual restraints placed on their contracted fighters.

As most know, the union’s beef with Zuffa stems from the Fertittas ownership of its Stations Casino. A failed attempt to unionize the workers at the Stations Casinos is the reason why there is staunch opposition to the legalization of MMA in New York. Lobbying efforts by the Culinary Workers have stifled efforts for passage of legislation allowing the UFC in New York.

USA Today reported in October that the union contacted Anheuser-Busch to boycott the UFC for “a history of tolerating homophobic conduct.” In addition, the Union has done the following to get its message across:

• Backing anti-MMA legislators in New York.

• Calling on the Federal Trade Commission to investigate UFC parent company Zuffa, which the union accuses of using monopolistic tactics to thwart competition from other promoters of mixed martial arts.

• Launching a website designed to highlight White’s use of vulgar language.

It will be interesting to see how much more the Culinary Workers will go to lobby against the UFC. The recent Zuffa lawsuit is a way around the union and lobbyists opposing MMA. So far, nothing is being reported about an FTC investigation of Zuffa and we will see if 2012 gives us any findings from the FTC about Zuffa and the claimed anti-competitive practices.

Viacom purchased a majority stake in Bellator this fall and announced that it would move its newest purchase to Spike TV in 2013.

With the UFC looking for a new network dance partner most of 2011, many believed that Bellator would make the move to Spike. The purchase of Bellator confirmed the speculation.

Spike TV has the rights to the UFC library through 2012 and it was thought that Zuffa would purchase the library from Spike but that notion has died down. Spike.com began airing the preliminary fights of Bellator events this year as well.

Ironically, Dana White embraced the Viacom move as the UFC believed that the purchase would ease an FTC investigation and any notion of Zuffa monopolizing the MMA industry. Instead, White described the UFC as a “mom and pop” in comparison to Viacom.

With the Viacom acquisition, it will be interesting to see how much of an investment it puts into Bellator on Spike. Talent acquisitions, production for Bellator programming and marketing should be at the top of the list for improvement for the organization.

Where would the world of sports, and sports reporting without twitter? The UFC has been on the cutting edge of social media at made twitter a requirement for its fighters.

Starting in June, the UFC announced quarterly bonuses for fighters using twitter. As part of its Fighter Summit held in May, the UFC held a workshop for fighters on utilizing twitter. The first quarterly bonuses came out in November with fighters receiving $5,000 each. The UFC intends to expend $240,000 in annual twitter bonuses.

While the UFC promotes its fighters to use twitter to promote the UFC, there are pitfalls to twitter usage. Forrest Griffin, a winner of one of the twitter bonuses, was criticized for a tweet he sent about rape. Griffin quickly apologized and donated money to a rape crisis center. Dana White defended Griffin in explaining away the tweet.

In contrast to Griffin, Miguel Torres was fired for a tweet in which he referenced a line from FX’s “Its Always Sunny in Philadelphia.”

And, as always ,Dana White is very active and outspoken on twitter. The phenomenon of twitter continues to help and hurt UFC stars (as well as other sports stars) as there is no filter and the user must self-edit their thoughts lest they get caught in PR problems like Griffin and Torres. We will see if fighters change their twitter usage in 2012 or will they continue to push the envelope to gain more followers.

Fuel TV will officially kick off the new year by airing a 24-hour marathon of UFC programming on New Years Day, which will feature five show premieres. This will also officially kickoff the partnership between Fuel TV and the UFC, which Fuel claims will air more UFC programming than any network ever.

FUEL TV (http://www.fuel.tv), FOX Sports Media Group’s dynamic entertainment and sports network for males, officially kicks off the Ultimate Fighting Championship® (UFC®) on FUEL TV January 1 with a 24-hour marathon of UFC programming featuring five show premieres. In 2012, FUEL TV telecasts more than 2,000 hours of UFC programming, with more than 100 hours of live fights, weigh-ins, preliminary bouts, and pre- and post-fight shows. In the New Year, FUEL TV offers more UFC programming than any network has ever offered.

