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UFC’s $150M/year deal with ESPN: “Iger’s taken the Disney trolley off the tracks”

By Zach Arnold | May 10, 2018

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Amazon is Best of Breed in maximizing cloud computing but they’re not stupid nor desperate enough to reportedly pay UFC $150 million dollars a year for a bunch of events. ESPN & Disney are, however.

The collapse of carriage fees on cable for ESPN means they are competing in a cutthroat streaming business market. One big competitor in the combat sports space is DAZN, who just hired former ESPN boss John Skipper. DAZN is going all-in with promoter Eddie Hearn and Matchroom Boxing for $125 million dollars a year. ESPN+ has Top Rank Boxing and will now have UFC content.

The biggest challenge for ESPN is being able to produce content that doesn’t conflict with contractual obligations to the various major cable providers. In order to get UFC content on ESPN+, it was going to cost a premium. $150 million a year for 15 shows is ridiculously reckless. In comparison to DAZN ponying up $125 million a year for Matchroom Boxing? Maybe not as heartburn-inducing as first thought.

ESPN+ is $5 a month or $50 a year for a full-time subscriber. Between the amount of subscribers needed along with digital advertising, Disney’s “investment” in UFC is a really risky proposition. It’s the equivalent of buying a mansion as an income property in hopes of paying off the mortgage using cash flow from others.

Amazon was never going to be able to offer UFC $150 million dollars a year nor should they have even considered doing so. What Amazon could do was provide an explosive platform to grow merchandising and advertising revenues. What Amazon represented was not a guarantee but an opportunity. For vulture venture capitalists, the guaranteed cash always beats out the promise of opportunity. The financiers aren’t playing around.

If you had told me from the start that someone was willing to pay over $100 million dollars a year for streaming rights, then I would have never considered Amazon to be a serious threat. Amazon could have made Fight Pass bigger than anything UFC could have ever imagined but what’s the point when Disney is throwing cash at you like a drunk sailor?

The story of UFC’s new marriage with ESPN speaks much more to the state of Disney’s health than it does the health of UFC. Disney is in a Comcastic death grip over the fight to acquire Fox Sports assets. Comcast pressuring Fox with a 15% premium over Disney’s largely stock-based offer means a future explosion. ESPN used to be the safest, take-it-to-the-bank business play. It was the 30-year American T-note. You could never fail with all those cable carriage fees because it didn’t matter whether or not people actually watched the network. The ESPN+ business model is no guarantee and Disney’s reliance on UFC to save their sports network is a remarkable turn of events for those of us who covered the sport of Mixed Martial Arts from its very modern beginnings.

Topics: Boxing, MMA, UFC, Zach Arnold | 7 Comments » | Permalink | Trackback |

7 Responses to “UFC’s $150M/year deal with ESPN: “Iger’s taken the Disney trolley off the tracks””

  1. Tradition Rules says:

    The only two things about this deal that interest me are the 15 “UFC on ESPN + Fight Night” event and the “non-exclusive access to UFC’s full archive of programming….”

    The “Dana White’s Contender Series” could be interesting, but the pre & post fight shows are not a deal maker for myself.

    The other “Original Content”,…..what does that mean? The need to announce what this “content” is and soon if they want to make it a selling point.

  2. 45 Huddle says:

    I don’t understand some of the complaints the fans have about this deal. ESPN+ is extremely easy to sign up for and cancel. It can be done so on a monthly basis. So MMA fans can pick and choose which cards they want to see and pay the $5 per month for it. I have no problem paying $5 for a MMA card I really want to see. It beats paying $60 for a PPV card.

    ESPN is doing some interesting stuff with ESPN+. They now have 15 UFC events and the UFC library. They bought out the rights to Major League Soccer, which is now cheaper for fans per year through ESPN+. They are getting a lot of fringe sports and putting them all together in a nice way.

  3. Pluc61 says:

    Do you find it weird how little talk there is in the MMA media on the CBS-Viacom merger? It could have huge ramification on Bellator.

  4. david m says:

    UFC is making a rather interesting decision by not cutting down on PPVs after this deal (which I would assume means they make money on their PPVs regardless of whether or not anyone buys them). Their roster is too thin for this many events; think of all the stars who don’t fight for the promotion anymore, or whom the UFC refused to sign: Mousasi, Askren, King Mo, Rory, Larkin, Rodriguez, Rampage, etc. I have done a lot of work with PE funds in the past, and it is becoming clearer to me that WME is going to get these deals done and then flip the UFC as soon as possible.

  5. jolrmtrr says:

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  6. Volodimirsl says:

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