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Three media notes on UFC that will cause a mixed reaction

By Zach Arnold | November 25, 2009

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First, this morning on ESPN’s news ticker (which airs on all their main television channels), they ran with a headline that said that Houston Alexander told KEZO-FM 92.3 (Z-92) that he would be fighting Kimbo Slice on December 5th in Las Vegas. Now, this match has been (if you are a hardcore MMA fan) one of the worst kept secrets in the world, but it was supposed to be a secret nevertheless because of all the teases UFC has made on The Ultimate Fighter about whether or not Kimbo would return to the tournament as a fighter replacement.

Making ESPN’s news item interesting is that on the Todd n Tyler radio show page, they use the following news teaser:

“Our UFC fighter buddy who’s fighting a guy whose name we can’t legally say yet., but it’s a big fight on Spike TV, Saturday December 5th.”

So the radio show doesn’t actually say who it is, but ESPN attributes the news item to them during their Houston Alexander interview. (Listen to the interview here.) The catch is that ESPN’s report is based on Sherdog’s report. Read the Sherdog item to see how it plays off the radio show teaser.

Second, there was recently a radio discussion about how low the PPV buyrate will be for Survivor Series, which used to be one of WWE’s biggest events of the year. The discussion, for a second, turned to last weekend’s UFC 106 PPV event:

BRYAN ALVAREZ: “God, you know what sucks is they can’t even blame it on UFC because that Tito buyrate ain’t going to be all that good.”

DAVE MELTZER: “No, but it doesn’t help when you have both on the same [weekend], but no no, the Tito buyrate isn’t going to be big either, I don’t think. That one I actually have a handle on, and so far… I mean I don’t have a good handle on it, but it ain’t going to be that big.”

Third, a media note related to the second item. MMA Junkie has a news item that says: UFC 106 draws 10,529 attendees (6,631 paid) for $3 million gate. What’s striking about that number is that Dana White gave out the 10,529 number at the post-fight press conference and given the $3 million gate, it made some sense that the paid number would be a good portion of the overall attendance figure. However, 6,631 paid for a crowd size of 10,529 is the type of number that should be alarming as far as UFC shows in Las Vegas is concerned.

A lesson you learn quickly as a promoter is that tickets = currency. If you give tickets out to charities or to potential sponsors and it helps you make some business in-roads, that’s acceptable. But when you have to comp. at least a third of your show, look out. The message it sends to fans who pay for tickets is this — why should we buy tickets early when we can get free or discounted ones near show time? Even more disheartening about the MMA Junkie report is while the paid gate of $3 million is respectable, the face value of the comps was $2.3 million dollars. Simple math says that the value of each paid ticket was around $450 and the value of each comp ticket was close to $600. What it indicates is that fans are not buying the more expensive seats and that UFC needs to start adjusting to the marketplace by lowering the cost of premium seats. They don’t need to discount every seat price, since they still do command good money for the tickets they sell. What’s interesting about this situation is that Dana White has been asked by a few reporters (including Yahoo writer and ESPN radio host Steve Cofield) if he would ever lower ticket prices like promoters did for the Shane Mosley/Antonio Margarito fight at the Staples Center last January and White’s response was one of those “all options on the table” responses, but the delivery of it made you feel like it wasn’t something that would be seriously considered. Well, given the amount of injuries with top stars and several top fighters taking time off, something has to give here for UFC. I’m not sure what the right answer is, but it’s an answer that the company really needs to sit down and take some time to analyze. The numbers from the UFC 106 show are a warning sign of things to come, despite how cursed the show was from the beginning.

Topics: Media, MMA, UFC, Zach Arnold | 63 Comments » | Permalink | Trackback |

63 Responses to “Three media notes on UFC that will cause a mixed reaction”

  1. fight master says:

    what is more alarming is, the ufc needs to keep selling alot of ppvs

    what is not brought up much on here, is the ufc does have 400 million in debt by loands the fertittas took out against the company

    that is alot .

    comparing to the wwe which has virtually no debt.

  2. david m says:

    Happy Thanksgiving to you all.

    I would say in all honesty this is the most intelligent mma forum on the intraweb. There are definitely some sherdoggy interactions (especially lately), but overall this place is great. Enjoy the turkey.

  3. […] easier for fans. Perhaps a few events with less than spectacular attendance and buyrates (also not so hot) will convince the UFC that they need to adjust their prices through this little plague of injuries […]

  4. The Gaijin says:

    “what is not brought up much on here, is the ufc does have 400 million in debt by loands the fertittas took out against the company

    that is alot .

    comparing to the wwe which has virtually no debt.”

    The WWE is also a company at or near it’s maturity, rather than an arguably high growth company like the UFC. The UFC can have some high debt ratios at this point, because the idea is that they’re going to continue to grow rapidly and the high debt can be offset. The WWE doesn’t want to have a giant amount of debt because they’re bringing in steady flows (and based on recent ppv numbers, decreasing while getting more from merchandising and dvd sales etc.)of revenue from their main drivers.

