Week in MMA & Boxing #46
MMA & Boxing News From the week of
July 2nd - July 15th, 2016
UFC Sale Official
After months of denials by Dana White and Lorenzo Fertitta of stories that the company was for sale, the company confirmed it was not just true but the sale was completed. The new owners are WME-IMG, the former William Morris Endeavor, at the same record-setting price tag of $4 billion that had been reported for months.
It was roughly double the largest sports franchise sale in history, that being the 2012 sale of the Los Angeles Dodgers for $2 billion. Lorenzo and Frank Fertitta purchased the company from Bob Meyrowitz and Semaphore Entertainment Group in 2001 for $2 million. They will garner in the neighborhood of $3 billion or more for their stock in the company. The exact figure is unknown since WME-IMG actually purchased less than 90 percent and both Fertitta Brothers will remain with a small amount of stock in the new company.
Dana White will remain as President of the Company. According to ESPN, he signed a five-year contract that would also pay him nine percent of profits. In past years, much, but not all, of UFC profits were distributed to the owners at the end of the year in the form of dividends. White would get nine percent of that distribution.
White was given ten percent of the company both to run it in 2001, and as a finder’s fee at the time. White’s stock in the sale would have been worth somewhere in the neighborhood of $360 million. If the $4 billion number was accurate, the sale would have been for 90 percent and not 100 percent, White’s cut would have been worth closer to $400 million.
White is said to have sold his stock, and then repurchased a percentage. The amount of stock he now has was not disclosed. Whether he purchased it at a sweetheart deal rate, because it was felt by the new owners that it was important for him to stay as the public face the company, was also not disclosed.
Lorenzo Fertitta, the CEO and Chairman, will be leaving, rumor has it, to either help build a football stadium to bring an NFL team (rumored to be the Oakland Raiders) to Las Vegas, or to purchase or build more casinos, including on the strip. WME-IMG told everyone involved in the deal to keep confidential about the exact amount of stock each side now owns.
The main financial backer of the new group, and key new stakeholders, is Silver Lake Partners, a worldwide business that has offices around the world, but is based in New York. The other major investors, KKR (Kohlberg Kravis Roberts), MSD Capital (the investment group of computer business mogul Michael Dell) and MSO Partners, are also New York based.
The final group of WME-IMG partners in making the deal are very different from the ones in various reports over the past few weeks. Their actual partners and backers have been reported to have changed many times.
The actual ownership breakdown leading into the sale was 71.89 percent by Fertitta Business Management, LLC (Lorenzo and Frank Fertitta), 9.99 percent by January Capital (parent company of Flash Entertainment), 8.09 percent by Dana and Anne White (Dana’s wife) Family Trust, 4.49 percent by the Frank Fertitta III Trust, 4.49 percent by the Lorenzo Fertitta Trust, 0.90 percent by the Dana and Anne White Irrevocable Trust and 0.15 percent by Zuffa Pipco 1.
The Fertittas in the sale have no decision-making power with the new company and are “passive owners,” similar to Flash. Flash purchased ten percent of the company many years ago for a figure believed to be in the $150 million range.
It’s notable that the new owners are all from New York based companies. It was thought with so many bids including money from China, that part of the goal of the new ownership group would be having local ownership would enable a move into China. Obviously everyone in the worldwide entertainment business is looking at China as a key market, but the UFC’s position in China would be similar to that of WWE and other companies, an American company trying to do business there, as opposed to being a Chinese company doing business there. That is a world of difference.
One of the reasons they were able to get a $4 billion price tag is because of the belief that in 2018, there will be a bidding war for the UFC television contract. Of course that’s almost identical with WWE beliefs on several occasions when their deals expired which every time ended up not panning out. UFC has become cornerstone programming on FS 1 and FS 2, occupying a large percentage of their days with both live shows, taped replays and specials. FS 1 surpassed ESPN 2 for second place among cable sports networks over the first six months of 2016, and UFC was a key part of that.
The expectation is ESPN will also bid for the contract, perhaps as much to get the key property off FS 1, their leading sports competition. The current television deal with FOX is worth about $110 million or so a year. The Los Angeles Times said insiders were talking about a $250 million annual increase when the new contract expires at the end of 2018, which would significantly increase the profit margins.
It was Fertitta’s financial wealth from the family’s chain of casinos that allowed UFC to survive some lean years, with a bad PPV deal and no television. They reportedly lost anywhere from $33 million to $44 million between 2001 and 2005. Once the company had a television deal from Spike TV, its PPV numbers exploded.
