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UFC Buys Strikeforce


KrisZ

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I'm trying to figure out why UFC paid $40M for it. Is it just to protect a monopoly? In the long term keeping contracts down?

 

I can see the benefits of that. But Strikeforce is sort of stagnating. It wasn't an epic business fail, but their CBS/Showtime stuff hasn't really taken off in terms of making the promotion wildly popular.

 

There is great value in being a monopoly. We see it in the NFL, and all of the major sports where there is just one entity controlling everything. But it's hard to see Strikeforce as the AFL, unless there was fear that a major money mark (say a Roman Abramovich type with money completely out of his ass) financed it *and* the promotion was able to both steal talent and develop it.

 

Perhaps there is fear that was about to happen?

 

The other possibility in normal circumstances would be if the Brothers were thinking about going public, and not wanting to have a viable promotion out there at that time. In other words, having some major high rollers out there see UFC valued at $1B, notice they can buy Strikeforce for $20M to $100M, and the UFC gets a more viable rival that is looking to building the business for a similar IPO.

 

That, at least in the past, doesn't seem viable as the Brothers would need to make all sorts of public filings about the finances of the business, and how the Brothers have leveraged it to the benefit of their other entities, and how little the payouts are relative to the revenue... and sign them under penalty of jail time if they're completely cooked...

 

Given what Snowden and others have written about how the Brothers are more than a bit sleazy in their finances, it doesn't seem likely *that's* how they would want to cash in. If they're going to see pieces (or all) of the company, they'd rather find money marks as opposed to making public filings.

 

So... uh... yeah... interesting to see what the thinking is.

 

On Bryan, it would be interesting to understand why he thought this was good. Is he fantasty re-booking Invasion with images of $$$ in his head? Even before that was shot down (i.e. that UFC is simply going to merge it in once they can), it was pretty obvious that's exactly what UFC would do. They want their brand to be it. UFC = MMA similar to NFL = Pro Football. They don't give a shit about Brand Extension, and they have years of data to show that UFC Sells and Other Brands Don't.

 

John

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UFC is even more monpolistic than the NFL, MLB etc. because at least in those leagues, you have groups of rich owners driving up salaries by competing with one another. You would need a Dana in charge of each fight camp or something to create an equivalent labor market in MMA. I suspect it will take some time for fighters to cease being grateful that UFC pulled them out of the gutter in terms of earning potential. But if the sport continues to thrive, some attempt at labor organization seems like a down-the-line possibility. It will be interesting to see if it ever gains more traction than it has in pro wrestling. Given the current set-up, I can't see the sport following a boxing model and splintering in a million directions.

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The official thinking behind the purchase seems to be that it allows them to aggressively expand the number of shows they run, in particular internationally. These guys dream big of making this the biggest sport (monopoly) in the world within the next ten years. This aids them in that (unrealistic) goal.

 

Regarding Bryan, his thinking was pretty clear from listening to the radio show. Strikeforce were overstretched idiots who were in over their heads, while Dana White is a promotional genius with a Midas touch. Think Ric Flair's reaction to WWE buying WCW ten years ago.

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I'm trying to figure out why UFC paid $40M for it. Is it just to protect a monopoly? In the long term keeping contracts down?

This, plus being able to go further more quickly with continued international expansion plus there was another similarly numbered offer on the table for Strikeforce.

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Dave said in his radio show today that UFC wants a regular presence in their overseas markets, no down time without live events there, meaning 8-10 shows per year in Australia, the UK, etc. Similar to Shane McMahon's short-lived idea of having full time WWE territories in all their major overseas markets.

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Does that mean 8-10 cards in the UK + 8-10 cards down under + 8-10 cards in Asia + 8-10 cards in the European continent (in addition to those in the UK)?

 

I really don't think they needed Strikeforce talent to run more shows overseas. They were just *cutting* talent in UFC. There's plenty of other talent out there to grab.

 

John

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I'm trying to figure out why UFC paid $40M for it. Is it just to protect a monopoly? In the long term keeping contracts down?

This, plus being able to go further more quickly with continued international expansion plus there was another similarly numbered offer on the table for Strikeforce.

 

The offer strikes me as more likely, especially if it was a major money mark level.

