MMA Universe

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.

MMA Fighting reported last week, Dana White reinstated Miguel Torres after he was let go 20 days prior for an inappropriate tweet.

Torres had sent a quote from FX television show, “Its Always Sunny in Philadelphia,” which caught the ire of White.

Via MMA Fighting:

A soft-spoken Torres said he visited five different rape crisis centers in the Chicago area, donating money and talking with the people there about the power his words have, even in an off-hand attempt at humor on Twitter, he said

Payout Perspective:

Although this occurred last week, its an interesting case of impulsive administration rectified. Another example of this occurred in October when Nick Diaz was taken off the UFC 137 card after no-showing two press conferences. He was then put back on the same card against BJ Penn.

Certainly, the UFC can do what it pleases in terms of disciplining its fighters. However, Torres’ dismissal appeared not planned out thoroughly. Its debatable whether Torres should have been fired for his tweet after Forrest Griffin had a tweet mentioning rape. But, Griffin is higher in the fighter food chain than Torres. The UFC could have just suspended Torres for a period of time. Realistically, a suspension has the same effect of discipline yet does not have the stigma of a termination. It would have still had the same message to other fighters to be weary of what you tweet.

From the standpoint of Torres, he was admirable in doing the right things to try to get back with the UFC. Its good to see someone that makes no excuses and is proactive with their career. Obviously, Torres’ underlying goal in visiting rape crisis centers was getting back to the UFC. However, the interview seems like Torres took away some valuable information.

The good news is that White accepted the meeting with Torres and then let him back in. With social media so much part of the UFC, it would be best if the UFC designed a set of rules for fighters to abide by so as to not get in trouble. Although this may have been hashed over at last year’s fighter summit, it appears that a refresher course may be necessary. As the UFC moves forward with its relationship with Fox, it must present and maintain an image to the new viewer. Standards and practices for fighter behavior should be known and not just subjective. There will be obvious cases where a fighter must go (Paul Daley sucker punching Josh Koscheck), but Torres case seems like the punishment did not fit the crime.

UFC 139’s weigh-ins last night provided some comic relief and three overweight fighters in preparation for tonight’s PPV. With some of the weigh-in comedy, one wonders whether the weigh-ins are now a place to work on fighters’ personal branding.

Remember when putting on a Jabawockeez mask to intimidate your opponent at the weigh-ins caused a near riot? It seems like the weigh-ins are becoming much more entertaining than just that.

Here are some highlights from yesterday:

-Danny Castillo wearing a tux which you could zip off from the back scored major points in the creativity department
-Tom Lawlor going Steven Seagal (shooting glasses and all). He also did his best Baron Von Raschke impression during the staredown as he gave the infamous claw. He also sported an XBox 360 shirt. In speaking with an XBox rep, Xbox is sponsoring Lawlor for its launch of the Kinect Sports 2. Demetrious Johnson remains as the only UFC fighter to be exclusively sponsored by XBox.
-Kyle Kingsbury and Stephan Bonnar hammed it up with a WWE-type posedown on the scales. With his patented fanny pack, Kingsbury is Zubaz and doo-rag away from being a 1980s wrestler from the Mid-South region.
-I’m not sure why more t-shirt sponsors of fighters allow the sponsored fighter to throw out free shirts to the crowd at weigh-ins. It gets your brand out there to the fans with the hopes of them coming back to purchase shirts. Of course the other side of that is the crowd is a considerable distance from the fighters. Thus, you get the Rick Story problem as he was unable to reach the crowd with some of his t-shirt throws. Since the NBA is out for some time, could the UFC borrow some of those t-shirt cannons to shoot out into the audience?
-Was Nick Pace confused in what division he was fighting in? Six pounds over really means that he should fight at 145 not 135.

Payout Perspective:

The weigh-ins seemed unorganized in terms of the actual weigh in. Whether there were issues with the scale or operator error, the weigh-ins seemed much more of an issue. Even though there were several fighters overweight, it usually doesn’t stop the pace of the weigh-ins. Also, it didn’t seem like the woman operating the scale knew about the one pound weight allowance as she grimaced each time she had to move the scale.

Similar to how the UFC wants its fighters to use twitter as a way to market themselves, the weigh-ins seem like an opportunity for fighters to promote themselves as well. Yes, the weigh-ins are usually something people pass over as its just guys getting on a scale. But, with a little more personality, it could be something that can be capitalized on in the future.

News broke last week that the UFC was planning to move the its PPVs back to a 7pm/10pm start time starting with December 30th’s UFC 141. In April at UFC 129, the UFC moved the start times up to 6pm/9pm to accommodate the east coast viewers.

In Jason’s perspective yesterday, he asked the question, “It would be interesting to know if the breakdown in PPV buys this year led the UFC to conclude that the 6pm start time did not influence PPV buys“.

I wondered the same thing, so I though I’d take a closer look at the numbers and try comparing buyrate averages leading up to the April 30th change to the subsequent events that followed.

So here I compared the buyrate averages from the 7 events prior to the change to the 7 events that followed.

UFC 121 to 128 covered the period between November 23 2010 and March 19 2011. The estimated average number of buys over this stretch was approximately 576,000. In comparison, UFC 129 to 135, which covered a time period between April 30 2011 through to September 24 2011 had an estimated 414,000 buys. That’s a decrease of 28% after the start time was moved up to 6pm/9pm at the end April.

NOTE: If we exclude UFC 121, we see a drop of approximately 17% after the change to 6/9pm (498k pre/414k post)

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Payout Perspective:

It’s hard to say for certain if this is the primary reason for the drop. There was a rash of injuries and health issues in the spring which effected main events and many argue that an over saturation of the product is causing consumer fatigue. But the move by the UFC signals they feel strongly that the change is having enough of an impact on their product that they are willing to revert back to the original start time less then a year after making the change.

Zuffa created a subsidiary called Forza LLC to control Strikeforce who was taken over from Silicon Valley Sports and Entertainment in March of this year. Since then, there’s been much debate as too whether Zuffa/Forza will continue to operate the promotion or just kill it off.

Strikeforces’ television contract with Showtime expires mid-February 2012 and both sides have been relatively quiet as to the future the promotions programming on the network. However, UFC President Dana White recently commented on the Strikeforce/Showtime situation at the UFC 135 pre-fight press conference:

“Who knows what’s going to happen? The way this thing works is, it depends on Showtime. The ball’s in their court. They need to decide whether they want to keep Strikeforce around or not”

Showtime has yet to comment on their plans moving forward. They do have an option to extend the deal through 2014, however, the ball that’s been left in their court doesn’t have much of a bounce left.

Over the past 5 months Strikeforce had their top draws cherry-picked by the UFC, an impressive list that includes former Strikeforce heavyweight champ Alistair Overeem, former welterweight champ Nick Diaz and Strikeforce light heavyweight champ Dan Henderson. It’s almost certain the Strikeforce lightweight champ Gilbert Melendez will join them. By hollowing out the promotions champions, Zuffa’s actions speak louder then words and Showtime should be getting the message now loud and clear.

So is there even a business case left for keeping Stikeforce around in 2012? Using the publicly available data we took a closer look at the performance of the two Strikeforce ownership groups, Silicon Valley, and Zuffa/Forza. We sampled data from the last 9 events under Silicon Valley ownership, between October 9 2010 to March 25 2011 that included 5 major tier 1 events and 4 smaller tier 2 Challengers events. We compared the average TV Ratings, Attendance, Gate and Payroll to the first 9 events under Zuffa ownership, between April 1 2011 and September 23 2011 that included 4 major tier 1 events and 5 tier 2 events.

Payout Perspective:

In the midst of losing their top talent, the rough estimation is that Strikeforce has seen TV ratings dip 5%, attendance drop 32%, live gate profits down 11% and an increase of 26% in fighters payroll since Zuffa took control in March 2011.

From Showtimes point of view, the ratings are stagnant and Zuffa is (or has) impeded the ability for Strikeforce to improve upon their ratings. Showtime is drawing approximately 2.5 times more viewers with boxing programming then with Strikeforce. M-1 Global, who also broadcasts MMA events on Showtime will air their next to last event on October 14th. With no word on a Showtime/M-1 contract renewal, perhaps Showtimes focus will shift solely back to boxing leaving the MMA programming by the wayside.

For Zuffa, they’re in a position where they have just signed a huge network television contract for the UFC with FOX, which includes distribution on the cable channels FX and Fuel TV. Plus, Spike TV appears set to continue broadcasting UFC content, counter-programming or not, throughout 2012. So for Zuffa’s primary brand there’s no shortages on the television front. There has been zero push for Strikeforce since the ownership change and none look to be in sight. The numbers aren’t terribly good and there is no momentum, I see little benefit for Zuffa to continue their support for Strikeforce. It’s plausible they would continue to broadcast Strikeforce on Showtime in an attempt to help limit potential competition but I think if Showtime is to continue with MMA programming, it won’t be under the Zuffa/Forza/Strikeforce banner.

With last week’s announcement of Cain vs. JDS as the match November 12th for the UFC’s network debut, the UFC is putting its faith in the Heavyweight championship to catch casual viewers. Its a smart move.

While the decision may take away PPV buys from UFC 139 in San Jose, it makes a good first impression with network television. First impressions are everything and a solid matchup for viewers was essential. Not only does the UFC want to make a splash with its first fight on network television, it will be competing with Pacquiao-Marquez III despite the promise that the Cain-JDS matchup will be over before Pacquiao enters the ring.

The UFC is selling the fight as an asset to a Saturday night of fights. It will serve as the de facto lead-in to the boxing PPV Saturday night. UFC has made it clear that its Fox debut will not interrupt fight fans from seeing both MMA and boxing main events the same night. While it will compete with the undercard of the boxing PPV, its hard to say that most casual fight fans tune into for a Pacquiao undercard. This will make the creation of the Cain-JDS undercard much more intriguing.  Does the UFC put up a solid undercard with known commodities? Henderson vs. Guida. Or, does it feature younger up and coming fighters (e.g., Rory McDonald, Edson Barboza) and push the likes of Henderson-Guida for UFC 139? Despite the Pacquiao main event, a strong Cain-JDS undercard could provide solid ratings and Zuffa could claim an overall win November 12th despite viewers tuning in to see Pacquiao.

Top Rank Boxing is targeting Pacquiao-Marquez III as the biggest PPV buy of Pacquiao’s career. Pacquiao-Mosley drew a reported 1.3-1.4 million buys depending on the source. In the past, he’s done 1.25 buys in fights with Oscar de la Hoya and Miguel Cotto.  (H/t Bad Left Hook) Is this a subtle message that Bob Arum wants to steal the night? It would be no surprise based on his distate for all things MMA and Dana White’s comments directed toward him.

For the UFC, White is seeking ratings higher than Kimbo Slice’s last Elite XC win against James Thompson in May 2008. MMA Mania reports that Slice’s KO of Thompson (remember the exploding ear) garnerd 6.12 million viewers with a peak of 6.51 million viewers. The Kimbo-Roy Nelson fight on TUF 10 received 5 million viewers as TUF 10 received the best ratings in seasons. As an aside, for as athletic and gifted fighters are in the UFC, the fights of a backyard brawler garnered the highest ever ratings in MMA. Does this say anything about the sport of MMA? About the perceptions of the public of the sport?

