[EmpireWF]

Right now, the business side of MMA is not looking too good. Besides the UFC, there are no major promotions turning a profit inside the U.S. according to a report from the Sports Business Journal.

Filings Show 2 MMA Groups Financially Bloodied
By Daniel Kaplan

Two key players in the mixed martial arts industry may soon go down for the count, underscoring the significant financial volatility in the sport despite its tremendous hype.

International Fight League and ProElite Inc., the latter of which made waves in February by signing the first MMA broadcast contract, warned in securities filings last week that they may run out of money later this year. Both also cautioned they could have accounting irregularities that resulted in inaccurate financial reports.

“You have got maybe some 20 MMA groups around the world, and every single one of them is struggling,” said Jay Larkin, IFL’s chief executive. “In the last three or four months, 10 have either reorganized, folded, changed names or completely gone out of business. That is a very heavy casualty rate for a sport that is supposed to be the greatest thing since the NBA.”

IFL is looking to align with a media concern or another MMA outfit, Larkin said, though the three-year-old company also is confident of raising additional equity. The MMA industry must consolidate to survive, Larkin said.

MMA combines boxing, judo and other hand-to-hand combat disciplines.

The dominant company in the conversation is Ultimate Fighting Championship, the Zuffa Corp.-owned outfit that dominates MMA but does not release financial results. UFC, which has previously dismissed rumors in the MMA world that it is looking for a buyer, declined to comment for this story.

Standard & Poor’s in November downgraded Zuffa’s $350 million of debt, citing weak pay-per-view buys and poor results in England.

IFL, which has lost $31 million since its inception in 2005, said in its annual 10-K filing last week that it “will likely have a cash shortage which would disrupt our operations, have a material adverse effect on our financial condition or business prospects and could result in us being unable to continue our operations.”

ProElite, which lost $27 million in 2007 on $5.3 million in revenue, similarly disclosed in its 10-K filing that “our auditors have expressed substantial doubt about our ability to continue as a going concern.”

A ProElite spokesman, in an e-mail, said “The company is optimistic about its financial position improving.”

Later in its report, IFL stated, “Our auditors have identified a material weakness in our disclosure controls and procedures … due to insufficient resources in the accounting and finance departments.

“There is more than a remote likelihood that a material misstatement of the consolidated financial statements would not have been prevented or detected.”

ProElite also reported it has identified internal accounting control problems.

In 2007, IFL reported revenue of $5.7 million and a loss of $21.3 million. The company is cutting the number of events it stages from 13 last year to six or seven this year. Commissioner Kurt Otto, who earned $250,000 in 2007, was let go on March 31 and instead will be paid $10,000 per event as a consultant.

UFC is broadcast on Spike, while IFL has deals with Fox Sports Net and MyNetwork. ProElite, which recently signed renowned fighter Kimbo Slice, announced in February a broadcast package with CBS.

According to filings, the International Fight League is reporting $31 million in losses since 2005. The IFL said it, "will likely have a cash shortage which would disrupt our operations, have a material adverse effect on our financial condition or business prospects and could result in us being unable to continue our operations.”

Pro Elite, the parent company of Elite-XC, reports losses of $27 million in 2007, an astounding figure. In their report, Pro Elite mentioned "our auditors have expressed substantial doubt about our ability to continue as a going concern."

The expectation for months has been that the IFL would go bankrupt and/or sell. Pro Elite's problems are interesting because they will be debuting on CBS next month and have recently signed several fighters to long-term contracts. It sounds like they will have to make some cuts and find some revenue streams to cut down on their massive losses.

Nobody ever said the MMA industry was one to make money.

[Seahawker 562]

I would like to see the IFL stick around. I liked that it was unique and it had teams and different cities. I was a San Jose Razorclaws fan

[Inkblob]

The WEC looks like it's taking a lot of ex-UFC fighters. How is the WEC doing? Just curious. UFC and WEC are really the only two I watch for. I never got into the IFL.

[bears9]

Originally Posted by Inkblob

The WEC looks like it's taking a lot of ex-UFC fighters. How is the WEC doing? Just curious. UFC and WEC are really the only two I watch for. I never got into the IFL.

WEC is owned by Zuffa, the same group that owns the UFC, so it gives the WEC very similar benefits that the UFC does, such as sponsors like Harley Davidson and Bud Light, so the WEC is just fine.

[EmpireWF]

Originally Posted by Inkblob

The WEC looks like it's taking a lot of ex-UFC fighters. How is the WEC doing? Just curious. UFC and WEC are really the only two I watch for. I never got into the IFL.

As Bears said, WEC is owned by Zuffa (the parent company of the UFC) so they are in no danger. In June, WEC is expecting their biggest show to date in the Arco Arena (I think..I know it's set for a big arena on the west coast) with a main event of Urijah Faber and Jens Pulver).