I can understand that businesses incur a net look in their first year operations but losing $27 million is a pretty hefty sum, unless they see it as a sizable cost to gain entry into a market already dominated by Zuffa.

I have to disagree with your comments about fights on the ground. There have been plenty of fights that got strong responses even when on the ground.

Go back and watch Griffin/Tavarez, Huerta/Guida, Griffin/Guida, Sanchez/Diaz, Diaz/Gomi, Forrest/Shogun, Griffin/Edgar, Lesner/Mir, GSP/Hughes, GSP/Koscheck…if there is action on the ground, most audiences respond well. I say most, because there is the occasional crowd that turns on the ground fights. But the Vegas crowds are almost always good crowds.

The only reason why the UFC is a hit in the PPV market is because of the household names and brand recognition (they have a monopoly on mma brand recognition). Look at every PPV without Chuck Liddell, Randy Couture or Tito Ortiz in 2007 and what you’ll find are PPV buys that never go above 400,000 (and average even less). In the TV market, the UFC’s Spike TV ratings are much more inferior to the WWE’s ratings when they used to be on Spike TV. And why? Because the fighters on Spike have less name recognition while the WWE tends to have the big names on RAW and Smackdown programing weekly (the biggest matches are reserved for PPV though).

They have another million and a half that’s related to depreciation and amortization, most of which is associated with the excess that they paid over the assessable value of the net assets of the entities that they acquired (“goodwill”).

They expensed a quarter mil for some fixed asset that they determined had no value (no idea what that is, but it’s probably a contract, I would guess).

So that gives you an idea of where about seven million in what could be termed paper losses went to. I’m guessing that all of those items are part of what composes their income statement item titled “General and administrative expenses,” which is odd, since they’re all (except d/a, which is normally broken out after profit/loss as well) what I would normally consider non-operating, and I would expect them to be broken out AFTER operating profit/loss.

That still leaves you with more than seven million in cash or equivalent expenses that are in general and administrative expenses. Typically that would be management salaries, insurance, etc. That’s a lot of money for a company that doesn’t make any money to be spending on that sort of stuff.

They blew through 20 million on that end. Their web site has indeed cost them a fortune, but this total seems awfully high.

Shaw made 435K in 2007.

I have to admit I am a little surprised at how much EliteXC has lost. That is a lot of money to burn through with such few shows. One fo the main reasons is how much they are paying guys like Gary Shaw and other top executives within the company. Those guys aren’t fans of the sport. They are just trying to make a profit, and if the company does poorly, they don’t care.

The thing with EliteXC is that they do have Showtime backing them. And after their current contract is up, Showtime could support the company, just like how HBO supports boxing through the revenues it generates. However, HBO has PPV to generate income, along with a huge subscriber base. And I can’t see Showtime putting in $25 Million a year into EliteXC. It just doesn’t make sense financially.

First mover advantage. IFL and EliteXC are both fighting up hill against a dominant competitor. When the UFC was struggling, they were losing money in a market they control. IFL and EliteXC are losing money in a market where they are fighting over a 10% and trying to a piece of the other 90%.

EliteXC and IFL thought the MMA market would continue to grow… except it hasn’t, or any growth has been grown on the UFC’s side.

The CBS deal is a make or break deal for EliteXC. There is no way they can continue sustaining the losses. Incidentally, if EliteXC does do well in bringing new fans in, it would help the UFC rather hurt them. I disagree with Cuban about his comment that fans would go away from PPV when there’s free MMA. Fans will always gravitate to the best product, regardless if it’s free or not. However, you need to offer free MMA to get the exposure and bring in new fans in the first place. That’s why MMA on network tv is great for MMA, great for EliteXC, and also good for the UFC.

They did spend/lose 4 million on 06.

http://forums.mmaweekly.com/showthread.php?t=2368

Above is a link to an overall breakdown I posted on the MMAWeekly forum on Tuesday night.

Here is a link to the entire document:
http://www.sec.gov/Archives/edgar/data/1015789/000114420408022539/v110558_10ksb.htm