The marketing of the November 12th fight on Fox has already started. Promos have been pushed during MLB games on Fox this past weekend, there will be a Primetime special after NFL Football on October 30th and Fox promises a “tailgate” party as a lead-up to the fight in Anaheim.

Via MMA Mania:

…FOX today promised levels of promotion the likes of which the world’s largest mixed martial arts organization has never seen before. That includes a red carpet and tailgate party complete with celebrities and the big time feel you’ve come to expect from major sporting events like the Super Bowl.

A “Super Bowl” like atmosphere? This is a good sign for the UFC as Fox is looking to put the full force of its marketing machine behind November 12. That’s a lot of pressure for just one fight. Hopefully Cain-JDS raise their level of skill to match the expectations. But, an injury to either one can prove to be disastrous for all parties involved. Is there a backup plan if either Cain-JDS gets hurt in training? Certainly this has to be an issue considering the number of injury replacements that were needed on cards this summer.

As for the logistics, there’s a lot of details that need to be hammered out.

Via MMA Junkie:

Admittedly for the UFC, there are a lot of things to work out with the promotion’s first effort on FOX: Where the show will air internationally, how it will look, what first-time fans can expect in the way of an introduction to MMA, and, don’t forget, the bulk of the fight card.

If nothing else, tuning into Fox to see how the UFC product is presented and how it differs from Zuffa’s presentation will be of interest to UFC followers. Another issue is to see how receptive the UFC is to Fox’s input on its broadcast. While everyone is friends right now, we shall see what happens the first time the UFC and Fox disagree.

In response to a tweet, Dana White wrote that ESPN has always hated the UFC. He clarified this tweet with another one stating that Jim Rome was the only good thing about ESPN.

It appears that the reaction is due to ESPN cancelling White’s interview promoting UFC 134.

Via MMA Mania:

Sounds like an awfully strong reaction over a cancelled interview and perceived lack of coverage. Perhaps there is more to the story that we don’t know? After all, ESPN airs “MMA Live” each week, which features stories revolving mostly around the UFC.

This is even more odd when one considers how much coverage ESPN dedicates to sports that routinely air on FOX networks, such as football, both college and pro, baseball and auto racing. And if White wanted more coverage for the UFC, wouldn’t it be a bad idea to make disparaging remarks about “Worldwide Leader in Sports?”

Payout Perspective:

Typical response by White? MMA Mania is correct in writing that the reaction is over the top considering how much ESPN has covered the UFC. Not to mention Stephan Bonnar and Rashad Evans are mainstays with MMA Live and the networks has provided coverage of many UFC PPVs. It is also included it in ESPY nominations too. Also, the MMA page on ESPN.com is predominantly UFC-Strikeforce news. And, of course, the appearances by White and UFC fighters on Rome is Burning.

Perhaps its the glee of the Fox deal, but White’s comments seem blown out of proportion. Could ESPN be blowing off White as a passive aggressive way to get back at the UFC for the Fox deal? Maybe. This seems a little like when Spike played the premiere of UFC 132’s Countdown midday. But here’s an example of the ills of the social media. Think before tweeting. Telling ESPN off doesn’t help keep a relationship with Rome is Burning. After all, Rome is on ESPN.

On a broader scale, the Fox deal will be interesting to see if the UFC will need to reign in some of its language. In addition, what will the UFC do if a homophobic or sexist slur is made during a broadcast? Will it be “business as usual” or will there be a need to address the situation?

I am certainly not alone in my view that the reported seven (7) year Fox/UFC deal is monumental for the sport of mixed martial arts on a number of levels.  As Kevin Iole points out over at Yahoo!, Dana White is a winner because he has fulfilled a dream of taking the UFC to network television, Fox is a winner because it is tapping into a sport that appeals to the highly coveted 18-34 demographic, but “[n]o one, though, will benefit more than those who have turned the sport into what it is: its fighters.”

Perhaps this is implicit, but let’s not forget about the fans of the sport that will now be exposed to a better, more refined production that will be available, as I understand, almost every day of the week.  Add to this the increased exposure the sport will receive with people who are otherwise not familiar with its intricacies, and I think the fan base should grow exponentially in the coming years.

For me (and many New Yorkers) I believe there is also significance to this deal that should not be overlooked – indeed, it should be capitalized on.  As you may recall, on November 17, 2010, I wrote an article for MMA Payout, A History Lesson (or History’s Lesson) on Mixed Martial Arts in New York, where I traced the history of the sport and the circumstances that ultimately led to the ban on the sport in New York in 1997.  In this article, I pointed out that the key to reversing the ban, in my view, was to increase exposure through, inter alia, the mainstream media to convince the public that this sport is not what it once was.

Regrettably, New York politics is a tricky beast, i.e., even though the votes are there to pass the bill that would legalize mixed martial arts, the political process (if we can call it that) has derailed the bill year-after-year.  This is not dissimilar to the political situation in the late 90s where the votes were there to make the sport illegal but the then Senate leader was preventing a vote on that bill.  Ultimately, the New York Times jumped on the legality of what it deemed barbaric and this and the resulting public reaction led to a complete 180—mixed martial arts went from legal to illegal virtually overnight.

Now (as then) I think the commitment by Fox, a major network based out of New York, to the UFC and mixed martial arts can help shine the light on, and expose, the superficial, strawman arguments of the opposition, e.g., Assemblyman Bob Reilly.  Once the public understands the sport—and New Yorkers understand that the state is losing money to neighboring states because it fails to sanction a sport that is not only legal in 45 states but is on network television, the pressure to put the bill to a vote should overwhelm any purported countervailing forces at play.

While I realize Zuffa tentatively plans on doing the first Fox event in Anaheim in November, New Jersey would be a solid option to show both Governor Cuomo (and New Yorkers) that mixed martial arts is here to stay both in our backyard and on network television.  This could be monumental for New York as the budget process gets underway.

Fight Lawyer

Justin Klein is an attorney at Satterlee Stephens Burke & Burke LLP in New York City where he concentrates his practice in commercial litigation and represents clients in the fight industry.  He regularly addresses current legal issues that pertain to combat sports, including efforts to legalize MMA in New York, at his Fight Lawyer website.  He is a licensed boxing manager with the New York State Athletic Commission as well as the founder and Chairman of the Board of the New York Mixed Martial Arts Initiative, a non-profit organization that gives inner city youth the opportunity to experience the emotional and physical benefits of martial arts training.  Justin lives in New York City where he trains in jiu jitsu and boxing.

DISCLAIMER

The information in this post and on my site consists of my opinion only, i.e., it is not the opinion of my employer or anybody else. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the articles, the reader should not consider information on this site to be an invitation for an attorney-client relationship.  I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site or my site to send me e-mail containing confidential or sensitive information.

Earlier this week Bellator CEO Bjorn Rebney stated that middleweight free agent Nate Marquardt “just isn’t a good fit” for Bellator. Marquardt’s rejection is just the latest problem in the career of one of the best middleweights in the world.

Via MMA Junkie:

Rebney confirmed he and Marquardt, as well as the fighter’s representatives, discussed the possibility of a Bellator deal. However, he declined to comment on the specifics of the discussions and wouldn’t reveal the exact stumbling blocks. Admittedly, though, it was worth a shot.

Payout Perspective:

Its interesting that Rebney turned down the deal knowing that Bellator’s Ben Askren and Hector Lombard have called out Marquardt. Speculation is that money was the likely “stumbling block” for Marquardt to come to Bellator. While Rebney did not rule out a superfight with Askren/Lombard, he indicated that despite Marquardt’s pedigree, he’d have to enter the Bellator-style tournament to earn a shot at Lombard.

On another note, its interesting to see the MMA community beat up (via social media) a guy that’s been caught and punished. Even Dana White called him a “nice guy” despite giving Marquardt his walking papers (via social media no less). I don’t recall that many fighters calling out Chael Sonnen with his situations (TRT and legal issues). Could it be that fighters knew that if they called out Sonnen he would return verbal grenades and then some a la Keith Olbermann?

So what should Nate do next?

Fight Back…Or “tweet” back.  He’s already engaged in a twitter war with BJ Penn. Another fighter critical of Marquardt. While this strategy is entertaining to read as it unfolds, there’s little value to sending hate tweets to all your critics. Shift Focus. In a way, Ben Askren, Hector Lombard and BJ Penn have helped Nate Marquardt. While each has called out Marquardt, it has given him the opportunity to shift focus.

Also via MMA Junkie:

Some of the fighters that think they’re so cool and tough by kicking a guy when he’s down. As far as my career, this has been one of the worst times of my life, and these guys are calling me a cheater and talking crap. I’ve taken note as to who those guys are, and I’m going to come for them. Eventually, I’ll get them. I don’t care if it’s in a superfight or if they want to come down to my gym. I’ll beat them up for free.

Good fire from Marquardt. The TRT issue is over, he’s no longer suspended and he’s setting his sites on people that have tried to kick him while he’s down. While the quote has a hint of LeBron James, he can refocus the attention on fighting.

Sign with a regional promotion and thereby take a paycut. Its easy to tell Marquardt to take a paycut, since we aren’t affected by it financially. But, if there is any chance to return to the UFC. he has to show that he is willing to start from the bottom once again. Even though Bellator turned down Marquardt, there are still some promotions out there that would be willing to give “the Great” a shot. With that being said, Marquardt and his reps would have to pick a promotion where the competition is decent. Lay low for  a while and stay mum. The most passive strategy of them all. But, people will forget about the steroid stigma. The only problem with this is that people will forget about how great a fighter Marquardt was prior to the TRT issue. The goal for Marquardt is to rehabilitate his image. He will have to determine a strategy to re-enter the world of MMA if he wants to continue with his career. Escaping the stigma is hard and we will see how this plays out for Marquardt.

UFC 132 will be the first PPV headlining the Bantamweight division since the UFC-WEC merger. The big question will be whether or not Urijah Faber and Dominick Cruz will be able to attract the UFC audience.

The matchup has some heat considering it is for Cruz’s UFC-WEC Bantamweight title. In addition, there is bad blood between the two and Cruz is looking to avenge a lost to Faber. The Countdown show did a great job in detailing their history. Unfortunately, the debut ran on Spike TV during the day Wednesday. Regardless, the big question will be whether viewers buy the PPV?

You could call Faber “Mr. WEC” as he was the face of the organization prior to its merger with the UFC. Many of the big WEC events occurred in Sacramento, Faber’s hometown, and many of the main events involved “The California Kid.”

Taking a quick glance at Faber’s draw in the WEC:

WEC 52: Faber vs. Mizugaki: Versus rating – 570K

WEC 48: Aldo vs. Faber: WEC’s PPV – 175K buys

WEC 41: Brown vs. Faber: Versus rating – 1.3 million

WEC 36: Faber vs. Brown: Versus rating – 497K

WEC 34: Faber vs. Pulver: Versus rating – 1.5 million

Compared to Faber, the champion does not have the same appeal. Of course, he has had limited chances:

WEC 50: Cruz vs. Benavidez 2 – Versus rating – 316K

WEC 47: Bowles vs. Cruz – Versus rating – 373K

Prior to the WEC merger, few lightweight fighters found themselves at the top of a UFC PPV card. Aside from BJ Penn, the Lightweight division does not have the following as other heavier divisions. The last UFC PPV with lightweights as headliners was January 1^st when Frankie Edgar defended his Lightweight title against Gray Maynard. While the contest was an exciting 5 round war, it did not equate into a high PPV buy rate. Notably, half of the people in attendance were comped tickets. Obviously, there were factors which could explain the less-than stellar buy rate (college football bowl games, recovering from New Year’s Eve) and comped tickets (hotels buying tickets for its high limit players that came for NYE).

