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Strikeforce Deal With Showtime and CBS Worth Millions

Strikeforce_showtime_medium

MMAWeekly reports:

Strikeforce is quickly putting the pieces together for its next year of MMA programming on Showtime and CBS. It's been a frantic month for CEO Scott Coker and his small staff as they zero in on dates, venues, and fighters for a possible 16 shows over the next 12 months.
...

With up to 48 shows to book, that's a lot of work. But according to another source with knowledge of the negotiations between Strikeforce, ProElite, Showtime, and CBS, the deal will prove very lucrative to the San Jose, Calif. promotion.

The source, who chose to remain anonymous, said Strikeforce stands to make $25 million dollars in license fees over the course of its three-year deal with the broadcast network and its premium channel sibling.

A portion of that revenue, first disclosed by an SEC filing by ProElite on Feb. 11 and, according to the source, put in the neighborhood of five percent, will be paid to ProElite Inc. as consideration for the sale of its assets to Strikeforce. The total revenue coming into ProElite coffers could total up to $1.25 million.

Since the sale, the Los Angeles-based company has been mostly silent about its future in MMA promotion. CEO Chuck Champion told SI.com that the company had an existing TV deal with Fox Sports, and planned to nurture its relationship with the remaining active promotion under its umbrella, King of the Cage. But how that relationship would develop, and what shape the restructured company would take, remained unclear.

 

MMAConvert gives its own take on the deal, and says it is not as lucrative as it sounds:

At first glance, $25 million sounds like a lot of money, but is it really? But, much like the "six-figure" TUF contract, it sounds great until you see it’s spread out over three years.

For argument’s sake, let’s assume a) the information is accurate, and b) they run all 48 shows and receive the full $25 million in license fees. Subtract $1.25 million off the top and you end up with $23.75 million divided by 48 events, which comes out to right under $500k/event. Now, not every show is created equal. A large portion of the 48 events will be smaller shows similar to the ShoXC series that will likely cost less than $500k to run, however, the bigger events, such as the one on April 11 will likely cost much more. All of a sudden, it doesn’t appear so "lucrative," does it?

 

TotalMMA gives its own perspective on the deal, and discredits MMAConvert's POV:

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.

 

So, if the numbers are correct at around 500K/show, Strikeforce is looking at a bright future ahead.  Many have criticized Network deals and said it was the last nail in the coffin for any organization that would sign them.  Most in the MMA field shared that same sentiment, pointing to the extinction of the IFL and EliteXC as their main examples.  Now, it appears that Scott Coker has negotiated the right deal for an MMA promotion to move forward with in the future. A deal that could benefit Strikeforce and MMA in general for the next 3 years, and open the door for other Networks and promotions to negotiate TV deals that would benefit both parties.

One can now understand why it took so long for Strikeforce, ProElite, CBS, and Showtime to come go an agreement, with the ProElite asset purchase being key in all other deals. The deal Chuck Champion pieced together is so good, that ProElite managed to get 5% of Strikeforce's revenue from CBS/Showtime. The total revenue coming into ProElite coffers could total up to $1.25 million, which will greatly benefit KOTC and all other promotions still under the ProElite umbrella. The complexity of such a deal was underestimated by many, and thought impossible by most.  The hard work and diligence of Chuck Champion, Scott Coker, Showtime, and CBS will benefit MMA and its fans for years to come.

The FanPosts are solely the subjective opinions of Bloody Elbow readers and do not necessarily reflect the views of Bloody Elbow editors or staff.

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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.

To call this quote from Total MMA an exaggeration would be a massive understatement. At first glance, it looks to be a decent deal that shouldn’t financially stress Strikeforce. The significant exposure yielded from being on CBS and Showtime is the diamond in the rough, in my opinion. There are a lot of aspects of this deal that we don’t know about. I expect that Coker and company did a good job of constructing an agreement that will work for them as he has proven to be an exceptional steward of his promotion.

I would guess that $25 million is the best case scenario as far as revenue from CBS/Showtime. Of course, I’m sure they’ll have to meet some type of performance level that could affect the agreement and whether it’s allowed to play out to its full duration. Conversely, if Strikeforce knocks the ball out of the park, they could conceivably renegotiate for better terms. My suggestion is to take this for what it is – incomplete information. Let’s see what else comes out and how Strikeforce does in executing alongside their new partners. MMA promotions generally bear more costs than boxing counterparts as Luke pointed out in the Teddy Atlas thread, so the comparison across sports is misleading.

Because someone says it’s “a license to print money,” doesn’t mean it actually is. Good finds though.

by Cannon Jacques on Mar 4, 2009 3:37 PM EST reply actions   0 recs

Agreed

wow@ using boxing numbers….

http://www.mmaforreal.com

by Kelvin Hunt on Mar 4, 2009 4:24 PM EST up reply actions   0 recs

Hmm, I figured you would post here.
Thanks for the Zuffa perspective on this deal though.

