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Conde Nast Portfolio does a quick synopsis of the IFL's recent announcement that it was going into suspended animation while trying to partner up. There were some interesting tidbits contained within the article. The IFL has been on the block but this article is the first to actually throw out a figure being asked for the company, $1 million. It would be a steal at that price if not for all the assumed liabilities the company has on it's financials. The article does let us now that the IFL has about $2 million in cash on hand, which will mainly be used to tide over the executive level through the third quarter as they still actively look to sell or merge with another company.
The article elaborates on how Larkin has slashed costs since he has been brought aboard. He has been able to reduce production costs significantly, going from about $1 million per show to about $125,000. While Larkin's comment at the press conference that the IFL was no longer operating at a loss seemed dubious, if costs have been cut to that degree then kudos to Jay.
Written by admin on June 13th, 2008 with comments disabled.
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When the Affliction clothing line announced its Affliction: Banned pay-per-view event, there was a great deal of skepticism. To be blunt, there is no way that the show will be able to make a profit.
Fedor Emelianenko, Tim Sylvia, Josh Barnett and Andrei Arlovski have big money contracts, and the ceiling for non-UFC MMA pay-per-views has been around 50,000 buys. That includes the Las Vegas Pride pay-per-views which had comparably star-studded cards, world-class production and a much stronger brand name. As a live event the Affliction show will take place at the Honda Center in Anaheim, which drew a $1.98 million gate for the last UFC show featuring Chuck Liddell.
The best case scenario for Affliction would be to beat every non-UFC MMA event in PPV history and to match the gate for UFC’s most recent live show at the same building. However, that best case scenario would make the company’s cut of PPV and the gate less than $3 million. That’s not enough to cover the $4 million to $6 million in rumored fighter salaries, let alone the countless other expenses that go with advertising and running a major event.
Promotions like Bodog Fight and the WFA ran major shows with the intention of challenging UFC, only to get cold feet when their first efforts ended up deep in the red. Without major backers, Affliction could have met the same fate, which led to great skepticism about the venture in knowledgeable circles.
That skepticism dissipated to a significant degree when Donald Trump announced last week he would become an equity partner in the Affliction MMA promotion. Trump brings some major positives to the table, and is a potential game changer. He has a brand that can attract attention to the promotion outside the hardcore MMA fanbase. He has business ties that could potentially line up a crucial television deal.
Most importantly, Trump’s resources allow the promotion to be patient. Affliction: Banned doesn’t need to be a financial success now. It can be used as a starting point for the future. Affliction can aim for the same path that UFC or pro wrestling company WCW followed: a billion dollar empire absorbs millions in early losses, seeking to create a foundation for future profits.
The two key targets for Affliction will now be Tito Ortiz and Randy Couture. Affliction has a host of talented and marketable fighters, but few are known by a large percentage of American MMA fans. What Affliction needs is a big star or two from the UFC that can bring in a larger audience and expose them to the Fedor Emelianenkos and Josh Barnetts of the world. Ortiz and Couture are the two fighters that can fit that bill.
With Trump in the fold and an impressive roster of fighters, Affliction has the building blocks for eventual success. The key question will be whether the promotion can stomach the early losses and keep the faith that bigger things are coming in the horizon.
Written by admin on June 12th, 2008 with comments disabled.
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As the industry continues to wait with baited breath for Dana White’s major announcement on Thursday, here are a few more items of rumor and innuendo to add to the guessing game:
- MMAPayout.com has learned that financial giant Morgan Stanley has reportedly been working on a collaborative/financial deal between Zuffa and another party.
- Sources have told MMAPayout.com that a significant licensing deal may be part of the planned announcement. Licensing and merchandising has long been identified as a major untapped revenue stream for the UFC. Adding even more intrigue is WWE’s rumored involvement in the deal. The WWE also has a press conference scheduled for Thursday.
- Last night a poster on the Underground Forums added the following rumor “from a reliable source” to the mix: “a group of investors led by Dana White have agreed in principle to purchase the UFC from Frank and Lorenzo Fertitta for an undisclosed amount. Included in this investment group is WWE’s Vince McMahon who will now own a minority stake in the company. They also have plans on taking the company public by years end.”
It should be noted that none of the sources referenced are parties to the negotiations. As a result, this report should be considered rumor or informed speculation at best. 
Written by admin on June 10th, 2008 with comments disabled.
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(The Fertitta brothers, preparing to order something expensive.)
The poor get poorer while the rich land on the cover of Forbes: Financial stability was a recurring theme in MMA this week, as two prominent leagues face death while another cemented its place at the top. First the bad news…
— The IFL filed their 10k SEC report on Tuesday, and things are looking grim. Since the league was founded in January 2006, it has suffered losses of $31 million. Last year’s revenues weren’t nearly enough the make up for the $15.9 million it spent on events; notably, the IFL only took in $498,000 in sponsorship revenue and $117,544 in branded merchandise sales in 2007. At this rate, the company won’t be able to survive past the third quarter of the 2008 fiscal year, and due to their continued losses, the IFL’s auditors have included a paragraph in their financial statements questioning their financial viability, which will make it even harder for the IFL to secure the additional financing it needs to sustain operations. As the report says, “If revenues grow slower than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, we may not achieve profitability and the value of your investment could decline significantly.”
— An earlier rumor that BodogFight was near death gained more traction yesterday with MMAWeekly’s report that the Bodog subsidiary may be ceasing operations next week. The company lost a reported $38 million in 2007, and hasn’t announced any more events since it sponsored a Las Vegas Tuff-N-Uff show in February. From the article:
Asked if the company was folding, one executive who declined to be named told MMAWeekly.com, “I can neither confirm or deny that.”
When asked what Bodog Fight was currently working on, the executive responded, “I’m sitting in an empty office.”
Of course, in the land of the Octagon, it’s all champagne and caviar…
(more…)
Written by admin on April 18th, 2008 with comments disabled.
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