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.
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.