UFC 132 will take place during a holiday weekend but shouldn’t experience the same distractions as UFC 125.  The only competition for viewers would be the heavyweight boxing match between David Haye and Wladimir Klitschko but since the fight occurs during the day (the fight is in Germany), UFC 132 has the fight community’s attention.

132’s undercard should support the main event as it provides some compelling matchups. The Leben-Silva matchup should be a slugfest and its almost guaranteed that one man will be knocked out. Also, fans may see the very last fight in the UFC for Tito Ortiz.

Payout Perspective:

It will be interesting to see the buy rate for the PPV. Despite Cruz being the champ, most fans are cheering for Faber. Faber is a marketable figure as exemplified by many of his endorsement deals which include a mainstream ad campaign for K-Swiss and regular appearances on the Jim Rome radio show. Cruz is a relative unknown and if he defeats Faber, the UFC will need to ratchet up the marketing efforts to sell Cruz against other bantamweights. Certainly there are other quality fighters in his division, but aside from Faber, could the casual viewer name one?

With the infusion of the WEC lighter divisions and the introduction of the 125 pound division, one can only wonder whether these divisions will ever headline a PPV. Or, will they just be support for a PPV card. It could be that the divisions will be used for Fight Nights and other televised events with the UFC’s next TV partner (or its own network).

All it took was two events after the Strikeforce purchase was announced for Zuffa to take over the Strikeforce promotion and replace the staff, quickly disproving the “business as usual” motto tied to the acquisition two months ago.

According to MMAPayout sources, May 9th, 2011 was the last day Strikeforce was an MMA  promotion under Silicon Valley Sports & Entertainment, their previous owners who sold the budding promotion to Zuffa, LLC.  A few days after 5/9, Scott Coker and Peter Dropick met with the old Strikeforce staff individually to inform them that their services would no longer be required to avoid operational overlap and inefficiencies. A couple of staff members were offered positions to join Zuffa, but accepting the job would required a move to Las Vegas, which was not seen as a desirable move for those that were already established in Northern California. Those few opted to stay in the Bay Area instead.  Those that were willing to relocate and accept an offer from Zuffa were not offered a position.

As MMAPayout reported last month, Strikeforce employees were aware that after the April 9 event, staff changes were going to be made by early May and Zuffa would complete the process around early July, when most Strikeforce staff is expected to have worked their last days under the promotion.  Rich Chou was let go a few weeks ago and was replaced by former WEC matchmaker Sean Shelby.  Former WEC VP Peter Dropick will now do most of the heavy lifting for Strikeforce, as he was assigned to help run the promotion shortly after it was purchased.

It is still unclear what Scott Coker’s role will be going forward, but he will still be the figurehead of the promotion as long as they are up and running. It’s said that part of Scott Coker’s contract, besides a guaranteed job with Zuffa, included a clause that states he does not need to relocate to Las Vegas and could continue to work from his San Jose office, though that could not be confirmed upon publishing this article.  Former WEC PR director Dave Sholler has been traveling with the Strikeforce staff helping promote their events since the purchase was announced, and will continue to spearhead the PR efforts for upcoming events.  He flies to Dallas this week to meet up with Scott Coker, Herschel Walker, and Josh Barnett for a press tour in order to promote the second leg of the Heavyweight Grand Prix event in June.

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Payout Perspective:

In post mergers and acquisitions, these type of layoffs are expected and it’s no difference in this case.  In fact, considering the situation regarding the Strikeforce TV deal with Showtime – which will be up around February/March of 2012 – it makes perfect sense.  During that time, Showtime will have the option of extending the TV deal, which would keep Strikeforce alive for the span of that deal.  Without an extension, many in the MMA industry believe the promotion could be folded as early as second quarter of 2012.  Negotiations between Zuffa and Showtime should heat up in the upcoming months leading up to the expiration date of the current TV contract.

Behind the scenes, Strikeforce is continuing to sign young prospects (Yuri Villefort, Maximo Blanco) and popular veterans (Keith Jardine, Jeff Monson) to fill up their cards, since they have a heavy schedule planned with Showtime for the remainder of the year.  During recent contract negotiations, fighters have stated that they only spoke to Zuffa personnel (no one from Strikeforce) and that everything ran a bit smoother behind the scenes since the takeover.  Fighter manager Monte Cox told Sherdog.com that Zuffa wasted no time in making changes:

“We didn’t get per diem [money]. We didn’t get mileage [money]. They just didn’t pay those things for the undercard…. Now there’s per diem. Now there’s travel. Now there’s three nights for a hotel. Instantly that all changed. For those guys, it’s a homerun.”

Along with increasing incentives for undercard fighters, Zuffa has done away with amateur fighters in the prelim slots, which will in fact help many in the Strikeforce roster who complained that they weren’t getting enough fights.  The extra room will allow to book more fighters already under contract, though Showtime will continue their policy not to air the prelims.  As a result, the UFC was looking to package those fights into another outlet for the fans, and although Facebook is a likely destination, nothing has been officially announced or confirmed yet.

No matter what type of outcome the Showtime TV negotiations produce, it appears that Zuffa  has their personnel ready to either keep the promotion running or start the merge process, a move similar to what the WEC experienced just a year ago.  Luckily for the former WEC staff, they are on the other side of the merger talks this time around.

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The soon to be Pacific 12 conference officially announced last week a blockbuster media rights deal with Fox and ESPN worth $3-billion over the span of 12 years, topping all other current collegiate conference TV deals and quadrupling the worth of their previous TV deal, setting the new standard for sport properties looking forward to upcoming re-negotiation periods.

Although some may wonder what the correlation is between this deal and MMA, you don’t have to search too long to realize that there is a scramble and bidding war going on at the moment to secure  more sport content for networks, many who are either trying to get into the game or just acquire as much content as possible to stay in it.  We are currently seeing a new trend for the sports and TV industry right now, where networks are paying a premium for this type of content, where now the Pac-10 has set the standard going forward.

CNBC’s Darren Rovell wrote, “[sports are the] best bet on entire television landscape. People get sick of sitcoms, reality shows and soap operas, but fans don’t lose interest in a sport. That’s why networks don’t have any problem signing deals that last as long as they do despite the fact that they have no idea what the economic or technological landscape is going to look like”.

Looking at the deal, the Pac-12 will use an equal revenue-sharing plan, which means each team in the conference will be raking in $21 million annually in guaranteed money just from this deal.  The Pac-10 will be bringing in $250 million per year ($60 million in rights with the previous deal), which tops all TV deals by other conferences, including the Big-10 ($220 million per year) and the SEC ($205 million).  As if that wasn’t enough, the soon to be Pac-12 will also start their own Network which will be fully owned by the conference, unlike the Big Ten Network which is 49% owned by Fox, which should bring even more revenue to the conference, which some have estimated could be worth an additional $10 million. The deal would put each team grossing around $30 million a year.  The conference also created the “Pac-12 Media Enterprises” to manage and sell sponsorship and licensing rights controlled by the conference, along with the conference championship games.  To illustrate how big of a deal this is for the schools, Utah – who left the Mountain West Conference to join the Pac-10 – was making about $1.2 million in TV money in the MWC, where in a few years in the Pac-12 could be 20-30 times more with the new deal signed.

According to Sports Business Journal, the front-runners in landing the Pac-10 deal were Fox and ESPN (who got the split deal) and Comcast/NBC, who was trying to pickup the rights for Versus, which will soon be renamed to NBC Sports after the Comcast/NBC merger.  If you recall, just a few weeks ago, NBC/Versus was able to retain the NHL (TBS/TNT, ESPN, and Fox were also bidders) by signing a 10-year 2 billion dollar deal, which pays out at about $200 million a year.  Versus – who currently has a TV deal with the UFC until 2012 – is in the midst of being renamed to NBC Sports as they will do their best to become a competitor in the sports TV market (ESPN). Keeping the NHL was a must and losing the Pac-10 deal was a blow, but it could be the silver lining for the UFC who has positioned themselves in the last couple of years as vital programming who can draw the 18-34 demo and brings in some of the better ratings for Versus. UFC events and playoff NHL games do about the same ratings on Versus (NHL averaged 624k viewers for the first round this year, UFC on Versus 3 on March 5th averaged 681k viewers), but UFC (MMA) outperforms the NHL during the regular season on average.

While the UFC’s deal with Versus is up next year, they are also in a renegotiation period with their other TV partner, Spike TV, who’s deal will also run out next year.  Experts within the industry believe that both parties have been involved in intense negotiations (Spike advertising Bellator events during TNA showings and UFC putting prelims and other specials like Primetime – which were previously exclusive to Spike- on other networks like Ion and ESPN on time-buys. The UFC has also been experimenting airing their own content by utilizing Facebook to provide free preliminary fights.

In the past year, the UFC’s Dana White told MMA Fighting that he expected a network deal to be done by 2011, followed up by possibly starting up their own network in the next couple of years, though he has shied away from those comments recently.  “Sports Business Journal came out with a survey asking big names in the industry with sport could start its own network and 4 out of 5 said us. They are right. I agree” said White.

Other networks that have long been interested in acquiring MMA content or a sport franchise are TNT/TBS/TruTV and Fox channels (FX & Fuel TV).  In the last couple of months, MMA start-up promotion Shark Fights signed a deal with Fuel TV to air their events on the newly created “Friday Fight Night” segment.  Long time Fuel TV VP/GM CJ Olivares stepped down from his role with the network just last month, and was replaced by Fox Sports Network’s George Greenberg who shared some insight if MMA programming will still be in the plans for Fuel TV.

You do not see a lot of MMA on Fuel right now. Will we have a little bit? Yes. Will we have more? Yes, a bit more. Television programming is a diet that needs a bit of everything in it. It’s okay to have some MMA, and it’s okay to have your action sports stars appear in shoulder programming, there’s absolutely nothing wrong with that. At the end of the day, TV is a horse race and we need to get ratings.

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On the other hand, FX will be a part of the Pac-10 TV deal with Fox, which it has agreed to televise college football games on the network.  Back in December of last year, it was rumored that Bellator was going to sign a TV deal with Fox which would put the MMA promotion on FX, FSN, and Fuel TV, a deal that fell through and ultimately landed Bellator on MTV2.  FX was also said to have some interest in Strikeforce and the UFC in the past, but nothing had gone beyond exploratory talks. It is said that after NBC/Versus and Fox lost rights to sport franchises they were bidding for, both entities could not afford to lose their current programming staples.

NBC/Versus signed a lucrative deal with the NHL and looks to use them as the premier league for their newly created NBC Sports channel, while Fox (losing out the LA Lakers contract in Southern California) needed to keep the Pac-10 programming to keep their stations going in that region. As a note, HBO, Fox, NBC, and ESPN/ABC have been said to be interested in MMA content from the UFC in the past, though nothing ever came to fruition.

