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The WEC Ticket

By John Philapavage | December 13, 2007

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WEC 31 tickets must have cost half a million dollars. That’s the only financially reasonable thing I can think after watching another Zuffa promoted WEC card out of The Hard Rock in Vegas. Keep in mind that this was the third WEC show at the 1,000 seat venue, and the last one on 9/5 was the highest rated. A .5 rating, well under a million viewers. Though I couldn’t find exact figures after a quick search, I can’t imagine a gate of over $250,000 in the last three shows. In fact, closer to $200,000 would be my high end guess for last night’s box office. Doug Marshall was running through the crowd in celebration of his quick arm bar victory, and I think he high-fived everyone there in about two minutes flat.

I understand Zuffa got on board with the Versus Channel because they had acquired a few promotions and fighters in part, but really because it blocked any other promotion from getting on an MMA-interested basic cable outlet.

Here’s what I don’t understand. You’re paying for the fighters, some of which are name guys. You’re paying bonuses, I’d assume. I can’t speak for last night’s crowd, but in the past many of them have been comped fighters and friends. You pay for advertising and TV production, announcers, and possibly the promotional special (anyone know specifics on what Versus pays, if anything?) You rent out the building, pay for live TV satellite time, and any of the other incidentals that come with running a professional ready-for-broadcast LIVE show. I know you can chalk it up as a loss leader or an investment on a financial report (you can justify a lot as a private business), but how is this supposed to catch on if you’re still on Versus at the end of the day?

I was presented with these points as possible answers as to why Zuffa continues to maintain the WEC promotion. Some of them I’d thought of, and some I had not. One point is that Zuffa is merely trying to lock up talent that has value but isn’t ready or isn’t at a level to be successful in the UFC. The idea is that even if WEC is losing money, if your going to tie guys up in contracts, you might as well make some of the money back with shows, expose a portion of the population to them, and have a good tape library in case of a controlled interpromotional feud with UFC. This effectively locks Elite XC or other upstart groups out of talent and TV.

Another point was that Zuffa doesn’t care if WEC makes money, as long as it breaks even. This goes back to the point above, where as long as you maintain the promotion all the benefits are there with minimal financial loss. This makes me want to see those Zuffa books, a thought I’m sure we’ve all had a few times, because I just can’t see the promotion in it’s current form making money. The question is, how much is it losing, and how long until UFC’s financial success slows down enough that they find WEC a liability. Which leads into the final point.

Dave Meltzer has a report out at Yahoo Sports saying Zuffa wants to take WEC on the road. Mr. Sunshine Steve Cofield put audio up on his site of WEC Vice President Brian Dropick discussing expansion to places like Albuquerque, Sacramento, Florida, Oklahoma, New Jersey, and Illinois. They’d attempt to pair markets with fighter camps or fighter’s hometowns. The idea of expansion speeds up the process because we’ll get to see if TV exposure on Versus means anything at the gate, if the company can sustain expansion costs, and if the casual fan sees World Extreme Cagefighting as UFC approved, or some low rent wannabe. Moving to UFC tested markets like Hollywood, Fl. Would increase venue size, but will it make money? I don’t see PPV in sight, not even for Faber vs Pulver. I get the idea they have to expand this to grow, but will the costs out way the fuss?

There is a wildcard I don’t completely have a grip on that may keep WEC in business as long as the UFC doesn’t do a nose dive. Tax write offs. It’s been brought to my attention that Zuffa could use the WEC and UFC to counter balance each other by Zuffa writing them off in tax filings.

My opinion is using the key fighters they promote in a few choice markets like Florida, Sacramento, and Albuquerque in 2,000-5,000 buildings would a success. They’ve talked about Pay-Per-View, but I don’t think that would be met with small and then diminishing returns. I don’t know how far in the black ink limited touring would get them, but I think it increases it to a comfortable level.

Having said all that I still wonder: at what point does Zuffa end the experiment of running a second brand, and if they continue, what are acceptable financial losses in their minds? At what point do they say, “We can have a certain level of success, but it’s not making enough money to justify it. Perhaps the coming year’s expansion coupled with the possible fates of both the IFL and Elite XC (and possibly all the promotions Pro Elite bought) will give us the answer in ’08.

Unless they pay people like Jens Pulver and Paulo Filho in respect, I have to imagine $500,000 ticket prices couldn’t be high enough for some Zuffa officials last night.

Topics: All Topics, John Philapavage, Media, MMA, WEC | 22 Comments » | Permalink | Trackback |

22 Responses to “The WEC Ticket”

  1. El Samurai says:

    It could also be that they could be getting rights fees from Versus. WEC is one of the few things showing any signs of life in the ratings on that network and they were quick to lock WEC up for a long-term deal as soon as the original was up.

