Another UKTT victim - Kirik - orcus - Alistair's contract:
"Pursuant to the terms of Overeem's UFC contract as outlined in the complaint, he is guaranteed a "bout fee" of $264,285 on Dec. 30. Should he defeat Lesnar, Overeem would receive an additional $121,428 "win bonus." Overeem is also in line to receive a $2 pay-per-view bonus per viewer, "for all revenues received by UFC-Zuffa for telecast of the Lesnar fight in the United States, Canada or over the internet in excess of $500,000.""
So at an average of $50/ppv, if they did 800k buys, Alistair alone made $264k + $121k + $1.58 million, for a total of just about $2 million. Brock likely made even more, since it was certainly him and not Alistair bringing in the buys.
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You can add in the $1,000,000 signing bonus that Overeem got.
From a cost standpoint, you should prorate the signing bonus over the number of bouts covered in the contract. Either way, it does need to get included in some manner.
I'm a bit confused about the math from orcus, though. The ppv cut is on the excess of $500,000 in gross ppv revenue, right? But the formula is per viewer above that excess, as I read it. Seems like a strange formula.
That was how I read it at first. I believe that it's just worded awkwardly. I think what it should be is $2 PPV buy and then subtract $500k. So it would be $1.6m and then subtract $500k so $1.1 million. Then add in the $400k and one-third of his signing bonus, and it's about $2 million.
All this guess work is so stupid. Every single person who has tried to post some type of guess at exactly what was made is so far off it's unreal. Why? Few reasons:
1) PPV costs vary not only from providers, but in different countries as well. (I see $45 from some, $55 from others, cost for Canadian HD is close to $67, +/- some cents, and -$10 for SD)
2) Taxes on PPV buys also vary, not only by state, but by province in Canada and by country. (Ontario sales tax (HST) is 13%, some provinces only use the General sales tax (GST) which is usually between 6-8%, the US States usually have much lower, I believe Pennsylvania's is something like 4%)
3) Given the above information, you don't know how many buys came from where, which would have a large impact on the money generated.
4) You have to account for exchange rates. CAD$1 is worth only USD$0.97. Considering the UFC uses USD in it's trade model, due to its licensing being US-based, you would have to factor all the Canadian buys and convert to USD.
5) Not everyone buys through PPV. Some people buy from their mobile phones. For me in Canada, it costs $49.99. I don't know what it costs other places, could be different, could be the same.
6) How much does the UFC make from preliminary card bouts shown previously on Spike and now on FX/Fuel and Rogers Sportsnet in Canada? While the channel will receive some revenue from commercial buys, so too does the UFC. The NFL makes roughly 10% of ad revenue from the Super Bowl (http://www.minyanville.com/businessmarkets/articles/thestreet-nfl-lockout-superbowl-xlvi-packers/1/27/2011/id/32444). What percentage does the UFC take?
That's only six variables of probably hundreds that would have a possible miniscule to massive effect on revenue. Guessing is completely out of the question. It's ridiculous to even try.
Calhoon - Thanks to the people who provided a place to look for ppv provider's #'s
LNP can't always be trusted as he likes to win arguements and I'm just trying to get a grasp on how he came up with 28%. I could care less if I win an arguement over the internet.
So $50 ppv price?
Alistair and Brock get what a $1.5 mill ppv cut each? Does half af that go to the ppv provider too?
How much would we all agree on for misc expense?
How much should I figure for profit from sponsers that Zuffa takes?
How much do you think Budweiser and other companies pay for display adds?
How many movies were advertised during the ppv and what should I add in for those?
What about merchandise sales and videos?
I need to add in $3.1 mill for the gate right?
Let's agree on some good figures for this problem and see what we come up with.
I never "came up with 28%"...sorry.
I am not trying to "win" anything. Just don't want posters believing that horribly innacurate "guess" you made at 9%.