Appreciate it.

by MMASuPreMaCy on Mar 4, 2009 4:30 PM EST up reply actions   0 recs

This deal is NOT the upside… it is a platform to a probable upside.

I agree that it is a platform to a probably upside, but in the end, 3 years of exposure on Showtime and CBS while being at net positive, you would pretty much have to agree that future looks very bright for Strikeforce, or for anyone else that wants to negotiate a deal like this outside of the UFC.

The exposure and ability to build fighters on Showtime and CBS should do wonders for Strikeforce and will ultimately determine when they would do a PPV.

by MMASuPreMaCy on Mar 4, 2009 4:43 PM EST up reply actions   0 recs

Strikeforce has a very bright future…

but your wet dream of someone challenging Zuffa is not gonna happen ;)

by mmalogic on Mar 4, 2009 11:49 PM EST up reply actions   0 recs

You mean your wet dream of no one being able to challenge Zuffa.
;)

by MMASuPreMaCy on Mar 5, 2009 12:44 PM EST up reply actions   0 recs

But see, that one is ACTUALLY going to happen. And soon, too.

by subo on Mar 5, 2009 2:23 PM EST up reply actions   0 recs

Seems odd to call reality a “wet dream.”

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 5:23 PM EST up reply actions   0 recs

Fine.

“Ever” is a mighty long time.

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 6:20 PM EST up reply actions   0 recs

It’s also not in his original post, quotation marks or not.

by subo on Mar 5, 2009 6:31 PM EST up reply actions   0 recs

meh

I assumed he was adding it to his previous statement rather than pointing to it in his previous statement.

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 6:47 PM EST up reply actions   0 recs

^ that got recs?

by bignerd on Mar 4, 2009 10:38 PM EST up reply actions   0 recs

Uh duh, he said ‘pussy fart’. How could it not get rec’s? ;-)

"I see him beating Anderson Silva. I see him picking him apart. Him at a 131 years old...(trails off)." - Tito on Belfort at Affliction:DOR

by Rundownloser on Mar 4, 2009 10:47 PM EST up reply actions   0 recs

how could you ever question an mmalogic post.
[\sarcasm]

by MMASuPreMaCy on Mar 4, 2009 10:55 PM EST up reply actions   0 recs

one important part is the notion, even nominal, that there is competition with Zuffa. Simply by creating a limited and merely ‘platform’ deal like this, keeps Zuffa honest in their productions. If Zuffa was to cut operating costs in order to maximize short term profit, the S-Force deal may ripen into more legit competition.

Further, just the existence of even so-called ‘competition’ on common carries like CBS and Showtime(if we can call Showtime a common carrier), benefits the consumer. Why should I pay for UFC ###?, I can watch the same sport, albeit at a lower level, on free CBS? Especially in this economic market, we the consumers benefit from manifestations of willingness to enter this market.

You’re right, Zuffa could’ve swallowed this deal easily. But, the willingness and continued efforts of different production entities to enter the MMA market is good for the MMA market, and the consumer.

Bottom line: Any attempt at competing or even merely entering the MMA market on a scale like this(especially CBS exposure), is very good.

by lcollins1 on Mar 5, 2009 2:39 AM EST up reply actions   2 recs

Well said and couldn’t agree more.

by MMASuPreMaCy on Mar 5, 2009 12:46 PM EST up reply actions   0 recs

I wonder what figures the UFC gets from Spike.

by Pondepon on Mar 4, 2009 4:04 PM EST reply actions   0 recs

More Strikeforce News

http://www.tapoutlive.com/media/7331/030209_TapouT_Radio:_Scott_Coker/

-There is no truth to the rumor of Kimbo vs. Werdum. Possible future fights for Kimbo include Paul Buentello, Brett Rogers, or a re-match vs. Seth Petruzzeli.

-Alistair Overrem still has obligations to Japanese organizations, but hopes to use him once this year and once next year.

-KJ Noons wants to box (obviously) “The door is open…and when you are tired of fighting six rounders, give me a call.”

-Eddie Alvarez & guys who signed with Bellator signed when they thought ProElite was going under; has assured these fighters they will get paid & contracts honored by Strikeforce. Told Monte Cox that he wants Eddie to fight for them after Bellator.

-Why didn’t he do Nick Diaz vs. Josh Thomson at catchweight? Nick wants to fight at 170-75. And he wanted a revenge match for his teacher.

-Frank Shamrock is already at 179lbs; Nick is at 185lbs.

-Tons of great fights for Robbie Lawler; Robbie vs. Frank, vs. Cung Le, vs. Misaki, vs. Cyborg (the husband). Even wants Jake Shields to fight Robbie.

