UFC, Strikeforce Set to Enjoy Early 2011 Success

February 14, 2011

The UFC has experienced tremendous growth over the last few years. Its PPV revenues have increased by an annual average of over 20% in the last three years and its live gate has tracked similarly at an average increase of 15% . This is outstanding growth, but also difficult to sustain, which is why many fans and pundits alike are questioning how much longer the UFC can continue this breakneck pace of expansion.

Dave Meltzer was the first to question whether the UFC would continue its revenue growth in 2011. He suggested 2011 might indeed serve as a rebuilding year for the UFC. Similar to a professional sports team taking a year to restock on talent, the UFC might need a year to build new stars and create new interest within each weight division. Meltzer’s argument isn’t without merit, either: the UFC’s top draw, Brock Lesnar, is no longer champion; the dramatic decline in the UFC’s television ratings might signal reduced interest as a whole in 2011; and the expansion into new foreign markets shifts some of the UFC’s focus away from their domestic PPV cash cow.

My own opinion is that the UFC still has room for growth within its current business model and slate of partnerships. The key to this growth is putting forth a consistent year from start to finish, which is something it hasn’t quite managed to do in the last couple of years. In 2009 it started with a bang but ended with a whimper due to injuries. In 2010 the carry over effect from those injuries saw the company get off to a late start, but really charge hard towards the end. Now, a glance at the next six months reveals that the UFC is off to solid start:

  • UFC 125: Edgar vs. Maynard II ($2 million gate, ~300,000 PPV buys)
  • UFC 126: Silva vs. Belfort ($3.6 million gate, ~700,000 buys)
  • UFC 127: Penn vs. Fitch (prediction: $3 million gate, 225,000 buys)
  • UFC 128: Rua vs. Jones, Faber vs. Wineland (prediction: $3 million gate, 625,000 buys)
  • TUF 13: Lesnar vs. Dos Santos
  • UFC 129: St-Pierre vs. Shields, Aldo vs. Hominick, Couture vs. Machida (prediction: $10 million gate, 850,000 buys)
  • UFC 130: Edgar vs. Maynard III, Jackson vs. Hamill (prediction: $2.5 million gate, 550,000 buys)
  • UFC 131: Lesnar vs. Dos Santos (prediction: $4.5 million gate, 800,000 buys)

The UFC could very well sell 4.0 million PPVs (over 7 events) and $30 million at the gate (over 11 events) in the first six months of 2011, which compares somewhat favorably to 4.1 million PPV buys (over 8 events) and $25 million at the gate (over 12 events) in the same period last year.

While the UFC probably won’t be smashing any previous records with another year of 15-20% event-related revenue growth, it’s more than reasonable to believe the company could achieve modest 5-8% increases on the year.

This, of course, also depends on a quality second half to the year, but there are more than a few reasons to think this could be the UFC’s most consistent year ever. The UFC will get both Cain Velasquez and Dominick Cruz back by late summer. Georges St-Pierre vs. Anderson Silva could help the UFC finish strong in December (although, first GSP needs to defeat Shields at 129). The outcome of several fights in this opening six months could produce a host of intriguing headliners for the second half (e.g., Faber vs. Wineland). Moreover, if we look away from MMA for a moment, potential labor conflict at the NBA and NFL could help to reduce some of the UFC’s competition come September; and, if you look at the numbers, the UFC has traditionally done the best during the summer when the NBA, NFL, and NHL are in off-season mode.

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There can be no conversation about the growth of MMA without mentioning Strikeforce. It may be the second largest fight organization in the world and far behind in the revenue race, but it possesses a heavyweight division as deep and talented as any out there. This Strikeforce HW GP is the perfect way to showcase that organizational strength and breathe new life into the organization. There’s a significance and purpose to these fights that Strikeforce has sorely lacked over the years. It’s not just enough to put on good fights in this business, Strikeforce has got to put on good fights that mean something, and this GP provides an answer to that age old sports marketing question of “why should we care?”.

If you look at Strikeforce’s schedule over the next three months, it’s easy to see why MMA fans are going to be a spoiled bunch in 2011:

  • Fedor vs. Silva, Arlovski Kharitonov (February)
  • Feijao vs. Henderson, Manhoef vs. Kennedy (March)
  • Overeem vs. Werdum, Barnett vs. Rogers (April)

The ratings Strikeforce pulled with its last event are certainly encouraging. I’m not certain a PPV is necessarily in the cards for 2011 – especially now that Fedor is out of the tournament – but I do think they’ll do enough to get themselves back on CBS within the year.

9 Responses to “UFC, Strikeforce Set to Enjoy Early 2011 Success”

  1. mmaguru on February 14th, 2011 9:35 AM

    Agreed on both fronts. I could see UFC posting a modest gain over 2010, but it’s still very early. Predictors for the last event have fallen short of UFC’s expectations but they still posted very good numbers. Just as SF has posted good seat sale and ratings numbers which are core to their success at the moment.

    SF needs to stay away from a PPV as long as possible. Simply put there are no fights that they could put together that would allow them to surpass the magical 100K PPV numbers.

  2. Matt C. on February 14th, 2011 1:46 PM

    I thought the UFC ratings actually went up last year for TUF and this next season of TUF will be Lesnar/Dos Santos that should be another boost in ratings.