Back in January, MMAPayout discussed the “The Sports TV Landscape” and brought up the domino effect of these lucrative TV deals and why a network deal would have to make sense to the UFC due to the PPV vs. Rights to fee trade-off. A move by the UFC to leave Spike TV could generate a chain reaction by Spike to replace them with another promotion if they wanted to keep airing MMA content, which would be no easy task but not impossible either, since many think that Bellator is being groomed just for that reason.  Larry Scott of the Pac-10 said it best when he proclaimed the three main goals for the conference that should apply to any sports entity looking to grow in the current market conditions are to increase revenue, generate exposure, and create your own network. Three key points the UFC has been stressing over the past couple of years and is aiming to accomplish in the near future.

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Current Sport TV Deals – Collegiate Sports, NHL, MLS, WWE, and UFC:

Pac-10: $250 million/Year (Fox/ESPN/ABC) … previously $60 million (Fox/ESPN/ABC)

Big Ten: $220 million/Year (ESPN/ABC)

SEC: $205 million/Year (ESPN/CBS)

NHL: $200 million/Year (NBC/Versus) … previously $77.5 million (Versus)

ACC: $155 million /Year (ESPN)

Big 12: $130 million/Year (Fox)

WWE: $30-35 million/Year [Meltzer] (USA Network) … With Syfy included, estimated at around $70 million/Year.

UFC: $30-35 million/Year [Meltzer] (Spike TV) … TV deals will be up after 2011 with Spike TV and  Versus (4 events).

MLS: $14.75 million / Year (ESPN2, $8.5 million/Fox Sports Channel, $6.25 million) … Asked for $20 million/Year (FSC)…. previously $3 million (FSC)

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The promotion for UFC 129 has been in full force over the past couple of weeks, which means tons of interviews and PR work for Zuffa’s staff.  Dana White released his latest Vlog and gave an insightful interview for MMAHeat.com with Karyn Bryant.

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Payout Perspective:

White’s Vlog was interesting to see in terms of how much his vlogs have changed from the days that he would attack promotions, MMA media, and pretty much let anything go off the top of the head.  Since then, Zuffa pays close attention tot he details now with any sort of media that reaches it’s fanbase and detractors.  In this video, we are presented with a very calm and relaxed Dana who is just strolling around the Zuffa offices playing practical jokes and giving us some insight into how the company works.
Along with interviews and Vlogs, the UFC has also just released a video ” Mr. Liddell: Executive Iceman” that goes along with these vibe they are painting to their audience. You can expect more of these videos from the UFC brass as they try to portray the UFC as a fun and laid-back brand to appeal to the casuals instead of the bloody cage-fighter image painted on to the sport from it’s early days.

We also get to see what White’s reaction was watching the Strikeforce event in San Diego back in April, where he keeps pushing the message that it was a great event and that he is a Strikeforce fan and enjoyed the show.  It was apparent that Dana had a worried look when Daley knocked down Nick Diaz, but was emotional and enthusiastic when Diaz was able to finish off Daley, who had been kicked out of the UFC for sucker-punching Josh Koscheck after their bout.

When Karyn Bryant asks about a UFC Channel, White quickly shy’s away and says that it’s not easy to get your own channel, though brings ups the fact that in a Business Journal article, UFC was the most popular property chosen to have enough content and demand to start one.

In a recent interview with ESPN, Randy Couture voiced his concern for fighters to receive health benefits. These comments raised the issue of whether there is a need for a fighter’s union. While Couture is against a union, he endorsed the need for fighters to receive some type of medical coverage.

Via ESPN:

Couture isn’t interested in spearheading a war for fighters’ rights, but he said there are issues that absolutely need to be addressed. His hope is that Zuffa and the fighters will come together with open minds before a war is the only option left.

Couture points out health insurance when not competing and the need for a pension as two issues he would like to see addressed to take care of fighters. However, Couture does not think unions are always beneficial. He points to the recent NFL labor issues as an example.

The Score disagrees with Couture’s comments:

The disagreement I have with Couture is that he believes that, without any leverage, Dana White and Lorenzo Fertitta will bow to the fighters command and do this. Why would Zuffa invest millions of dollars into fighter safety away from the cage when there is no pressing need to do so? The last line of Couture’s interview says it perfectly “There’s got to be a way to come together and meet on ground that everyone can live with.” This is why Unions exist, so that two parties can come together, on equal footing, and negotiate a common ground.

Whether it’s Couture’s political ideology or the fact that his retirement is imminent and needs to be in the good graces of hte UFC so he can receive a Chuck Liddell-like position in the UFC, Couture believes that Zuffa and fighters would come together to address concerns. While I do not believe there will be a Norma Rae moment in the UFC or Strikeforce, it begs the question of the need for insurance coverage for fighters. Its not clear whether Couture actually thinks that Zuffa and fighters would actually sit down and talk about these issues…let alone think that the discussion would be amicable. Bear in mind, Couture and Zuffa have been involved in litigation. Perhaps Couture is painting a rosy picture on this issue as he fades into retirement.

While there is speculation that some fighters are covered by Zuffa in their contracts, others are not. For an up and coming fighter at the bottom rung of the card, it would be hard to request in their contract a clause for insurance. The fighter market is so competitive that if a fighter is injured, its easy to find someone to replace the injured fighter. There have been instances of fighters going into fights with known injuries but doing it because they need the money to feed their family.

There are distressing stories out there about fighters not being covered by insurance. Former TUF welterweight winner Joe Stevenson had to go to Mexico for x-rays due to the fact that he could not afford it in the U.S. This was after Stevenson had won the six-figure contract as the TUF winner. Then there is the gruesome injury (don’t click on the link if you have a weak stomach) suffered by Corey Hill in 2008. Dana White indicated that the UFC paid for Hill’s medical treatment and rehabilitation. Even though Hill’s medical bills were paid, Hill still had financial problems. Obviously breaking a leg when your profession is being a fighter hurts you financially. One may argue that the individual should be held accountable for their financial fate. But, most fighters give up other careers to focus on their dream of fighting in the Octagon.

For the UFC’s part, it has conducted seminars for its athletes to educate them on the need for coverage. If nothing else, this can provide the necessary information on what is and what is not covered in terms of health insurance coverage. Then, it would be up to the individual fighter to determine whether to purchase insurance.

With no health or disability insurance offered by Zuffa, fighters are left to make the decision on whether to purchase it themselves or roll the dice and hope that they are not seriously injured. Certainly, insurance premiums would be high considering the nature of the work.

Although it would be prudent for an agent or manager to persuade their fighter to purchase insurance, it would be up to the fighter. With all the other expenses in training for a fight, paying for insurance might seem excessive at the time.

Zuffa could provide some sort of fund that would pay for health and/or long-term disability coverage for fighters suffering injuries while under contract with the UFC. But, a foreseeable result of something like this would be lowering fight purses and fight bonuses. Essentially, if money is taken from Zuffa, it would likely find another area to recoup the money.

Moreover, this could lead to the potential for lawsuits if a fighter is denied coverage.Then there is the logistic question of which fighters are covered and if there should be a threshhold of fights an individual must compete in to be covered.

During a web chat in leading up to UFC Fight Night in Seattle Dana White was asked about whether fighters should unionize, Dana White responded that it was up to the fighters. Despite being a neutral answer during the web chat, it’s probable that he would oppose fighter’s unionizing. In fact, he would probably hold a personal vendetta against those attempting to unionize. If you thought denying a media credential was bad, think of what Zuffa would do to fighters attempting to create a union.

Last week’s shocking Strikeforce sale is still resonating through the MMA landscape as it left fans and media with many unanswered questions. MMAPayout will explore why Strikeforce was sold, SVSE’s future plans, and why they decided to walk away from MMA.

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In an interview with HDNet’s Bas Rutten, Scott Coker revealed that Silicon Valley Sports & Entertainment (main financial partner behind Strikeforce) wanted to bring in another sports franchise to San Jose, ultimately deciding that in order to do so, they wanted out of the MMA business to focus on that as well as continue to build their San Jose Sharks NHL franchise.

Frank Shamrock told MMA Fighting’s Ariel Helwani the following regarding the relationship between SVSE and Strikeforce:

“I can’t say I saw it coming but I know the demands of Strikeforce were high and I knew the financial partners were strained and weren’t interested in the big risks,” Shamrock said. “I knew change was coming, I didn’t know we were going to change that much.”
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According to Shamrock, Coker spent a lot of money to compete in the marketplace. For SVSE, Strikeforce became too much of a risk.
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“They got tired of writing big checks and not seeing the big return,” he said. “For them [the older established sports model is] the kind of business they wanted to be in. They didn’t want to be in the visionary, high-risk startup kind of MMA business.”

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In regards to the sports franchise that SVSE is looking at to bring into San Jose, it has been speculated since the end of 2009 that they have diligently pursued an NBA team to occupy the NBA-ready HP Pavilion.  Former SVSE/San Jose Sharks CEO Greg Jamison, who stepped down from his position in October of last year, was said to be looking at the Sacramento Kings NBA franchise and was in talks with their owners, the Maloof brothers, for a good portion of 2010.

Greg Jamison, chief executive of Silicon Valley Sports & Entertainment, which manages the Pavilion and owns the San Jose Sharks hockey team, said his company has talked to “a number of teams” over the last year about relocating to San Jose.
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A source familiar with the situation said Jamison in recent months has met with the owners of the Sacramento Kings, who are looking for an alternative to aging Arco Arena.
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Though it’s far from certain that the Kings will ever play a game in San Jose, things have apparently moved far enough ahead that the San Jose City Council as early as month’s end will vote on a “memorandum of understanding” that would guide negotiations with any National Basketball Association team.

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Back in September of last year, MMAPayout reported on rumors of a Strikeforce sale tied to Greg Jamison’s decision to step down as CEO of SVSE. Nearly three months later, Strikeforce was searching for financial partners to keep the MMA promotion going.  It was a clear sign at the time that SVSE was changing their strategy and vision for the future, and they couldn’t sustain to ventures that were not profitable (though both had potential to become profitable investments with risk) in the San Jose Sharks and Strikeforce.

Jamison, who has worked in the Dallas Mavericks and Indiana Pacers NBA franchises in the past, has vast experience dealing with NBA teams and was the front man in the negotiations with NBA franchises.  Although he has stepped down from his position as CEO from SVSE, it is said that Jamison still serves as a San Jose Sharks representative for the NHL and is still a minority owner of the team.  Under his ownership, the San Jose Sharks have been widely regarded as one of the best managed teams in the NHL according to Forbes magazine back in 2009. In the NHL, the team earned a league-wide reputation for quality and thoroughness from the bottom up. Without the television dollars and revenue sharing other leagues enjoy, the Sharks and SVSE helped turn HP Pavilion into a top 5 event destination and made some key investments in local ice hockey rinks, the Strikeforce MMA promotion, tennis tournaments, and driving successful merchandising and publishing arms.

Although the news is all positive in terms of managements, Forbes also notes that they weren’t profiting (something very commen in the NHL), and were hoping to be doing so by 2012.  They also point out that the San Jose Sharks brings them $84 million out of the $155 million of revenue accounted for back in 2009 (compared to the $30 million revenue that Strikeforce brings).

