Opinion: The UFC, Still in Love With Last Year's Model
Editor’s note: The views and opinions expressed below are those of the author and do not necessarily reflect the views of Sherdog.com, its affiliates and sponsors or its parent company, Evolve Media.
Friday the 13th has come and gone, but the Ultimate Fighting Championship’s bad luck is already in full swing.
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Yes, Bisping and St. Pierre will do big business for the UFC, but it comes at the cost of cannibalizing the rest of its product, a modern, ongoing hobgoblin that reinforces the promotional division between superstars and everybody else.
UFC 217 is on some theoretical level supposed to be an affirmation
and boon for the UFC’s pay-per-view model, the method by which the
company has made the vast majority of its money for the last 16
years. In light of recent reports on the UFC’s PPV numbers,
however, UFC 217 actually highlights the current tensions and
fraying of its PPV philosophy.
The Wrestling Observer Newsletter’s Dave Meltzer this week reported that UFC 215, headlined by the UFC women’s bantamweight title rematch between Amanda Nunes and Valentina Shevchenko, drew an estimated 100,000 buys, while UFC 216, which paired Tony Ferguson and Kevin Lee’s interim lightweight title fight with Demetrious Johnson’s record-setting 11th straight UFC flyweight title defense over Ray Borg, drew a marginally better 120,000. While I stress the word “estimated” in this case -- more on that in a moment -- but there are no two ways about it: These numbers are not good.
Let me address the immediate elephant in the room: The PPV buyrate numbers we all enjoy and obsess over in the MMA sphere, with a few rare exceptions, like ESPN’s Darren Rovell reporting the estimated butyrate for UFC 214, come almost entirely from the aforementioned Meltzer, who has leveraged years of legendary, indispensable reporting on the pro wrestling business to develop connections within the cable industry. Typically, Meltzer uses his sources inside certain cable companies to gain their buy numbers, uses that info to extrapolate how other carriers might have drawn and then projects a total estimate.
As I wrote about some weeks ago, outside of the numbers offered last year in the UFC’s lender presentation when it was angling to sell and drum up investors, the UFC doesn’t release PPV numbers as a matter of policy. Naturally, this is done to keep fighters and managers in the dark and give the promotion leverage over its athletes. That’s why Ultimate Fighting Championship officials have traditionally kvetched and moaned about media estimates, which they generally feel are too high and distort the negotiation process.
All of this to say: If there is predictive error and inflation in the UFC 215 and 216 buyrate projections, either or both of these events could have done less than 100,000 buys, which would put the UFC back in literal pre-“Ultimate Fighter” territory, the sorts of numbers the company drew back in 2004. By 2006, the accepted basement number for a UFC PPV was generally considered to be 300,000.
Of course, the UFC can still draw on PPV, but the opportunities to do so are becoming more and more limited. Even if his actual fighting presence seems perpetually elusive, McGregor is still the UFC lightweight champion but has reached a point where the promotion can no longer run him into the Octagon every four months. UFC 214, anchored by the rematch between Daniel Cormier and Jon Jones, drew an estimated 860,000 buys, which is a fantastic number; however, it’s critical to note that less than four months earlier Cormier’s rematch with Anthony Johnson at UFC 210 clocked in at a reported 300,000 buys. Cormier-Jones is the greatest rivalry in MMA history on every level you could conceive; you can’t just replicate the dynamic in hopes of selling units.
The UFC’s rapid expansion, both geographically and in mass media, whether it’s the Fox deal or the launch of Fight Pass, has caused even the most casual consumers to lose faith in what was once a point of pride and near mantra for the UFC: “This isn’t boxing. You get a stacked card top-to-bottom every time. You get your money’s worth.” I continue to be shocked in my own anecdotal experiences, encountering friends of friends, Uber drivers, delivery guys and the like, all of whom know the bloom is off that rose. Even those orbiting lightyears outside the hustle and bustle of MMA recognize and appreciate what oversaturation has done to the product, and as a result, even they have lost faith and confidence in the UFC’s ability to deliver.
