The majority of people on this site have been overwhelmingly negative toward afflictions business model. I was on the fence, the salaries look to be huge and PPV buy rates not enough to capitalise the project. On the other hand I think UFC dominance will only last so long, affliction might crack the market or keep just about in the black and glean profit from increased t-shirt sales.

One fanpost has already discussed why it could, long term, be profitable for a affliction to take a large hit now, i.e. the promotions game is an aggressive marketing campaign.

mmapayout, in an article titled Affliction’s Day of Reckoning May Be Further Away Than Anticipated, expand on the point made by HonorableJudgeIto.

Out of the 125 million in annual sales the MMA brand alone accounts for about $25-35 million, that obviously does not include people buying t-shirts due to exposure at MMA events that are not part of afflictions MMA brand. The figure of t-shirt sales related to MMA is probably somewhat higher, but even sticking to this figure you are looking at around $10-14 million in profit from MMA. Added to this “the company believes that these events help sell those shirts. Large sales spikes have been reported around both of its events”.

This makes the loses forecasted by journalists and fans alike on events seem less danming.

With regard to fighter payroll, part of the wage surely covers the fact that they are draped in affliction apparel in the build up to the fight. Also, it may include a contract for a particular fighter’s line of t-shirts. To sponsor every fighter on a card would be quite a hefty bill. I know this is speculation, but is a logical conclusion to come to give the size of the fighter’s payroll.

With Golden Boy promotions and the Trumps involved the promotion gaining media attention and access to considerable business acumen. De La Hoya and Trump also provide a nice image booster, similar to the boost provided by putting an affliction t-shirt on “Rampage” Jackson. They are sponsored to make the company look good. When a fan sees Golden Boy a great promoter + Trump a great business man, they can trust the product being sold.

As a result of the 5 million comment by Larry Merchant we have got an even grater insight into the make up of GB’s relationship with affliction. See these articles for more details: mmajunkie and sherdog. This quote sums it up:

 “Affliction] in turn, he said, would then cover all expenses, including paying the purses of the fighters and marketing the event. Golden Boy’s end of the deal, Schaefer said, would be to run the operational side of things and arrange for licensing, handle the fighters’ medicals, book the venues and deal with the relevant state athletic commissions. Affliction Entertainment does not have a promoter’s license.

Golden Boy also promised to make De La Hoya available to help market and promote the events.”

On the bases of what I have been reading lately it looks as though there may be life in affliction yet. The deals with GB and Trump seem to make sense and articles on sherdog and mmapayout seem to indicate that PPV sales were stronger then expected, although it’s too early to say for sure. Schaefer states in the sherdog article that affliction have put up $5 million for the event. If you take away $500k they would have spent on sponsoring a similar event to this level and the $1.5 million live gate, this would mean they need to hit $3 million in PPV sales to break even. If the PPV provider takes 50%, that means about 130k buys. If the reports are true this would not be beyond the bounds of reason. I know my figures are very simple, but what they do show is that it would not be outlandish to claim that DOR, overall, has done enough business to warrant a third outing by affliction. I have also not factored t-shirt sales into the analysis, these could add substantially to profit. So maybe it’s not all doom and gloom in the land of gaudy t-shirts.