" I'm a bit confused about the math from orcus, though. The ppv cut is on the excess of $500,000 in gross ppv revenue, right? But the formula is per viewer above that excess, as I read it. Seems like a strange formula."
Yeah, I agree. That's how the terms were reported everywhere, though. My math was therefore: $500,000 gross revenue = 10,000 buys (or less). 800,000 buys - 10,000 buys = 790,000 buys * $2 per buy = $1.58 million.
aarondramp probably has it right.
LayNprayNINJA - Calhoon - Thanks to the people who provided a place to look for ppv provider's #'s
<b>LNP can't always be trusted as he likes to win arguements and I'm just trying to get a grasp on how he came up with 28%. I could care less if I win an arguement over the internet.
</b>So $50 ppv price?
Alistair and Brock get what a $1.5 mill ppv cut each? Does half af that go to the ppv provider too?
How much would we all agree on for misc expense?
How much should I figure for profit from sponsers that Zuffa takes?
How much do you think Budweiser and other companies pay for display adds?
How many movies were advertised during the ppv and what should I add in for those?
What about merchandise sales and videos?
I need to add in $3.1 mill for the gate right?
Let's agree on some good figures for this problem and see what we come up with.
I never "came up with 28%"...sorry.
I am not trying to "win" anything. Just don't want posters believing that horribly innacurate "guess" you made at 9%.
I worded that very bad.
I meant I did not know if you were correct on how much cut goes to ppv provider.
I also meant my original post was set out to see how Metzer came up with the number of 28% of the REVENUE (not profit) goes to the fighter.
My original figures should have included the PPV bonuses which would have raised the fighter pay by around $ million I guess but the revenue percentage to fighters would still not be close to 28%.
Lorenzo said in the interview that the revenue percentage was close to 60%. He was way off but I gave him the benefit of the doubt and thought maybe he was talking about 60% of the profit so I once you guys started adding in all of the expenses I wanted to see what that figure turned out to be.
I doubt that Lorenzo does not know the difference between revenue and profit though. I think he just misspoke.
Once people started adding in expenses
Big Pun - I'm not sure why WWE and UFC are even mentioned together. One is an actual sport and one is entertainment. Why not compare Avatar to Strikeforce if we're going to have stupid ass news articles liek this. Hey I know let's do Harry Potter vs. UFC. This article is for window licking retards
I didn't realize Harry Potter ran live arena events with monthly PPVs using independent contractors they could hire and cut at will, while appealing to a very similar market demographic. You're a fucking moron, fuck off. Seriously.
The only thing you take out before Gross Revenue is the cable and satellite distributor's cut of the PPV money (which yes, is roughly 50%). Because that's where the starting point is. The UFC does not get $50 a buy and then hand $25 back to In Demand, In Demand/Comcast/etc. take $50 and then hand $25 to the UFC. That is your starting point. Things like marketing costs, staff payroll, venue fees, productions costs, all that comes out of the UFC's pocket directly just like fighter pay. The PPV distributor's cut is something they never even see and never passes through their hands and thus does not count towards it. So start there:
UFC 141 grossed roughly $24,000,000 for the UFC if you include the live gate. It was an exceptionally big PPV and the UFC knew it would be a very big PPV so the amount going towards fighter payroll would be higher than normal because people like Brock Lesnar can demand huge chunks of change, just like Manny Pacquiao. In smaller events like UFC 142 you get people with much less leverage like Jose Aldo main-eventing and the percentage of revenue going towards fighter pay is probably considerably lower. I appreciate Meltzer's analysis but one show is an insufficient sample.
Chromium,
How much revenue is generated from advertising, such as trailers from the latest movie or video game coming out and the Bud light logo printed in the middle of the cage ect. also all of the sponsership cuts they get from the fighters, merchandise sales and so on. Should those numbers be added to the $24,000,000 you came up with?