For now, it will be business as usual, but inevitably, there will be changes made. Ari Emanuel, who heads WME-IMG, was the intermediary that helped UFC lock its current television contract with FOX. He’s worked with the UFC for years and is no stranger to the operations or to White. His company also represents Ronda Rousey and Chris Weidman, but only for their work in Hollywood, and did not negotiate their fighting deals.
The $4 billion price tag alone speaks of how significant a business UFC has become. Yet its fighters earn 12 to 14 percent of total gross revenue, a fraction of the cut of the pie that athletes in most major sports earn. The few top stars can make millions per fight, but the vast majority of UFC fighters struggle to make it, and their plight is far different from major league athletes in most of the major sports, even though they have to work extremely hard training in a variety of sports and sustain a high level of physical and mental punishment. Given the money involved with the sport, and its profit margins, its participants are grossly underpaid.
The ability to keep fighter pay low that enabled the UFC to be profitable in a bad year like 2014, and made it so attractive to investors. The feeling is with investment company ownership that there will be even more pressure to keep profit margins high.
Employees are nervous, and rightly so. They had been told throughout the build to UFC 200 that all the media stories were false. Some, because they were told it so often, believed it, including some of the highest ranking officials.
Make no mistake about it. When it comes to the true history of the UFC, this sale will rank right there with the original concept of the UFC, the Fertittas original purchase and the first television deal with Spike, as the most important moments in company history. It is a new era, and nobody knows what that means. But if I had to guess, it will change from cowboy to corporate.
In all, when it came to talent and name star depth, this was the strongest show UFC had ever put on. But while the show itself had a lot of interesting news, from the entertainment and fight standpoint, it was a letdown. The show was probably the least exciting of the five shows since the change in weigh-ins times has seemingly has created healthier fighters and more action fights.
The UFC’s first event at the new T-Mobile Arena in Las Vegas drew a sellout reported as 18,202 fans paying $10.7 million, both of which would be Nevada records and the gate would be the second largest of all-time in MMA history, trailing only the Georges St-Pierre vs. Jake Shields show at the Rogers Centre in Toronto of $12,075,000.
The crowd was very different from a usual crowd down the street at the MGM Grand Garden Arena. It was notable just walking into the building. While the mic’ing wasn’t good, as people at home kept commenting on the crowd being dead, that wasn’t the case. But it was not as hot as many crowds and they were absolutely dead for some key matches like T.J. Dillashaw vs. Raphael Assuncao and Pena vs. Cat Zingano, both of which were key fights in their respective divisions as far as determining the next title contender.
Usually when the video is shown right at the start of the PPV, you can really get the interest level in the crowd for the key fights. Lesnar was expected to be the star of the show, but there was almost no reaction to him. Yet, this felt the most like a pro wrestling crowd, really more like it than an MMA crowd as far as Las Vegas went. In the building, the two people the crowd was most behind were Silva and Tate, followed by Cain Velasquez. They also got the biggest reactions at the weigh-ins. Jones was also super popular in his appearances at the press conference and UFC Tonight before he was pulled. It felt like they were interested in Lesnar but didn’t really react.
Cormier, Tate and Lesnar (and there may have been others like Silva and Aldo, but we know of those three) all had PPV points on the show. While every contract is different as far as breakdowns, the general rule based on contracts we’ve seen, is guys with points will make about $3 million extra on a 1 million buy show and $4.5 million extra on a 1.5 million buy show. Cormier noted that while he was down $500,000 from what he would have gotten in base pay (and maybe more if losing Jones hurt the number of buys), that he was still making enough to where he’s happy with it.
Lesnar wasn’t as happy, saying Jones was unprofessional. It’s hard to say what losing Jones meant to the card. My gut is very little, as there was more media before the show because of the Jones story. Not that it was positive, and losing Jones would have hurt had anyone but Silva been the replacement. But it was still UFC 200, still had Lesnar, and had the deepest card ever.
As far as how it did, it’s too early to say. We have no estimates at press time. It no doubt did well.
The prelims did the third highest number ever for FS 1, trailing the prelims before McGregor’s last two fights. And that’s with the show starting 32 minutes late because a baseball game went into extra innings. We’ve received a number of bar reports from around the country, which were very similar. In almost every case, with few exceptions, the report was that people were surprised. Turnouts were good, well above usual, but it was nothing like a Rousey or McGregor fight, and people were expecting long lines to get in.
