Ring Of Sports Marketing

Date archives July 2016

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Dana White’s New Contract Gives Him 9% Of Future Profits

UFC President Dana White will stay on as President once the new ownership group takes over.  White owned 9% of the UFC before it was sold to WME-IMG and other outside investors for $4 billion, which most likely netted him $360 million.  It is not known how much ownership Dana White will retain after the largest acquisition in sports history.

ESPN is reporting that Dana White’s new contract gives him 9% of future profits.  In an interview with CNN last year Lorenzo Fertitta said that the UFC made $600 million in revenue.  Based on some speculation done it is estimated that the UFC makes a $200 million profit a year.  The contract is set to last for five years and given logical estimations will create an annual salary for Dana White in the realm of $18 million.

Ringside Analysis:

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Athlete Branding

Dennis Bermudez Seeks To Expand Brand Through Social Media

UFC fighter Dennis Bermudez found some viral success after a video of him breaking the Guiness World Record for drinking the most lemon juice hit YouTube.  The video’s success showed Bermudez just how much attention, and therefore money, can come from creating digital content.

From the article by MMA Junkie:

“I was like, ‘How much do you make just being a YouTuber?’ And he was like, ‘I don’t know. My best month was, like, $30,000.’ I was like, ‘What? Shut up!’” Bermudez told MMAjunkie. “I was like, why am I not doing this?”

Bermudez also tracked down information on gaming platform Twitch from UFC flyweight champ Demetrious Johnson and others who live-stream to other gamers.

In the cage, Bermudez’s assets are revealed in his conditioning, heavy hands and strong wrestling. On camera, though, he said his greatest tool is his personality. Right now, he’s using the latter to build an audience, one video at a time.

Ringside Analysis:

For a sport that only pays the top fighters a lot of money that parallels and sometimes exceeds that of other leagues it is incredibly important for athletes to develop their own brands.  Especially when considering that the window of time an athlete can make a lot of money from their performances is so small.

Distribution is free.  With the internet and platforms such as Twitter, Facebook, Instagram, and Twitch anybody can take control of their own online presence and be in contact with all of their fans instantly, for free.  Since Facebook has gone to a payment model in order to reach all of one’s fans the rush to Instagram has begun.  When most of the companies I speak with want to be active in social media I tend to recommend Instagram.  Instagram has a huge user base and a content feed best for brands.  Also, many of the companies have a customer base that already lives on Instagram.  The large marketing potential on the social network means that influencers on Instagram can make thousands of dollars for a single mention depending on how many followers they have.

For the most part, if fighters can make money without fighting and cashing in on their brand they will stop fighting.  Ronda Rousey already has been executing on an exit strategy that would push her into Hollywood as an actress in the film industry.  The pound-for-pound best fighter in the UFC, Demetrious Johnson, has created a following by streaming himself playing video games on Twitch.  Again, this is a fighter creating a brand separate from his fighting career by marketing a certain part of himself to a certain fan base on a specific medium.

Creating a clear brand and a large following can create a second source of income, maximize one’s earning potential while playing, and extend the life of his money-making abilities well after his playing days are over.

UFC

Despite Main Event Loss, UFC Sets Gate Record In Nevada

Even losing Jon Jones and having to put a new main event in didn’t stop the UFC from setting a new gate record in the state of Nevada.  At the UFC post-fight press conference the organization announced that the 18,202 people in attendance created a revenue of $10.7 million.  The previous UFC record was for UFC 194, featuring McGregor-Aldo, that had an attendance of 16,516 people and made $10.1 million for the UFC.

The new T-Mobile Arena in Las Vegas run by AEG and MGM has a 20,000 seat capacity.  UFC 200 was the second fight to be held at the new arena with the first fight that featured Canelo Alvarez knocking out Amir Khan.  At one point there were rumors that the UFC was going to purchase naming rights for the new arena.

Ringside Analysis:

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UFC

UFC Sold For $4 Billion

Rumors have swirled for the last two months that the UFC was being sold in the neighborhood of $4 billion.  Chris Maathuis at CBS KLAS-TV in Las Vegas, says the UFC sold for $4 billion to outside inverstors.  Dana White and Lorenzo Fertitta are scheduled to make an appearance at 5 am on KLAS-TV.

According to LasVegasNow:

“The new owners include an alphabet-soup partnership of WME (William Morris Endeavor), the internationally known talent agency,  IMG (International Management Group) a global sports and entertainment company based in New York, and MSD, a private equity group headed by Michael Dell.  Also involved as a strategic partner is KKR, a global investment firm.

According to persons familiar with the deal, Lorenzo Fertitta will remain as chairman of UFC for 6-8 weeks during the transition but will step down after that. UFC president Dana White, who currently owns 9% of the organization, will continue in his role with UFC and will have a smaller ownership stake.”

ESPN reporter Brett Okamoto had some texts with Dana White that he posted on twitter:

Ringside Analysis:

The UFC selling for $4 billion would be the biggest deal in the history of sports.  The company has come a long way from when the Fertitta brothers purchased the UFC in 2001 for $2 million.  Last year Lorenzo Fertitta told CNN that the UFC had made $600 million in revenue, so the sale is going for seven times the reported revenue.

There is a lot more money behind the UFC with the new investors.  Between one of the largest sports and entertainment marketing companies and private equity and investment firms that have billions more dollars behind it the sport, as Dana White says, will be going to the next level.  The extreme money and unparalleled expertise now running the sport could really push the UFC to the mainstream, a goal that the Fertitta brothers and Dana White have been saying since they bought the company.

