(It will be interesting to see how Viacom’s vested interest in the company will translate into its promotion of ProElite)
By Mike Russell
It looks like the proclamation UFC president Dana White made a few months ago that CBS will likely go head-to-head with his promotion again in the near future was right on the money.
Sources close to the promotion that was recently brought back from the verge of death by Stratus Media Group, who acquired a 95 percent ownership stake of the company in June, have informed CagePotato.com that ProElite is in the final stages of negotiations for a multi-year television deal with Viacom that will see its events broadcast on both Showtime and CBS starting in the first quarter of 2012.
Viacom owns 20 percent, or approximately 11,991,172 of the 59,955,862 outstanding shares of ProElite (PELE), which are currently trading at 48 cents each after sitting at a penny for the past three years since EliteXC folded. At the height of EliteXC’s popularity, ProElite’s shares routinely traded at $15. A resurgence of the company aided by a deal with Viacom, would mean that for every dollar they can raise the stock purchase price by, the media conglomerate could stand to earn close to $12 million U.S.
In September 2008 Showtime Networks filed a public notice with the Securities and Exchange Commission (SEC) that stated their intention to enter into discussions to purchase ProElite to try to save the company from bankruptcy, but the deal never came to fruition. The company’s CEO at the time, Chuck Champion instead chose to sell off select limited assets, including fighter contracts and its extensive video catalogue to Strikeforce in an effort to bring the books back into the black, which he did with the transaction. Since then, the company, whose other assets include major stakes in the UK’s Cage Rage and Korea’s SpiritMC promotions, remained dormant until the Stratus Media acquisition brought it back from the ashes.
Showtime’s current deals with Strikeforce and M-1 will soon be over, effectively clearing the way for ProElite’s shows to be broadcast on its networks, which will in turn mean bigger name fighters signing with the promotion whose roster includes former UFC heavyweight champion Andrei Arlovski, The Ultimate Fighter season 3 winner Kendall Grove and UFC veteran Joe Riggs.
M-1 has two events remaining on its current deal and it is rumored that it will feature recently released Strikeforce heavyweight and former PRIDE champion Fedor Emelianenko on at least one of them. Strikeforce’s three-year contract expires in February 2012, but according to a source we spoke to, it could end sooner if Showtime deems the quality of events the UFC sister promotion is putting on is less than expected.
ProElite 2.0′s first event under its new ownership and the leadership of former ICON Sport T. Jay Thompson and Strikeforce matchmaker Richard Chou will take place August 27 at the Blaisdell Arena in Waikiki, Hawaii. Although Thompson has stated that the promotion is not looking to compete with the UFC, the deal with CBS and Showtime will position ProElite to do just that in the near future.
We will have more on the situation as it develops.
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Your base assumption of company size being the determining factor of success in MMA is so poorly reasoned I am cringing with embarrassment for you.
- Excluding the historical fact that Zuffa has countless times been threatened by several other competitors with a seeming resource advantage (CBS/Showtime for EliteXC, Mark Cuban, Donald Trump, Arum, Golden Boy, etc) that would supposedly now show them the flaws in their business model, only to see these competitors find it impossible to create a successful MMA business model of their own, your argument is still monumentally stupid.
- Even if you use your roughly thrown together numbers of Zuffa’s revenues of $1.5 billion to Viacom’s $9.5 billion, you completely miss the fact that Zuffa’s entire business is built around and invested in MMA. Zuffa is an MMA company. Viacom is not. You really think Viacom would even risk $100 million into such a risky business (and historically failing business for all companies not named Zuffa), let alone risk $1.5 billion to match Zuffa? If they did, their board of directors would fire their executive management before you could cream your shorts thinking about all of the competitive hopes you have for them.
