UFC PPV buys matter more than ever in 2017

Hardcore MMA fans and media alike, since the early days of MMA, have been obsessive about paying attention to the UFC’s pay per view buy rates. It has been a key barometer determining the overall health of the UFC (and the sport as a whole) for a long time. During MMA’s infancy, it was a place to look to gauge the viability of the product. From the middle oughts through 2016 it has been a key identifier of the sport’s growth. Now, in the dawn of the WME-IMG era it will be the crucial component to justify the astounding $4 Billion UFC purchase last August.

Ari Emanuel and Patrick Whitesell, whose WME-IMG creative talent agency is now the majority owner of the largest MMA promotion in the world, took on an overwhelming amount of debt in order to make the purchase happen. Such an amount of debt that the Federal Reserve warned Goldman Sachs about it during their transaction.

Like most corporate takeovers, WME-IMG has already implemented some cost cutting measures, in particular when it comes to eliminating redundancies, laying off employees, and shoring up production costs for ancillary products like The Ultimate Fighter.

But that cannot be enough. According to investor documents retrieved by MMA Junkie, 71% of the UFC’s current revenue stream comes from putting out content. 51% of their content revenue is made from residential and commercial pay per view buys. There can only be so much fat trimming one can do to save money. The new owners of the UFC have to sell pay per views to make sure they have the funds to pay this massive debt.

While 2015 and 2016 saw a surge in 1 million plus PPV events. Those are not guaranteed to show up again in 2017.  In the history of the UFC there have been 14 PPV events that have 1 million buys or more. Half of those came in 2015 and 2016. However, only one of those seven (UFC 200) was headlined by someone not named Conor McGregor or Ronda Rousey.

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Out of the 26 PPV events held in those two years, McGregor and Rousey’s nine events averaged 1.09 million buys while the 17 others averaged 366,000. In total buys, Rousey and McGregor sold 57.75% more than all of the others combined.

The trouble is, the UFC will most likely be without these two stars for all of 2017.

Dana White has proclaimed that Rousey is “probably done” with the sport after suffering brutal back to back defeats. Conor, on the other hand, seems to be insistent that his next fight will be in a boxing ring against Floyd Mayweather sometime early in 2018.

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While there are plenty of potential avenues for WME-IMG to significantly increase their revenue streams (TV rights deal, attracting higher profile sponsorships, bringing more investors from their agency networks, etc.), those are all deals they have to work on over time. Nothing gives you cash on hand as immediately available as putting on an event people will pay for by the droves. We will have to see – starting with Saturday’s UFC 208 (first PPV card of the year) – if they can find a  way to keep the momentum of the last two years going or if the wake cast by the McGregor/Rousey duo starts to smoothen out. If it’s the latter, WME-IMG will have to get creative.

They are, of course, a creative talent agency after all.   

This article comes to you via @GavelPro