Many of the details of Strikeforce’s deal with Showtime and CBS have been revealed to the public thus far.
One that hasn’t? Money.
MMA Weekly believes they’ve found the answer though. According to one of their sources, the deals could be worth up to $25 million in license fees over three years, a small part of which will go to ProElite.
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.
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?
Of course, there’s way too many variables to accurately predict how much Strikeforce will make on each event, so that may not be a fair assessment. Nevertheless, they’ve made their living thus far on the live gate, and from these numbers, it appears that will need to continue.
Scott Coker and co. have proven to be smart businessmen, so I don’t think it’s fair to judge them on these deals like ProElite and Affliction have been judged in the past. I’m quite sure they’ve done all the proper forecasting and number crunching to determine exactly how they’ll be able to pull this off and make money doing it.
However, if nothing else, this just goes to show that the big money to be made in mixed martial arts promoting is still in pay-per-view, and thus far, only one organization has figured out how to be successful there.
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[...] 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, [...]
you said yourself 18 of the 48 will be shoxc style cards those cost around $50.000 in fighter purse if they are getting $500.000 those show will be highly profitable and should more than make up for any money they lose on the bigger shows
I’m not saying they’re definitely going to lose money. No one knows for sure. In fact, I don’t think they will.
There’s way too many unknown variables that factor into the shows to determine whether they will be profitable or not at this stage. Fighter purses are just one of those unknown variables.
I would imagine on big and small shows, with revenue from their broadcast partners and the live gate, they should do well enough to make a little meanwhile setting themselves up for pay-per-view.
My point to the article was the broadcast deals by themselves aren’t as “lucrative” as the MMA Weekly post made it sound, but I suppose that also depends on what your interpretation of what “lucrative” means.
You are correct good sir.