Even if you’re slightly more hardcore, if you know Demetrious Johnson is in a lopsided title fight, even if it’s a historic one, why not save your money and rest comfortably knowing you’ll see one of the greatest submissions of all-time splashed across your social media timeline within seconds of it happening? The UFC’s bloated structure has trained folks to largely settle for animated gifs and Twitter highlights unless a fight is so big that it registers as a spectacular event.
That’s exactly why Bisping-St. Pierre will draw. Never mind the title tripleheader or the Madison Square Garden trappings; it’s a spectacle in the most literal sense of the word, something truly historic even if it’s partly nonsensical. However, no matter how much St. Pierre repeats that he’s contractually obligated to face Robert Whittaker if he wins the 185-pound crown, he’s not sticking around for long. If Whittaker is the future, he has a long way to go to build on the estimated 130,000 buys his interim middleweight title win over Yoel Romero generated in July.
Manufacturing a superstar is a slow, hard process for the most part, as the vast majority of fighters don’t enter the UFC with some fundamental magnetism or “hook” like McGregor, Ronda Rousey or Brock Lesnar. It’s not just true in MMA, either. Saul “Canelo” Alvarez and Gennady Golovkin’s middleweight blockbuster in September did a reported 1.3 million buys. Yet despite all of Golovkin’s excitement and charisma and the spotlight HBO has put on him over the last four years, he did just 170,000 buys to fight Daniel Jacobs in March.
The difficulty of the star-making process is what makes it all the more paradoxical that the company has so emphasized the every-so-often mega-card structure. It’s instructive that in 2010-11, PPV accounted for 55 percent of the UFC’s revenue and today it’s in the 40 percent range. The UFC is making less of its money from PPV on paper, yet it’s these scant, sensational events that require more of the time, effort and resources at the expense of all other events and the athletes that populate them. Pay-per-view represents less of the UFC’s business as time goes on, yet the company seems more beholden to the medium than ever before, as it’s the only way it can fuel its promotional engine.
As a few select superstars and their exploits are called upon to propel the UFC, it places an inherent financial importance on those same stars, which in turn drives up contracts across the board. A rising tide lifts all boats and when fighters get wind of what a McGregor is making, they want to get paid, too. The UFC still takes in an estimated $2.5 to three million in gross revenue on 100,000 PPV buys, which sounds like a quiet saving grace until you realize that UFC 216 paid out $2.2 million to its fighters. Plus, Will Brooks and Nik Lentz haven’t been paid yet, pending their rebooking, and that’s only what has been reported. Those fighters deserve that money and some of them deserve even more than that, but even a lame duck UFC card costs the company more than ever.
As the McGregor-Floyd Mayweather “Money Fight” just keenly reminded us, the biggest events will always be on PPV; fundamentally, if you can make every interested consumer pay for an event individually, you maximize profit. Ultimately, the UFC wants its PPV product to be entirely on UFC Fight Pass, so it can keep 100 percent of the revenue instead of sharing half with cable companies. However, that’s a long-term goal that at the most optimistic is years and years away. In the here and now, the UFC’s period of exclusive television rights negotiations with Fox ended two weeks ago, and as the promotion pursues its new television deal, it needs to seriously confront the idea that a smaller piece of its product than ever is worth fans’ money.
If this means that Fox, ESPN or some other outlet is putting the vast majority of the UFC product on free television and there are only four to six PPV events per year, so be it. Nobody, not even the UFC at this point, is benefitting from taking pound-for-pound quality fighters like “Mighty Mouse” Johnson and Ferguson and turning their exploits into figurative trees falling in the forest with no one around to hear them. It’s paramount that whoever the suitor, whatever the terms, the UFC’s next TV deal accounts for the true changing complexion of the company and can, at least to some extent, correct its PPV pathology.
Bisping-St. Pierre will do big business, but no matter how much revenue it generates, the UFC simply needs to thank its lucky stars that it seduced GSP to come back; this is not a renewable resource. While the UFC is thanking its lucky stars, it ought to add them up, as well, and realize it doesn’t have too many of them left, nor can it easily create them. Last year’s model is finished.
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