Update on the UFC’s 2012 PPV Business

September 4, 2012

It’s no secret that the UFC has been struggling of late in the Pay-per-view department. 2011 was the first year parent company Zuffa saw a decrease in Pay-per-view buy rates—the primary source of revenue for the company.

Some attributed the decline to a rash of injuries causing havoc on fight cards, while others complained about product saturation having an adverse effect on the fan base. Whatever the reasons or combination thereof, the Pay-per-view business was down and the brass at Zuffa couldn’t be very happy.

So how big was the decline in the business from 2010 to 2011? Let’s take a look at the numbers:

There was an overall 27% drop in business between 2010 and 2011. Average Buys dipped 157,500 from 579,375 to 421,875. Total Buys were down a significant 2.5 million which translates to about a $63 million dollar hit on Pay-per-view profits (profit calculations are based on income after costs to distributors/networks).

So what about 2012? Well, the injury bug continues to be a big problem for the promotion. Mike Chiappetta reported that 78 fights have been canceled this year due to injury and five of the cancelled main events were Pay-per-view headliners. Brock Lesnar, the UFC’s biggest Pay-per-view draw has retired from MMA and returned to professional wrestling.

Surprisingly, through the first eight months of the year the Average Buys are up slightly over last year (YTD). This success comes off the back of UFC 148 Silva vs. Sonnen II which reportedly did 1 million buys (the first UFC event to score that many buys since UFC 121 in October 2010). However, Total Buys and Estimated Profits have decreased simply due to the fact of their being one less event this year versus last.

 

Payout Perspective

The UFC still has four scheduled Pay-per-views remaining in 2012. But with the cancellation of UFC 151 there will be 2 less events than previous years. In order to finish 2012 with similar results as last year the promotion would need to make up approximately 2.9 million total buys over the remaining 4 events, or approximately 750,000 buys per event. This is something that’s unlikely to happen. On the other hand, Average Buys could hold on and finish stronger in 2012 than in 2011. The end of the year will add some substantial numbers (baring any injuries) as bigger draws such as Jon Jones, Georges St. Pierre and Heavyweights Junior Dos Santos and Cain Velasquez are all scheduled to fight by years end. If the Average Buys finish up over last year it’ll indicate a bit of a turnaround for the UFC. Finally some good news in the Pay-per-view department. Perhaps having less Pay-per-view events a year is helping drive a slight increase in the Average Buys per event. We’ll have to wait and see what happens. Only time will tell.

22 Responses to “Update on the UFC’s 2012 PPV Business”

  1. jose on September 4th, 2012 3:06 PM

    So, UFC gets roughly $90M per year from Fox and $170M per year from PPV.

    I expect the trend over time will be declining or flat PPV while broadcast money rises. The PPV business model might not last more than another decade.

    As all of Big Media launch sports networks (ESPN, NBCSports, CBSSports, rumored rebranding of SpeedTV to FoxSports) there is increasing demand for sports properties and I expect UFC will, eventually, find they make more money on TV than PPV.

    In fact, I think with their next deal (after the Fox deal ends), UFC will become primarily be a TV company.

    Meanwhile WWE sees the same future of a dying PPV model and is trying to shift to a cable TV, WWE Network, model.

  2. BrainSmasher on September 4th, 2012 3:38 PM

    I dont believe the UFC is in any dire straights. But the fan base has changed a lot over the years. When TUF come out there were a handful of fighters that reaped the benefit of the increased fanbase more than then anyone else. Chuck, Randy, Forrest, Hughes, GSP, etc. All were able to draw 500K buys verses anyone. Then you have a next level fo guys who could hit 500K with the right opponent. They just dont have that anyone more. A few of the draws lost their hype and didnt pass it to anyone who could carry the torch. Then there is 10 times more fighters the UFC is marketing than they ware in 2005-2006. Now the fan base has spread out to Aldo, Cain, Santos, Chael, Shogun, Machida, Faber, Cruz, Bendo, Frankie, etc. The fan base is no longer all calling 5 different fighters their favorite. The fan base is spread across dozens of fighters. So as the UFC created more headliners they took away the dependance they had on just a handful of fighters.

    I believe the UFC is much more secure now than it was because of the many new guys they can call a headliner. I myself dont think of a Frankie or Bendo as a headliner. BUt there is a lot of people out there who that is their favorite fighter. It was nice to have the huge hyped fights sold 500,000+ PPVs. Now only GSP and Silva can do that. Others need the right fight. The good news is i dont think the fan base as awhole has dropped off. It is just harder to judge it because no 1 fighters brings everyone in. Also fi the UFC can grow the fan base on Fox those fans will trickle down and follow the 20+ headliners the UFC now has and will one day be able to hit 500K almost every card out.