“We’re beyond excited for the monster launch of the UFC on FUEL TV and can’t wait for the ball to drop on New Year’s so we can finally unveil all this incredible programming,” says George Greenberg, FUEL TV Executive Vice President and General Manager. “On January 1, FUEL TV becomes the number-one television destination for UFC fans. We’re going to deliver amazing live fights, FOX-style pre- and post-fight shows with expert commentary, insightful news shows with exclusive material and powerful documentaries that followers of the UFC have never seen before.”

“We’re excited that FUEL TV will become the ultimate destination for UFC programming in 2012,” says Dana White, UFC President. “We knew when we made the partnership with the FOX Sports Media Group that FUEL TV would allow us to put on more programming than every other network. If you’re a fan of the UFC, you’ve got to have FUEL TV.”

In addition to five shows premiering on January 1, FUEL TV launches “UFC Tonight,” the official news and information show of the UFC hosted by Todd Harris, on Tuesday, January 3 at 10:00 PM ET. The first Live UFC Weigh-in (UFC RIO™: ALDO vs. MENDES) is Friday, January 13 at 1:00 PM ET, followed by the first Post-Fight Show on Saturday, January 14 at 1:00AM ET. FUEL TV features the first Preliminary Bouts for UFC® on FX: GUILLARD vs. MILLER on Friday, January 20 at 6:00 PM ET.

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 LIVE UFC Programs on FUEL TV in January:

January 13, 1:00 PM ET
Live UFC Weigh-in: UFC RIO™: ALDO vs. MENDES
UFC’s biggest and baddest stars weigh-in and face-off live before a night of epic battles inside the Octagon.

January 14, 1:00 AM ET
UFC on FUEL TV: Post-Fight Show – UFC RIO™: ALDO vs. MENDES
Jay Glazer and today’s top MMA analysts recap the night’s bouts, serve up exclusive fighter interviews, and talk about ‘what’s next’ for the winners and losers after the big fight in this one-hour show.

 January 19, 5:00 PM ET
Live UFC Weigh-in: UFC® on FX: GUILLARD vs. MILLER
UFC’s biggest and baddest stars weigh-in and face-off Live before a night of epic battles inside the Octagon®.

January 20, 6:00 PM ET
UFC on FUEL TV: Preliminary Bouts – UFC® on FX: GUILLARD vs. MILLER
Witness the next generation of UFC stars rise as FUEL TV kicks off a night of unforgettable action, featuring three hours of MMA’s hungriest and most promising fighters. If you want to see the battles that make up-and-coming fighters into household names, you don’t want to miss the prelims on FUEL TV.

January 20, 11:00 PM ET
UFC on FUEL TV: Post-Fight Show – UFC® on FX: GUILLARD vs. MILLER

 January 27, 5:00 PM ET
Live UFC Weigh-in: UFC on FOX

January 28, 5:00 PM ET
UFC on FUEL TV: Preliminary Bouts – UFC on FOX

 January 28, 10:00 PM ET
UFC on FUEL TV: Post-Fight Show – UFC on FOX

January 31, 9:00 PM ET
Countdown to UFC® 143: DIAZ vs. CONDIT

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NOTE: Fuel TV’s New Year UFC marathon will repeat the above mentioned programing (8 hours block) for the entire day.

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Payout Perspective:

This will be a great way for Fuel TV to kickoff the New Years and celebrate the recently signed TV deal with the UFC. Fuel TV is a network who’s sole purpose is to draw young males by airing entertainment and sports programming geared towards that demographic.  A deal with the UFC stands to benefit Fuel TV greatly, as it hopes to increase it’s reach from the 36 million homes that was previously estimated before signing the TV deal with the UFC.  Since then, Dana White claims that the channel has increased it’s reach by 11% and that now 38 million homes have access to the channel. Yahoo Sports reports:

“I think that was part of Fox’s strategy in signing the UFC. They’ve gone up 11 percent since we signed the deal with Fox, and they’re in 38 million homes.”
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While White is confident that more cable and satellite providers will add Fuel, it won’t hurt for fans to call and politely ask for it.
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“I think it’s already happening. The announcements that we made have people [expletive] at their cable companies since we made the announcement.”