  2. I think they are, that’s why i threw in the line “You pay for advertising and TV production, announcers, and possibly the promotional special (anyone know specifics on what Versus pays, if anything?)”. I know they have 6 live specials on Versus next year, but Versus isn’t a network that throws around a huge amount of money, nor do they have the penetration on cable of a Spike TV (the reported $100 Mil. deal). i know people will bring up the NHL on Versus, but that’s an established sports brand they most likely payed a pretty penny to. I do bet the rights fees are healthy, but I’d bet that means they don’t share in ad revenue.

  3. The WEC is definitely getting good money from Versus … the IFL is the only company that gives it away for practically nothing.

  4. El Samurai says:

    Another point to ponder: Zuffa had a long-term deal to run shows at the Hard Rock, but they obviously like the Palms better. It could be these WEC shows were simply to fill out the remainder of their contract.

  5. cyphron says:

    MMA is still growing. The UFC thinks it has the formula to grow the sport. Unfortunately, it can’t get the UFC on any other channels other than Spike. So here comes the WEC. Interestingly enough, they only focused on the WEC seriously after the Pride situation went kablooey in Japan.

    Zuffa obviously wants a NFC/AFC unification thing later on (they stated that much when they bought Pride except it didn’t happen that way). If Versus gets on the first tiered cable/satellite lineup, I expect the WEC to blow up just like the UFC did. Unfortunately, they’re stuck with the .5 ratings as long as it cost 15 bucks extra to get Versus (at least with Dish Network). Hey, a crappy channel is better than no channel.

  6. D. Capitated says:

    Oh noez~! An MMA promotion that doesn’t do UFC numbers and has a smaller payroll and network support. How can they survive in this world? Let’s crunch the numbers and see how they compare to TNA’s sea of red ink. This is obviously the superior business model to use than to compare to something like boxing, which also runs a similar number of live cards on the same network to a similar audience.

  7. At the moment, ProElite’s money from television is more or less a fantasy. Maybe next year.

  8. Capitated-
    Laughed my ass off when you mentioned TNA. Granted Zuffa spent something like 34 mil. from ’01-’05, but Panda Energy’s board of directors should be shot for allowing TNA to burn money the way they have been. I’m just amazed you never hear about them even possibly shutting down.

    I don’t think, nor do I think anyone, should expect UFC like number. I don’t agree that WEC would be huge just because it cleared all cable and dish packages, but it’s a step. TV is important to talk people into PPV and live attendence (for some reason MMA never got licensing and merch. as much). I think it’s important they keep Versus, even if they may (possibly) have to pay some production costs, but I don’t think a WEC PPV makes money. At one point I read in Meltzer’s publication that break even on live PPV events, depending on scale of promotion and production, was 100,000 to 125,000 domestic. I don’t see WEC hitting that. The Versus deal is only 6 shows a year, so I’m not sure how significant that is in rights revenue, but I’d imagine actual payroll (which we should know in days is 60-80K, so it’s low

  9. WEC may or may not make money, but I suspect that with it’s TV and ad revenue it’s doing alright.

    The reason it needs to go on the road is that since there’s already an existing television deal, and the number of dates per year may well be practically defined by that deal (if it’s exclusive, then you’d end up with money losing dark events if you went over six a year), to increase revenues, you need to sell more tickets, and you can’t do that in that specific venue, in addition to the general problem of coming back to the well too often.

    There are six to ten thousand seat arenas all over the country though, and you could do good money playing to the early regulating states that UFC tends to pass by now, especially if you’re bringing around some relatively well known UFC names with you.

    I would not be very surprised if we were talking Quad Cities, Springfield (once MA gets regulation), Agannis Arena, etc. At least for the time being.

    UFC came up the same way, and it’s looking increasingly like if Zuffa wants to expand the number of events, they’re going to have to stratify things. It’s going to be a good mix of UFNs, TUF Finales, WECs, PPVs, and Free to air shows in the future.

    I would be surprised if UFC has given up on the “superbowl of MMA” idea too…you have to build WEC up to that same level, but this is something that Zuffa has proven they can do.

  10. Ivan Trembow says:

    The “why” in all of this was reported at the time: The IFL was about to get a TV deal with Versus (which would have been a long-term, stable TV deal), and that couldn’t be allowed to happen.

  11. D. Capitated says:

    The UFC needs to go on the road before the WEC does. For christ’s sake, there’s no legitimate justification as to why they haven’t run Mohegan Sun with the 6,000 seat setup, Washington, Oregon, Iowa, Atlanta, Biloxi, etc when they’re doing UFN and TUF Finales. A couple of the Palms shows (including the TUF 6 finale) had tons of empty seats. Why not, you know, move the show to Reno for once at the least?

  12. No question, UFN needs to go on the road.

    I wonder if they might not because of production convenience. Helps keep costs low since all of Zuffa’s people and connections are in Vegas.

  13. David says:

    “Doug Marshall was running through the crowd in celebration of his quick arm bar victory, and I think he high-fived everyone there in about two minutes flat.”

    HAHAHA, I was thinking, damn.. I ain’t never seen this before; now I know why!

