UFC 120: Payout Perspective

Welcome to another edition of Payout Perspective! This week we’ll be taking a look at UFC 120: Bisping vs. Akiyama that was held on Saturday, October 16th from the O2 Arena in London, England. In addition to Bisping vs. Akiyama, the event featured a host of British and European fighters including Dan Hardy, John Hathaway, Paul Sass, Cheick Kongo, Alexander Gustafsson, and Cyrille Diabate.

Bisping decisions Akiyama, remains on track for title shot

Michael Bisping gave the home crowd something to cheer about in the main event with a sound decision victory over Yoshihiro Akiyama in a fight that was awarded Fight of the Night by Dana White. Bisping was able to leverage his speed and reach to routinely beat Akiyama to the punch, but he still seems to lack the punching power necessary to really hurt an opponent.

The win was important for both Bisping and development of the UK market. Bisping is now one step closer to a shot at the title. The fact that he won on home turf also helps to reinforce the tremendous support the UK market threw behind this event and its fighters. Moreover, the promise of a potential title fight between Bisping and Silva in 2011 could really help push MMA in the market, because it would play on the tremendous amount of nationalism within the country and give the media a legitimate reason to feature the sport on a consistent basis for a couple weeks (especially if the fight is brought to London or Manchester).

Condit KOs Hardy, stuns crowd

Carlos Condit’s knockout of Dan Hardy will likely prove to be a candidate for KO of the Year. It was the perfect combination of speed, power, and timing with the added element of surprise — no one expected Hardy to be laid out in such a manner.

Now things have just gotten a lot more interesting in the UFC’s welterweight division. Condit has racked up three straight wins in the UFC and managed to knockout the opponent that the champion couldn’t even finish. He’s proved his worth. Here’s the situation as I see it:

• GSP and Koscheck will fight in December and the winner will likely be available by March or April.
• The winner of Shields and Kampmann will likely get the next title shot (especially if it’s Shields) because it puts a fresh face in the main event and Jon Fitch hasn’t earned himself any new fans with his style.
• However, I do expect Fitch to remain in the title hunt – especially if GSP defeats Koscheck — and it would seem to make a lot of sense for him to fight Condit to produce the next challenger in the division come Summer or Fall 2011.

UFC 120 sets UK attendance records

UFC 120 has reportedly set the UFC’s attendance record for Europe with 17,133 fans in attendance for a total gate of $2.56 million. It’s certainly an improvement over the last time the UFC was in London at the O2: UFC 95 did just over 13,000 fans for an estimated gate of $1 million. However, as Junkie points out the UFC earned more at the gate on fewer fans in attendance at UFC 75 with the Rampage vs. Henderson title fight.

UK title fights necessary, but may come at high opportunity cost

UFC 120 was an eye-opener due to its strong sales and the great amount of support the card was able to generate. The use of local talent proved to be an effective strategy for the UFC and evidence that it’s expansion into the market is on course. I’ll admit that when the fight card was first announced, I was very skeptical that it would sell, but it did.

Now, my question is for how much longer is this strategy viable?

I remain adamant that my larger point still stands: if the UFC is to continue its growth in the UK it must deliver better fight cards with bigger stars to the market. Unless Bisping or Hardy or another UK fighter become a bona fide star over the next few years, neither is going to adequately quench the appetite of UK fans for top-quality MMA.

The challenge with delivering bigger stars and fight cards to the UK is, of course, incurring significant opportunity costs. The UFC is rightfully reluctant to pull a great card away from the North American market, because it loses that short-term revenue guarantee associated with the PPV buys. To overcome the opportunity cost the UFC is going to have to do two things:

1.) Maintain its focus on generating medium and long-term growth with the realization that this growth will easily eclipse the immediate sacrifice of domestic PPV revenues. The $5-10 million they give up now could contribute towards annually earning $50-$100 million in the UK market five years from now.

2.) Push the limits of social media and other cost-effective promotional tools that might allow the UFC to increase promotion of its foreign events without significantly increasing costs. It seems to me the UFC could really leverage this “spoilers” controversy to form an interesting internet marketing campaign that might increase awareness in foreign events and motivate fans to actively ignore media outlets on fight day in favor of purchasing the event that evening. The model they used for UFC 112 seemed to work, but I also have to think it was somewhat expensive with all of the extra television and print ad inventory they purchased to go along with the time buys on many RSN’s throughout the US.

Then again, perhaps the UFC doesn’t need to make these events PPV at all. Its television ratings have been declining over the last nine months largely because the quality of their UFN and TUF cards has been lacking. If the UFC is going to hold a title fight in the UK, it might consider giving the fight away for free on Spike TV as an exposure play and gesture of goodwill to the fans. This is something that might be easier to do if, say in 18 months, the promotion is on ESPN. Nonetheless it’s an option worth considering.