Of SVSE’s revenue of $155 million, NHL hockey brings in $84 million. The rest comes from things like a chain of ice rinks, three professional tennis tournaments, a mixed martial arts circuit and an apparel company. Last year the team’s hockey operations lost $5 million, but the profits from the other businesses cut that loss to an estimated $2 million. Gregory Jamison, a Sharks co-owner who’s in charge of day-to-day operations, sees the combined businesses turning a profit in two to three years.
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In May 2008 SVSE acquired a 50% position in cage-fighting outfit Strikeforce. Since then revenue for the fighting operation has shot up tenfold to an estimated $30 million. Thanks to the credibility and broadcast experience of the Sharks’ owners, Strikeforce’s fights will now move from a 2 a.m. time slot on NBC to prime time on CBS and Showtime. The TV deal, signed in February, would not have happened without the Sharks on board, says Strikeforce founder Scott Coker.

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Going after another major league franchise and bringing it to San Jose would easily bring in over $100 million in revenue to SVSE and to the city of San Jose in addition to the $84 million the Sharks bring in, although luring an NBA team has not been an easy task, failing to do so over the past couple of years.  Dropping unproven high-risk investments  in order to focus on acquiring an NBA team and growing the San Jose Sharks makes the most business sense for SVSE and for the city of San Jose, as Strikeforce attendance numbers were dropping since they started to host events back in 2006, when they drew an amazing 18,265 fans for their debut event in the HP Pavilion.

Along with the Sacramento Kings (who are now rumored to be moving to Anaheim instead of San Jose), there have also been talks to the New Orleans Hornets with the help of one of the richest men in the world, Larry Ellison, who is the co-founder and CEO of the Oracle Corporation (net worth is around $40 billion dollars). According to the Mercury News:

The NBA/San Jose advantages: Ellison’s billions, the handful of teams in financial distress, and the existence of HP Pavilion, which is NBA-ready.
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In January, Ellison, one of the richest men in the world, confirmed that he bid on the New Orleans Hornets, but the league chose to take the team over at that time and said it was seeking local ownership.
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But it’s probably safe to assume the NBA will wait until after this summer’s labor negotiations, then put the Hornets back up for sale…

Of course, any Ellison/San Jose effort would involve Silicon Valley Sports & Entertainment, the company that runs the Sharks and the arena and has sought an NBA co-tenant for years.

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Although luring an NBA franchise is a huge task to take on, there are plenty of other barriers that would have to be settled before an NBA team could move to San Jose.  One being that the Golden State Warriors, who reside in Oakland (40 miles away from San Jose), have a 75-mile NBA “marketing rights” zone, but could potentially be waived if the NBA Board of Governors chooses to do so. Other concerns include TV deals and splitting the fanbase in the area with two NBA franchises.  Although there are obstacles, there is no doubt that SVSE has made up their mind on what their next venture will be.  MMA and Strikeforce are not in the plans any longer and choosing a more proven and lucrative venture is most likely the right call, but it also raises red flags to any potential MMA investor with deep pockets hoping to jump into a market which is now heavily dominated by the UFC.

This weekend’s Zuffa-Strikeforce purchase announcement shook up the MMA landscape in such a way, that many fans, fighters, and sponsors were left in limbo as to what the future will hold for the sport and business of MMA.  The announcement also created a huge void for a number 2 promotion in the market, an opportunity which some MMA investors are already analyzing and moving some money around.

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Why would investors be interested in MMA at this point after Strikeforce was just purchased by Zuffa? Well, lets take a look at the events that lead to Strikeforce’s sale to understand why.

Showtime, which was a part owner of ProElite, spent a good amount of resources and budget to build up and kick-off MMA on the network. They were fairly successful in making stars within the promotion, such as Kimbo Slice, Gina Carano, Robbie Lawler and Nick Diaz, though they spent way too much money and accumulated debt of around $55 million, which lead the company to to almost file for bankruptcy, but instead chose to sell off it’s assets to recuperate some of the losses for Showtime.

Strikeforce and CEO Scott Coker were in the kickboxing promotion business all the way up to 2006, when they promoted their first MMA event in California, which was hugely successful and still holds the U.S. paid attendance record for MMA.  Before their first MMA event, they had a strong regional fanbase and following in San Jose.  SVSE along with Scott Coker struck a deal and created a partnership which slowly built up the company to the point where they were well positioned enough that when the Showtime was looking for a new MMA promoter, they were able to strike a deal with Showtime and Pro Elite to acquire their assets. Sherdog had the details back in February 12, 2009.

Strikeforce parent company Explosion Entertainment LLC purchased selected assets of Pro Elite Inc. for $3 million, according to a United States Securities and Exchange Commission report released Wednesday.
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As part of the multi-million dollar purchase announced last week, Strikeforce acquired valuable fighter contracts, media assets that include the ProElite fight library and inventories that include all EliteXC-related DVDs. Various promotional and marketing materials were also part of the deal.

The asset purchase also lead Strikeforce to signing a TV deal with Showtime/CBS, a deal which was estimated to pay Strikeforce $25 million dollars in license fees over the course of the three-year deal.

In October of 2009, the Stratus Media Group acquired a 95% stake in ProElite for $2 million after the companyalmost filed for bankruptcy earlier in the year.  Although they sold most of their valuable assets to Strikeforce, they still maintained rights to the brand name ProElite (ProElite.com), Cage Rage, Spirit MC, and most importantly the EliteXC brand. The ProElite group, who put a bid for Strikeforce back in December of 2010, was composed of some original ProElite members such as Doug De Luca, William Kelly, Glenn Golenberg, along witch newly appointed Chairman of the board Paul Feller from the Stratus Media group.  It was said they raised enough capital to place a bid for $40 million dollars, though it wasn’t enough and was eventually outbid by Zuffa.

The other bidder for Strikeforce was from a group headed by Shelly Finkel, who is Mike Tyson’s manager and has been one of the most powerful managers in boxing for the past 30-plus years.  Finkel officially announced that he was leaving the sport of boxing back in June of 2010, citing politics of the sport as the reason he was driven away to where he got his start, music promotion under Empire Sports and Entertainment.  Although Finkel left boxing, he continued to act as an advisor to heavyweight champions Wladimir Klitschko and Vitali Klitschko, with whom he has worked for several years.  Empire Sports and Entertainment’s mission was said to become a leading media and entertainment company known for promoting the best events in concerts, music festivals, pay-per-view specials and sporting events around the world.

If we look back at some of those figures, it took an investment of $3 million dollars from SVSE and Explosion entertainment back in February of 2009 to cash out on March of 2011, span of 2 years, to be bought by Zuffa for above $40 million dollars. Being the #2 promotion or the “next competitor to the UFC” paid off for Strikeforce, and I think many other promotion are looking at their model to try and accomplish the same.

On Monday, just a couple of days after the Zuffa-Strikeforce purchase was announced, ProElite stock (one of the bidders for Strikeforce) opened at less than $0.01/share and closed at a 52 week high of $0.06 /share with a volume of just under 1 million. The average volume over the past 3 months had been around 14,000.  On Tuesday (the following day March 15, 2011), ProElite stock closed at $0.19 /share and had a day high of $0.24 /share.  What the numbers are saying is that investors and MMA fans have already started looking for a viable competitor for the UFC in the MMA market, and as Strikeforce proved in the span of 2 years, money can still be made in the market without being the #1 promotion as long as you have a platform for your product (Showtime) and a unique selling point you offer to fans.

If Zuffa ends up deciding that they do not want female MMA in the UFC, another promotion could build a solid stable of female fighters and scoop whatever talent is left out there not under the UFC umbrella (see Bellator) to start the process all over again.  FX, Fuel TV, G4, FSN, and other networks have shown recent interest in MMA programming, and all it takes is the right deal to present itself to a promotion for a shot at the #2 spot.  With that being said, the risk in the market has grown exponentially high this time around, as UFC has taken a dominant share of the market and has the majority of the top fighters in MMA.

Strikeforce is said to have roughly 140 fighters under contract in addition to UFC’s current 260 fighters, which is a whopping 400 fighters under the Zuffa banner at the moment.  It is expected that a good portion of those fighters will be cut and out of the UFC by 2012, since Zuffa has said before that they feel comfortable with a roster of around 200-220 fighters.  The UFC will also have to sign many foreign fighters as they keep reaching new international markets (trying to find the GSP of each country they visit), which only guarantees that many domestic fighters will be getting cut in the next 12 months.  This bodes well for the promotions such as Bellator, MFC, Shark Fights, Titan FC, & Tachi Palace Fights in the States,  BAMMA, and Cage Warriors in the UK, and KSW in Poland to name a few. It also bodes well for a station like HDNet who has TV contracts with MFC, Shark Fights, and Titan FC. These promotions have shown a great deal of potential in the last couple of years and the talent pool quality of MMA fighters should be increasing in the next year.  One of those could make the next step up or it could be an investment group, like the ones behind ProElite to assume the #2 spot in the market. It will definitely be a risk for any investor to jump into the current state of the market, but fans and investors seem eager to give it another go.

This weekend’s Zuffa-Strikeforce purchase announcement shook up the MMA landscape in such a way, that many fans, fighters, and sponsors were left in limbo as to what the future will hold for the sport and business of MMA.  The announcement also created a huge void for a number 2 promotion in the market, an opportunity which some MMA investors are already analyzing and moving some money around.

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Why would investors be interested in MMA at this point after Strikeforce was just purchased by Zuffa? Well, lets take a look at the events that lead to Strikeforce’s sale to understand why.

Showtime, which was a part owner of ProElite, spent a good amount of resources and budget to build up and kick-off MMA on the network. They were fairly successful in making stars within the promotion, such as Kimbo Slice, Gina Carano, Robbie Lawler and Nick Diaz, though they spent way too much money and accumulated debt of around $55 million, which lead the company to to file for bankruptcy and sell it’s assets to recuperate some of the losses for Showtime.

Strikeforce and CEO Scott Coker were in the kickboxing promotion business all the way up to 2006, when they promoted their first MMA event in California, which was hugely successful and still holds the U.S. paid attendance record for MMA.  Before their first MMA event, they had a strong regional fanbase and following in San Jose.  SVSE along with Scott Coker struck a deal and created a partnership which slowly built up the company to the point where they were well positioned enough that when the Showtime was looking for a new MMA promoter, they were able to strike a deal with Showtime and Pro Elite to acquire their assets in bankruptcy court. Sherdog had the details back in February 12, 2009.

Strikeforce parent company Explosion Entertainment LLC purchased selected assets of Pro Elite Inc. for $3 million, according to a United States Securities and Exchange Commission report released Wednesday.
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As part of the multi-million dollar purchase announced last week, Strikeforce acquired valuable fighter contracts, media assets that include the ProElite fight library and inventories that include all EliteXC-related DVDs. Various promotional and marketing materials were also part of the deal.

The asset purchase also lead Strikeforce to signing a TV deal with Showtime/CBS, a deal which was estimated to pay Strikeforce $25 million dollars in license fees over the course of the three-year deal.

In October of 2009, the Stratus Media Group acquired a 95% stake in ProElite for $2 million after the company filed for bankruptcy earlier in the year.  Although they sold most of their valuable assets to Strikeforce, they still maintained rights to the brand name ProElite (ProElite.com), Cage Rage, Spirit MC, and most importantly the EliteXC brand. The ProElite group, who put a bid for Strikeforce back in December of 2010, was composed of some original ProElite members such as Doug De Luca, William Kelly, Glenn Golenberg, along witch newly appointed Chairman of the board Paul Feller from the Stratus Media group.  It was said they raised enough capital to place a bid for $40 million dollars, though it wasn’t enough and was eventually outbid by Zuffa.

