MMA Analytics 10.29.07: Analysis of M-1 Global
Posted by Leland Roling on 10.29.2007
With the announcement of Fedor Emelianenko signing with the newly formed M-1 Global, will M-1 succeed in becoming an organization that can rival that of the UFC? 411's Leland Roling takes an inside look at M-1 Global, its parent company Sibling Entertainment, its new CEO Monte Cox, and whether or not the new organization will succeed in the domestic and international MMA markets!
Last week was full of news that mixed martial arts fans around the world may have been hoping to hear for quite some time. M-1 Mixfight officially announced that it had been purchased by Sibling Entertainment under the new subsidiary, Sibling Sports, LLC. Under Sibling Sports, M-1 Global was created as a new international mixed martial arts organization that will hold events throughout the world and harbor an A-list stable of fighters. This was all according to the new CEO of the company, a man who is heavily involved in all aspects of MMA, Monte Cox and the chairman of Sibling Entertainment Mitchell Maxwell. Should we be excited about this new entry into the mixed martial arts community? Let's take an inside look into the M-1 Global.
M-1's parent company
After weeks of rumors regarding the purchase of M-1 Mixfight, a name that nobody could have seen coming had eventually came to light. Sibling Entertainment Group, Inc. had finalized their stake in M-1. Sibling Entertainment is a fairly small company involved in the entertainment industry in a number of different capacities. The company is mainly involved in the theatrical business, producing on and off Broadway shows that have had some success. If you've ever heard of HATS!, the Broadway show about the Red Hat Society, then you've seen a Sibling Entertainment produced Broadway hit. Theater shows aren't there only contribution to the entertainment community.
Sibling also delves in independent films, music, and venue management. They have a host of independent films based on past plays that they have produced. They also manage the Denver Civic Center and have increased its revenues by nearly four times its previous earnings. Sibling also has a properties division that owns stakes in real estate that holds a few restaurants that Sibling owns in New York City.
Sibling's President, Mitchell Maxwell, is a 34 year veteran to the entertainment industry and along with his sister Victoria have managed to run a small successful entertainment company up to this point. On M-1 Global's website, Maxwell's excerpt claims that he has made almost 80 million dollars in profit from an initial investment of $350,000 from the Broadway musical hit, Stomp. He has an impressive resume in the theater business.
Although the company is publicly traded as a small cap stock, there isn't much known about Sibling other than their theatrical exploits. The company has had some bad investments in the past that have caused the Maxwells to leave the company at one point. Investments in downloadable Internet films, battery companies, and other ventures have proved to never pan out. According to their SEC filings, the company expects a net loss at the end of the year and has a net loss of 3.5 million heading into June of this year. This is fairly inaccurate considering Sibling Entertainment keeps most of their businesses and productions underneath it as limited liability companies that do not have to report profits to the SEC. Another note is that Sibling Entertainment Group, Inc. is merging with Sibling's main company, Sibling Entertainment Group Holdings, Inc. Their short-term goal is to merge the two entities into one, bringing all of the subsidiaries into one large company. The net loss figures could be considered inaccurate because of this, and the fact that the profits they have made from the small LLC's underneath the subsidiaries do not need to disclose figures. As a comparison, Zuffa is an LLC that has the advantage of being a private company that does not disclose contract figures, fight bonuses, and many other pieces of information.
M-1's panel of expertise
Mitchell Maxwell mentioned during the press conference last Monday that he had no knowledge of mixed martial arts. Because of that, he has surrounded himself with people that have been in the mixed martial arts game for quite some time. He hired MMA sports agent and promoter, Monte Cox, as his CEO. Monte is considered one of the most successful fight agents in mixed martial arts. He manages nearly 60 world class fighters, many of them being based out of the Miletich Fighting camp near his home in Bettendorf, Iowa. Not only has he been an agent, but he has produced nearly 400 events such as the Extreme Challenge events, Xtreme Fighting Organization, International Combat events, and Courage Fighting Championships. With a duel role as a promoter and agent, it's now up to him to act as matchmaker, promoter, agent, and CEO of the company.
