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Strikeforce and others find out UFC is the dominant brand; Film at 11

By Zach Arnold | February 16, 2010

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Recently, there were reports regarding the lousy business that the Strikeforce event did in Florida on Pro Bowl Weekend. The Observer reported a gate of around $320,000 and only $8,000 of that was on merchandise sales. $8,000. Holy $^%! When you take a look at the payroll for fighters on the show and how much some of the talent cost, it is real hard to see how the math proved to be favorable after this event was over.

The number to focus on is that $8,000 merchandise number. That is atrocious. It’s illuminating on a couple of levels:

1) Strikeforce has no brand power and people don’t watch the Strikeforce shows because it’s Strikeforce. This is a long-term losing strategy. Dave Meltzer in the Observer put it this way:

CBS seems more like MMA is something they are doing but don’t seem to have a strong commitment to it, and Strikeforce is just their current supplier, kind of like boxing promoters who supply HBO and Showtime with fights. If one of them does well or doesn’t do well, if they want regular fights, there will always be a promotion to work with, just like Strikeforce came after Elite XC went down.

The quandary SF is in is that a move to PPV will not likely prove to be a winner if they simply don’t have the brand power to pull it off. You’re left with CBS/Showtime financing and if it requires heavy gimmicks to attract some attention, then you can’t build long-term brand power with constant short-term fixes (see: Herschel Walker). When various sports media outlets covered Walker’s fight and the Rex Ryan middle-finger incident, ESPN commentators and hosts kept calling it “the Miami MMA show.” Strikeforce as a brand was not on anyone’s mind.

The talent pool is already thin enough as it is. The question coming into SF’s national expansion was whether or not they would be able to get talent on their own financial terms or if the price for the talent would be inflated. It appears that the salaries have been inflated (mostly by SF’s own doing and not so much due to UFC raiding talent) and that Dana White’s point about being happy that Dan Henderson signed a huge money contract with the promotion has some validity. He thinks Henderson and Fedor are guys that will bankrupt SF. He may very well be right.

2) I remember doing a long transcription of an interview Dan Henderson did on Sherdog right after he signed with Strikeforce and he mentioned that one of the big attractive points he saw with SF was their ability to let him sell Clinch Gear products at SF shows. Well, if SF is generating $8,000 for merchandise at a show, all I can say is that selling Clinch Gear merchandise will not prove to be a wildly profitable venture for him.

The concept of booking former UFC talent for bigger non-UFC shows has always been dicey. There’s a right way and there’s a wrong way of doing it. In the case of Bellator, they have largely avoided using ex-UFC fighters, but tonight the promotion announced Eddie Alvarez vs. Josh Neer for May. Alvarez is one of the golden boys for Bellator and seeing how Bellator books outside talent against him in future fights.

UFC will have some intrigue for their Saturday show in Australia (not sure how it will do for PPV buys, but I like the show going in) and then onto Versus in March and Abu Dhabi in April. Based on the recent Strikeforce show numbers, UFC has nothing to worry about whatsoever regarding “the competition.”

Topics: Media, MMA, StrikeForce, UFC, Zach Arnold | 73 Comments » | Permalink | Trackback |

73 Responses to “Strikeforce and others find out UFC is the dominant brand; Film at 11”

  1. Jeremy (Not that Jeremy) says:

    UFC also is the dominant brand. That brand is able to divert more ancillaries to the fighters, bigger sponsorship deals (even when UFC takes a cut of it), larger audiences, potentially better opponents, meaningful titles. That means they basically get the “hometown discount” on any serious fighter.

    Other organizations have to pay more because the other revenue streams and non-monetary remunerations are more limited than they are in UFC.

    Of course, going with UFC has risks too, exclusive contracts, contract freeze outs, relegation to dark matches…

  2. Zack says:

    “Ehhhh. Wrong. Just because Hendo is a lot better than Ortiz does not mean he is a bigger draw. Despite the KO of Bisping Hendo is still a relatively low draw in the US. Definately no where near Tito.”

    This is actually unproven. The only card that Hendo has been on since his time on TUF was UFC 100 which was obviously huge and seen more than any other UFC PPV ever. Who knows where he stands now? It’s all speculation. Dude got the flashiest knockout on the biggest UFC of all time.

