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Did SVSE want out of Strikeforce in order to focus on getting the NBA’s Sacramento Kings?

By Zach Arnold | March 24, 2011

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Yesterday on Sherdog radio, Scott Coker made an appearance and did a largely paint-by-numbers interview. He was open and honest about how long Silicon Valley Sports & Entertainment wanted out of Strikeforce (around five ~ six months) and his ordeal to try to find new business partners to keep momentum going. He talked about Fedor fighting towards the end of July and that all of Fedor’s fights with SF will still be co-promoted by M-1. M-1 contends that Fedor’s contract is with Showtime and not Strikeforce, something Mr. Coker said he didn’t want to comment on. He also confirmed that there will no longer be any amateur fights on Strikeforce undercards, which is a fun blow by Zuffa towards Jeremy Lappen and his former Elite XC colleagues who are trying to control the amateur MMA scene in California. When it comes to the question of whether or not Zuffa will keep Strikeforce alive long-term, Mr. Coker said it was up to him and his team to make the league work financially unlike the WEC. “[Zuffa] gave WEC a good opportunity to try to flourish and I just think it didn’t pan out the way they wanted it to…” In regards to his recent meeting with Showtime executives about the sale of assets to Zuffa, he said that “they are very happy with Strikeforce and happy with the fights and they just want that to continue and it will.”

However, buried at the beginning of the Sherdog interview and not touched upon was a news item that I think the general sports media in America would be very interested in. As he talked about in his HDNet interview with Bas Rutten, Scott Coker talked about SVSE wanting to get out of the Strikeforce business and move back into a more traditional sports franchise business. In Wednesday’s Sherdog interview, Mr. Coker said that SVSE wanted to get out of Strikeforce in order to make a play for ‘a basketball team’ to move to HP Pavilion and he also curiously brought up the phrase ‘the 50 mile radius here.’ The talk about ‘radius’ is terminology that Bay Area sports fans in Northern California are used to hearing because of sports franchises considering relocating to San Jose (like the A’s) and how franchises in San Francisco or Oakland are not happy about such developments because they want to protect their home turf. Somehow, I don’t think a college or semi-professional basketball team is being discussed here by SVSE to bring into HP Pavilion.

Right now, there’s only one real ‘basketball team’ up for relocation and that’s the Sacramento Kings, owned by the Maloof Brothers (another Vegas power family like the Fertittas). The team has stunk on ice for many years since the glory days of Chris Webber & Vlade Divac ended and the Maloofs wanted a new arena built in Sacramento on the backs of taxpayers. That idea got rejected out of hand and there has been a big drama brewing about whether or not the Kings will stay in town. Mayor Kevin Johnson (a former basketball star in his own right) all but admitted that the Maloofs want out of Sacramento and would not sell the team to someone else if it meant keeping the franchise in Sacramento.

The one arena and business partner that has long been discussed of working with the Kings for relocation has been the Honda Center and, next week, something big is rumored to be happening there. If you believe media reports, ownership of Honda Center was willing to give the Maloofs a $100 million loan (they turned it down) and supposedly a big cable deal (with Fox Sports West) worth tens of millions of dollars was offered should the Kings relocate to Anaheim and become the Royals. If such a deal happened with FSW, it’s because of the King’s hated rivals Los Angeles Lakers moving away from FSW to create their own sports network in a similar fashion to the YES Network.

(They’ve been wearing old-school jerseys that say Royals on them lately.)

Larry Ellison of Oracle fame desperately wanted to purchase the Golden State Warriors and allegedly made the best money offer but got turned down. There are a lot of business moguls in Silicon Valley who have wanted to bring a basketball team to Bay Area South for a while now. The notion of the Warriors relocating to HP Pavilion is highly unlikely, as there has been talk of moving to San Francisco if they need to get away from the Oakland Coliseum (Oracle Arena).

If what Scott Coker is saying is true and not some excuse SVSE cooked up to make him feel better about wanting to dump Strikeforce, then my reading of his cryptic comment about SVSE is that they were interested in getting involved in the bidding battle with the Honda Center (Anaheim Pond) over who will become the next arena landlord of the Sacramento Kings. What makes this idea wholly ironic is that the Maloofs are crying foul when it comes to debt in Sacramento and want a better deal (they own Arco Arena), so they are likely relocating the team during an off-season in which there is an expected NBA lockout pending because the owners want to significantly slash the salaries that players are making.

(Michael Jordan purchased the Charlotte Bobcats franchise and took on a lot of its debt from former BET founder Robert Johnson.)