Chromium - The only thing you take out before Gross Revenue is the cable and satellite distributor's cut of the PPV money (which yes, is roughly 50%). Because that's where the starting point is.
Not following you. Gross revenue should be before any revenue sharing. Net revenue should be after the distributor cut. Disagree?
Another UKTT victim - Chromium - The only thing you take out before Gross Revenue is the cable and satellite distributor's cut of the PPV money (which yes, is roughly 50%). Because that's where the starting point is.
Not following you. Gross revenue should be before any revenue sharing. Net revenue should be after the distributor cut. Disagree?
What I think Chromium is saying, and I tend to agree, is that since the Provider collects the money, and then gives Zuffa their "cut" after monies are collected, it would be the providers Gross Revenue of a full 50/buy, not Zuffas.
"In September, Mayweather-Ortiz sold 1.25 million pay-per-view units and generated $78.44 million in revenue. In November, the Manny Pacquiao-Juan Manuel Marquez bout did 1.5 million pay-per-view buys. Though no official revenue number was announced, it was well over $70 million."
-Lorenzo Fertita
If you do the math thats a revenue of $62 per pay-per-view for Mayweather/Ortiz.
Does it sound to you like Lorenzo multiplies
"# of buys X Price / 2"
to get the revenue figure?
How much revenue do you think the UFC generated for UFC 141 now that you have this figure to compare?
Calhoon - Chromium,
How much revenue is generated from advertising, such as trailers from the latest movie or video game coming out and the Bud light logo printed in the middle of the cage ect. also all of the sponsership cuts they get from the fighters, merchandise sales and so on. Should those numbers be added to the $24,000,000 you came up with?
$24,000,000 is a very rough estimate and direct sponsorship I have no idea on but should add less than a million dollars per event I would guess.
Another UKTT victim - Chromium - The only thing you take out before Gross Revenue is the cable and satellite distributor's cut of the PPV money (which yes, is roughly 50%). Because that's where the starting point is.
Not following you. Gross revenue should be before any revenue sharing. Net revenue should be after the distributor cut. Disagree?
I agree completely. You just got something backwards. The PPV buys are the Satellite and TV distributors sharing revenue with the UFC, not the other way around. The money goes directly to them. In Demand gets $50 for a UFC PPV and then gives $25 of it to the UFC which is the first time the UFC sees it. When you call up your cable company to order a PPV you pay them, they then pay the UFC based on contractually negotiated rates. The UFC does not "share" their revenue with cable and satellite distributors, those distributors share the money with the UFC, which is why that $25 is gross revenue. It is the only money the UFC ever sees from that PPV buy before their own expenses. I think I've stated this like five different ways now so I don't know what to tell you if you still don't get it.
Chromium,
Figure the revenue on the Mayweather/Ortiz fight and see if you come up with the same revenue Lorenzo did.
"In September, Mayweather-Ortiz sold 1.25 million pay-per-view units and generated $78.44 million in revenue. In November, the Manny Pacquiao-Juan Manuel Marquez bout did 1.5 million pay-per-view buys. Though no official revenue number was announced, it was well over $70 million."
-Lorenzo Fertitta
Calhoon - "In September, Mayweather-Ortiz sold 1.25 million pay-per-view units and generated $78.44 million in revenue. In November, the Manny Pacquiao-Juan Manuel Marquez bout did 1.5 million pay-per-view buys. Though no official revenue number was announced, it was well over $70 million."
-Lorenzo Fertita
If you do the math thats a revenue of $62 per pay-per-view for Mayweather/Ortiz.
Does it sound to you like Lorenzo multiplies
"# of buys X Price / 2"
to get the revenue figure?
How much revenue do you think the UFC generated for UFC 141 now that you have this figure to compare?
I don't believe Lorenzo provided a revenue figure for the UFC, and also the also the stat you gave me there is not usable for like four or five different reasons, sorry.