-DREAM has offered to have Jacare to come and fight Robbie Lawler.

-Cyborg vs. Carano will probably happen in the fall.

-Discusses Gina & her making weight problems. She didn’t have those problems when she fought muay thai for him. We’ll see on her next fight.

-May fight card should be announced within the next two weeks.

-Future shows will branch out to East Coast & Midwest. Playboy show will probably be done again.

by MMASuPreMaCy on Mar 4, 2009 4:56 PM EST reply actions   0 recs

Didn’t you already post this in another comment section?

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 4, 2009 5:02 PM EST up reply actions   0 recs

Ha

I knew I’d read it here before.

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 4, 2009 5:53 PM EST up reply actions   0 recs

Ugh...

KJ Noons is a seriously shitty boxer. It’s a real shame that the guy is a legitimate MMA fighter but is trying to focus on his boxing and MMA career rather than just focusing in on where he is good (MMA) and is limiting himself by focusing any of his attention on pro boxing.

Contributing Editor - BloodyElbow.com - SBNation's mixed martial arts headquarters.

by Brent Brookhouse on Mar 5, 2009 4:36 AM EST up reply actions   0 recs

I have a feeling he will come around. I mean the upside of his MMA career is much bigger than his boxing. He is caught up in being a boxing and MMA champ at the same time, for some reason.

by MMASuPreMaCy on Mar 5, 2009 12:52 PM EST up reply actions   0 recs

And it'll never happen...

I like Noons a lot as an MMA fighter. But as a boxer he is a midcard loser to a midrange prospect on Friday Night Fights at best. Fully devoted to MMA he could really make some long term noise

Contributing Editor - BloodyElbow.com - SBNation's mixed martial arts headquarters.

by Brent Brookhouse on Mar 5, 2009 3:38 PM EST up reply actions   0 recs

Well see what happens when he loses a couple fights in boxing.
That usually does it for you as a prospect in boxing.

by MMASuPreMaCy on Mar 5, 2009 3:56 PM EST up reply actions   0 recs

shoxc cards

what you have to remember is that 18 of the 48 events will be shoxc style cards which cost around $50.000 in fighters purse so if they are getting $500.000 they will be making a big profit on those shows

by keith133 on Mar 4, 2009 5:07 PM EST reply actions   0 recs

True...

but the other 30 cards could be problematic along with the details that we don’t know about. How much will they have to spend promoting cards with Shamrock, Carano, Diaz, etc. and how much will they have to pay these fighters? How much will Showtime charge Strikeforce to produce the shows? Is that figure subtracted from the $25 million figure? I contend that there is much we don’t know.

by Cannon Jacques on Mar 4, 2009 5:26 PM EST up reply actions   0 recs

Exactly what I was going to point out.
The only Events with BIG payrolls will be the CBS cards and SOME Showtime events.

They should make good money on the ShoXC cards, since they will be held in Casino’s, etc.

by MMASuPreMaCy on Mar 4, 2009 5:35 PM EST up reply actions   0 recs

Where are you getting that $50,000 figure from? Even WEC shows have purses 4-5 times that size.

by Chromium on Mar 5, 2009 12:52 AM EST up reply actions   0 recs

that was the official payroll of the last 2 shoxc shows weis/cullum and hamman/suganuma 2

by keith133 on Mar 5, 2009 5:19 AM EST up reply actions   0 recs

Playboy show will probably be done again.

That’s a shame. The first one sucked so hard that I didn’t even bother to pay attention to the second one.

That’s actually a little unfair. The internet feed for the first one sucked so hard. Well, Daniel Puder was on the show, too, so it must have been kind of lousy. Oh, and that war between BILL MAHOOD and ROBERT E. SOUTHWORTH. Ugh. Figures the feed broke down entirely when the Gilbert Melendez fight started.

"BJ on the BE" - Kierkegaard

by Brett Jones on Mar 4, 2009 5:25 PM EST reply actions   0 recs

Second event was good.

by MMASuPreMaCy on Mar 4, 2009 5:36 PM EST up reply actions   0 recs

The thing the article doesn’t mention, is not even the costs that Strikeforce will have to pay in salaries and whatnot, but the costs that they will have to pay to CBS and Showtime to “produce” the shows.

I can’t be bothered to find the numbers from the old Pro elite filings, but it seemed like when you factored in what they had to pay CBS to produce the CBS cards, they were only getting 100k a card.

The same thing is going to apply here. If CBS pays them 500k to air a card but then charges them 400k to produce it, they’re right back where Elite XC was. I don’t know if the production fee to CBS will be that much, but people need to realize fighter salary is not the only expense coming out of this 500k number. there is definitely going to be a 6 figure number paid directly back to CBS for production right off the bat.

by Phildo on Mar 5, 2009 2:37 AM EST reply actions   0 recs

That’s why they are not planning to do many CBS cards in the first place.
AT MOST 4 a year I believe, not a guaranteed 4, so they will only do 1 or 2 this year.