    Or were you talking only about Fight Night and prelim show ratings being in dramatic decline? Even with that didn’t the last prelim show set a record high or close to it? I realize a one time bump doesn’t totally reverse things but with the string of good events coming up I think the prelim shows have a chance to show an increase in their ratings as well.

    With the Fight Nights I see the UFC being able to stack them a little more this year. For example look at the next Fight Night:

    * Antonio Rogerio Nogueira vs. Tito Ortiz
    * Dan Hardy vs. Anthony Johnson
    * Duane “Bang” Ludwig vs. Amir Sadollah
    * Leonard Garcia vs. Nam Phan

    Tito/Lil Nog and Hardy/Johnson are pretty good fights for a Fight Night.

  3. Jason Cruz on February 14th, 2011 2:14 PM

    Matt,

    The Metzler article referred to here states that TUF ratings were down but that was skewed since the last TUF before GSP/Kos was the one with Kimbo Slice. Also, the TUF ratings should not be considered negative as GSP/Kos was the 4th highest rated TUF in its history. Seasons 1, 3 (Tito-Ken) and 10 (Kimbo) were higher. TV ratings for 2010 were down but Metzler attributed that to lack of star power on the Fight Night cards. In 2009, Couture and Kimbo were headliners whereas 2010 Michael Bisping was the big name.

  4. Machiel Van on February 15th, 2011 8:15 AM

    “There can be no conversation about the growth of MMA without mentioning Strikeforce.” No kidding-Strikeforce is the crowning example that a non-UFC MMA organization can be successful in the North American market IF it is managed properly under skilled personnel with the appropriate vision and patience. Think about if there was no Strikeforce right now… it would be pretty hard to argue against Yahoo using “UFC” instead of “MMA” in their menu bar. It would certainly hurt MMA journalism with a lot less content to cover.

  5. Machiel Van on February 15th, 2011 8:19 AM

    Anyone think that Lesnar might still be able to push past the 1,000,000 buyrate mark after all the exposure from TUF? I think it’s definitely possible, but Kelsey, looks like you think his drawing power has taken an approx. 20% hit? Thoughts?

  6. Kelsey Philpott on February 15th, 2011 11:23 AM

    MV,

    Yeah, I’ve been pleasantly surprised by SF in the last few months. I still think it’s got lots of room to improve, but the key thing is building depth and context within the divisions. They don’t need to rely on Fedor (can’t anymore, anyway). Nice to see some hard working guys like Scott and his team have success. SF is the model to follow in terms of building from a local to regional to quasi-national promotion. I think the key will be not getting too ahead of themselves; expansion is great, but you always have to be careful that you take care of the home market first.

    Re: Lesnar. I believe Lesnar has taken a bit of the hit. He’s no longer the champ and there’s less credibility behind him now (especially if you look at the beating he’s taken in the last two fights). However, if that TUF season goes really well in terms of him being able to engage the audience (either make them love him or hate him) then yes, he absolutely could push 1 million. Let’s also not forget that there’s been no co-main event announced for that show yet. You could very well have a couple complementary draws on there that really push it over that 1m mark.

    KP

  7. Machiel Van on February 15th, 2011 12:36 PM

    I think that in the end, signing Fedor was a good move for Strikeforce in that it got the organization a lot of attention in a period of growth, and has left a residual effect on their heavyweight division (they now have two fighters who have handed Fedor losses, who will move on in their Grand Prix). Getting the hardcore fan base interested in their heavyweight division was predicated on their acquisition of Fedor, and honestly, the fact that he has now lost two straight may have been the best thing for them. They will never again be under the thumb of M-1 Global (I seriously question whether Showtime will still broadcast M-1 events, although I don’t know the details of that situation), and do not need to renegotiate with Fedor because there are now more relevant fighters in their heavyweight division, especially in regards to the Grand Prix. Therefore, with a bit of luck, they were able to leverage an expensive asset to bring attention to their brand at a crucial junction in the promotion’s development, then use him as a stepping stone to promote other fighters whose management is far easier to deal with. I hate to say it, as I have and always will be a fan of Fedor, but him losing back to back fights and losing his mythical status fixed a BIG problem for MMA. I ONLY say this because of the way he was being managed. We don’t need a Floyd Mayweather Jr. situation in this sport (someone who’s status as the greatest of all time is DEBATABLE given their inability/unwillingness to ink fights with the best competition available). Say what you want about M-1 Global, if Fedor had ever REALLY given a damn he would’ve shirked the mismanagement and fought the best of the best since the fall of PRIDE, EVERY FIGHT. IT WAS HIS CHOICE.

  8. Machiel Van on February 15th, 2011 12:41 PM

    Sorry for the rant, I’ve just always HATED the “Oh, it’s not Fedor who won’t fight so and so, or sign with the UFC, it’s M-1 Global.” We are all our own person at the end of the day. He could’ve been the undisputed best MMA fighter in history but he chose not to be. End of story and hopefully he made enough money that it was worth sacrificing the potential for a FAR greater legacy than he now has.

  9. Machiel Van on February 15th, 2011 12:44 PM

    Just to be clear, when I say “the way he was being managed,” I include Fedor in every one of those management decisions. It’s not like someone else signed the contracts for him.

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