    “The question is, how much is it losing, and how long until UFC’s financial success slows down enough that they find WEC a liability. Which leads into the final point.”

    Great point. However, the UFC is becoming more and more common among the 18(16)-34 year age demographic and over time the exposure will hit the tipping point. Also, posterboy Huerta, the good looking fighter who ate an illegal knee to a downed opponent, a bursting ball of energy that is Guida, and wrestled a tired Guido into domination! The Mexican demographic is huge, and as I said, the tipping point could be next year or it could be in 10 years but with advertising money on the rise, I think D-Dubya could pull some sh*t off. Think about it this way, the company, and most MMA companies, are not public for a reason. I think the reason is that the do shady business: under the table, maybe mafia, foreign investors, etc. It’s about time I write some good shiz.

  14. cyphron says:

    We need to remember that the UFC was not an overnight sensation either. In comparison to all the other wannabees, the WEC so far looks to be the best. I went to the last Strikeforce show in San Jose and believe me, it sucked. The WEC for the most part has exciting fighters and exciting fights (lower weight division for the win!). That is how it’s going to grow itself in the MMA market. That and getting itself on basic cable. One out of two ain’t bad.

  15. nicklovesmma says:

    I would totally spend 30 bucks on a WEC PPV. Believe it or not, my favorite MMA organization is the WEC; I love the announcers, the fighters are world class for the most part, and the champions are awesome across the board.

  16. Zack says:

    “I would totally spend 30 bucks on a WEC PPV. ”

    I’m sure there are 600 other people who feel the same that you do.

  17. Two things reading over this that i see:

    First, I worry about how excited people get over Mexico. The economy is so bad there, and it should not be underestimated. CMLL, Mexico’s WWE wrestling promotion, owns it’s own Arena in Mexico City and runs every Friday night (talk a bout burn out). Up until recently they were getting sell outs of 18,000 many Fridays – and for 2006 they averaged over 12,000 for the year. The problem is tickets have to be very cheap for most people to afford them, as the exchange rate is horrible for taking revenue back to the U.S. It’s one of the reasons the WWE decided against expanding into that market this year. I’m not saying it can or won’t be done, just that i wouldn’t see that move as financial gold. Still, it’s good to get a foothold and brand name down there. MMA is very new to them.

    The second is that while exciting fights and fighters are great, the way you make the big bucks is the casual fan. They’d need to hook people with personality, because I’m sure we’ve all had a million friends who are amazed by fights at 155, and like a fighter here or there, but they aren’t hooked. you have to drag them to something they enjoy once they’re sitting there.

    Thanks so much to everyone for the good feedback and discussion on this topic. That’s not a final word, just wanted to get it out there.

  18. Michaelthebox says:

    JP: People aren’t getting excited over MexicO, they are getting excited over MexicANS. Mexicans living in the US are a big demographic, love fight sports, and will spend good money to enjoy them.

  19. As racist as that statement’s tone sounds, I have to agree with Michaelthebox here. It’s not all about Mexico, it’s about Mexican-Americans.

    That doesn’t mean that Mexico itself isn’t also on the radar though. UFC sees television rights fees there that are ripe for the picking, and holding shows in Mexico City or Guadalajara would help raise their profile.

  20. Michaelthebox-

    I am aware of what your saying. Boxing thanks that demo very much over the last decade. But it’s not like the UFC is invisible, or that Mexican’s live in an area of America where the UFC isn’t on TV. It’s been almost 3 years with the UFC on TV, and while I’m sure there are Mexican fans, shouldn’t they be here? I’d personally be much more excited over opening a region up to shows and TV then a demo I haven’t been able to hook yet. That demo seems still enamored with boxing, and I haven’t seen it targeted ad wise. In there an initiative anyone is aware of.

    Lat thing. No offense Mike, because I understand where you are coming from, and it’s a perfectly valid point. But the reason i said what i did was because I have only read of people excited about MexicANS because Dana White talks about going to MexiCO. That’s why it was said.

  21. cyphron says:

    I’m pretty sure when Dana said Mexicans, he meant Mexican Americans. I don’t even know if PPV exist in Mexico.

    That is why they’re pushing Roger Huerta so much. For what it’s worth, when I went to the Strikeforce show, there was plenty of Mexicans rooting for Mexican fighters. The show survives mostly on the support of the local population and they are mostly Mexicans and Asians. Shamrock and Cung Le as premiere draws is no coincidence.

  22. D. Capitated says:

    The reality about MMA in Mexico is that aside from it being a new phenomenon, there’s simply very little promotion of the sport being done down there and really no major camps of note. Mexicans love boxing because Mexico has a strong history in the sport. There are no people who were born in Mexico who’ve come up through the ranks of the amateur and professional system there to become UFC champ. Huerta will help to some extent, but expecting them to take to him like he’s Julio Cesar Chavez is crazy talk. The UFC needs to do anything but run Mexico.

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