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Disney’s gigantic yearly gamble on UFC/ESPN+ leaves PPV door wide open for Al Haymon

By Zach Arnold | March 19, 2019

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Al Haymon is the biggest winner from UFC leaving traditional PPV

When Vince McMahon launched the WWE Network, I remember veteran wrestling & MMA writer Jonathan Snowden telling me that it was the equivalent of shooting PPV with a gun and putting that business model out to pasture. The carcass of PPV would be left behind to drip blood.

Years later, the traditional American PPV business model itself isn’t dead but the two major PPV drawing behemoths — WWE and UFC — have exited out of traditional PPV due to their own financial self-interests.

These are the major talking points I want to focus on regarding UFC’s new PPV-exclusive ESPN+ deal with Disney:

Disney just spent nearly $72 million dollars on UFC & Fox assets for their war chest

If you think Disney overpaid Endeavor and UFC ($400 million+ guaranteed) to move all of UFC’s PPVs over to ESPN+, then you might have a heart attack looking at the financials on Disney’s acquisition of Fox assets from Rupert Murdoch.

The new UFC/ESPN deal includes a $300 million TV extension and PPV rights.

Both investments by Disney are incredibly smart. ESPN+ is a major gamble but a gamble that had to be taken to ensure survival in the sports landscape. The headlines about Disney bleeding money on ESPN+ are accurately glum but Bob Iger’s in a battle to set Disney up for the next 20-30 years of survival before he leaves his position. This is all about ensuring a legacy.

You snooze, you lose. If you can’t buy WWE, the next best sports property is UFC. Disney managed to get all of UFC’s yearly content. Disney wasn’t going to be able to cut a deal like this with any other sports league or property. UFC’s audience is exactly the demographic that will buy into ESPN+. This marriage makes a lot of sense.

Ari Emanuel is backing up the Brinks truck for good with UFC

There is great skepticism about UFC’s future. On paper, you’re moving from a PPV universe of potentially 80 million customers to an ESPN+ universe with 2 million subscribers. The Costco business model of having to pay to be a member to buy something looked sexier a decade ago.

But I can easily make the argument that the current powers-that-be who control PPV will be diminished in the next decade. Pick your poison.

DirecTV’s future is rather glum. There are no new satellites to be floated into the sky. The AT & T merger with Time Warner has been anything but smooth given the heavy debt load involved. Even worse, Jeff Zucker of CNN fame has been floated as a top candidate to over Warnermedia sports.

Comcast continues to bleed pay television customers. The major players left in the pay television space will be fiber providers. And what happens when Google Fiber disrupts this burgeoning market?

I’d rather be in a partnership with Disney than be partners with business entities who are subject to incredibly volatile business conditions.

UFC moving PPV rights to ESPN reportedly accepting at least $400 million with a strong downside guarantee is a no brainer. You gain an enormous sum of cash. You eliminate uncertainty. You partner up with the biggest media player in the sports landscape. When I argued in favor of a marriage between UFC and Amazon, this was exactly the kind of business deal I had in mind. Little did I know that Disney would be willing to pay UFC nearly over half a billion dollars a year.

The biggest losers? The fighters. You take away leverage from fighters who had been so reliant on PPV points. Unless an association comes into fruition, talent and management remains completely fractured. There is no organized effort to take on Dana White. Articles claiming that fighters are taking control of UFC are amusing. And guess what? If the fighters create too many headaches, Endeavor can sell UFC at any time and get out.

UFC indirectly gives Al Haymon yet another big business assist

Two years ago, Al Haymon was dealing with a serious shareholder derivative lawsuit in Kansas that was aiming to attack the money set aside by hedge fund investors for PBC. There were rumors of a boxing promotion with Dana White and Al Haymon working together. They both hated Bob Arum & Oscar De La Hoya.

Then UFC left Fox for ESPN. Everything changed. Fox ponied up significant assets to work with Al Haymon. Suddenly, Haymon gained big power. PBC went from the hospital to the penthouse. The stream of broadcasting television shows continued while a legal settlement between Top Rank and Haymon was hammered out. It created the business conditions for Top Rank to work with Haymon fighers.

UFC did Al Haymon a big, big favor by leaving Fox. They just did him an even bigger favor leaving the traditional PPV landscape. Haymon’s fighters are working with the other big boy promoters. His fights are drawing big crowds (see: Errol Spence vs. Mikey Garcia). According to Mike Coppinger, there are early estimates of over 300,000 PPV buys for Spence vs. Garcia.

Everything is turning up in Haymon’s favor. He’s the major game in town now. The PPV splits with distributors just became more favorable. Business is going to pick up even more steam.

Topics: Boxing, Media, MMA, UFC, Zach Arnold | 3 Comments » | Permalink | Trackback |

3 Responses to “Disney’s gigantic yearly gamble on UFC/ESPN+ leaves PPV door wide open for Al Haymon”

  1. SlickRick00 says:

    Hi, Zach! Quick question: Where did you hear the $400 million figure for UFC PPV content? A source had told me that the guarantee from ESPN is roughly $200 million per year for the 12 PPV events and $300 million for the rest of the content for a total of $500 million per year from ESPN (could be more if certain metrics are hit).

    • Zach Arnold says:

      Thanks to your wisdom, I updated my post here. Until there is more concrete evidence of what was contractually agreed upon, it’s better to be safer than sorry.

  2. Larry says:

    Great article and analysis as usual, Zach. Despite things being in his favor, Haymon/Showtime didn’t get greedy and kept this Wilder fight off ppv when they probably could have. Maybe they were afraid it wouldn’t do enough numbers and would diminish Wilder’s rep as an A side fighter

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