The other bidder for Strikeforce was from a group headed by Shelly Finkel, who is Mike Tyson’s manager and has been one of the most powerful managers in boxing for the past 30-plus years.  Finkel officially announced that he was leaving the sport of boxing back in June of 2010, citing politics of the sport as the reason he was driven away to where he got his start, music promotion under Empire Sports and Entertainment.  Although Finkel left boxing, he continued to act as an advisor to heavyweight champions Wladimir Klitschko and Vitali Klitschko, with whom he has worked for several years.  Empire Sports and Entertainment’s mission was said to become a leading media and entertainment company known for promoting the best events in concerts, music festivals, pay-per-view specials and sporting events around the world.

If we look back at some of those figures, it took an investment of $3 million dollars from SVSE and Explosion entertainment back in February of 2009 to cash out on March of 2011, span of 2 years, to be bought by Zuffa for above $40 million dollars. Being the #2 promotion or the “next competitor to the UFC” paid off for Strikeforce, and I think many other promotion are looking at their model to try and accomplish the same.

On Monday, just a couple of days after the Zuffa-Strikeforce purchase was announced, ProElite stock (one of the bidders for Strikeforce) opened at less than $0.01/share and closed at a 52 week high of $0.06 /share with a volume of just under 1 million. The average volume over the past 3 months had been around 14,000.  On Tuesday (the following day March 15, 2011), ProElite stock closed at $0.19 /share and had a day high of $0.24 /share.  What the numbers are saying is that investors and MMA fans have already started looking for a viable competitor for the UFC in the MMA market, and as Strikeforce proved in the span of 2 years, money can still be made in the market without being the #1 promotion as long as you have a platform for your product (Showtime) and a unique selling point you offer to fans.

If Zuffa ends up deciding that they do not want female MMA in the UFC, another promotion could build a solid stable of female fighters and scoop whatever talent is left out there not under the UFC umbrella (see Bellator) to start the process all over again.  FX, Fuel TV, G4, FSN, and other networks have shown recent interest in MMA programming, and all it takes is the right deal to present itself to a promotion for a shot at the #2 spot.  With that being said, the risk in the market has grown exponentially high this time around, as UFC has taken a dominant share of the market and has the majority of the top fighters in MMA.

Strikeforce is said to have roughly 140 fighters under contract in addition to UFC’s current 260 fighters, which is a whopping 400 fighters under the Zuffa banner at the moment.  It is expected that a good portion of those fighters will be cut and out of the UFC by 2012, since Zuffa has said before that they feel comfortable with a roster of around 200-220 fighters.  The UFC will also have to sign many foreign fighters as they keep reaching new international markets (trying to find the GSP of each country they visit), which only guarantees that many domestic fighters will be getting cut in the next 12 months.  This bodes well for the promotions such as Bellator, MFC, Shark Fights, Titan FC, & Tachi Palace Fights in the States,  BAMMA, and Cage Warriors in the UK, and KSW in Poland to name a few. It also bodes well for a station like HDNet who has TV contracts with MFC, Shark Fights, and Titan FC. These promotions have shown a great deal of potential in the last couple of years and the talent pool quality of MMA fighters should be increasing in the next year.  One of those could make the next step up or it could be an investment group, like the ones behind ProElite to assume the #2 spot in the market. It will definitely be a risk for any investor to jump into the current state of the market, but fans and investors seem eager to give it another go.

There were two other bidders in the running to acquire Strikeforce MMA from Silicon Valley Sports & Entertainment (SVSE) and Strikeforce CEO Scott Coker. In the end, both suitors were unable to match the bids put by Zuffa LLC, owners of the UFC, as the ante was raised several times until an agreement was reached.

According to Dave Meltzer of Yahoo:

Coker wouldn’t say who else was bidding to buy the company, but Pro Elite, Inc., which had the Showtime deal in 2007 and 2008 before going belly-up and having its assets purchased by Strikeforce in early 2009, had raised new capital and had reportedly made a $40 million offer.

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Other names, including Shelly Finkel, Mike Tyson’s manager, were reportedly interested. While Fertitta said he was not aware of other offers while negotiating this deal, insiders with knowledge of the negotiations said the UFC deal was more lucrative and they kept raising the ante until the deal was agreed upon.

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As for the reason for the the sale, Scott Coker shared his side during Monday’s press conference:

“Silicon Valley Sports and us were great partners,” Coker said. “They wanted to get back to their core business, the hockey business and expansion of their other sports businesses. We had a long conversation and started taking different offers and then we started talking to Lorenzo. They had a really good time in this business, but they wanted to get back to their core business. I wanted to stay in this business and this is how we hooked up.”

Now, while this announcement was a shock to many, there were some signs and discussions that hinted at the notion in the last 6 months.  Folks within knowledge of how Strikeforce worked said it was tough to do everything they wanted to do given the budget and constraints they were given.  There seemed to have been some tug-of-war game between Coker and SVSE, who grew inpatient his year with Strikeforce’s returns.  According to Loretta Hunt of LA Times, Strikeforce had incurred debt, though they were slowly headed in the right direction as the early success of 2011 showed with record ratings and buzz for the promotion.  Insiders say that Strikeforce grew too big for SVSE to want to further commit any more resources, since it would eventually lead into a war with UFC, which were brought up by three key events: the Showtime deal, the Fedor deal, and talk of heading into the PPV market.

Back in September of 2010, talks of a Strikeforce sale surfaced within the MMA world, and MMAPayout contacted both SVSE and Scott Coker to get their take on the matter. Scott Coker said the rumor was untrue, while SVSE (who was involved due to the news that CEO Greg Jamison was stepping down as of October last year) made the following statement:

As is the case with all properties owned and operated by Silicon Valley Sports & Entertainment, Strikeforce [a joint venture between SVS&E and WCP] is not for sale and the day-to-day operations of Strikeforce will continue under the direction of President Scott Coker.

Only a few months after this statement was issued, talks between SVSE, Scott Coker, and Zuffa (among other bidders) commenced as both SVSE and Scott Coker began to part ways.  Was SVSE already heading in a different direction last year and could it have possibly triggered the sale?

As for the bidders, Pro Elite was bought by the Stratus Media Group back in October of 2009, after the company filed for bankruptcy and who’s key assets were purchased by Strikeforce and SVSE to strike the Showtime deal.  Stratus Media is an owner, producer, promoter and operator of live entertainment events that generate revenue through corporate sponsorships, ticket sales, corporate hospitality, event merchandise and concessions, who also provide athlete management, representation and endorsements. The ProElite group, who was heading this venture in bidding for Strikeforce, were original PE members Doug De Luca, William Kelly, Glenn Golenberg, along witch newly appointed Chairman of the board Paul Feller from Stratus Media.  It was said they raised enough capital to place a bid for $40 million dollars, though was eventually outbid by Zuffa.

The other bidder was from a group headed by Shelly Finkel, who is Mike Tyson’s manager and has been one of the most powerful managers in boxing for the past 30-plus years.  Finkel officially announced that he was leaving the sport of boxing back in June of 2010, citing politics of the sport as the reason he was driven away to where he got his start, music promotion under Empire Sports and Entertainment.  Although Finkel left boxing, he continued to act as an advisor to heavyweight champions Wladimir Klitschko and Vitali Klitschko, with whom he has worked for several years.  Empire Sports and Entertainment’s mission was said to become a leading media and entertainment company known for promoting the best events in concerts, music festivals, pay-per-view specials and sporting events around the world.

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UFC/STRIKEFORCE PRESSER NOTES:

- Business will stay as usual for Strikeforce according to Dana White, although most believe it will stay as usual until the Showtime TV deal runs its course in Feb/March of 2012, which at that time may merge Strikeforce into the UFC like it did PRIDE, WFA, and the WEC. They will stay as separate entities until then.

- The Fertitta’s and Dana White made it very clear to steer away from any monopoly talk brought up by reporters, citing that there are thousands of promotions all over the world and there is nothing that is stopping anyone with backers to get into the market and compete. They also made it a point to state that any sort of fighter union would be up to the fighters.

- As part of the sale, Scott Coker got a long-term contract to work for Zuffa, but NO ownership stake in the company.

- Zuffa cited that there is a big demand for their product in Canada, Australia, and the UK (global expansion).  The addition of Strikeforce and Scott Coker would help aid that demand.

- The heavyweight GP will continue as planned, and the finals may be held as a PPV event.

- Strikeforce will now abide by the Unified Rules, which means elbows to a grounded opponent will be allowed.  Strikeforce will continue to use its six-sided cage and production and commentary team from Showtime.

- Talks between Showtime and Zuffa have yet to take place.

- Zuffa was in the San Jose today to pay a visit to Strikeforce offices, which met with the staff.  Strikeforce will be sending some of their personnel to Las Vegas later this week to meet and get acclimated with Zuffa staff and culture.

Welcome to another edition of Payout Perspective! This week we’ll be taking a look at the Strikeforce Feijao vs Henderson event televised on Showtime and headlined by Strikeforce LHW champ Rafael “Feijao” Cavalcante, as he made his first title defense against MMA legend Dan Henderson.

The event took place at the Nationwide Arena in Columbus, Ohio coinciding with the annual Arnold Sports Festival and featured the Lightheavyweight title fight between Rafael Cavalcante vs. Dan Henderson, the womens Welterweight title fight between Marloes Coenen vs. Liz Carmouche, Tim Kennedy vs. Melvin Manhoef, and Billy Evangelista vs. Jorge Masvidal. The prelims – which were later streamed on Strikeforce.com -  were headlined by Jorge Gurgel vs Bily Vaughn and Welterweight prospect Roger Bowling vs Josh Thornburg.

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Fighter Disclosed Payouts

Note: that the money reported below is only the money required to be reported by the commission, which does not take into account undisclosed bonuses or “locker room” bonuses, as they are referred to in MMA.

Courtesy of MMAJunkie:

The total disclosed payroll for the event was $439,500.

Champ Dan Henderson: $250,000 (no win bonus)
def. Rafael Cavalcante $28,000

Champ Marloes Coenen: $10,000 (no win bonus)
def. Liz Carmouche: $5,000

Tim Kennedy: $50,000 (no win bonus)
def. Melvin Manhoef: $10,000

Jorge Masvidal: $30,000 (includes $15,000 win bonus)
def. Billy Evangelista: $20,000

Roger Bowling: $7,000 (includes $3,500 win bonus)
def. Josh Thornburg: $2,000

Jorge Gurgel: $8,000 ($4,000 win bonus)
def. Billy Vaughn: $1,500

Jason Freeman: $3,000 ($1,500 win bonus)
def. Jason Riley: $1,500

Brian Rogers: $3,000 ($1,500 win bonus)
def. Ian Rammel: $1,500

Mitch Whitesel: $3,000 ($1,500 win bonus)
def. Marc Cofer: $1,500

John Kuhner: $3,000 ($1,500 win bonus)
def. J.P. Feity: $1,500

Attendance and Gate

MMAJunkie reports that Strikeforce: Feijao vs Henderson achieved an attendance of 7,123. The number stands as the 8th most attended event for Strikeforce in all of 2010 and so far in 2011, only doing better than the Miami and Los Angeles events, noting here that the Los Angeles event was a special Wednesday show coinciding with E3 . It would have to be considered a disappointing number considering that the WEC last year drew 8,345 fans.  The UFC set the U.S. attendance record in the same venue back in 2007, but saw declining figures ever since.  In 2009, UFC 96 drew 17,033 attendees but was only able to get 13,470 paid.  This year, the UFC skipped Ohio altogether choosing to go to Australia instead and the WEC is no longer around, which gave Strikeforce the chance to step in this year.