The irony of SVSE wanting to get out of a ‘high risk’ business like Strikeforce in order to go a more traditional, yet real high-stakes game of poker like working with an NBA franchise is something that I think a lot of people would be interested in learning about.

Topics: Media, MMA, StrikeForce, Zach Arnold | 22 Comments » | Permalink | Trackback |

22 Responses to “Did SVSE want out of Strikeforce in order to focus on getting the NBA’s Sacramento Kings?”

  1. Tommy says:

    Great post. MMA Payout also posted a article with more info about SVSE

    http://mmapayout.com/2011/03/exploring-why-svse-walked-away-from-strikeforce-mma/

    Another good read, one thing I found surprising was that the San Jose Sharks were in the red. Without any other pro sport franchises in San Jose I know that city is crazy about the Sharks.

    If the Sharks aren’t making a good amount of cash how in the world are other warm weather NHL cities doing?

    If, SVSE views MMA as a high risk play than what would they categorize their signature sports entity as?

    By the way it seems that the Maloofs are tripping on their own shoelaces with this Kings/relocation fiasco

    • nottheface says:

      Most sports franchises don’t make that much in the way of profit. The real worth is the increase in value that owners see almost every year. Example: Wiilf bought the Minnesota Vikings in 2005 for $600 million and the franchise now estimated at around $800 million. This is what makes the UFC’s success so eye-popping, not only have they seen a dramatic increase in value, but all while paying out huge profits to the owners.

      Another interesting note brought up by MMAPayout – SVSE saw $85 million in revenue from the Sharks, with expenses running $89 million. They brought in $71(around $30 million of which was Strikeforce) from all their other ventures, with $68 million in expenses. With only $2 million in overall loses, it makes me think that if Strikeforce was losing money it wasn’t much.

      • The Gaijin says:

        What NTF said re. sports franchises’ profits. IT’s all about the franchise value.

        Another interesting aspect is that a lot of franchises do some very sophisticated accounting to show them (the franchise itself) as running at a loss (e.g. mainly tax driven reasons and for CBA purposes it doesn’t hurt), and they don’t care about publicly showing the losses b/c their worry is about overall franchise value vs. operating revenues (e.g. being a member of the NBA/NFL/MLB is much more important).

        In fact, many times teams that people consider the least successful, e.g. Florida Marlins, are actually quite “profitable” when you pull away all the fancy accounting – e.g. different entities own the arena, different entities own the concessions and merchandise contracts, local tv and radio – and these “poor martyr” owners are rarely losing money in any real world sense.

        • Tommy says:

          Great info NTF & TG

        • edub says:

          Gaij- Is it the Marlin owners that schemed their city out of a bunch of money last year?

        • The Gaijin says:

          Yes – it was scandalous and completely maddening. The worst part was it wasn’t the first time a professional sports ownership has done so, and I don’t even think it’s the first time the Marlins have done it (pretty sure Huizenga did it back in the day when they won the Series in ’97). I actually remember this econ class I took back in the day “Economics of Professional Sports” that showed with little doubt that the argument that a pro sports team brings money and business to a city is a total myth and they used the 1997 Marlins team as a case study (unrelated to the adding to the economics of a city) regarding how “profitable teams” become “unprofitable”.

  2. Stel says:

    The Kings should never have traded J will

  3. Pierre-Luc Allie says:

    The fact is city can’t afford to build arenas on the back of taxpayer at this time. Wouldn’t be surprised if the NBA contracts 2 teams. Once those cities wants back in and are ready to pay for the arena, they will use them as leverage for negotiation or give them back brand new franchise at a higher price.

  4. 45 Huddle says:

    Coker knows how to play the game. He quickly turned into a Zuffa guy. He should have a nice job moving forward. He was smart to never burn bridges.

    • The Gaijin says:

      Funny how most of these guys have turned into “Zuffa guys”…say what you will about someone like Barnett for instance, but you can’t say he’s not a sharp guy. Even JOSH GROSS is coming around to towing the company line.

      As for Coker, I don’t think he’s changed his tune much, he was always the guy that stayed away from slinging muck and tried to play the “we’re doing our thing” line.

      • 45 Huddle says:

        I agree that Coker hasn’t changed at all. If anything, he sounds a little less stressed now.

        He fought a war with the UFC, but never made it personal.

        As for Gross & Barnett and guys like that…. Some of them are doing out of necessity. Hopefully there are no more Paul Daley’s….

