SBD/March 14, 2011/Leagues and Governing Bodies

UFC Parent Purchases Strikeforce; Companies Will Continue As Separate Entities

Strikeforce will run separately from UFC, exhaust contracts with Showtime
UFC parent company Zuffa LLC "has purchased rival mixed martial arts promoter Strikeforce, though they will continue to operate as separate entities," according to Josh Gross of ESPN.com. An official announcement is expected today in Las Vegas. Strikeforce Dir of Communications Mike Afromowitz said, "Right now the plan is to operate on our own. Business as usual." Sources said that an agreement to "sell Strikeforce's licensing rights, fighter contracts and video library closed with the UFC on Thursday or Friday." UFC President Dana White said that Strikeforce CEO Scott Coker "would remain in charge of Strikeforce and retain his staff of around 10 employees." The company "would run separately from UFC and exhaust its contracts with Showtime television." Gross wrote it is "expected UFC will fold Strikeforce under its banner at the conclusion of the partnership with Showtime ... as it did with WEC at the start of 2011." Sources said that "current contracts between fighters and Strikeforce are transferrable to Zuffa" (ESPN.com, 3/13). In Ohio, Dann Stupp writes the deal, which sources estimated in the $30-60M range, "sent ripples through the industry" (DAYTON DAILY NEWS, 3/14). White first announced the news on MMAFighting.com, and he said, “We need more fights, and let's face facts: Strikeforce is a brand that fans have come to like. They do have a following." White said, "Strikeforce is going to continue to run business as usual. There's contracts in place, these guys are on Showtime. Strikeforce pulls good ratings for Showtime. I think Showtime's happy with them and all those contracts will be honored." White added Coker will "continue to run that business" (MMAFighting.com, 3/12).   

CREATING A SUPER COMPANY: YAHOO SPORTS' Kevin Iole wrote, "In time, the deal will create a super company in which all, or virtually all, of the world's elite fighters will compete in the same league." With the contracts it owns between the UFC and Strikeforce, Zuffa "probably now has 90 percent of the top 100 fighters in the world." But fighters currently with Strikeforce "won't be able to move to the UFC, no matter how good they are, until their Strikeforce deals expire." The purchase also "creates some fascinating subplots," as White "has repeatedly hammered Showtime Sports general manager Ken Hershman and has railed on Showtime announcers." White said that the "changes that would be made would be mostly behind the scenes." He "wouldn't say if he would change Showtime's announcing teams." But he said, "Showtime controls the production (for Strikeforce). We'll make some back-of-house improvements so the fighters will notice that things may run more smoothly, and the media may see a difference in how we do things, but this is still going to be Strikeforce" (SPORTS.YAHOO.com, 3/12). White added, “I'm sure the last thing Showtime wants to see is me show up at the doorstop and come over there and start having conversations, and that's no big deal. [UFC Chair & CEO Lorenzo Fertitta] can deal with Showtime" (MMAFighting.com, 3/12). In Las Vegas, Case Keefer wrote the move "creates an interesting dynamic considering Strikeforce has served as the landing spot for a handful of personalities who had a falling out with White and/or UFC" (LASVEGASSUN.com, 3/12). USA TODAY's Sergio Non reported Coker "expects Strikeforce to generate as much as $30 million revenue in its current fiscal year." White said that while the UFC "can help Strikeforce grow and tweak the operation, for now there will be no crossover between the brands as far as sharing fighters." White: "We won't be doing any superfights. Even when we own it, we don't co-promote, period" (USATODAY.com, 3/12).

GAME CHANGER: YAHOO SPORTS' Dave Meltzer wrote the deal "changes the entire face" of MMA. The "elimination of Strikeforce as a rival promotion will also keep fighter salaries from spiraling out of control, as fighters would not be able to play one company against the other" (SPORTS.YAHOO.com, 3/12). MMAFIGHTING.com's Michael David Smith wrote the deal "won't result in business as usual," rather it "will result in the UFC's business growing far beyond the usual." Smith: "With one company now controlling the sport of MMA to an unprecedented extent, we're going to see business get better in a lot of ways." For the mainstream media, this move "will simplify things, and make the sport easier to follow, and therefore easier to cover." Also, "taking over Strikeforce means taking over the TV contracts, and it's a step toward a world where the UFC is able to gain more exposure on TV without cannibalizing its bread-and-butter pay-per-view business" (MMAFIGHTING.com, 3/12). In L.A., Loretta Hunt wrote the acquisition is MMA's "most monumental since Zuffa purchased the Japan-based Pride Fighting Championships in March 2007" (LATIMES.com, 3/13). In London, Gareth Davies wrote the "main implications are that Zuffa have eliminated a rival organisation which was looking at expansion outside the U.S." Also, the deal "strengthens Zuffa's position in the global TV market" (TELEGRAPH.co.uk, 3/13). In Toronto, Chris Doucette wrote UFC "has taken another giant step toward global domination in the mixed martial arts world by purchasing its main U.S. competitor" (TORONTOSUN.com, 3/12). YAHOO SPORTS' Maggie Hendricks wrote the deal is a "game changer" (SPORTS.YAHOO.com, 3/12). SI.com's Jeff Wagenheim wrote, "A sports consolidation of this magnitude naturally makes fans wonder about the impact on MMA of the UFC having essentially no competition. The thing is, though, the UFC didn't have much competition even before this deal was struck" (SI.com, 3/12).
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