MMAPayout has not been able to get a gate figure for the event at press time.

- 11,757 spectators, “Strikeforce: Fedor vs. Werdum” (June, 2010)
- 11,287 spectators, “Strikeforce: Fedor vs Silva” (February, 2011)
- 9,059 spectators, “Strikeforce: Diaz vs Cyborg” (January, 2011)
- 8,635 spectators, “Strikeforce: Houston” (August, 2010)
- 8,196 spectators, “Strikeforce: Nashville (April, 2010)
- 8,136 spectators, “Strikeforce St. Louis: Heavy Artillery” (May, 2010)
- 7,559 spectators, “Strikeforce: Diaz vs Noons II (October, 2010)
- 7,146 spectators, “Strikeforce: Henderson vs Babalu II (December, 2010)
- 7,123 spectators, “Strikeforce: Feijao vs Henderson” (March, 2011)
- 7,010 spectators, “Strikeforce: Miami” (January, 2010)
- 5,259 spectators, “Strikeforce: Los Angeles” (June, 2010)

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Ratings

MMAJunkie reports that Strikeforce: Fedor vs Silva averaged 412,000 viewers (1.8 rating) and MMAPayout has exclusively learned from sources that the main event between Henderson and Feijao gained an additional 100K viewers, creating a peak of around 520,000. The average number was good enough to rival the Strikeforce Fedor vs Werdum event which received 412k average viewers and peaked at around 700K viewers back in June 2010.  It ties the Fedor vs Werdum event as the 5th most watched MMA event for Showtime in terms of average viewership.

Though this rating is a drop-off from the previous two shows which did excellent numbers, Henderson vs Babalu II – just a few months back in December – did 341k average viewers with a peak of 465K, so the average viewership for a card which was headlined by Dan Henderson in the span of about 3 months increased by about 70k viewers, which shows what type of momentum Strikeforce is currently riding in 2011. It is also key to note that the 3 big Strikeforce events in 2011 have placed in 1st, 3d, and 6th in terms of most average viewership for an MMA event on Showtime ever.

- 741,000 viewers (1.1 million peak), “Strikeforce: Fedor vs Silva” (February, 2011)
- 576,000 viewers (856,000 peak), “Strikeforce: Carano vs Cyborg” (August, 2009)
- 561,000 viewers (853,000 peak), “Strikeforce: Diaz vs Cyborg” (January, 2011)
- 517,000 viewers (peak not available), “Strikeforce: Miami” (January, 2010)
- 412,000 viewers (700,000 peak), “Strikeforce: Fedor vs. Werdum” (June, 2010)
- 412,000 viewers (520,000 peak), “Strikeforce: Feijao vs Henderson” (March, 2011)
- 367,000 viewers (470,000 peak), “Strikeforce: Houston” (August, 2010)
- 350,000 viewers (509,000 peak), “Strikeforce: Diaz vs Noons II (October, 2010)
- 341,000 viewers (465,000 peak), “Strikeforce: Henderson vs Babalu II (December, 2010)
- 308,000 viewers (448,000 peak), “Strikeforce St. Louis: Heavy Artillery” (May, 2010)
- 164,000 viewers (197,000 peak), “Strikeforce: Los Angeles” (June, 2010) [Special Wednesday Show]

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Storylines

Strikeforce Fills MMA Void In Arnold Sports Festival

- After the UFC decided it would be heading to Australia this year instead of the Arnold, a great opportunity came knocking for Strikeforce.  Not only would the Arnolds be full of sports and fitness enthusiasts, but also a good amount of businesses within the industry.  It created an opportunity for Strikeforce to spread the brand, convert new fans, and build some relationships within the industry.

Duane Finley of BloodyElbow was there and shares some of his experiences and observations from the show:

In addition to the event at the Nationwide Arena, Strikeforce looked to capitalize on the opportunity to connect with their fan base as they set up a large booth at the Fitness Expo which ran from Friday to Saturday at the Columbus Convention Center. As one of 700 vendors on display Strikeforce made sure their booth was visible as they pulled out all the stops to create one of the most visually appealing and visitor friendly stands. The entire booth was designed using the official Strikeforce cage where fans could filter through to meet the fighters or stop and have their pictures taken with the Rockstar/Strikeforce ring girls on the outer perimeters. At the entrance, Strikeforce set up a box office where tickets could be purchased for Saturday’s show in addition to signing up for raffle drawings that were held throughout the course of the weekend.

Once inside the cage fans and visitors could play EA Sports MMA on several monitors in addition to signing official Strikeforce placards that were being sent, along with the cages used for the weekend’s events, overseas to the U.S. Military. Strikeforce also gave visitors a chance to interact with their All-Star roster as the organization scheduled appearances and presentations allowing fans, new and old, to meet some of the top fighters and personalities on their roster. Josh Thomson and Frank Shamrock held meet and greet sessions during the opening portion of the Expo on Friday while current welterweight champion and one of the world’s pound for pound best Nick Diaz held court on both Friday and Saturday afternoons. Also making appearances were MMA legend Pat Miletich, Antonio “Big Foot” Silva and recent Strikeforce signee Josh Barnett, who is preparing to make his official Strikeforce debut when he faces Brett Rogers on June 18th in the opening round of the heavyweight tournament. The convention center was jammed packed from the time the doors opened until they closed and Barnett, who had a massive turnout, had this to say in regards to the insanity.

It’s huge,” Barnett exclaimed. “It’s busy as hell. This is a great venue for Strikeforce to be in. New fans…in addition to us getting a chance to make an impression on them and get them to follow what we are doing. So I think it’s a necessity. Plus, I like the fact that they have all the events for the kids to keep them entertained.

Strikeforce was in a position where they could attract many new fans not only to the promotion, but to the sport of MMA.  In preparation, they created a educational material, had a playable gaming station of EA Sports MMA and gave the fans a full MMA experience with their meet-and-greet opportunities and the other numerous activities they provided to Arnold Classic attendees.

Strikeforce Fan Guide Pamphlet:

Arnold Classic Fan Experience:

Arnold Schwarzenegger Makes a Stop at the Strikeforce Booth

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Post-Event Notes

- Strikeforce announced they have signed Japanese fighter and Beijing gold medalist in Judo Satoshi Ishii and will fight on the April 1st Challengers event on Showtime against K-1 veteran now turned MMA artist, Scott Lighty.  Here is the way that card is stacking up:

Strikeforce Challengers from Stockton, California (4/1/2011)

Justin Wilcox (10-3) vs Rodrigo Damm (9-4)
Satoshi Ishii (4-1) vs Scott Lighty (6-1)
David “Tarzan” Douglas (6-2) vs Caros Fodor (7-2)
James Terry (9-2) vs Conor Heun (8-4)
Damian Douglas (3-1) vs Wayne Phillips (5-3)

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- Strikeforce announces the 4/9 card to be held in San Diego, CA which bumps the Strikeforce HW Grand Prix to June 18 in Dallas, Texas.

Strikeforce Diaz vs Daley from San Diego, California (4/9/2011)

Nick Diaz (24-7) vs Paul Daley (27-9)
Gilbert Melendez (18-2) vs Tatsuya Kawajiri (27-6)
Gegard Mousasi (30-3) vs Mike Kyle (18-8)
Shinya Aoki (26-5) vs Lyle Beerbohm (15-1)

- Strikeforce introduces new designed belts at Strikeforce: Feijao vs Henderson.

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Twitter and Google Trends

Great news for Strikeforce here, as the key words “Hendo“, “Coenen“, “Carmouche“, “Tim Kennedy“, “Manhoef” , and “Masvidal” were all top twitter trends during the evening of the Strikeforce: Feijao vs Henderson event. That would make 6 out of the 8 fighters who fought on the Showtime televised portion of the event top twitter trends for the evening.

Also, “Dan Henderson” and “Strikeforce” were top searches for the evening on Google. They were among the top 10 Google Trends in the U.S. for that evening, with “Strikeforce” reaching the #3  spot behind HBO boxing’s event headlined by Saul Alvarez.

That would make it 8 out of the last 10 events that have trended on Twitter for Strikeforce, with the previous being the last show which was the first round of the HW Grand Prix which was headlined by Fedor Emelianenko and Antonio “Bigfoot” Silva.

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Sponsor, Promotion and Marketing Watch

- All the usual sponsors where there for this event: FullTilt Poker, Rockstar, GoDaddy, Clinch Gear, EA Sports MMA, etc. As we like to point out here on MMAPayout, we always like to see more synergy between big sponsors and the promotions. Ranger Up had a nice presence in the event as well, sponsoring Tim Kennedy and Liz Carmouche, both who are enrolled in the U.S. Armed Forces. MicroTech was also a welcomed sponsor for Strikeforce.

MicroTech CEO Tony Jimenez attended the event and sponsored Rafael Feijao, Marloes Coenen, and Tim Kennedy.

MicroTechCEO : At @Strikeforce Columbus in @Fahrenheitnutri Suite watching preliminary fights! Thx 4 the invite! http://yfrog.com/h6ik8gj

Intimidation MMA also played a big role in sponsoring fighters for the prelim portion of the event, which included Roger Bowling, Brian Rogers, Jason Freeman, Billy Vaughn and Mitch Whitesel.

IntimidationMMA Update: Bowling, Rogers, Freeman & Whitesel all victorious at Strikeforce http://fb.me/M61WvdzD

- Strikeforce had a promo to Tweet where you were seated for a chance to win floor seats again, dubbed #sfpickme. Again, a great way to utilize the social media tools that they have. Also. hosting a Ring Girl Contest on their Facebook page as well to keep the motto going.

- Strikeforce is slowly integrating the fighters and their brands with the promotion. If we take a look at the Strikeforce Store, we see Dan Henderson advertised on the front page with his own signature shirts for the Columbus event on March 5th. We will keep a look out and see if they will keep this strategy for future big show headliners. They have recently added new Fedor, King Mo, and Jason “Mayhem” Miller signature shirts as well.

Strikeforce confirmed this week what Sherdog reported a week ago,which was the postponement to the second leg of the Heavyweight Grand Prix, which was originally scheduled to take place on April 9. A few days ago, Josh Gross of ESPN then confirmed that the HW GP would indeed be postponed and continue in Dallas, TX on June 18.

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As a result of the move, the April 9th HW GP bouts were replaced by Nick Diaz vs Paul Daley and Gilbert Melendez vs Tatsuya Kawajiri. The Strikeforce press release states the following:

NEW YORK (March 2, 2011) – The STRIKEFORCE World Grand Prix — Heavyweight Tournament will continue on Saturday, June 18 at American Airlines Center in Dallas, Texas, LIVE on SHOWTIME® (10 p.m. ET/PT, delayed on the West Coast).