  3. edub says:

    “The reality is, the UFC has more to lose by overpaying guys because for everyone at a certain level they have, there are more others at that same level than other promoters have at that level”

    Isiah are you trying to say that multiple orgs have someone the level of Henderson besides the UFC?

    Oh and 45 keep posting man…

    I guess you have to pick sides at this site. You either have to go against everything Zuffa does, and act like they are Nazi germany.Or you have to defend them just to feel sane.

    So please label me a zuffa cheerleader now because I’m going to argue every retarted point made by people drinking the haterade. No matter how much validity there is to said point.

  4. mattio says:

    “The quandary SF is in is that a move to PPV will not likely prove to be a winner if they simply don’t have the brand power to pull it off.”

    Wouldn’t Strikeforce’s CBS shows suffer if they went to pay-per-view? Obviously they would. Unless their would be no difference at all between their CBS shows and their pay-per-view shows, which would make charging people for a show that should be free silly.

  5. Isaiah says:

    Edub,
    I’m “trying” to say that the UFC has more fighters on Hendo’s level and above than other promoters, and thus would have to increase a lot of guy’s pay (eventually) if they increased Hendo’s pay. I know that makes me a total Zuffa hater to say this, but I think they have a lot of good fighters.

  6. Alan Conceicao says:

    Wouldn’t Strikeforce’s CBS shows suffer if they went to pay-per-view? Obviously they would. Unless their would be no difference at all between their CBS shows and their pay-per-view shows, which would make charging people for a show that should be free silly.

    What’s the difference between UFC 105 and UFC 109? Exactly.

  7. 45 Huddle says:

    The UFC has enough brand power to pull off a card like UFC 109 on PPV…. Strikeforce does not….

  8. Alan Conceicao says:

    The UFC has enough brand power to pull off a card like UFC 109 on PPV…. Strikeforce does not….

    Until we see them fail on PPV, I’m not ready to to say they can’t. Hell, they’re like 8 months away from a PPV anyways. Lot can happen.

  9. 45 Huddle says:

    I’m ready to. History is on the side of them failing on PPV. Pride, WFA, and Affliction have all failed on PPV. Nobody has been able to make money except for the UFC.

    They won’t be getting any money from Showtime or CBS for the PPV card. The best they are going to get is production costs paid for…

    At $45 per buy, they will probably be getting $15 at best once all the other people take their money. That includes the PPV provider and probably a little bit to Showtime.

    Then look at their payroll. Fedor vs. Overeem will cost a minimum of $1.25 Million. $1 Million to Fedor and $250,000 to Overeem. Mousasi vs. Henderson will cost a minimum of $300,000. $250,000 for Henderson and $50,000 for Mousasi. That’s a total of $1.55 Million for 2 fights. I wouldn’t be shocked to see the payroll get up to over $2 Million when everything is said and done…

    But just to cover the 4 big named fighters ($1.55 Million)…. They would need 100,000 PPV Buys at a very minimum. Affliction didn’t do much more then that…. I highly doubt Strikeforce can do it. And I gave best case scenario numbers….

    Then there are a lot of “what ifs”…. What if Overeem doesn’t fight. What if Henderson loses before then. What if CBS wants a big card around that time period instead….

    And they can’t use all of their talent for a big PPV, because they would have nothing left for Showtime for a few months….

    Not to mention the UFC is either going to try a PPV at the same time… Or they will do a free event on SpikeTV.

    There isn’t much upside for Strikeforce on PPV.

  10. 45 Huddle says:

    http://www.sec.gov/Archives/edgar/data/885475/000095012308004130/y54148e10vk.htm

    One of the only great things about the IFL is that they were a public company. So was EliteXC, but they overspent so much that it is hard to look at their books and figure out what was necessary and what was excess.

    The IFL didn’t really have much excess. 2007 is the best year to look at. They were in full swing and it was really the only year that they were fully functioning. They had 13 cards that year.

    During that year…. They had “Selling, General, and administrative expenses” of $8.7 Million. That does not include live event costs.

