UFC 123: Payout Perspective

Welcome to another edition of Payout Perspective! We’ll be taking a look at UFC 123: Jackson vs. Machida that was held at The Palace at Auburn Hills just outside Detroit, Michigan on Saturday, November 20th. In addition to the light heavyweight showdown between former champions Jackson and Machida, the event also featured the rubber match between BJ Penn and Matt Hughes.

Rampage survives late onslaught, judging system called into question

Rampage Jackson was the aggressor over the first two rounds and survived a late push from Machida to earn a split decision victory on Saturday night. The result of the fight has many questioning the validity of MMA’s current scoring system as Jackson won more rounds, but Machida did more damage in aggregate with his late flurry in the third round that almost finished Rampage both on strikes and via an armbar. It certainly makes sense to look at a different scoring system – e.g., the half-point system – but I’m not sure any significant progress will be made without a huge effort on part of the UFC to pass changes through the Unified Rules.

Jackson was clearly the most popular fighter on the night. It’s probably better for UFC business to have him win, as opposed to Machida whose style can, at times, leave fans wanting. Although, it’s difficult to say what’s next for Jackson, because the entire 205lbs division has seemingly been put on hold with the injury of Shogun and unwillingness of Rashad Evans to fight anyone else. The winner of either Jones vs. Bader or Griffin vs. Franklin would appear to be most likely, but those are fights that likely won’t take place until mid-Spring at the earliest.

Penn annihilates Hughes, set to face Fitch at 126

BJ Penn dominated Matt Hughes like no other and, in doing so, issued a clear statement to the UFC – he’s not done yet. This is obviously great news for the UFC from a business perspective, because BJ is one of the most popular fighters in the UFC and he’ll be used to bolster at least the next few fight cards in which he participates. Dana White mentioned at the post-fight press conference that Penn would fight Jon Fitch in February at UFC 127 in Sydney, Australia.

The UFC has put together strings of excellent fights over the past couple years – the most recent being March through August of 2010 – but it’s never put together a full year. However, that could all change given the UFC-WEC merger and what that has already meant for the start of the UFC’s 2011 campaign.

UFC 125: Edgar vs. Maynard and Aldo vs. Grispi
UFC 126: Silva vs. Belfort, Jones vs. Bader, and Torres vs.  Banuelos
UFC 127: Penn vs. Fitch and Bisping vs. Rivera
UFC 128: Shogun vs. Evans and Ortiz vs. Nogeuira

The UFC has broken its PPV total two years in a row (2008 and 2009). It will officially break the record again this year. Yet, the odds of the company breaking the record for a fourth consecutive year seem quite good.

UFC 123 a non-title fight model

The folding of the WEC into the UFC should limit the number of non-title UFC PPV events in the future, but UFC 123 is definitely a model for how to book a non-title event when its necessary. The UFC used four former title holders in Jackson, Machida, Penn, and Hughes to anchor this fight card and then supplemented the show with a host of intriguing match-ups. I doubt it will sell beyond 600k, but it likely provided enough incentive for most of the hardcore fan base to purchase the card and bring in a 400-500k buyrate.

In the absence of the title draw, the UFC must continue to leverage former titleholders that already possess material levels of equity in order to draw fans to the card. It cannot rely on would-be contenders to headline shows, because few people have heard of them – regardless of whether they may fight for a title some day. If those contenders need exposure then place them on the main card; not in a headlining position.

Sponsorship Watch

In October, Boost Mobile officially announced its partnership with the UFC. I thought UFC 123 would provide the brand with an excellent platform to introduce and activate the partnership given that Rampage Jackson, its primary fighter endorsement, was also headlining the card. I was wrong.

The brand continues to run with the same “Your Town, Our Fighter” promotion they opened with and it really hasn’t added any new activation to the fold other than some minimal social media engagement through Facebook and Twitter. I understand that Boost isn’t Sprint’s priority, but there are a host of cost-effective measures the company could employ to better activate around this partnership and essentially own the UFC’s mobile category.

I don’t know the exact details of the sponsorship deal or if there were any advertising/activation requirements, but this is yet another example of a brand coming to the UFC and missing an opportunity to claim value. Not only is the brand leaving money on the table, but it’s detrimental to the UFC as well. The purpose of sponsorship isn’t just to sell additional advertising inventory, but to leverage the partnership to better engage its fan base and add value to the consumer experience.

Yes, the UFC can only do so many things at once – expand to new markets, lobby for further legalization, improve regulation and drug testing, etc. – but the way it influences sponsorship activation directly effects its core marketing strategy. This isn’t a small matter.

Note: I’ve been slacking  on the Sponsorship Blue Book lately, but I promise a comprehensive update is coming prior to December 11th!