    I think now more than ever the UFC needs a Brock Lesnar type gimmick. They have the platform to reach more people now than ever and with FOX many new people. Now is the time to lure in a lo0t of eyes and hope the many personalites that the UFC promotes attracts them permenantly.

  3. Sampson Simpson on September 4th, 2012 7:25 PM

    BS = garbage as usual.

    Do you not READ numbers? That stats don’t lie but you seem to have no problem lying to yourself.

    UFC is on a decline, country is in a recession, super simple to understand.

  4. Machiel Van on September 5th, 2012 9:06 AM

    Sampson, you come off like a silly curmudgeon. Again, do you even like MMA, or do you just like being a contrarian and attempting to get a reaction?

    Anyway, it’s obvious that the UFC needs to work harder to build more stars and just accept that they’re going to have to deal with prima donna behavior. Zuffa’s attitude that the UFC brand is what really sells fights needs to be abandoned. The decline of yeteryear’s stars has not coincided with the rise of new fighters that the casual fans care about. That, combined with oversaturation (which exacerbates the injury factor) and the fact that even decent draws seem to be fighting less times per year, is the main thing that’s hurting the UFC’s numbers right now. They’ll need to really put their marketing muscle behind some potential stars to “get them over” and start capitalizing on their fame.

  5. Mossman on September 5th, 2012 10:51 AM

    Whats the source of this data? All of a sudden Zuffa is self reporting?

    Any “leaks” from Zuffa can automatically carry a 25-30% inflation of the numbers.

  6. Shiny on September 5th, 2012 12:25 PM

    Dave Melzer down graded Silva-Sonnen 2 to 800k buys
    Other events have been downgraded too. You’d think this site that’s meant to be number centric would keep tabs on these things.

    He also said Brock vs Reem only did 500k

  7. Jose Mendoza on September 5th, 2012 1:27 PM

    BTW, we are keeping tabs on all of it, but we always welcome feedback and input. Thanks!

  8. BrainSmasher on September 5th, 2012 2:46 PM

    I dont believe for one second that Reem/Brock only did 500K. If Dave is truely down sizing his own reports when his reports were just estimates on “some’ cable insiders then we are going to have to disregard his numbers all together. He is just throwing numbers out there from his ass. He can he honest say that 1/3 of all the PPV buys he claimed to have sold didnt sell?

    All the numbers we have ever heard make 750K sound like what would be expected. If that wasnt right then we are back to square one and do not have any idea what the UFC really sells. It could be more or it could be less.

    Another thing that shows Dave is full of shit”if he truely down graded his estimates” is Overeems contract. He only gets a PPV cut on sales over 500K. So not only is he saying Overeem didnt get any cut of PPV buys but he never will. Because if he doesnt get over 500K with Brock Lesnar he never will.

    I would like to see a source of this down grade!

  9. EK Poll on September 5th, 2012 6:30 PM

    Whenever we discuss UFC PPV numbers, I think it’s more of an art then a science.

    But from what I understand, UFC 148 had more than 900,000 but was short of 1 million.

  10. Random Dude on September 6th, 2012 5:07 AM

    I hate that Dave Meltzer guy and the fact that people think he has any legitimacy. His numbers are all made up bullshit. It’s a good scam…I mean job…if you can get it…

    He doesn’t have any contacts or insider info. Celebrity tabloids print more accurate news than he does.

    I would bet the UFC’s PPV numbers are down, but nobody knows how much or how bad, especially Dave Meltzer.

  11. BrainSmasher on September 6th, 2012 8:41 AM

    I find it strange that Dana White tweets him according to Dave. Why would Dana buddy up with the only source that leaks his Private PPV numbers? Unless more often than now Daves numbers are much lower than they really are.

    From what we know as fact is that some contracts have a 500k buy mark as the PPV cut point. Everyone is wanting a cut of the PPV. I have a hard time believing that win the low PPV buys the last 2 years than no one is getting a cut but 2 guys. No one would be lining up to take a PPV contract that starts at 500 if the UFC brand was t good for 300 like it used to be and few cards were getting 500.

    You would think with up to 20 fighters getting a PPV cut that more would have been leaked as to dacha contract and what they got from a specific PPV. But the only numbers we have is Coutures from many years ago. These fighters get the final numbers on PPVs but never leak it.

  12. Sampson Simpson on September 6th, 2012 1:21 PM

    Funny how Meltzer’s numbers are considered gospel when on the up and up but he apparently has no credibility when the revised numbers are released.

    Amazing ostriches, all of you.

  13. Weezy on September 6th, 2012 1:41 PM

    Good analysis. I suppose one question I have is this: is this an industry wide (meaning PPV industry in general) phenomenon over the past two years or is it exclusive to UFC? For example, how have the aggregate numbers of boxing PPVs and WWE PPVs trended over the last couple of years? I guess what I’m getting at is: Are people getting just MMA weary or are they getting PPV weary in general?