    Now, $2 Million of that was from going public. And let’s say that Strikeforce is a more efficient company, and can operate at $4 Million a year. Highly doubtful since they are going to be running more cards…. But lets just say that is how effective Scott Coker is…..

    Over 20 cards a year…. that is a fixed cost of $200,000 per event. And that isn’t even including the cost of running events. Even with Showtime picking up the product costs, there is likely other potential costs associated with this….

    The numbers don’t make sense. The numbers make even less sense when they have to go on PPV and they aren’t getting a minimum of $500,000 per event.

    I remember even during the IFL and EliteXC days, people were in denial when the financials were smack right in their face. They were even in more denial with Affliction because they supposedly got over 100,000 PPV Buys….

    There is only so much cost cutting that Strikeforce can do…. There is only so much money Showtime can pay out…

    PPV doesn’t make sense….

  11. Jonathan says:

    45 Huddle, what is your e-mail address. I would love to have a conversation with you about what EXACTLY you believe…honestly. I understand you being hesitant, so you can e-mail me at iloveuco@yahoo.com

    Seriously, send me something. I want to know what you want to see in the sport of MMA. Honest answers, no BS or anything.

  12. 45 Huddle says:

    I’ll email you tonight.

  13. Isaiah says:

    It’s pretty obvious that he doesn’t care about the actual fights. I think as 45 sees it, the fun part of MMA is imagining Zuffa making money and its competitors having trouble.

  14. edub says:

    “I’m “trying” to say that the UFC has more fighters on Hendo’s level and above than other promoters, and thus would have to increase a lot of guy’s pay (eventually) if they increased Hendo’s pay. I know that makes me a total Zuffa hater to say this, but I think they have a lot of good fighters.”
    Oh it sounded different the way you said it. That doesnt make you a hater, but the 5 or 6 other posts you make per day kinda build a strong case for it.

  15. 45 Huddle says:

    I actually enjoy the fights a lot… I don’t enjoy not being able to see Lesnar vs. Fedor (co-promotion does NOT make sense after it’s bad history in MMA). I don’t enjoy not being able to see Jon Jones vs. Gegard Mousasi. Or GSP vs. Shields. Competition has also hurt a lot of athletes in that it has pushed them too fast and stunted their career growth.

    Zuffa is the only company that has shown they can run the sport the correct way.

    But I do enjoy the fights a lot. Lately, the UFC has been a let down (and I have said so). I think people just ignore my comments when I say I’m not buying UFC 109 and stuff like that. I’m really looking forward to the next few months of fighting….

  16. Isaiah says:

    Well, we can agree on that much. I don’t think 110 is a great card, but it’s the first decent one in a little while, and the next two after at are even better (Vitor’s injury was a major, major letdown for me, though). There’s also a couple of good free cards coming up.

  17. skwirrl says:

    I’ve taken Meltzer’s numbers with a huge grain of salt ever since he joined part of the political arm of ZUFFA in working with Yahoo singing their praises.

  18. EJ says:

    Meltzer is the best in the business at what he does and has been doing way before anyone cared. I know people love to reach to hate anything UFC but bashing him just shows ignorance on multiple levels.

  19. Ed says:

    The latest rumor about Strikeforce is that the CBS card will be held in Nashville on 4/17 and Fedor will NOT be fighting. The main event will be Henderson vs. Shields.

    Source: http://twitter.com/Nashville_MMA

  20. 45 Huddle says:

    Why isn’t Fedor fighting?

  21. Alan Conceicao says:

    LOL, I hope to god its M-1 finding an out and that mystery Lesnar opponent for May coming true to be him. How totally sweet would that be?

    One can dream. Watch it be something retarded instead.

  22. The Gaijin says:

    Rothwell out, Anthony Perosh in. So much for seeing if Mirko’s gaining anything from his new alliance with Hippolyte…squash!

    And I’m sure everyone will be upset to hear that Sinosic vs. Haseman was cancelled due to a shoulder injury. That fight had no place on a top tier organization’s fight card – at least it was going to be a dark match.

  23. Paul Horton says:

    I am of the opinion that “45 Huddle” is “orcus” over on the UG. Wow…the obsessive need to go after all non-UFC promotions with LONG, well-thought-out-but-full-of-logical-holes arguments is kinda scary bud… 😉

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