Larkin Named IFL CEO as League Losses Down
The International Fight League announced a major shakeup in its
senior management on Tuesday when Jay Larkin was named acting chief
executive officer. Larkin joined the company on Sept. 21 as
president and chief operating officer. He replaces IFL co-founder
Gareb Shamus as CEO.
Larkin made his name at Showtime, where he spent 20 years working his way up from junior publicist to become one of the most important power brokers in boxing. He is perhaps best known for his role as one of the key negotiators in the 2002 heavyweight title fight between Lennox Lewis and Mike Tyson. Co-promoted between Showtime and HBO, the fight was the biggest pay-per-view in history until De La Hoya-Mayweather unseated it earlier this year.
Additionally, Larkin was responsible for countless entertainment specials, including Dave Chappelle, Britney Spears and the Rolling Stones.
"Taking a sports and entertainment entity from an idea to an established brand in 14 months is nothing short of amazing. Gareb should be commended for his vision and leadership during that period," said Larkin in a statement. "From first class events with rising athletes to quality broadcast television and landmark licensing and sponsorship deals, the IFL brand that has been built is very strong, and I look forward to the challenge of taking that growing brand and working with our television partners, business partners, staff, coaches and athletes to make it the best organization possible for a very long time to come."
The IFL also held an investors' conference call Tuesday. Third quarter revenues were $1.9 million, up 12 percent from the second quarter despite holding only two live events in the third quarter compared to five in the second. Revenues were up 150 percent over last year's third quarter.
The increase was the result of improvements in television and sponsorship revenues. Ticket sales were also up 60 percent from the second quarter on a per event basis.
Third quarter losses were $3.6 million, down roughly 47.8 percent from the first and second quarters, which saw losses of $6.9 million and $7.0 million respectively. The company attributed the decline to higher revenue and lower event costs, but much of the decline can seemingly be attributed to fewer live events in the quarter.
At the end of the third quarter the IFL had $9 million in cash on hand and expects sufficient cash to operate into the third quarter of 2008.
For the fourth quarter of this year, Larkin wants to show progress by growing revenues and reducing costs. "The near-term goal is to become cash flow positive and with the ultimate objective of course to become bottom line profitable on a sustained and growing basis," he said.
Larkin identified two major items that the company is focused on to achieve those goals. First, the IFL plans to significantly reduce its selling, general and administrative (SG&A) expenses such as salaries, office space and supplies, travel expenses, advertising costs and payroll expenses.
The IFL has cut the size of its staff and will be moving into less expensive office space in addition to exploring outsourcing of some functions of the company. The company is also in the process of reducing television production expenses 25 percent with the goal of reducing them by another 25 percent in 2008.
The second focus centers on increasing revenue.
"To significantly grow the company we must increasingly view ourselves to be in the business of selling tickets and sponsorships, licensing and television, and MMA is our platform for doing that," Larkin said. "Our mandate is not only to attract existing MMA fans, but also to attract major consumer brands as sponsors and the people who buy their products without losing the integrity of our core product. We need to attract a broader audience."
To do this, Larkin said, the IFL must "acknowledge the general perception that the UFC and MMA are often synonymous." He went on to compare the struggle to defeat this perception with the battle he faced at Showtime with HBO.
When recently asked if the industry is experiencing an MMA boom or a UFC boom, Larkin told Sherdog.com, "The sport is in its infancy. The UFC has done very well in the last few years, but this is a long-term business and those who can present a solid road map for success will succeed."
Larkin also told Sherdog.com that the IFL has not ruled out pay-per-view. "We will only do pay-per-view when it makes good business sense," he said. "It is not a golden answer to all business problems, and most who try it fail."
Many people within the television, pay-per-view and MMA industries see pay-per-view as a dying business. In fact, the IFL is one of the leading proponents in MMA of new media and Internet content, as evidenced by the organization's recent agreement with YouTube.
