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If K-1 has to do a pay-for-play deal for NYE, it would be disastrous

By Zach Arnold | November 25, 2010

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Japanese MMA photographer Dan Herbertson dropped a big item this morning:

FEG is paying to broadcast this year’s Dynamite!! on TBS. I don’t have time to check right now but I believe this is the first time.

I was taken aback by this because this would be the ultimate story of 2010 in the Japanese fight landscape if true. Later on, Dan revised the item and found out from a source that K-1 and TBS are currently negotiating the terms of their deal for New Year’s Eve.

But what would happen if K-1 was forced into a pay-to-play deal with TBS for their New Year’s Eve event? Considering this a what-if article.

It would be devastating news that could very easily spell the end of K-1 as we know it.

Pay-for-play is something that we have seen done in recent years in Japan with the smallish TV-Tokyo network. Promotions like All Japan Pro-Wrestling, ZERO-ONE, Hustle, and Sengoku all paid for air time on the smallest of the free-to-air broadcast networks in Japan. None of those companies who bought time ended up making any substantial progress from doing so. It’s (generally) a money-losing concept.

In essence, buying time from a broadcast network for a pay-to-play transaction puts you in the same standing and regard as an infomercial. Except, infomercials are mostly profitable. When I say that pay-for-play puts you in the same standing, what I mean is that the TV network is taking a check from you for air time and is taking zero risk. You buy the time, you sell the advertising, you handle the matchmaking (mostly), and the risk is on you.

Pay-for-play situations on broadcast networks are extremely expensive, even if we’re talking middle-of-the-night time buys. However, what if your time buy is on a major television day like NYE in Japan and it’s in ‘golden time’ (prime time)? I asked one long-time office source in Japan to estimate to me what kind of price tag it would be to buy time in such a slot and the source estimated a price tag of $4 million USD.

For the sake of argument, let’s assume that K-1 has to pony up the cash and is $4 million USD in the hole. What about advertising? K-1 will be forced to sell their own advertising and that is simply not the company’s usual standard operating procedure. There will be enormous stress placed on everyone working for the company to not only lean harder on their current sponsors but to also try to attract new sponsors within a month. To put this into perspective, let’s look at how past NYE shows worked on major TV platforms like Fuji TV and Tokyo Broadcasting System. As a promoter, you work closely with a major sports TV executive producer. You come up with a general frame work for a card by mid-September, early October at the latest. You work with one of the major ad agencies in Japan (Dentsu the largest, followed by Hakuhodo and Asatsu) and give them about three months to start selling ad time and attracting clients. The TV network executives help shape a card that they think will draw the best ratings and end up paying a rights fee to the promoter in exchange for ownership rights to the footage and (sometimes) production.

In a pay-for-play scenario, K-1 has to handle all of these aspects and do so within a compressed time frame. Almost impossible to achieve without financially taking a gigantic hit. In many respects, K-1’s NYE 2010 event could end up as a much more costlier version of DREAM where it’s on PPV to buy and a shortened version on broadcast television with limited sponsorship support.

If the ad agencies told Tokyo Broadcasting that there was enough sponsor support/demand for K-1’s NYE show, the network probably would continue doing business-as-usual with K-1.

On pay-for-play time buys with broadcast networks, network support for such programs (like infomercials) is very limited. Granted, TBS would want to draw good ratings on NYE because NYE has become the biggest day of the year for the ratings war in Japan. However, if K-1 is paying them for the time and it’s a disaster, TBS already got the money and can simply cut ties with K-1.

Without the generous television money to back their show, K-1 would not be able to pay for big-name talent to appear at their Saitama Super Arena event. Not having stars on the show would mean a show that attracts low ratings and that in turn would seal K-1’s fate with Tokyo Broadcasting, if not Fuji TV as well.

If K-1 has to buy time on Tokyo Broadcasting System, this will in effect be the end of Kazuyoshi Ishii’s grand ‘pipeline strategy’ plan. When PRIDE collapsed, K-1’s big strategy to control the entire fight business in Japan was to control the major broadcast networks. If you wanted to be on a network (think: Yarennoka with former DSE staff), you had to work with K-1 and do business on their own terms. K-1 collected the rights fees from television and let the promoters collect whatever they could for the live gate. It was a dominant position for them to be in. It also kept the competition away from acquiring a substantial television deal (ask Sengoku) and created a strangle hold. However, that strangle hold is only as strong as the ratings that K-1 attracts and their product has gone completely cold with the public. Both their kickboxing and MMA properties have failed to appeal to the Japanese television audience.

