By Zach Arnold | October 8, 2014
It turns out that the Rory MacDonald fight that aired on Fox Sports 1 after the marathon baseball game between the Giants & Nationals drew around 800,000 viewers. Not bad. I’m not sure if this should be celebrated, but everyone seems to be grading on a curve these days given the oversaturation of Zuffa’s TV product.
There was the recent report that the ill-fated UFC 177 Arco Arena show in Sacramento with TJ Dillashaw vs. Joe Soto drew 125,000 PPV buys.
As for the fate of UFC 178 Las Vegas PPV buys…
— MMA Supremacy (@MMASupremacy) October 7, 2014
No matter how you spin the numbers, UFC is falling off a cliff on PPV right now. Sure, they can pop 500k for a Chris Weidman/Ronda Rousey dual event. That appears to be the ceiling. Without GSP & Anderson Silva, it’s a rough go of things. Johny Hendricks is really their best hope at this point in time.
As WWE got overexposed on PPV and stunk up the joint, they cut the cord on PPV and gambled with their online WWE Network. UFC is headed down the same path. They may not give up entirely on PPV but their own business practices are ensuring a one-way outcome for their PPV future.
A series of news items from the estimable Adam Swift indicates what the future looks like for UFC:
Combination of declining PPV and increasing TV pushed PPV rev as a % of total UFC revenue from 45% in 2009 to 30% in 2013 per SBJ. 1/2
— Adam Swift (@AdamMSwift) October 6, 2014
What this means is that fighters who find themselves tied to PPV points as their main means of revenue are not getting a good cut of the overall TV revenue pie at all. When you have #1 contenders like Cat Zingano making $9,000 to show and $9,000 to win, you have to start asking yourself what the future negotiating strategy will be for agents & managers in dealing with Zuffa. The UFC has accelerated their McDonaldification process by pushing entirely a volume-based global plan. They are obviously making substantive money internationally. The problem is that they are leaving themselves vulnerable domestically and that’s where Bellator & Spike can take advantage of overall UFC fatigue.
If you’re a hardcore MMA fan, there’s a lot of pressure in trying to keep up with all of the different events. It does feel like a job obligation. If you pick and choose events, then your loyalty is questioned in being down with the cause. If you watch all of the events and complain about fatigue, then you get needled for trying to keep up with every event because not every event is supposedly meant to be marketed towards you.
As the UFC declines on PPV and draws most of their money from television deals, the next question is how much can UFC expect to get from Fox or other suitors when their United States TV deal expires. Sports leagues are thrilled with the massive rights fee increases the NBA was able to get from both ESPN & TNT. The downside, of course, is that it means pay TV bills are going to rise further for customers. As long as people are willing to pay and are willing to consume lots of the product, it’s a gamble the networks will take with sports programming.
UFC currently is getting $90 million USD a year from Fox Sports. They will want more come renewal time. The problem is that UFC’s ratings on the Fox platform have gone in a downward direction. UFC has been anchor programming for Fox Sports 1 in an attempt to get the channel launched. Fox Sports is hoping to get a real increase in carrier fees from TV distributors soon to boost FS1’s ability to retain clients like UFC. The problem for UFC, however, is the following:
Great insight into MMA fans. Place lowest priority on sports of any fan base. Rank next to last in free time & hrs of sports TV/week. 2/3
— Adam Swift (@AdamMSwift) October 6, 2014
MMA fans watch less than 7 hours a week of sports programming. What the current fan base that supports MMA is like in America is pretty simple. 18-to-34 year olds. 75% male. Most have graduated from watching professional wrestling or watch wrestling & MMA together. A little more money for disposable income than WWE fans.
If you’re Fox Sports, you have a lot of leverage here come 2018 with UFC negotiations. PPV numbers down. Ratings down. A lot of cards on Fight Pass. UFC audience least likely to watch sports programming. Fox is trying to build a sports channel and one of their anchor properties attracts TV viewers that are the least interested in watching sports.
The question for UFC: who else is going to pay $100 million dollars a year on your TV product in the United States? Likely no one else. If UFC can get $100M a year from Fox in 2018, that would be a best case scenario. The wildcard now is PPV. Fight fans will still pay to watch big events. PPV as a vehicle is not dead. It’s not going to be dead any time soon. However, UFC’s burnout rate on PPV is intensifying and they may end up in the same boat as WWE. Once you devalue PPV, it’s hard to rebuild that trust. It’s not impossible, but it’s very hard.