 

John

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Does that mean 8-10 cards in the UK + 8-10 cards down under + 8-10 cards in Asia + 8-10 cards in the European continent (in addition to those in the UK)?

 

I really don't think they needed Strikeforce talent to run more shows overseas. They were just *cutting* talent in UFC. There's plenty of other talent out there to grab.

Yes, theoretically it does mean 8-10 cards in each major overseas market. I agree that they didn't need Strikeforce's talent to run more shows overseas, they had too much talent already. But they wouldn't have anywhere to air all those extra shows, as already Spike TV wouldn't pick up all of UFC's PPV prelim shows, forcing them to buy time on Ion to air the ones Spike didn't want to pick up. Zach Arnold is suggesting that the main advantage to buying Strikeforce is the money from their Showtime deal can bankroll UFC's international expansion plans.

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Let me get this straight... the money from Showtime would fund the expansion.

 

Showtime Money > $40M Current Value

 

I don't think that adds up.

 

Allegedly, there are three years left on the contract. That's interesting because the original contract in 2009 was for 3 years, so it would seem that Strikeforce extended it at some point.

 

John

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  • 6 months later...

Just because it was always the plan to subsume Strikeforce into UFC, doesn't mean that completely tanking the promotion was a smart thing to do. Given that the likes of Josh Barnett, Antonio Silva, Luke Rockhold, Ronaldo Souza, King Mo, etc are all going to end up in UFC soon enough, you want as many eyeballs as possible watching their fights, so when the merger happens those guys fighting on UFC cards will mean something.

 

We need to see how the FOX deal pans out, but by the sounds of it UFC will be running about the same number of live special for FOX/FX next year that they did for Spike TV and Versus this year. So without the Showtime deal, Zuffa will have to do a massive purge of their roster, and with Bellator likely ending up on Spike TV and Showtime finding replacement MMA programming, we're back to square one. They should have let someone else pay through their nose for the tainted brand.

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Just because it was always the plan to subsume Strikeforce into UFC, doesn't mean that completely tanking the promotion was a smart thing to do. Given that the likes of Josh Barnett, Antonio Silva, Luke Rockhold, Ronaldo Souza, King Mo, etc are all going to end up in UFC soon enough, you want as many eyeballs as possible watching their fights, so when the merger happens those guys fighting on UFC cards will mean something.

 

We need to see how the FOX deal pans out, but by the sounds of it UFC will be running about the same number of live special for FOX/FX next year that they did for Spike TV and Versus this year. So without the Showtime deal, Zuffa will have to do a massive purge of their roster, and with Bellator likely ending up on Spike TV and Showtime finding replacement MMA programming, we're back to square one. They should have let someone else pay through their nose for the tainted brand.

Why would they focus more on the Strikeforce card featuring a tournament that may or may not ever conclude when they have 4 cards in 4 weeks on the horizon, two of which feature the promotion's biggest stars?

 

Zuffa bought Strikeforce to get a few key pieces of talent, not to deal with Showtime. It's akin to them buying WFA just to get Rampage and Lyoto. Dana has said repeatedly he doesn't want to deal with Showtime. Since the day they purchased Strikeforce it's all been about waiting out the Showtime deal. This "massive purge" you speak of is going to be lower level guys Zuffa doesn't want around anyway. Are you advocating putting promotional efforts into Strikeforce and Showtime to save the Zuffa employment of Lorenz Larkin?

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  • 4 weeks later...

Zuffa bought Strikeforce to get a few key pieces of talent, not to deal with Showtime. It's akin to them buying WFA just to get Rampage and Lyoto. Dana has said repeatedly he doesn't want to deal with Showtime. Since the day they purchased Strikeforce it's all been about waiting out the Showtime deal.

 

I wish Showtime gave a rat's ass because I imagine with some good ballyhoo you could get a pretty big audience for M1 Monson v Fedor. Anarchist v Russian military in Moscow: a history of anarchism in Russia, history of the repression of anarchism, Monson meets Voina, Fedor and the mayor of Moscow, Zahar Prilepin to write a poetic intro piece on Fedor. It shouldn't be hard to promote that on Tv and sell it as a far bigger deal than actually is.It feels like it wouldn't take alot of money for Showtime to thumb its nose at UFC and promote the M1 show.

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