Besides being in about 62 million homes less than Spike TV, Fuel and FOX are banking on the UFC’s popularity and their hardcore loyal fanbase to make the switch from Spike and increase the channel’s reach and low ratings.  That task will not be an easy one in 2012, as Spike TV will still own the UFC’s library which prevents Fuel TV from airing any UFC programming that has already aired on Spike TV until the deal ends in 2013.  Even more daunting, Spike TV plans to use UFC programming to counter-program future UFC on FOX, FX, and Fuel TV events by featuring fighters that those platforms will already be promoting for those events. Spike retaining the UFC library throughout next year only makes it that much harder for Fuel TV gain traction with UFC fans, who most consider the UFC to be synonymous with Spike. Until the library rights are given back to the UFC, it will give a number of MMA fans many reasons to delay the inevitable transition to the FOX platforms to catch live UFC programming outside of PPV events.

Just last week, Spike TV announced “Ultimate Fridays”, which will feature the best of TUF to directly counter-program the new seasons of TUF on FX.  It also previously announced that they would counter-program UFC on FOX 2, which they also did for UFC on FOX: Velasquez vs Dos Santos – the UFC’s network debut on FOX. According to Spike, the programming they put around the FOX event on Spike TV did very well rating’s wise, averaging around 800k-900k viewers.

All things considered, business is business for the Viacom owned network. Spike TV President Kevin Kay said it best in a recent interview with Sherdog:

“The deal [is] there’s a tail-end year of the library, and we pay for it. And we pay a good price for it. So we have to use it, and we’d be foolish not to use it…That’s our job. Our job is to use this library and monetize it.”

UFC 129 in Toronto was the company’s first stadium show which set records for attendance, gate and bonuses. The bonuses were the biggest ($129,000) in recent memory. It also held the first of two UFC Expos held this year. In the end, the UFC had a substantial impact on the economy in Toronto.

The card featured the showdown between GSP vs. Jake Shields, Jose Aldo vs. Mark Hominick and Randy Couture (in his final match) vs. Lyoto Machida.

UFC 129 was the biggest PPV buy of this year (excluding UFC 141) with 800,000 buys. We will see how it does in January for UFC 142 as Aldo headlines the card.

UFC 134 in Rio De Jineiro, Brazil was a return for the company. The show was a sellout and similar to Toronto, the crowd was hot during the entire show. Anderson Silva headlined the show by defeating Yushin Okami. Notably, the UFC promoted that it would air the prelims on a digital screen in the Little Brazil section of Times Square to watch the prelims. Unfortunately, due to Hurricane Irene, this promotion was thwarted.

Silva scored major sponsors for UFC 134 including a soccer club, Burger King and Nike. He also starred in a Budweiser commercial that aired in Brazil.

Bonuses were huge as well with every category winner getting $100,000.

Unlike 129, UFC 134 did not score as well with PPV as it only garnered 335,000 buys.

The UFC’s return to Toronto this December did not garner as much fanfare as 129 but received a nice PPV number of 480,000 buys worldwide.

These two shows paved the way for international expansion for the UFC. 129’s stadium show displayed the type of draw and economic impact it could have over an area when it comes to town and its Rio show spawned UFC 142 and the first international TUF.

For years, the UFC tried to lobby and legislate and now its time to litigate. Prior to its lawsuit, it presented an economic impact study, educated the concerned that MMA is safe and brought its top fighters to the state to rally supporters. Facing a roadblock, Zuffa decided to file suit against the state Attorney General and District Attorney of New York.

The crux of the lawsuit argues that MMA should receive First Amendment protection and that the New York MMA Professional Ban on the sport is unconstitutional. At this point, the defendants have until January to file its Answer to the Complaint.

Only speculation, but its likely that New York will attempt to dismiss Zuffa’s lawsuit. If this occurs, what would Zuffa do next? We should see in 2012.