Sports Shutdown To Cost Upstart MMA Promotion More Than $500K

JohnWallStreet

The sports world was turned upside down on March 11th when the NBA abruptly suspended its season. Lights Out Xtreme Fighting (LXF) was scheduled to host its 5th-ever card just two days later at the Commerce Casino in Los Angeles, but after Governor Gavin Newsom announced health officials were suggesting that gatherings in excess of 250 people should be halted until “at least the end of March (on Thursday the 12th), the sold-out event (1,100 fans were expected) was postponed (it's since been cancelled). While obvious in hindsight, the last-minute decision to shelve the show was a costly one for the upstart MMA promotion. Not only did upwards of $200K in anticipated profits evaporate, LXF covered all of the travel expenses incurred by the fighters and production staff.

Howie Long-Short: MMA fighters are independent contractors, so they’re typically responsible for picking up the costs associated with their own travel, but with LXF5's postponement coming on the eve of weigh-ins - and most of the personnel associated with the card already in town - the promotion chose to do right by their people and made them whole. It must be noted that no one was paid for their work as the event did not take place.

+/- $200K is a big hit for a company that’s done less than $1 million in revenue to date and unfortunately it doesn't seem as if they're going to be able to make it up quickly. With shelter in place orders in effect through at least April 30th and fans unlikely to be permitted to attend mass gatherings for a several months thereafter, it’s not clear when LXF will be able to host their next live event. That’s problematic for “an up-and-coming company that relies heavily on ticket sales and travel [packages].” Co-founder Shawne Merriman said “without the fans [in attendance] and the revenue generated from [the live gate], it’s going to be hard for companies like ours to keep moving forward.” An LXF spokesperson said he/she anticipates that their next 3 scheduled events will all be cancelled. Should that happen, it would cost the company as much as “$600,000 + additional [potential revenues]” (think: sponsorships).

The sports shutdown has also forced the California based LXF to alter its timeline for expansion. Merriman said “[the company was planning on] rolling out [its product] to the rest of the country at the end of 2020”, but with so much uncertainty surrounding when shelter in place orders will be lifted and what the economy will look like when they are, those plans now sit on the back burner. The former pro-bowl linebacker explained that the company's business model is predicated “on having partnerships with casinos and big venues [and right now], we don’t know what that part of the business is going to look like [over] the next several months.” While the company is still planning to hold live events later this year, it's also exploring alternative revenue streams including “[doing] more shows on T.V. or possibly on a streaming service.”

There’s obviously a demand from fans and broadcasters alike for live sports content while we're all cooped up and with the minimal personnel needed to stage an MMA fight - at least relative to a sport like football - it’s fair to wonder if LXF would consider staging fights in a studio environment in the interim. Merriman said that is very much a possibility, especially after seeing other companies do it successfully (see: WWE, AEW). In fact, the former Chargers (and Bills) star said his company is “working on [putting on a card behind closed doors] right now.” He hopes to have some news to announce sooner than later.

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