The date originally reserved for continuation of the three-stage, single-elimination tournament comprised of eight of the world’s top heavyweights, April 9, will now feature a terrific STRIKEFORCE World Championship Doubleheader from Valley View Casino Center in San Diego, Calif., formerly the San Diego Sports Arena.

In the second event of the tournament, STRIKEFORCE Heavyweight World Champion Alistair “The Demolition Man” Overeem (34-11, 1 NC) will face the only man to tap out MMA legend Fedor “The Last Emperor” Emelianenko, the Brazilian Jiu-Jitsu specialist Fabricio Werdum (14-4-1) and the heavy-handed Brett “The Grim” Rogers (11-2) will take on former UFC World Champion Josh Barnett (29-5).

“STRIKEFORCE is coming off a record presale and impressive attendance for the kickoff of the Grand Prix at IZOD Center in New Jersey that also drew a record viewership on SHOWTIME for live MMA,” said STRIKEFORCE CEO Scott Coker.  “To build on the tremendous momentum from New Jersey we needed the proper time to promote an event of this magnitude, which is why we have decided to continue the Tournament on June 18 at American Airlines Center in Dallas, a venue that has been identified as one of the premier sports and entertainment venues in the U.S.”

Coker continued: “We have a great relationship with the Texas State Athletic Commission, who, along with the American Airlines Center, is enthused to host the Grand Prix.”

STRIKEFORCE Welterweight World Champion Nick Diaz (24-1, 1 NC) will defend his title in a highly anticipated grudge match against the brawling Paul “Semtex” Daley (26-9-2) in the April 9 main event.  Gilbert Melendez (18-2) will make the second defense of his STRIKEFORCE Lightweight World Title against the powerful Tatsuya Kawajiri (27-6-2).  Also on the April 9 card is a bitter showdown between current DREAM Light Heavyweight Champion Gegard Mousasi and Mike Kyle.

“We are fortunate to replace the April 9 date with a tremendous World Championship Doubleheader featuring the eagerly awaited showdown between Nick and Paul and the sensational matchup between Gilbert and Tatsuya,” Coker said.  “This is a fight everyone has been waiting for and I’d like to thank DREAM for allowing Tatsuya to come to the U.S. to take on our Lightweight World Champion.”

PAYOUT PERSPECTIVE:

The news of the postponement has definitely raised a cloud of doubt among MMA fans in terms of Strikeforce’s ability to pull off the HW Grand Prix without any further hiccups.  We will take a look at what delaying the second leg of the HW GP means, the reasoning behind the move, and how they are trying to capitalize from the event.

- Reasons Behind Delay:

* Talks to host the event in Japan did not materialize. Booking a venue (Saitama Super Arena) for the April 9 date was a big issue, as well as locking down logistics, gaining sponsors, promoting the event, and finding supporters in Japan in such a short amount of time after the 2/12 event.

* Once the April 9 date could not be booked in Japan, Strikeforce began to look for major markets in the U.S. that could possibly host the event. A problem encountered was that many of the states and venues they were looking into were booked on Saturday night, either by NBA or NHL.  Only a few were found that worked with all the parties involved, but they also happened to be in California. The Oracle Arena in Oakland and the San Diego Sports Arena were the two leading venues, though both were out of the question to host the HW GP second leg due to the Josh Barnett licensing issues with the California State Athletic Commission, which Strikeforce want’s Josh Barnett to resolve in case he advances to the semi-finals and final rounds of the GP.

* Finding enough time to promote and capitalize on the HW GP.  With the limited resources Strikeforce has in hand, concentrating on the HW GP while also having to plan for Challenger events and the big Columbus event which coincides with the Arnold Sports Festival provided logistics hurdles. They are looking into properly promoting not only the second leg of the HW GP, but also all the shows in between.  They won’t be able to free resources up until May as  Showtime and CBS will be heavily involved in promoting the Manny Pacquiao vs Shane Mosley fight, so May will be a chance for Strikeforce to catch their breath.  On the positive end, all signs point to Strikeforce being promoted on the huge platform, so it could pay off big for them heading into the latter half of the year.

* There was a rumor floating around that Alistair Overeem wanted to fight in May or June, and that April 9th was too soon to put up a full training camp.  He has fought frequently for FEG in the past 5 months, taking home the belt in the K-1 World Grand Prix as well as defeating Todd Duffee in the NYE card to become the DREAM Interim HW Champion.  Overeem made the following statements to MMAFightingt back in November of last year:

“I will be ready for Strikeforce as soon as I would say April, May, June,” Overeem said Monday on MMAFighting.com’s The MMA Hour with Ariel Helwani.

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After his December fight(s) in Japan, Overeem says he will take a vacation in January and would need two to four months after to properly prepare for his return.

MMAPayout was able to reach both parties, who subsequently denied the rumors.  Golden Glory team stated the following  “Alistair has been training hard lately and is always ready to fight! Doesn’t matter if it was April or June, he will be ready as ever…”

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- The Cons:

* Long layoff hurts momentum created by the hugely successful first leg of the HW GP held in February 12  and headlined with Fedor Emelianenko vs Antonio “Bigfoot” Silva.

* Fighters who fought on the 2/12 event will go 7 months without a fight, fighters who were told they were fighting on 4/9 have a 2 month delay in the middle of training camps. There are already rumbles that Antonio Silva does not want to wait around that long and that his management want’s a fight in between. Alex Davis told ESPN.com “For us it sucks. I gotta keep him in action. What I’ll try to see if they’ll let him fight in Japan. He’s in the tournament so it wouldn’t make any sense to have him fight in Strikeforce. We can’t just wait this long.” The obvious issue here is that if you let Silva or any other fighter fight outside of the promotion and they lose or get injured, it would not be very good for the tournament, which is not a very good position for either side.

* Jeopardizes the scheduling of the entire tournament to conclude in 2011, since the margin of error (bad luck/injuries) is now slim, as the semifinals are tentatively scheduled for September and the finals around early December. Strikeforce did previously mention that if there was an injury, they were willing to give the fighter a 2 month window to see if he could heal to avoid using a replacement for minor injuries.  If any of those situations occur, the event may have slipped into 2011 regardless of this 2 month delay.

* As a promotion who is still working out the kinks in transitioning into a worldwide promotion, having these scheduling issues and hiccups only fuel those within the MMA community who already think Strikeforce is not yet capable of properly handling hurdles that are presented to them.  The two month delay has raised concerns from a number of fans, but if the rest of the GP can go smoothly, I think it will be easily forgotten, though smooth sailing is hardly a given when it comes to MMA or tournaments.

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- The Pros:

* The key here with the extra time is to use it wisely and promote the second leg of the HW GP. Alistair Overeem, Fabricio Werdum, Brett Rogers, and Josh Barnett (making his Strikeforce debut) are all relatively unknown in the U.S. still, so using this time wisely to promote the fighters and the idea of a tournament is a must here.  Although it’s not a positive for the fighters, Strikeforce and Showtime now have more time to promote the next event and cash in on the extra attention from it.  It also doesn’t hurt that the event takes place in Texas, where Gina Carano is from and where big attractions like Herschel Walker can be used to gain publicity.

*April 9th was originally planned as a Japan show, which has now moved to San Diego in what appears to be a Strikeforce vs DREAM event, which should excite fans the closer we get to the event. The event is rumored to have Diaz vs Daley, Melendez vs Kawajiri, Mousasi vs Kyle, Aoki, and Takaya as possible participants.  In fact, it looks like many of the same fighters which were going to participate in the 4/9 event in Japan are still on the card in San Diego.  Sources say that Strikeforce pretty much had Strikeforce done, but due to lack of time and logistics (venue), were not able to pull it off, essentially moving the event to San Diego.  Not only is Strikeforce getting DREAM fighters for the event, but NightmareOfBattle is also reporting that DREAM will also support Strikeforce with the event in terms of “production”.   The event will be billed as a DREAM vs STRIKEFORCE event and DREAM is hoping that they can continue the relationship in 2011, having fighters from both promotions participating in Japan and the U.S. The report also states that DREAM will be focusing on the Bantamweight division and will look forward to crowning champs for each division.

* Although Overeem vs Werdum and Barnett vs Rogers was pushed out, Nick Diaz vs Paul Daley was pushed in to be the main event.  Paul Daley is coming off another impressive first round stoppage, this time over DEEP WW champ Yuya Shurai on BAMMA 5, an event held in the UK.  Daley’s popularity has grown so much as of late, that his fight against Shurai – which aired late Saturday night in the UK on Syfy and streamed live in the US in the afternoon -  resulted in Paul Daley being a top Twitter trend in both markets, which is remarkable. Capitalizing on the buzz Paul Daley has at the moment is key for Strikeforce, and they have done that with booking Diaz vs Daley as the main event of the 4/9 card.  The only worry now is that they have to sell that fight and promote it, which shouldn’t be too hard to do with those guys.  It will also be the date Strikeforce gets their LW champ, Gilbert Melendez, back from injury.

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- Aiming to Capitalize On the HW GP:

* In terms of business, sources within the industry have said that the Fedor vs Silva event has opened up financial opportunities for Strikeforce that were not there before, so stretching out the GP may not necessarily be such a bad thing for them business wise.  It also means more mainstream interest and coverage from otherwise unwilling outlets.  The key here is for Strikeforce to draw mainstream attention to the in between HW GP events and use the GP to boost up the brand.

* The HW GP has opened up PPV for Strikeforce in several non-domestic markets.  Sources within the industry have pointed out that sponsors and other groups are seeking to work with Strikeforce in part to the the HW GP, especially if it could mean a future spot on a PPV or CBS event for the final rounds.  According to NightmareOfBattle, the famous Japanese Magazine “Kamipro” is reporting PPV success for Strikeforce in Japan, to the point where the April 9 event will also be a highly anticipated event in Japan.

“According to authorized people it looks like the amount sold for the SKY PerfecTV! televised PPV of Fedor vs. Bigfoot was quite good. I’m anticipating a Kawajiri vs. Melendez PPV as well!!”

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In addition to Japan, Strikeforce has also partnered with UK PPV provider Primetime, which now appears to be a budding partnership.

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Looking at the April 9 card, the key participants are Paul Daley, Kawajiri, Aoki, and Takaya guys who will be used to bump the PPV sales both in the UK and in Japan.  Roger Gracie is also rumored to potentially land on the event, who lives in London.

Other countries with no TV deals (i.e. Australia) can also purchase Strikeforce HW GP events via PPV.  Latin America saw the Fedor vs Silva event via HBO Plus, which did extremely well and was a top Twitter trend for most of the day in Brazil due to the buzz the event created. The Latin American market has opened up for Strikeforce mainly due to the Canal Space TV deal, which has been vital in penetrating the market and exposing the brand to numerous countries in the region in the past year.

Though holding PPV’s is not ideal for a promotion who is still trying to grow the brand, slowly phasing it in when no other television options are available will give them some sort of non-domestic revenue and a good study in venturing into the sparingly used only for special events  PPV business.

* Ultimately, the goal for Strikeforce will be to hold an event on CBS and then plan a PPV around the HW GP finals or semi-finals.  At the time, they hope to cash in on what they are slowly building with the GP this year.  Ratings, attendance, gate, merchandising sales, and interest in the product are all significantly higher in 2011 in the first 3 months than what it was for the latter part of 2010 for the promotion.

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