- And Lanchester’s Square Law is an all-things-being-equal law of attrition and losses for opposing forces. You are not taking anything into account towards creating equity and parity between the two for fair comparison, including established position, resources devoted to the same outcome, or willingness to endure said attirtion for that goal. Lanchester’s Square Law would be completely inadequate to apply to this situation, as it is incapable to taking the variables and intangibles into account.
- To put it another way, if we use your specious reasoning in using straight money comparison, then why hasn’t Walmart put every television manufacturer, cell phone company, clothing company, and any other company where they produce a competitive product out of business due to their overall revenue? Maybe because Walmart does not invest their entire revenue into these products. Just as Viacom will not invest much of its revenue into MMA.
- And your understanding of corporate interactions seems to be built off of repeated viewings of Wall Street and Pretty Woman. Sorry to break it to you, but Zuffa is a private company. There will be no hostile takeovers and siezures of majority shares, not stock swaps. They choose what, when, and how to sell any piece of the company, and seem to be damn choosy about doing so.
I’m not even going to touch the stupidity of your cyborgs and exoskeletons, since I already feel dirty enough having bothered with the rest of your crap.
- So we get it. You don’t like Zuffa. Can you just say that from now on and spare us the rest of your bullshit?
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@RwilsonR
- I am not trying to impress anyone, if I was I would not be on this website. I should point a few things out to you, that you may have missed, or misunderstand. Which you want to wave off as bullshit, are actually facts. I deal in facts, not bullshit.
- The Lanchester's Square Law introduced has nothing to do with the size of a company. You interpret its utility incorrectly. As I clearly stated, its specific to demonstrating power advantages, not size. From your post I don't get the impression your stupid, but you fail to understand the difference.
- Unlike you, I never once thought any of the other MMA organizations you listed ever once threatened Zuffa. These others lacked rising talent, and instead relied on either has-been's - or discarded fighters. In the case of Kimbo, Slice he was a test case and a anomaly, and in his case - he too got was immediately signed by the world class UFC that you love to defend. (snicker)
- Also, these other organizations lacked management depth, and they misunderstood the sport, and Zuffa's initial entrenchment into MMA events - you can give that bit of credit to Dana and his simpleton's luck.
- Early on it was a blessing in disguise for Zuffa, as these competitive ventures grew the previous talent pool by leaps and bounds nearly overnight. The proof is in the pudding. The cream of the crop (along with Kimbo), made their way to Zuffa when each of the other organizations collapsed. And they got picked up on the cheap.
- Your right Zuffa is a closed corp., Viacom (if the rumors are true and they reenter MMA) is a public corp. I only know of Zuffa opening their books one time, and for one person. He is named Sheik Tahnoon of Abu Dhabi (Flash Entertainment.)
- This alone forced all to ask, why share your balance sheet with a Shiek? Why a fucking Arab? Their population is roughly 1 million people, women are not allowed to go to sporting events (which means half the seats stand empty), booze is illegal, gambling is not allowed, and all in the name of their national love of, Allah.
- Go look up Islmaic Banking - specifically Hawala. Its off books. Another words, in this case its very likely Flash and the UFC operate in conjunction under a "international corporate shell." The sheik moves his 10% investment into the shell company, and then that shell is used as a means for filtering in off-book cash to prop up its US based parent.
- Why not the Chinese? The Chinese have 1.3 billion potential rice eating viewers and boatloads of more money than the Middle East. Here most speak English (they have more 2nd language English speakers than the US has in total population), and they love to drink, gamble, and get loose.
- Where better to grow the UFC brand, but in China. Obviously there was another need that has yet to be disclosed by Zuffa. I have a dam good guess why, but if you know, please tell me now? I'll give you a hint, it starts with a the letter "D", as in Debt. Massive fucking debt.
- Since you didn't like me tripling the UFC's revenue's lets get back keeping it real. I know the UFC does 10 shows a year, with an average yield of $500 million per year. Viacom revenue stands at $9.5 billion...their books are open to the public and they don't need to leak information as the UFC often does to spin up hype.