"We don't know what the future is," Larkin said. "It will be some combination of digital, pay-per-view and traditional broadcast, but regardless you have to build the fan base through strategic partnerships and good old-fashioned marketing of your talent. The goal is to control as many rights as you can, so that when the right opportunity comes along you are in position to act.
"That's why the IFL model will work. We, unlike any other organization, control the rights and likenesses of our athletes, our coaches, our teams. We produce our own TV and handle our own in-arena show with a solid grassroots base. We are one stop shopping for any business partner, and that's something you cannot say for 99 percent of the sports or entertainment properties out there."
On the conference call, Larkin also emphasized the shift away from generic teams toward camps that center around the promotion's coaches, whom he called one of the IFL's most valuable assets. The move will give the promotion greater flexibility in terms of its roster of fighters as well as a more authentic experience than the current contrived team format. In addition the move will allow individual title fights on each show.
"It's not a shift in focus," Larkin told Sherdog.com. "It is an adjustment. The teams, the camps, are the focus to build stars. Stage one was establishing those great coaches and the stable of great athletes. Like any league it is as great as its stars, and that is the next stage of IFL evolution, as it always has been."
Regarding television, Larkin said that the promotion hopes to announce soon a television partner for its Dec. 29 Grand Prix show as well as a partner for its 2008 season. He indicated that live television is one aspect under discussion because there is "no compelling reason to watch a taped sports show" in the Internet age.
"It is not a question of minutes or space," Larkin said on the importance of television. "It must be compelling. Live is a big part of it, but not the whole part. At the end of the day, it has to be good action with solid back stories. Very simple."
Consolidation has been a relevant topic in MMA this year with Zuffa and Pro Elite making several acquisitions, and Larkin also expressed interest in consolidating during Tuesday's conference call.
"There is a splintered landscape in MMA with a number of struggling companies competing for attention," he said. "We see this as an opportunity for consolidation. We are more established than most of the competition and have a better infrastructure."
At this point the promotion is planning nine events in 2008 and focusing on three or four regular venues in an effort to reduce costs. A detailed schedule for 2008 is expected in a few weeks.
Adam Swift is the Editor of Payout: The Business of MMA
Larkin made his name at Showtime, where he spent 20 years working his way up from junior publicist to become one of the most important power brokers in boxing. He is perhaps best known for his role as one of the key negotiators in the 2002 heavyweight title fight between Lennox Lewis and Mike Tyson. Co-promoted between Showtime and HBO, the fight was the biggest pay-per-view in history until De La Hoya-Mayweather unseated it earlier this year.
Additionally, Larkin was responsible for countless entertainment specials, including Dave Chappelle, Britney Spears and the Rolling Stones.
"Taking a sports and entertainment entity from an idea to an established brand in 14 months is nothing short of amazing. Gareb should be commended for his vision and leadership during that period," said Larkin in a statement. "From first class events with rising athletes to quality broadcast television and landmark licensing and sponsorship deals, the IFL brand that has been built is very strong, and I look forward to the challenge of taking that growing brand and working with our television partners, business partners, staff, coaches and athletes to make it the best organization possible for a very long time to come."
The IFL also held an investors' conference call Tuesday. Third quarter revenues were $1.9 million, up 12 percent from the second quarter despite holding only two live events in the third quarter compared to five in the second. Revenues were up 150 percent over last year's third quarter.
The increase was the result of improvements in television and sponsorship revenues. Ticket sales were also up 60 percent from the second quarter on a per event basis.
Third quarter losses were $3.6 million, down roughly 47.8 percent from the first and second quarters, which saw losses of $6.9 million and $7.0 million respectively. The company attributed the decline to higher revenue and lower event costs, but much of the decline can seemingly be attributed to fewer live events in the quarter.
At the end of the third quarter the IFL had $9 million in cash on hand and expects sufficient cash to operate into the third quarter of 2008.