In many places, they also emptied out after Lesnar vs. Hunt, and didn’t stay for Tate vs. Nunes. There was that fear that would happen live as well, but there were less than 200 empty seats in the building when Tate vs. Nunes started.
Trending numbers that have been proven to be accurate most of the time in predicting, indicate numbers a little above 1 million, but not at the levels of UFC 100 and UFC 196. Google search numbers were very big all week, but below that of the recent Rousey and McGregor fights. In particular Lesnar’s numbers were nowhere close to that of Rousey or McGregor come fight night, although still ahead of anyone else. Still, this is all early because while all these metrics are usually good indicators, they aren’t 100 percent. In the past when UFC has had shows, like the McGregor vs. Aldo and McGregor vs. Diaz fights, that were going to threaten or break records, they talked about how the PPVs were trending to break records pretty quickly after the show. Nothing was said here.
As far as the ratings went, starting 32 minutes late, the prelims averaged 1,786,000 viewers, behind UFC 194 (Aldo vs. McGregor show) at 1,931,000 and UFC 196 (Aldo vs. Diaz show) at 1,843,000. It’s pretty much a lock had the show started on time that it would have beaten at least UFC 196. The peak was 2,046,000 viewers for the Julianna Pena vs. Cat Zingano FS 1 main event. Of those viewers, 1,084,000 were between the ages of 18 and 49–the key ages for PPV buyers, and that is the largest ever on FS 1. The postfight show did 244,000 viewers.
Jon Jones Failed Drug Test
Whether UFC 200 sets records or not, this was not a good week for the company, because of what happened to the main event and one of its biggest stars, Jon Jones.
Jones failed an out-of-competition drug test taken on 6/16, three weeks before the fight. Official details have been sketchy. Jones is claiming a tainted supplement and manager Malki Kawa said the same on the MMA Hour. If they can prove that, it could be the same type of situation as Yoel Romero and Tim Means, although later on the show Kawa also said it could have been something prescribed by a doctor. Romero and Means were able to prove a tainted supplement to USADA. Both were suspended for six months as opposed to the usual two years for a first offense under the new regulations.
Kawa claimed that Jones was under the highest PPV cut on the show and would have earned in excess of $10 million for the fight.
Dana White talked in passing about two different drugs found in his system. The belief is that both drugs were performance enhancers as White made it clear they weren’t recreational drugs. The belief is that neither substance was a steroid. Chael Sonnen on the Joe Rogan Experience said the two substances were both estrogen blockers, and while Sonnen says a lot of things, Rashad Evans, who knows people in Jones’ camp, and was working for CBS Sports covering the show, had reported the same thing before Sonnen did. Jones’ people did not disclose what it was he tested positive for.
Generally estrogen blockers would be used to prevent things like gynocomastia (bitch tits) when on or after a steroid cycle. The drugs will likely be revealed on 7/18 at a public Nevada Athletic Commission hearing where they will decide on their own punishment for Jones. A Nevada suspension would be adhered to by all commissions in North America while a USADA suspension would only apply to UFC.
A two-year suspension would be devastating for Jones’ career and be significant for UFC. The precedent is if he took things unknowingly and can prove it by producing a sealed supplement container and having it tested and shown it contained what he failed for, that he could be back in less than two years.
Even a six month suspension puts Jones off the Madison Square Garden show that he was expected to headline. Cormier’s next title defense without Jones would have to be against the Glover Teixeira vs. Anthony Rumble Johnson winner. That fight is 8/20 so the title fight isn’t likely as soon as MSG in November.
There was an issue in test done that close to a fight and the time it took for UFC to get the results.Tests done with headliners in the last few weeks before the show need to be expedited and shouldn’t take three weeks. Even if they feel the need to retest positive samples before getting the word out, UFC should at least get private word so they can start making plans. In this case you had someone in the main event of one of the biggest shows in history fail a test on 6/16, but UFC wasn’t even aware of it until 7/6, at which time to say they were scrambling to save a huge money event would be an understatement.
If Jones had tested positive a week later, but the result didn’t come in until after the fight, it would have been even worse. If he was on PED’s, then beat Daniel Cormier and won the title, and the result was overturned, and then Cormier was given the title back, it would be a black eye for the company and badly hurt the division. Because something similar happened last year with Anderson Silva, it would be hard to have sympathy for them in that case.
Jones’ B sample came back dirty, positive for the same two unreleased substances. It took less than two days to get that result back. There was a reason, as the B sample they were only testing for the two drugs that came back dirty as opposed to testing the A sample for everything they could test for. But White said the reason it took three weeks is because they tested and retested that A sample to make sure there wasn’t a mistake.