Vadim Finkelstein is a jack of all trades. A businessman who was the brainchild of M-1 Mixfight and serves as an agent to Fedor Emelianenko. His business savvy has allowed him to become a fairly good promoter in Russia, but he also has other ventures. On top of being an agent and promoter, he also runs his own healthy energy sports drink company and a fast food chain that only sells healthy food in Russia. A page out of the health food surge from the United States. Along with Joost Raimond and Apy Echteld, an event management expert and promoter and MMA trainer respectively, his team will be consultants to the organization.
With a solid mixed martial arts background, the team that Maxwell has assembled has vast experience in the U.S. Market and the international scene. Will this spell success for M-1 Global? We shall soon find out, but let's take a look at why it may not.
Success may be distant
With the creation of a new organization came the news of another significant piece of the puzzle, the signing of PRIDE Heavyweight legend Fedor Emelianenko. M-1 Global signed Fedor to a six fight, two year deal worth nearly $2 million dollars per fight, a $1.5 million dollar signing bonus, and the prospect to hold a piece of the pie if he sticks with M-1 Global for 5 years. Not only did M-1 land the most sought after athlete in mixed martial arts, but they've also set up promotion that could bring back the days of PRIDE.
This may give many fans a feeling of warmth through their bodies. Those fans who loved PRIDE and didn't want to see it die at the hands of Zuffa. But let me reference one quote that I think is a huge mistake. Mitchell Maxwell stated that fighters will want to be "aligned with the best". By "the best", he meant Fedor Emelianenko. Fedor is considered to be pound-for-pound the best fighter in the world, and I would have to tend to agree with that. With Couture's next fight up in the air, Fedor should maintain the spot even with Anderson Silva decimating Rich Franklin for the second time this past weekend. But will fighters around the world flock to M-1 because Fedor is there?
Doubtful. There are only a few fighters that may be actually wanting to head to M-1 because Fedor is on the roster there. Josh Barnett could be one potential fighter who's looking to seek out Fedor. There are a number of other fighters that may be wanting to fight him as well, but are they willing to take a lowball contract in order to fight him? Probably not. Barnett and Couture seem to be the likely matchups. We'll have to wait nine months to see if Couture can get out of his contract and fight Fedor for a huge payday, and Barnett has yet to state that he has signed with M-1. M-1 did state that they would announce a stable of fighters in the coming week, most likely Red Devil Sports Club fighters.
Along with the notion that many fighters will flock to M-1 because of Fedor, another assumption that I doubt has merit is the fact that Sibling has so much vast experience that they will easily be able to produce and market events that sell. Sibling is a small time entertainment company. They haven't produced huge events such as this before, but they did form a partnership with SFX Media & Events, who has produced events such as the Boston Marathon, ATP Tennis events, and other major sporting events. Sounds legitimate now, right? I'm not completely convinced.
Even with the added production, promotion, and marketing team from SFX Media & Events, how will they manage to market a non-English speaking Russian fighter to casual fans in the United States. How will they manage to sell to fans that rampantly hit the forums spouting off thoughts about Fedor dodging Couture when Couture clearly stated he was offered the fight for $3 million and declined it? I doubt they will be able to have a significant effect on the fans in the States. Without a significant TV deal that gets Fedor's image on cable television, not a pay channel like HBO or Showtime and not a limited available network like HDNet, it's going to be fairly hard to surpass even the 13,000 buyrate that Bodog got when Fedor vs. Lindland happened in their promotion.
Add in the fact that Sibling is relatively unknown with unknown backers and no knowledge of how MMA works, we could see only one produced event from the organization. The outlook isn't good, but if they can manage to get past their U.S. Debut, a Japanese event could bode well if they can grab up a stable of ex-PRIDE fighters.
I'm not giving M-1 Global a very good chance at succeeding. We've seen many classic examples in history of these types of ventures not working. I'll spare you the history lesson, but it's happened many times before. Trying to lure fighters by signing one great fighters still does not work when money really drives where a fighter ends up. The UFC sometimes does not give the best offer, but they do have a stable of fighters that make each division worth fighting in, and they do have the television deals to cause advertisers to sponsor fighters more often with bigger pay. M-1 also has a suspect company that owns them. Little is known about their financials and it's a mystery as to what they will be able to do with M-1. Add in the conflict interest of Monte Cox being an agent and CEO of the promotion and the fact that marketing a Russian fighter in the States is next to impossible without a mainstream television network, we may see very hard times already on the brand new M-1 Global.