  5. 45 Huddle says:

    UFC 128 did around 450,000 buys. Which isn’t too bad. I predicted around 500,000…. But I forgot about the NCAA Tournament…. So having less buys makes sense.

    I have seen some people put the buyrate down, which I don’t understand. Rua has never really been a draw. None of the former Pride guys have been. And this was Jones’s first PPV Main Event. The important thing is that there is so much upside in the future. Jones/Evans should easily do over 500,000 buys and only increase Jones’s star power.

    My prediction for 2011 was that it would be a transition year for Zuffa. It has absolutely been that so far, only far more then I ever thought it would be.

    They are trying to get more traction on 2 weight classes, increase the drawing power of Jon Jones, use Strikeforce to likely gut their talent. It can’t get more transitional then that for 1 year.

    And I also wouldn’t be shocked if MMA’s popularity finally leveled off. I would be happy with it’s current popularity level in America. Enough to have some good money into the sport but not big enough to get the national press tearing it down all the time.

    • Zach Arnold says:

      I had put the over/under at 425k for buys for our question on the site and everyone went way over. 450,000 is about right for Jon Jones, given the fact that he was facing a weak opponent in terms of mainstream appeal.

      • The Gaijin says:

        Yeah I went too far over as well, partly not factoring in NCAA, but also putting too much stake in Rua. Although his ppvs drew well (all over 500k iirc) I guess that was more due to Machida’s perceived invincibility and then the controversy of the first fight plus Kimbo.

        Crapping on this only getting 450,000 is silly. Ok he’s not Tyson, but we already were told this! Plus GSP wasnt always selling 700+ k on ppv. His first few efforts were just north of 500 and while we need context insofar as this was a few years ago, we also weren’t getting 1.5 ppvs a month among other things. The other thing this tells me is that all the WEC guys cannot be relied on to spike buy rates and will need at least some build from the Zuffa machine.

        • edub says:

          I think a lot of people aren’t realizing how many viewers the beginning of the NCAA tournament pulled away from this event. This was a good card with a great fight, but it was going up against the second biggest sprting event in the United States (March Madness).

    • EJ says:

      It is pretty hillarious to see the spin now coming out about UFC 128. It was never going to do huge numbers I predicted around 500k which when all the buys are added up it will probably end up doing.

      But it’s no surprise the writers over at BE for years have been making ridiculous reaches always trying to claim doom and gloom regardless of the facts.

  6. Robthom says:

    I know that basketball is more popular then MMA, Snowden told me so, but heck if I can think of anybody I know who’s ever been to a golden state warriors game.

    I know plenty of people who go to plenty of Cal Bears games, but nare a one to a warriors games.

    I think my grand dad said he went to one back in the 70’s, but he might be old and confused.

    And yet they’ve somehow hung around here for decades.
    Maybe its just traditional.

    • Robthom says:

      And if I had my druthers they’d give SJ the traiders before letting the A’s leave.

      But as usual, when the money gets involved whats right and wrong goes out the window.

      Although I doubt most people living in Oakland can even afford to see a traiders game, a lot more rich kids from the suburbs come to town to see the traiders and play toughguy raiders fan then come to see the A’s.

      And Oakland needs that money to foot this city wide welfare bill.

      But I’m crossing my fingers, we’re not as dumb as we seem sometimes.

  7. David M says:

    Once the UFC hype train gets a hold of the insults that Rashad and Jon Jones will be hurling at each other, their fight will get a million buys.

    Having 2 black guys fighting in the main event is a big deal for the UFC, it gives them legitimacy amongst ethnic fanbases and amongst the white people who still think that boxing attracts superior athletic talent to mma, and that mma is “gay”. Nothing makes liking a sport more palatable to white people who would otherwise deem it gay than knowing that it has a stamp of approval from black people, and no mma fight could get as many black people to watch at this point as Jon Jones vs Rashad. Should be epic hype. Jon Jones has a buzz around him now that is something out of this world; he hasn’t looked the least bit beatable in any of his fights; even GSP, before he won the title, got submitted by Hughes. Jones fought the most accomplished 205er in the history of the sport and made him look like an amateur.

  8. The Gaijin says:

    “Nothing makes liking [insert anything] more palatable to white people who would otherwise deem it gay than knowing that it has a stamp of approval from black people,…”

    Slightly tweaked it for you, but otherwise, very well done. ha-ha…too true as well.

  9. Zack says:

    LOL @ the Sac Queen demise. Go LAKERS!!

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