For the fourth quarter of this year, Larkin wants to show progress by growing revenues and reducing costs. "The near-term goal is to become cash flow positive and with the ultimate objective of course to become bottom line profitable on a sustained and growing basis," he said.
Larkin identified two major items that the company is focused on to achieve those goals. First, the IFL plans to significantly reduce its selling, general and administrative (SG&A) expenses such as salaries, office space and supplies, travel expenses, advertising costs and payroll expenses.
The IFL has cut the size of its staff and will be moving into less expensive office space in addition to exploring outsourcing of some functions of the company. The company is also in the process of reducing television production expenses 25 percent with the goal of reducing them by another 25 percent in 2008.
The second focus centers on increasing revenue.
"To significantly grow the company we must increasingly view ourselves to be in the business of selling tickets and sponsorships, licensing and television, and MMA is our platform for doing that," Larkin said. "Our mandate is not only to attract existing MMA fans, but also to attract major consumer brands as sponsors and the people who buy their products without losing the integrity of our core product. We need to attract a broader audience."
To do this, Larkin said, the IFL must "acknowledge the general perception that the UFC and MMA are often synonymous." He went on to compare the struggle to defeat this perception with the battle he faced at Showtime with HBO.
When recently asked if the industry is experiencing an MMA boom or a UFC boom, Larkin told Sherdog.com, "The sport is in its infancy. The UFC has done very well in the last few years, but this is a long-term business and those who can present a solid road map for success will succeed."
Larkin also told Sherdog.com that the IFL has not ruled out pay-per-view. "We will only do pay-per-view when it makes good business sense," he said. "It is not a golden answer to all business problems, and most who try it fail."
Many people within the television, pay-per-view and MMA industries see pay-per-view as a dying business. In fact, the IFL is one of the leading proponents in MMA of new media and Internet content, as evidenced by the organization's recent agreement with YouTube.
"We don't know what the future is," Larkin said. "It will be some combination of digital, pay-per-view and traditional broadcast, but regardless you have to build the fan base through strategic partnerships and good old-fashioned marketing of your talent. The goal is to control as many rights as you can, so that when the right opportunity comes along you are in position to act.
"That's why the IFL model will work. We, unlike any other organization, control the rights and likenesses of our athletes, our coaches, our teams. We produce our own TV and handle our own in-arena show with a solid grassroots base. We are one stop shopping for any business partner, and that's something you cannot say for 99 percent of the sports or entertainment properties out there."
On the conference call, Larkin also emphasized the shift away from generic teams toward camps that center around the promotion's coaches, whom he called one of the IFL's most valuable assets. The move will give the promotion greater flexibility in terms of its roster of fighters as well as a more authentic experience than the current contrived team format. In addition the move will allow individual title fights on each show.
"It's not a shift in focus," Larkin told Sherdog.com. "It is an adjustment. The teams, the camps, are the focus to build stars. Stage one was establishing those great coaches and the stable of great athletes. Like any league it is as great as its stars, and that is the next stage of IFL evolution, as it always has been."
Regarding television, Larkin said that the promotion hopes to announce soon a television partner for its Dec. 29 Grand Prix show as well as a partner for its 2008 season. He indicated that live television is one aspect under discussion because there is "no compelling reason to watch a taped sports show" in the Internet age.
"It is not a question of minutes or space," Larkin said on the importance of television. "It must be compelling. Live is a big part of it, but not the whole part. At the end of the day, it has to be good action with solid back stories. Very simple."
Consolidation has been a relevant topic in MMA this year with Zuffa and Pro Elite making several acquisitions, and Larkin also expressed interest in consolidating during Tuesday's conference call.
"There is a splintered landscape in MMA with a number of struggling companies competing for attention," he said. "We see this as an opportunity for consolidation. We are more established than most of the competition and have a better infrastructure."
At this point the promotion is planning nine events in 2008 and focusing on three or four regular venues in an effort to reduce costs. A detailed schedule for 2008 is expected in a few weeks.
Adam Swift is the Editor of Payout: The Business of MMA