If that’s the case, at the first sign there may have been something amiss, if nothing else, UFC should have been notified so they could prepare instead of having to scramble at the last minute. Granted, that becomes difficult, because if they made back-up plans, it could get out publicly that something was amiss even if they didn’t tell the backup fighter why he needed to stand by.
Cormier vs Silva
With Jones was off the show and not knowing until the last minute, there were limited options to keep Cormier on. There were no top light heavyweights booked on any of the shows this week. Neither Johnson nor Teixeira would have been ready to make weight on such short notice.
Anderson Silva and UFC got in touch and he agreed to take the fight with no training. It was the best possible outcome for marketing the show and created a storyline for UFC 200. Silva became the most popular fighter on the show, although the fight ended up being heavily booed by the audience because Silva was so much of a favorite, but Cormier kept taking him down and laying on him. Silva was much lighter than Cormier and took the fight without any camp, so the crowd wanted to see him win.Even after losing again, Silva got over, and would still be the biggest draw against Bisping.
Cormier also didn’t look good enough in the win that anyone thought he would have beaten Jones. Everything is so different you don’t know, but for the crowd accepting that he was the best light heavyweight and him drawing based on that, this fight didn’t change people’s feelings.
Cormier vs. Silva wasn’t a championship fight because Silva, because of not having any training, would only agree to a three-round fight. Because it wasn’t a title fight, Cormier, based on his contract, got a base pay of $500,000, instead of the $1 million he was to receive for his title defense against Jones.
Lesnar beats Hunt
Brock Lesnar defeated Mark Hunt, being able to take Hunt down and pound on him in the first and third rounds to win a straight 29-27 decision, with a 10-8 third round. For Lesnar, the fight was pure vindication. He had been saying that when he was last in the UFC, that no individual beat him, and that his losses, or at least his last two, were due to trying to compete while having diverticulitis and not being close to his best. With the win over Hunt, Lesnar is now listed as the No. 8 ranked contender for champion Stipe Miocic in the company’s ratings.
For WWE, it was a gamble that paid off, as their No. 2 star was all over the world, being a superstar in front both a current and a more mainstream audience at a time when wrestling is more niche.
But more questions were left unanswered. Will Lesnar fight again? Lesnar talked about how happy he was to be back, holding court with reporters after the show and being clearly in a great mood. Even so, he would not commit to anything. When his contract with WWE was brought up, he said that “Brock Lesnar does what Brock Lesnar wants.”
According to those close to the situation, he is keeping the option of returning opened. A key part of this equation is as long as he is an active UFC fighter, he’s subject to random drug tests at any time. If he’s not interested in fighting again, it makes sense for him to retire now just to avoid that hassle. If he is to retire, and then changes his mind, he would have to undergo four months of drug testing before being allowed to fight again.
Fight Week Results
Amanda Nunes put on a great performance to beat Miesha Tate for the women's bantamweight title. Rousey may be coming... Dana White has already said Rousey can fight Nunes next if she wants, but where Rousey’s head is at has been a question since November.
The best scenario that is likely to happen is Holly Holm beating Valentina Shevchenko on 7/23 and a Nunes vs. Holm fight. If Shevchenko wins, that would likely mean Nunes vs. Julianna Pena as the next title fight, a gigantic step down in interest from every bantamweight title fight since the division was introduced.
Eddie Alvarez upset Rafael dos Anjos to win the lightweight title. The best option for him would be the winner of the Nate Diaz vs. McGregor fight.
Joanna Jedrzejczyk kept her strawweight title beating Claudia Gadelha in a great fight. Jedrzejczyk is likely to face the winner of Rose Namajunas vs. Karolina Kowalciewicz on 7/23 in Chicago.
Jose Aldo beat Frankie Edgar for the interim featherweight title to either earn a match with McGregor, or be declared outright champion if McGregor takes another fight after Diaz. Aldo vs. McGregor should do well, although would mean more off a McGregor win.
Cain Velasquez beat Travis Browne in tremendous fashion. Right now he would seem on deck for the Stipe Miocic vs. Alistair Overeem fight on 9/10 but a lot can happen between now and then.
Best Selling PPV in History
In a Los Angeles Times interview, Dana White said that UFC 196 was the best selling PPV in history. That was the 3/5 show headlined by Nate Diaz vs. Conor McGregor and Holly Holm vs. Miesha Tate, which he said did 1.6 million buys, beating out UFC 100 which did slightly under that number.