By having to do a pay-for-play situation with Tokyo Broadcasting System, K-1’s pipeline plan is killed. K-1 losing television means significantly more than a vacuum being created. It would mean that the fight business would encounter ‘ghost town’ status amongst television executives looking for programming to attract ratings. When the Reconstruction period happened, Rikidozan was the major star on Nippon TV. The next generation was Antonio Inoki and Giant Baba. In the 90s, wrestling declined and older TV executives who used to be big backers of the fight game faded away from supporting the product. Newer executives came into power and fewer of them have the same kind of sentimental thoughts about fight programming that their predecessors had. This lead to New Japan and All Japan airing on network TV at 2 AM in the morning. It led to a decline in interest for house shows and ratings, resulting in a collapse of the pro-wrestling industry. The same thing is happening for K-1 now and the erosion process is very hard to stop, let alone reverse.

If K-1 ended up doing a pay-for-play scenario for their NYE event on Tokyo Broadcasting System, they would be paying for their own corporate funeral — a very expensive one at that. The funeral wouldn’t feature Gilbert Melendez vs. Shinya Aoki II, either.

Topics: DREAM, Japan, K-1, Media, MMA, StrikeForce, Zach Arnold | 18 Comments » | Permalink | Trackback |

18 Responses to “If K-1 has to do a pay-for-play deal for NYE, it would be disastrous”

  1. 45 Huddle says:

    1) The mere fact that pay to play is being discussed is a bad sign. At the very best, they will get very little money to broadcast their show. The problem is that they have no stars to bully around the TV networks with. Ishii is a semi-star at best compared to what K-1 or Pride use to create.

    2) I am not surprised that Melendez/Aoki isn’t happening. I knew deep down that K-1 didn’t want to make this fight. What IS interesting about Melendez/Aoki is that there is an open discussion now about Melendez being at the end of his contract and how he hasn’t signed a new one yet. Very interesting to see how this one plays out.

    Strikeforce is in a very weird situation. If you notice, in the last few years, the UFC has alays signed champions to extentions BEFORE the idea of the championship clause kicked in. This is obviously by design as they don’t want to test those waters unless it is an absolute worst case scenario. There is always a chance the clause could be found non-enforcable and a champion could have enough money to defend himself in court against it.

    With Melendez/Strikeforce…. If Strikeforce doesn’t negotiate in good faith and Melendez gets “screwed” over…. It is going to send a sign to the rest of their roster to not fight for a Strikefore title because it is a potential bottomless pit.

    On the other hand, Strikeforce can’t afford to lose Melendez to the UFC. After losing Shields, it would be absolutely devestating to lose a 2nd champion.

    And to throw a monkey wrench into the equation, Melendez’s only real interesting competition left outside of the UFC is with Eddie Alvarez. A fight that Scott Coker won’t make for many reasons (and I agree with him on his stance). So there is also the little problem of Scott Coker getting Melendez enough competition for him to be happy…. Which I just don’t see happening….

    And one of the reasons is because Japan is hurting money wise, they aren’t turning out any top level new fighters, so Coker can’t even co-promote to fill the void….

    See how that all goes full circle? lol

    • Jonathan says:

      45 Huddle,

      I bet you’re just loving the idea of a promotion not named the UFC going out of business. I’m sure that is what you are mos thankful for on this Thanksgiving day.

      Just go to UFc.com and make yourself happy.

      • 45 Huddle says:

        I’m salvating at this. Fewer options means better chance of the top guys under one organization.

        When Japan no longer becomes a viable option for the top tier fighters, then the better ones will have to make their way to the UFC or Strikeforce in order to be relevent.

        And if K-1 goes under…. It hurts the sport of kickboxing, but it potentially means more athletes will go towards MMA instead.

        Wouldn’t it be nice if Overeem only did MMA? Or if Schilt worked his way back into MMA? I think it would.

        • mr. roadblock says:

          To be fair, 45, if it weren’t for K-1 no one would care about Overeem.

        • Funny. Wednesday I had the same talk the other way around: all good fighters already are at MMA and that is why no new talent is coming to K-1.

          Actually all the good guys already are doing MMA. I remember at one point K-1 had add Cheick Kongo to their website fighter profiles who at that point obviously was not under contract because a few months later he had his UFC debut. This was in my eyes the turning point. Ever since new talent was going away from kickboxing to mma.