You are also forgetting that when a card is on CBS, sponsorship money is greater as well.
There are pros and cons for everything, so if you speculate the negative, you also have to look at the positive.

by MMASuPreMaCy on Mar 5, 2009 12:55 PM EST up reply actions   0 recs

It’s almost a guarantee that they redid the TV deals from Elite XC, but don’t get so excited about the sponsorships.

How many Edor returns commercials were there last time? When was the AA/Nelson match added to the card? That was a lot of air time that CBS had laying around unsold a week or two before the show.

My point was, don’t even worry about fighter salaries, advertising (commercials sold, and advertising done by Strikeforce) the 500k number that CBS will pay to Strikeforce is misleading because of the fact that Strikeforce has to immediately turn around and pay CBS to produce the show.

The 25 million sounds a lot better on paper than it actually is.

by Phildo on Mar 5, 2009 1:00 PM EST up reply actions   0 recs

No, it actually it is a pretty good deal for Strikeforce.

Also, keith133 below wrote that 90K was the fee to produce the shows towards the end of their agreement, although, this may not matter since CBS/Showtime may have changed the deals anyways. Also, Strikeforce has a low overhead since they only have less than dozen employees.
The ShoXC shows in Indian Reservations get money from the Casinos, plus the CBS/SHowtime money, + 50K or less in fighter purse will really be the shows that bring in some real money to Strikeforce.

by MMASuPreMaCy on Mar 5, 2009 1:05 PM EST up reply actions   0 recs

I’m not denying that they’re probably going to be successful.

I’ll I’m doing is saying that the 500k per show is not as good as it seems.

by Phildo on Mar 5, 2009 1:16 PM EST up reply actions   0 recs

I don’t get that POV.

If it puts them in a position to grow and become successful, than the 500K per show is as good at it seems. I do understand where you are coming from though, but I don’t think anyone is chanting 100% success and JACKPOT for Strikeforce, but it is a really NICE deal for them.

by MMASuPreMaCy on Mar 5, 2009 1:30 PM EST up reply actions   0 recs

It’s a good deal for them, but not because of the 500K per show. I think that’s all Phildo is trying to say. I could be wrong.

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 5:24 PM EST up reply actions   0 recs

Why would that be relevant then? If it is a good deal, why would you be questioning whether 500K per show is good or not, if overall the deal it self is good?

by MMASuPreMaCy on Mar 5, 2009 5:49 PM EST up reply actions   0 recs

He must be a Zuffa plant!

by subo on Mar 5, 2009 6:07 PM EST up reply actions   0 recs

Subo, one day, hopefully YOUR wish will come true.
One day.

by MMASuPreMaCy on Mar 5, 2009 6:14 PM EST up reply actions   0 recs

BTW, is Phildo your long lost brother?
:)

by MMASuPreMaCy on Mar 5, 2009 6:14 PM EST up reply actions   0 recs

Just another wise mind

by subo on Mar 5, 2009 6:30 PM EST up reply actions   0 recs

Relevant how?

This thread is discussing the Strikeforce deal…

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 6:21 PM EST up reply actions   0 recs

Relevant whether 500K/show is better than it seems is what he was trying to point out.

My point is that how could you argue that 500K/show is not as good as it seems, yet say that the overall deal is a good deal.

by MMASuPreMaCy on Mar 5, 2009 7:13 PM EST up reply actions   0 recs

500K/show isn’t as much as it sounds like when you take into account costs associated with the show. It’s still a good deal because they’re not losing money and they’re building their brand.

It’s not really a criticism and I’m not sure why it has turned into such a point of conflict since it’s not a big deal given that we all agree the deal is overall a good one.

Bolts from the Blue // "Game over." - Jamal Williams
Bloody Elbow // "Every normal man must be tempted at times to spit upon his hands, hoist the black flag, and begin slitting throats." - H.L. Mencken

by Richard Wade on Mar 5, 2009 7:20 PM EST up reply actions   0 recs

Exactly my point.

by MMASuPreMaCy on Mar 5, 2009 7:52 PM EST up reply actions   0 recs

Also, they negotiated a new deal here, so we don’t know that they are charging that much to produce a show, since whatever EliteXC had with Showtime/CBS was all re-negotiated.

by MMASuPreMaCy on Mar 5, 2009 12:56 PM EST up reply actions   0 recs

that was changed

at the end of last year the contract between elitexc and showtime was changed so that they paid set fee of about $90.000 per show for prodution from what i understand all the showtime shows were profitable after june the shows that were not profitable were the cbs shows where the fighter fees were bigger

by keith133 on Mar 5, 2009 5:15 AM EST reply actions   0 recs

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