Bisping vs. Henderson 2
Dana White said they were looking at doing Michael Bisping vs. Dan Henderson for the middleweight title in Manchester, England. The big question is if they can run a show in the middle of the night and have it as a PPV, or if they’ll do it at a regular time in the U.K. and have it on FS 1. There is the story there, in the sense giving Bisping a chance to avenge UFC 100 and giving Henderson a shot at winning a title at 45, but it holds up the division and would keep Chris Weidman from getting a title shot on the Madison Square Garden show. And everyone figured that show would be built around Weidman and Jon Jones in major matches. Weidman could still face Luke Rockhold or Jacare Souza in a top contenders fight but you’d still need a blockbuster main event.
Mighty Mouse Out
Demetrious Johnson was injured this past week and pulled out of his scheduled 7/30 fight in Atlanta with Wilson Reis. That PPV looks weak because right now it’s Robbie Lawler vs. Tyron Woodley as the only thing, since Matt Brown vs. Jake Ellenberger is No. 2.
Mir Ask Out of UFC
Frank Mir has asked for his release from UFC after being handed a two-year suspension retroactive to his April test failure for usage of a banned substance. Mir’s B test confirmed the same substance as his A test. He noted that the suspension will keep him not just from fighting until April 2018, but also from broadcasting as it’s a complete suspension from UFC. He was on the MMA Hour and said he wanted a release so he could work somewhere since has a family to support, but didn’t know if UFC would release him. Because it was a USADA suspension and not a commission suspension, technically the commissions and other promotions would not have to honor the suspension term.
Low PPV Numbers
Regarding PPV numbers, it’s pretty clear fans are buying the big shows and not buying in great numbers shows that are strong on paper but not “the big ones.” UFC 198 which was the big Brazil show with Fabricio Werdum vs. Stipe Miocic but a strong undercard of stars with Jacare Souza vs. Vitor Belfort, plus Cris Cyborg’s debut and Mauricio Shogun Rua, looks to have done a little under 300,000 buys (290,000 was the last estimate I’d heard).
UFC 199, with Luke Rockhold vs. Michael Bisping and Dominick Cruz vs. Urijah Faber, which was a hell of a show, looks to have done slightly better, between 300,000 and 350,000 (with 320,000 being the current estimate). For UFC 198, with the loss of Anderson Silva, who was still the biggest draw on the show, it was about what I’d have figured. Really given the lineup’s marquee value without Anderson, it could have done a little less but there was the hope the idea of a sold out 45,000 seat stadium show and the idea of an All-Star Brazil show and Cris Cyborg’s debut would help it. For 199, to me, it’s a sign people are waiting for the big ones.
With UFC 200 as “the big one,” even a strong 199 didn’t blow them away. And 199 had strong stories with Faber vs. Cruz being a long rivalry, although I think that was hurt by people not believing Faber could win the big one, and Rockhold vs. Bisping had the story of Bisping going for the title and talking it up so big, but 300,000 is now the normal number for a show unless it has a mega draw on top no matter. The undercard quality and depth doesn’t really make a difference as 198 showed nor do titles as the multiple title 199 showed. It’s 100,000 to 200,000 when you’ve got the non-draw champions, 300,000 for a normal show, 400,000 for Jon Jones with an opponent people don’t believe in and perhaps double that if they can find someone people believe has a shot with him, and the sky is the limit for McGregor and Rousey.
UFC top 200 fighters of all-time
The UFC did a listing of its top 200 fighters of all-time for a series of FS 1 specials. The top ten were listed as 1. Jon Jones; 2. Anderson Silva; 3. Georges St-Pierre; 4. Matt Hughes; 5. Chuck Liddell; 6. Randy Couture; 7. B.J. Penn; 8. Jose Aldo; 9. Demetrious Johnson and 10. Royce Gracie. It’s all subjective and that’s not a bad list, although really Aldo is too low and Penn for sure is too high. The thing with Penn is that everyone thought he was great and he did beat Hughes to win the title a weight division up, and so is a rare two division champion, along with being best drawing lightweight champion ever. But when you look at his record, it’s just not top ten of all-time. It’s also been noted that four of the top ten have had forms of failures, including the top two, although Penn’s failure was an IV situation that can legitimately be called a misunderstanding. Gracie failed a steroid test for his second fight with Sakuraba at pretty ridiculous levels, but that was long after his UFC heyday.