- Of the $9.5 billion in revenue, their 'Operating Income' is a whopping $2.2 billion, about a quarter of their revenue. Zuffa with their closed $500 million in revenue, would have less than $125 million (and this number is a high SWAG from me). Just last year, the Las Vegas Review Journal pointed out that Zuffa carries a minimum of $450 million in debt.
- Look at it from a more sophisticated perspective. Dana may like to flash his bling, but in reality he really owns 10% of the total debt. Another words, he is on the fucking hook for his share of the $450 million in debt. Dana is $45 million dollars. He is in debt up to his asshole.
- Do you still think the UFC is rolling in dough? Of course not, the UFC has to borrow $4 dollars just to earn $1 fucking dollar. Do you really want to trick the people here into thinking that the UFC is any better managed than CBS/Showtime for EliteXC, Mark Cuban, Donald Trump, Arum, Golden Boy? Come on Wilson, your talking nonsense.
- On top of that, you dare compare the UFC to Walmart. Walmart is the richest fucking company in existence, ever. They have a annual revenue of more than $422 billion dollars, and that's more than $52 billion dollars more than the oil giant Exxon/Mobil ($379 billion) makes in a year. Stop talking out of your ass, as you cringe in your embarrassment for me.
- I never once said there would be a hostile take over of Zuffa, nobody wants their fucking irresponsible debt. Not even the dumbest fuck on this website would get sucked into that. If Lorenzo was smart, he would have Dana hemmed up with whats called a "Share and Options Buy Back Agreement."
- Why because Dana would be the first rat to jump ship and sell his shares if he felt he needed to pull the rip cord. If I was him I would do the same and line my pockets before the bill collectors started knocking on his doors. Remember Dana is not a fool, surely his wealth has given him access to an exit strategy.
- Second, if there is a Buy-Back Agreement in place, it would mean Dana would have to sell his shares to Zuffa as such agreements give a first right of refusal to the corporation. If the corp. passes, the next option for repurchase is given to all other shareholders. This is what's termed a pro-rata basis, and fairly distributed.
- Here is what you really fail to comprehend, as you had the chance - yet failed to mention it yourself. The real POWER lays not at the television station (example: Spike-Viacom or G4-Comcast) it's all in the infrastructure. Viacom has paid for, built out, and owns their infrastructure, that's commonly called the last mile.
- Zuffa owns no voice, video, or data infrastructural, zero. They, like Golden Boy (who has to partner with HBO/Time Warner), and all the other's who have come on gone will forever be nothing but a little bitch to the big dogs. In this case, it could very well be Viacom coming out on top with a minimum effort.
- This clearly explains why the UFC is always talking about and hinting about a potential deal with the G4 channel. Comcasts G4 channel is primarily structured for the video game generation. This is an attempt to play off the UFC video game. I will tell you this "reach around" is because they are nearing the end of their rope. Most grown men could care a less about video gaming. I will admit, with this strategy the end may justify the means, as the UFC is focusing on the youth. This may be the best and wisest move for them.
- Lastly, you did get one of your conclusions correct. I don't care about Zuffa, the UFC, Frank, Lorenzo, or Dana. I like watching MMA fights, period. Yet, what I like even better is watching them for free. Free and the UFC do not equate. For the UFC to become free, they have to partner soon with a big fish, or they will be eaten alive.
- Wilson over this entire topic, fuck you and your bubble-gum MBA degree. Its simple for anyone to understand. Dana White is identical to another guy named Charlie Sheen. We all know what happens to fucking big mouths who step out of line. The big dogs will always kill them off, every fucking time. Dana is no exception. I my opinion he needs to recalibrate his public image, and step it up.
- Let me ask this. As its common knowledge that the UFC has a team of paid fluffers and pumpers working every MMA blog in existence, every one ask themselves this. Who here best fits that description? Who here defends the UFC at every turn, as if they were sucking their favorite cock? Surely that fucker is not me.