Anyway doing some math I would peg the UFC's 2010 record gross revenue at somewhere in the very rough vicinity of $315-340 million. This is based on an estimate of direct revenue from total PPVs (after the distributors get their cut before giving the UFC their cut), and Standard & Poors' May 2010 estimate that the UFC gets 75% of their revenue from PPV, a percentage I might revise downward slightly since it conflicts with a statement from Dana White himself (I don't remember the exact percentage he said but it was more like 67% or something) and also they've been steadily increasing their non-PPV income and this was true within 2010 as well. 2011 was almost certainly down, but the Fox deal should help them rebound, and more importantly switching some of their revenue to direct television rights fees is a more stable business model than the PPV one so they can do better long-term planning. They still get the majority of their revenue from PPV.
I could totally be off and if someone has another take on it or if DFW wants to tell me I'm a fucking moron, feel free to do so.
Calhoon - Chromium,
Figure the revenue on the Mayweather/Ortiz fight and see if you come up with the same revenue Lorenzo did.
"In September, Mayweather-Ortiz sold 1.25 million pay-per-view units and generated $78.44 million in revenue. In November, the Manny Pacquiao-Juan Manuel Marquez bout did 1.5 million pay-per-view buys. Though no official revenue number was announced, it was well over $70 million."
-Lorenzo Fertitta
That seems like someone just multiplied the number of PPV buys * cost of buy-per-PPV. The total generated revenue was the direct revenue generated for all involved (the PPV distributors and then what they passed on to Top Rank). This is different from the revenue that Top Rank got specifically, which would be based on whatever percentage share they individually negotiated with different PPV providers. Again, it's not a useful figure, thanks. Lorenzo's statistic is not directly applicable to the situation we're talking about. In fact it wouldn't be directly applicable even to a similar situation in Top Rank. The interviewer probably didn't know that though, which is why Lorenzo said it.
Lorenzo knew what he was saying unlike you I think.
How are you so sure of your figures?
Are you 100% sure that Zuffa's cut from the ppv cost is half?
Does 10's of millions of dollars really seem like a price Zuffa's would pay for 3 hr's of air time to you?
Do ppv providers not take half up to a certain amount and then drop the number drastically because that is what I have heard and those figures seem more accurate to Lorenzo's figures with the $70 price tag on Mayweather/Ortiz and the revenue figure totaling $62 on each sale.
Calhoon - Chromium,
So Lorenzo says Mayweather/Ortiz generated $78.44 million in revenenue with 1.25 million sales even though he knew that half of the ppv sales goes to the ppv provider and should not be counted as revenue? Is that what you are saying?
Uh, yeah, that is one of the things I'm saying (no idea if it's half exactly), and I'm guessing that Lorenzo was saying the truth. What Mayweather/Ortiz generated is different from what the promoter Top Rank got from it. That's another thing I'm saying.
Chromium - Another UKTT victim - Chromium - The only thing you take out before Gross Revenue is the cable and satellite distributor's cut of the PPV money (which yes, is roughly 50%). Because that's where the starting point is.
Not following you. Gross revenue should be before any revenue sharing. Net revenue should be after the distributor cut. Disagree?
I agree completely. You just got something backwards. The PPV buys are the Satellite and TV distributors sharing revenue with the UFC, not the other way around. The money goes directly to them. In Demand gets $50 for a UFC PPV and then gives $25 of it to the UFC which is the first time the UFC sees it. When you call up your cable company to order a PPV you pay them, they then pay the UFC based on contractually negotiated rates. The UFC does not "share" their revenue with cable and satellite distributors, those distributors share the money with the UFC, which is why that $25 is gross revenue. It is the only money the UFC ever sees from that PPV buy before their own expenses. I think I've stated this like five different ways now so I don't know what to tell you if you still don't get it.
Yeah, we're on the same page. I just made a poor choice of words with revenue sharing.
By the way, the entire topic of semantics in business performance metrics drives me nuts, and I have to deal with it almost every day.