Personally, I’m extremely excited to see where this sport goes.

 

Uncategorized

Lorenzo Fertitta And Dana White Speak With LA Times About Sale And UFC 200

There have been two stories that have dominated the talk in the MMA world: the possible sale of the UFC and UFC 200.  In a recent interview with the LA Times, the head of the UFC, Lorenzo Fertitta, was quick to dismiss any rumors about the UFC being for sale and deflected the question in favor of UFC 200.  The two owners wanted to strongly emphasize the growth of the company since UFC 100.

Lorenzo said on selling the UFC:

“Look, if we bring on an investor or something happens, we’ll let everyone know,” Fertitta said. “I sat here as I got back from the Fourth of July weekend and went through every piece, every second, of what’s been created for UFC 200.”

“I’ve never been more bullish on the business. I still have massive love for the sport. I never said I was walking away.

“What’s happening — this is standard. Any company, this size and magnitude, you don’t talk about things you’re working on in strategical terms. So there’s nothing to report.”

UFC 200 is just 36 hours away and while Jon Jones has been pulled from the fight the card remains stacked with huge names like Daniel Cormier, Miesha Tate, Anderson Silva, Jose Aldo, and Frankie Edgar.  Brock Lesnar makes his UFC return to fight Mark Hunt.  Their 3-round fight is now the main event for UFC 200.

On the growth of the company Fertitta said:

“The spectrum and brand of the sport has come a long way. You don’t take time to look at the accomplishments and appreciate how the sport has grown when you’re doing this every day – but there’ve been a lot of changes.”

Ringside Analysis:

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Jon Jones Pulled From UFC 200

Today the UFC announced that Jon Jones has been pulled from UFC 200.  USADA notified Jon Jones that he failed an out-of-competition drug test that took place on June 16th and will be unable to compete Saturday night.  There is an appeal process but it takes 72 hours for it to be completed and the process would not be done by the time of the fight.

This is not Jon Jones’ first issue with testing and adds onto his history of out-of-competition incidents.  Jones was stripped of his light heavyweight title after a felony hit-and-run charge in April 2015.  Before fighting Daniel Cormier, Jones also failed a drug test a month prior to fighting when testing found cocaine in his system.  In January of 2015 Jones had a brief stint in rehab.

Jon Jones is still on probation so if it is found that he did something illegal, such as using steroids, he will be in violation of his probation and will go to prison again.  Recreational drugs are not tested out-of-competition so the positive test must be a result of a performance enhancing drug (PED).  If there is in fact a PED violation Jones is also looking at a two year suspension from fighting.

Daniel Cormier was looking to get revenge from his loss in UFC 182 and was looking at making seven figures from this fight.  Cormier will be missing out on a lot of money given that the fight is no longer happening.  Dana White left open the possibility that the UFC could find someone to fight Daniel Cormier on what is essentially 48 hours notice.

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UFC And Topps Partner For Digital Trading Card App

The UFC and Topps Trading Cards has launched the Knockout 16 app just in time for International Fight Week.  The app will have thousands of trading cards with unique artwork and will feature some of the biggest stars in the UFC such as Conor McGregor, Miesha Tate, and Demetrius Johnson who is the cover athlete.

From the press release:

“Topps has been a great partner and we’re thrilled to offer fight fans a new way to experience UFC in the digital realm while watching live events,” UFC Senior Vice President of Global Consumer Products Tracey Bleczinski said. “Fans are really going to enjoy collecting and trading their favorite UFC athletes in real-time.”

“We’re excited to expand on our relationship with the UFC by introducing engaging and easily accessible digital trading cards to keep up with the demand of UFC fans around the world,” said Jeremy Strauser, Vice President and General Manager of Topps Digital. “We see the enormous impact and global popularity of the UFC, so UFC KNOCKOUT 16 is a natural fit for Topps’ apps portfolio.”

Ringside Analysis:

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UFC Makes UFC 200 Promo For Adult Swim

In promoting UFC 200 taking place on July 9th the UFC has made ad buys on Comedy Central during “Adult Swim.”  It is more branded content than straight commercial and brings back King of the Hill’s Hank Hill and George Liquor from the Ren & Stimpy show.

The main reason for the buy is not only Dana White’s affection for Adult Swim but also the clear alignment of demographics.  People who watch Adult Swim are the same type of people who like the UFC.

From the article on Adweek:

“The way the pay-per-view market works for us, we give them a spot and then they circulate it through all the cable channels. But our spots are never on Adult Swim,” said White. “Comic-Con is huge, and that demo is a very loyal fan base and hardcore, much like ours. We’d never had a presence on this network that is so strong with this young demographic.”

White reached out to Judge about creating an animated short, and Judge tapped friend and fellow UFC fan Kricfalusi. The spots took more than a year to create due to the red tape required to clear the rights to use Hank Hill (which is owned by Fox) and George Liquor, and getting Adult Swim on board. “They’re into funky, crazy new shit, and they were so supportive of this thing,” said White of the network.

Ringside Analysis:

The UFC is fully committed to marketing to the core fan.  Almost every marketing effort is designed to attract men between the ages of 18 and 34 with an African-American ethnicity.  Basic marketing is that you market to the people who are most likely to buy your product, not to persuade non-buyers to suddenly purchase your product or service.

One of the genius parts of this spot is that it doesn’t show knockouts or the kind of footage that people who aren’t necessarily already fans of the UFC characterize as “goofy” and “weird” and actually end up deterring them.  Creating an advertisement that doesn’t follow the usual images and messaging is a great move and I’m sure will end up being a huge success for the UFC.