How to Actually Interpret the Strikeforce Numbers
Posted by Alan Conceicao on March 4th, 2009
So someone has leaked info about the Strikeforce TV deal and the internet is abuzz. Unfortunately, it is not abuzz with anything intelligent being said. To further explain, Strikeforce is getting roughly the average of $500,000 a show for 3 years to produce 40 shows. Some will be big shows. Some will be small shows. To compare how they’re paid compared to, say, everything else in combat sports, some numbers:
IFL on FSN - $20,000/show
ESPN2 Friday Night Fights - $30,000/show
Solo Boxeo Tecate on Telefutura - $90,000/show
Showtime Championship Boxing - $300,000/show
HBO World Championship Boxing - $anywhere from 150K - 1.2 million, depending on the fight
In short, Strikeforce is being paid more than boxing promoters are for costlier world title fights in boxing by the same network to run events. Noticably more. This, by the way, does not prevent Strikeforce from running a PPV. How bad a deal does that sound for a company with next to no debt? That hasn’t blown their wad buying small organizations for 5 times their actual value? That made money running on networks nobody watched for piddly money? As long as they continue along the same path as before and can repeat some of the ratings successes, Strikeforce has a license to print money.
EDIT: One of the folks over at Bloody Elbow decided to remind me that comparisons to boxing numbers don’t work, since MMA organizations have costs outside that of what boxing companies have. Which is true when talking about Zuffa, since they love to have control of the production aspects. The thing is that it is not true when talking about Strikeforce, because the model being followed here is exactly that of boxing. Showtime Sports is and will be the distributor of PPVs, will be running the production, picking announcers, and all the rest. Strikeforce just has to show up to the venue. But I’m sure you guys knew that already, right?
That it is a “max” is of course true and assumes that Strikeforce will be able to generate some EXC-esque ratings for CBS, otherwise CBS almost assuredly has an opt out clause. But then, there’s a reason why I put in the “if” as to whether or not they’d be able to sustain what’s already been done.
March 4th, 2009 at 3:27 pm
Ok, Alan, so what exactly is unintelligent about what I said? Did I say it was a bad deal? No. All I said was it wasn’t as “lucrative” as the MMA Weekly post made it sound.
March 4th, 2009 at 6:22 pm
How could it be more lucrative in the space of reality? They’re being paid more than probably 3/4 of the promoters will be for HBO’s top flight boxing cards, which is the platinum standard by which combat sports is compared. Obviously it isn’t PPV money, but no one, not the UFC, not Oscar De La Hoya, no one is going to get PPV money from a network. Nor can this be compared to the UFC’s deal, which differs in that they are the producers of the programming (Showtime Sports will undoubtedly do Strikeforce’s) *and* provide weekly television for Spike, thus not needing to be added into the price tag.
So, to make this even shorter, Strikeforce has a deal in which it pays nothing, gets paid more than anyone in a comparable spot in the industry, keeps the live gate, and can hype up future PPVs on network TV, in prime time. I would say its pretty damn lucrative.
March 4th, 2009 at 7:22 pm
The impression I got reading the MMA Weekly post was that they were passing off the deals as these huge money makers for Strikeforce, “worth millions” as the headline read.
My point was that the monetary value attached to the deal, when spread out over 3 years, isn’t as impressive as it seems in the context of the story.
You’re right, when you factor in the live gate, it should put them in a position to be profitable meanwhile setting themselves up for pay-per-view.
If you’re looking at the big picture, I suppose it could be considered “very lucrative,” but that’s not what the story was alluding to as I read it. In terms of how much revenue they bring in from the deals alone, it’s not as impressive as MMA Weekly made it sound, despite whether it puts them in a good position or not.
If my perspective is unintelligent, so be it, but that’s how I interpreted the story.
March 4th, 2009 at 8:22 pm
It is worth millions of dollars. Its among the most lucrative deals in the history of all combat sports, much less MMA. They make money now: They will make millions more then. Plus, not only does it fund them for the foreseeable future, it means that it can fund any prolonged attempts at breaking the PPV market. They’re doing this without EXC’s absurd spending on social networking sites or purchases of Korean MMA promotions.