By Zach Arnold | May 21, 2007
By Zach Arnold
Here is a summary of the interview (and we’ll focus on the questions regarding the company’s finances).
The topic of Super Fights
Otto stated that the legends (Bas Rutten, Pat Miletich, etc.) attracted fans initially to the IFL and when those legends started recruiting fighters, it motivated the fighters to want to compete again. The IFL has been able to place the legends in positions to build new stars. Sometimes the super fights are good and sometimes they are not good.
The topic of Maurice Smith vs. Marco Ruas
Otto said that Maurice Smith stuck to his game plan, which involved wearing out his opponent. Even though Ruas won the first three rounds, Smith ended up wearing him out in round four and Ruas ended up going to the hospital. He has a slight orbital/cheekbone fracture. Otto claimed that he had no regrets in booking that fight and thought it was unfortunate that uneducated fans booed the fight while the more educated fans watched the fight closely.
The topic of merchandising
A caller phoned in and asked Otto why the IFL doesn’t have a complete selection of merchandise to order online or to buy at the live events. Otto stated that merchandising was done in-house but that they have now been able to outsource production to a new company, which should result in a good turnaround in a few weeks.
In regards to IFL DVDs, Otto claimed the first DVD would be released soon and it would be a montage of the best submissions, knockouts, and fights from the debut season.
The topic of marketing the team concept
Otto remarked that fans are starting to care about the team concept and the idea of having a playoff format. He cited a Sherdog.com poll that had close to 19,000 votes on it — but the radio hosts (Greg Savage and Jeff Sherwood) either didn’t know about the poll or forgot about it. Otto stated that the team competition has really stepped up from last year when the Silverbacks won the championships. The Silverbacks are now fighting to survive to make the playoffs.
The topic of the IFL’s financial heath
The IFL stock price is around $3 USD/share and on Tuesday, the company’s quarterly report stated that they lost $7 million USD (net loss) in 2007 Q1. Since the IFL’s debut, the company has had a net loss of $16.6 million USD. The report also stated the following:
Future Capital Requirements
Since inception, our MMA operations have incurred losses, and we have funded these operating deficits through proceeds of $2.5 million from the 2006 issuance of preferred stock and from net proceeds of approximately $22.2 million from our December 2006 private placement. Based upon management’s current forecast of future revenues and expenses, the Company believes its cash resources will likely be sufficient to fund operations into, but not through the end of, the fourth quarter of 2007.
Otto responded to questions about the company’s health at the 48 minute mark of the radio interview. Greg Savage said that in a meeting he had with Gareb Shamus on Saturday, Shamus thought the media’s focus on the company’s stock price and financials was unfair because the ’strong’ TV ratings the IFL is drawing with Battleground and FSN are not being pointed out enough. Otto stated on the radio interview that the fans support the IFL and generally care about the company’s health. In response to media reports focusing on the IFL stating in their Q1 2007 report that they would run out of money by the end of the year, Otto clearly stated twice that ‘that’s not the case‘. Otto stated that management is in it for the long haul and that they want to make a difference in the sport. He mentioned that new people have been brought into production for the IFL Battleground show and that each show is improving. Between the IFL initial & replay telecasts on Fox Sports Net and MyNetworkTV, the company is getting seven hours of media exposure a week. Otto stated that the IFL is in a race to get great ratings and to use their TV shows to tell the world who they are and why they are on the air. He emphasized that the TV coverage was vital and that it would trickle down into increasing show ticket sales and merchandising sales. Otto stressed the need for patience and to dig in deep for results to surface. He wished that fans would cut them just a little bit of slack, as the company is ‘growing’ at a healthy rate.
In regards to the stock price, Otto feels that the current price is an accurate reflection of where the company stands. He felt that the stock price was overvalued a little bit and that the 60 Minutes TV segment catapulted the stock price to the levels it reached (in the $15-17 USD/share range). Otto claimed that he’s not focused on the stock price and feels that being a publicly-traded company allows them to get access to more capital and to make business partnerships. Being a publicly-traded company gives them legitimacy. It takes money to build the IFL machine, but do people know where the money they are spending is going? It was not in the IFL’s business plan to have two TV shows in under a year’s worth of time and that the Battleground show costs them money to produce (but it’s ‘money well spent’).
Otto denied (for a third time) that the IFL would run out of money.
The topic of booking new super fights
Otto discussed Igor Zinoviev’s desire to return to fight, but that other super fights need to be booked first. Otto stated that he doesn’t believe in giving legends tomato cans, as demonstrated when he booked Mark Kerr against Mike Whitehead. He stated that watching The Smashing Machine inspired him to ‘do this’ (I think he means getting into MMA…).
In regards to Frank Shamrock being positioned as a heel or a ‘bad guy’, Otto believes that it’s due to Frank being outspoken about his ability and his knowledge of the sport. He (Otto) has not discussed money issues with Frank in regards to fighting in the IFL, but stated that if Frank can make big money elsewhere then he should go for it.