          The only people left in K-1 are guys who were not able to convert to MMA or had no interest in doing so.

          But not only fighters turned their backs on K-1 also the smaller organizations. The biggest step was when It’s Showtime decided to do their Amsterdam Show without K-1. At that point it became very clear that K-1 is struggling.

          Today, a few years later, K-1 is threatened by sinking into insignificance. Kickboxing, at least a far more socially acceptable fightsport, lost the war to MMA.

        • 45 Huddle says:

          Valid points.

          The same could be said for American Wrestling. A lot of the potential world team members are calling it quits after college and then going into MMA. Which is one of the big reasons we are doing so poorly on the world stage.

          I wonder if the same thing is happening in BJJ. I’m not familiar with the sport enough to really know.

          Outside of boxing, MMA has really become the “ultimate” goal for combat sport athletes. The prestige of winning in your specific discipline has sort of been lessened due to a more complete fighting style out there. And the only reason this hasn’t happened in boxing is because the purses are still extremely high for the top .001% of the boxers.

      • 45 Huddle says:

        And the UFC website is garbage. When they redid the entire site, it definitely was for the worse….

  2. d says:

    I was under the impression that FEG finance their future shows on the back of Dynamite shows. If they had to pay to air it they wouldn’t last a full year.

  3. Garret says:

    You and I both know that, by all reports, FEG are on their last legs. If they in fact are paying for a prime-time slot on NYE, I’m not surprised. Kogan has publicly come and said the future of FEG is uncertain.

  4. Chuck says:

    Damn! If K-1 closes down, then I think Pancrase will be the biggest fight company in Japan! Or New Japan if you really want to count pro wrestling.

    I really hope K-1 pulls through…

    • Tradition Rules says:

      “Or New Japan if you really want to count pro wrestling.”

      WOW,….think about that.

      That is actually how it used to be in Japan. I wonder if pro-wres. will become popular in Japan again?

      …Not to the levels it was at once, obviously, but it is almost unimaginable when you consider how popular K-1 & PRIDE were at their peaks that New Japan could be considered the largest “fight” promotion in Japan. 🙁

      I would prefer to a strong MMA company in Japan as well. It would be another location to groom new talent, but the level of fighters in and coming out of Japan stunningly sub-par right now…

      • Chuck says:

        Good points. Yeah, I can see something of a pro wrestling resurgence in Japan because of FEG closing (IF they do). I doubt most potential fighters want to trudge through Shooto, Pancrase, DEEP, etc. for their whole careers. And New Japan is still a big dog in the wrestling world, so yeah I can see it.

        That, or most potential fighters or wrestlers become soccer players or baseball players instead. One or the other.

  5. liger05 says:

    Crazy times and very very worrying. I would be amazed if K-1 went under.

  6. Black Dog says:

    K-1’s only alternative may well be to do a pay-per-view only. Either go to the fight and see it life, or get it that way. It might be their only hope.

    If Zach’s source is correct on that price tag, it’s too risky. I don’t even know the card, but something tells me K-1 is not gonna recoup the investment.

    The PPV setup to me would likely cost less, and they can command the price they want. It would be worth a shot.

    So 45, do you have some kind of job with UFC? Or is that you, Dana? Just askin’.

    • Chromium says:

      PPV is just not very accepted outside of North America. In the places it does exist, it’s usually like $15. I don’t think Japan is any different. PPV is just not a feasible model for a Japan-centric product, sorry.

      As much as I’d love to see every top fighter under a single banner, it’s just not necessarily what’s best for MMA. JMMA needs at least one major promotion to help keep the pipeline of Japanese talent going.

      I rather hope FEG doesn’t go under.

  7. mr. roadblock says:

    With the exception of soccer and football I think the success of sports relies on superstars.

    K-1 right now doesn’t have much, if any, must see talent.

    I really love the K-1 brand and I hope that they can weather this storm until they find some new blood and get strong again.

    I think FEG and Sengoku have done a terrible job with MMA. I would like to see K-1 go to kickboxing only and I wouldn’t mind seeing them get away from the tournaments. Make the GP every 3 years if you have to so it means something again.

  8. David M says:

    It has been sad to see mma in Japan die slowly since the yakuza scandal brought down Pride.

    I don’t know the state of the Japanese talent pool, but the promoters better hope they can find another Saku or Kid Yamamoto or Masato..Ishii had better get good quickly.

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