  14. Random Dude on September 6th, 2012 2:02 PM

    I don’t believe his numbers when they are going up or when they are going down. I don’t believe he has any numbers. Nobody knows what is going on with the UFC’s PPV buyrates. It is a good guess though that they are lower now than before.

  15. Jose Mendoza on September 6th, 2012 2:19 PM

    Weezy:

    Stock got upgraded and PPV numbers have gone up for WWE
    http://mmapayout.com/2012/09/the-pro-wrestling-post-analyst-upgrades-wwe-stock/

  16. @dneighbor on September 6th, 2012 3:42 PM

    I think what these numbers are supposed to represent when they say “estimated PPV profit” is actually estimated PPV revenue. Profit would be less all the overhead of advertising, fighter pay, and any other operational cost. I like the site and applaud the author’s effort but I doubt he comes from a business background. I don’t believe Dave Meltzer’s numbers to be gospel but I don’t think he pulls them out of thin air either. Clearly PPV buys have declined recently but much of that can be attributed to the over-saturation of cards since the Fox deal, injuries to headliners, and the loss of many pro-wrestling/Brock Lesnar fans.

    The UFC’s biggest problem in my opinion is the enourmous amount of promotional content they put on FuelTV which is still only in about 30-million U.S. homes. I can’t get FuelTV and it is infuriating as someone who spends hundreds if not thousands on the UFC every year.

  17. BrainSmasher on September 6th, 2012 7:09 PM

    Samson,

    When someone comes out and says 1/3 of the info the claimed before was wrong then it is common to question their legitamacy and hw they counted 250,000 of something that didnt exist. Not all of us follow things blindly like you do. As for why we listen to th Just the e numbers at all. Well thats because he is the only numbers out there. Just the jobs he has had and time spent covering the sport makes his numbers more credibily than any random tool like yourself throwing out numbers on forums. Just because he has a better idea than anyone else on the outside doesnt mean his numbers have to be in the ball park of the real numbers.

    Weezy,

    I believe all of them have the option to keep them private. Some choose to release them or so they have us to believe. We find out WWE numbers because they later release them to share holders. We hear numbers boxing claims because they use the numbers to display hype around a fighter or fight. They have been know to lie about their numbers. We still are not 100% sure of PPV buys of Affliction a few years ago and Pride 5+ years ago. We have educated guess’.

    From someone who has following the buy rates over the last 12 years. Most events seem to fall in with every other event. There isnt that many surprises and where there is it isnt a big surprise. But the adjusted numbers for UFC 141 doesnt pass the smell test. You can look at every fighters past PPV sells and the current trend of UFC events and if there is any hype going into an avent like major news that gets the UFC name out there or the event. Then you can almost always predict the buy rates within 100,000 buys. Its been that way for every UFC for a decade. Then you get these 141 numbers and it makes you question everything.

  18. BrainSmasher on September 6th, 2012 7:10 PM

    NVM weezy, i miss understood your question.

  19. EK Poll on September 7th, 2012 9:11 AM

    @dneighbor: Yes, “Profit” might not have been the best term… but I did state that: “profit calculations are based on income after costs to distributors/networks”… I do however see your point.

  20. Mossman on September 7th, 2012 10:11 AM

    EK what “costs” are you factoring in for the PPV distributors… do you even have a clue what that breakdown is? Do you know the splits on the rev share? Do you know the tiers where revenue splits change? Do you know the other factors that move that needle and the payout breakdown such as advertising support through the distributor network?

    Its quite reckless to write an article without substance, sources, or a clue…

    BS… glad to see youre still drinkin the kool-aid. The UFC will always be growing as long as they get your $65 every two weeks, or is it week, or just once this month, or maybe on a Friday…

  21. EK Poll on September 7th, 2012 10:31 AM

    Mossman: $50 average with half going to the UFC… these are just estimates…

  22. Crazy Enough to Be True: Ten Wild MMA Predictions for 2013 | TheJasonMoles on January 6th, 2013 1:09 PM

    […] The numbers are in and they’re not exactly promising. Many of you have debated whether or not the UFC is over-saturating the market. Others still haven’t recovered from witnessing Ryan Bader upset Quinton Jackson at UFC 144 back in February, and haven’t really noticed much of anything other than their old PRIDE tapes. It’s funny how watching old fights can take us back to a time when everything made sense, you know, like not having back-to-back fight cards or double-booking a Saturday in two different countries. Money talks, so when average Joe hits up @DanaWhite on Twitter to say he’d spend more money buying a bunch of stacked PPVs as opposed to waiting for a really good one every now and then, the Zuffa brass will listen. […]

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