  5. 45 Huddle says:

    Amateur Financial Analysts are always the best…..

    Most larger companies have debt on their books. The natural reaction is for somebody to see this and think it is a bad sign. Most larger companies have debt and that is considered a good sign. What you want to look at is debt to equity ratios and if the company can cover their interest expenses. Besides that, it is nothing to worry about.

    It’s about as comical as people who think Station Casino’s financial peril’s have anything to do with the UFC. Fertitta got so much money from Station that his own portfolio will be reduced but still strong. And the effect on the UFC is basically zero….

  6. The Gaijin says:

    The whole debt on books = bad is pretty overplayed. If credit is cheap and you can find uses for it with a higher return why wouldn’t you? When credit was really cheap and there was a lot of opportunities out there, people were leveraging their asses off and it was considered a good thing. The big problems were for the people who lost money when they were insanely leveraged (where are you going to find the money to pay back your debts when they become due?) and when company’s tried to refinance their existing debt but couldn’t find financing at acceptable rates, if at all, and banks were calling loans at maturity.

    That whole Station thing pulling Zuffa down is a joke…Zuffa and Station are totally separate entities. The Fertitta’s were paying themselves gigantic amounts of comp (somewhere in the in the 8-9 figures from what I heard) and pulled a lot of money out of the place already, so to think that Station falling will have any impact on them personally (other than seeing the company collapse or go into the hands of someone else) is minimal. The impact it will have on Zuffa, is even less so.

    I’m not sure if that was a jab at me 45…but if it was, I’m not sure if you’re expecting me to write detailed dissertations for people on message boards who can’t even spell, but I’m not about to, though you’re quite welcome to.

  7. Rob Maysey says:

    “The whole debt on books = bad is pretty overplayed. If credit is cheap and you can find uses for it with a higher return why wouldn’t you?”

    Exactly Gaijin, which is why the mocking I took when in retrospect is comical. What use, in large part, did Zuffa put of the debt it took on?

    It funded dividends! What does this mean? It wasn’t used to fund Zuffa operations or growth at all. I ask again, doesn’t this suggest, at the very least, that the owners of Zuffa may believe they have better uses of with higher returns on investment of that cash outside of Zuffa?

  8. Ivan Trembow says:

    They’re sure as hell not “putting it all back into Zuffa” like they publicly claim whenever someone asks them how a billion-dollar company can pay its fighters such a small percentage of gross revenue.

  9. fight master says:

    actually the fertittas net worth has dropped quite a bit the past year, they are not even billionaires now.

  10. Alan Conceicao says:

    This thread in short:

    -The UFC is reliant on big stars to sell PPVs. You already knew this if you had paid any attention at any point in time. Really. Matt Hughes sold hundreds of thousands more PPVs than Rich Franklin 3 years ago. No different now comparing Brock and, say, Anderson Silva or Tito Ortiz.

    -Tito isn’t a draw. Interestingly, it wasn’t long ago that he was such a draw, it was a mistake for Strikeforce or Affliction not to have signed him. Even further back, he wasn’t worth the money the UFC paid him. This was a 40,000 bonus of declared money from UFC 84 to now!

    -Debt isn’t necessarily bad. Debt existing to pay the owners with the idea being that future returns will pay it off is questionable. Noting that those same owners have run their previous business into bankrupcy; apparently not worthy of being noted.

    It looks like I didn’t miss much. Apparently Rashad is one fight away from fighting Rampage? Gee, sounds like someone started talking Rampage’s language. Meanwhile, Anderson’s “elbow still hurts”. LOL. Best charade ever. If only they’d actually strip him!

  11. fight master says:

    hi alan i have to agree with you ,

    also if the ufc, do not continue to sell alot of ppvs they can be in a crunch financially

    i believe zack and other sites said 75%of there income is from ppvs, which is scary.

    400 million debt for a fight company that relies on ppv sales as there main source of revenue, would be scary to me.

    the fertittas are in danger of losing there casinos.

  12. Alan Conceicao says:

    75% of their income is from PPV because PPV fights ARE THEIR PRODUCT. Its really that simple. They can’t go making direct to DVD movies or expect action figures to make a mint when their average fan is a fratboy or in his mid 20s. They are what they are. Its like questioning the longterm viability of NASCAR because they have to drive cars and thus don’t appeal to motorcycle riders, people who ride bikes, or use public transportation.

    Look, if they want to leverage the UFC to make tons and tons and tons of money, that’s fine. Its up to the employees to try and extract as much money as they can out of the promotion for themselves. If they refuse to do that, its their fault when they retire broke or end up having to fight on into their mid 40s and start risking all the same afflictions that hit boxers.

  13. […] flashback to the UFC 106 numbers last November in LV: What’s striking about that number is that Dana White gave out the 10,529 […]

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