On Tuesday, the UFC announced a ‘groundbreaking’ multi-year deal with ESPN+ for 15 live events that will land on the streaming service launched by the Disney owned company earlier this year.
Ever since ESPN+ kicked off, executives at the Connecticut based company have been looking for sporting events and promotions to partner with to bolster the service that current costs $4.99 a month.
The UFC deal will bring 15 exclusive events to ESPN+ with the deal reportedly running for five years at approximately $150 million per year.
In addition to the 15 live streaming events, ESPN+ will also broadcast Dana White’s Tuesday Night Contender Series starting in June 2019 along with shoulder programming for the UFC Fight Night events airing on the streaming service such as pre and post shows.
ESPN+ will also have access to the back catalog of UFC content that’s currently exclusive to UFC Fight Pass subscribers such as previous fight cards, pay-per-views and other UFC produced specials and programs.
The announcement was made just two weeks after reports surfaced that ESPN was interested in making a bid on at least part of the UFC’s upcoming teleivison rights package that will kick off in 2019 at the end of their current deal with FOX.
Now that the deal is done, what does this mean for the UFC, ESPN+, UFC Fight Pass and the rest of the television package? Well, let’s take a look.
WHAT DOES THIS MEAN FOR THE UFC TELEVISION RIGHTS PACKAGE?
When Endeavor (previously known as WME-IMG) purchased the UFC for just over $4 billion, part of the promise made to investors was that a chunk of the money that would be used to pay back loans to buy the promotion would come in from this new television deal.
In documents sent out to investors, the prospectus from Endeavor said that they expected to get somewhere around $450 million per year for the new UFC television rights deal — a significant increase from the $120 million per year average that they currently receive from FOX.
Well ESPN+ being willing to pay $150 million a year for just 15 total events already paints an optimistic picture about what the UFC will likely receive for the remainder of their television rights package.
That same report that said ESPN was interested in obtaining at least part of the UFC television rights package also stated that FOX was willing to up their bid to a little more than $200 million for the remainder of the live fight cards airing in 2019 and beyond.
Considering what ESPN just paid for a small portion of the UFC’s television rights, that likely sets the bar for the promotion to receive at least $200 million or more for their next deal.
The likely suitors right now include FOX as well as NBC, which almost had a deal with the UFC back in 2011 before Endeavor co-CEO Ari Emanuel eventually helped the promotion land at FOX instead. In those days, Emanuel was representing the UFC as an agent but now as an owner he has a vested interest in those television rights fees going as high as he can possibly get out of networks looking to add mixed martial arts to their programming lineup.
A third suitor could emerge in June once a judge renders a verdict in the current AT&T/Time Warner merger that has been held up in anti-trust court. If that merger goes through, the new AT&T/Time Warner conglomerate could make a big push to land UFC programming with benefits to networks such as TNT and TBS as well as HBO and pay-per-view through DirecTV, which would all then be under the same umbrella.
It’s entirely possible the UFC is waiting for that verdict before making any kind of decision on the remainder of their television rights package.
All along the UFC wasn’t expected to announce their new television home for 2019 until sometime in the late summer, which is exactly when they confirmed their deal with FOX back in 2011.
Unless a fourth option suddenly emerges, FOX, NBC and possibly AT&T/Time Warner will duke it out for the remainder of the UFC rights. Of course you can never count out Amazon or Apple to suddenly make a huge money offer if they are convinced that the UFC could be a benefit to their streaming services but considering the deal the UFC just signed with ESPN, it’s likely they want to stay on network television for at least a few more years.
WHAT WILL BE LEFTOVER FOR THE REMAINDER OF THE UFC TELEVISION RIGHTS DEAL?
In 2017, the UFC ran a total of 39 events including 12 pay-per-views and 27 ‘fight night’ cards that ran on FOX, FOX Sports 1 or UFC Fight Pass.
With 15 events already headed to ESPN+ in 2019, what will be leftover for the remainder of the new television rights deal?
Well if the UFC still wants to do 12 pay-per-views in 2019, then based on the total number of events in 2017, that would only leave 12 more cards leftover for the other television partner. In other words, it’s likely that the UFC will increase the total number of shows produced in 2019 and beyond.
What’s more likely is that the UFC will plot out approximately 20 to 24 events that will be exclusive to their television partner starting in 2019. That’s just about the only way the UFC can justify asking for $200 million or more for their programming if ESPN just paid $150 million for 15 events.
Is it possible that the UFC would do away with a couple of pay-per-views per year in interest of a bigger package available to a broadcast partner?
That remains to be seen but if a television partner like FOX or NBC is willing to pay more up front per year for those premium type events, it’s possible that the UFC would forgo one or two pay-per-views per year. While the pay-per-view business has gone down in recent years, the UFC still makes a lot of money from that particular avenue and with Conor McGregor expected to fight later this year as well as the rumored return of Brock Lesnar, don’t expect them to give up on pay-per-view any time soon.
The most interesting prospect for the UFC’s pay-per-view model could come from a deal being struck with a new AT&T/Time Warner where it’s possible some of those second tiered events could end up on an entity like HBO much like boxing does currently. The biggest fights like when McGregor competes would still go on pay-per-view but lower drawing pay-per-views like this weekend’s UFC 224 card could conceivably end up on a premium network such as HBO.
Again this is all speculation but these are all factors the UFC will take into consideration when negotiating an asking price for the remainder of the television rights deal.
WHAT ABOUT UFC FIGHT PASS?
One of the biggest questions coming out of the announcement about the UFC’s new television rights deal with ESPN+ is what happens to UFC Fight Pass?
UFC Fight Pass has always been part of the package that Endeavor was using to entice networks for the new television rights deal and it appears ESPN+ is getting a big part of that for their new streaming contract. The few exclusive UFC events on Fight Pass will now likely land on ESPN+ and the new streaming service will also allow customers to have access to all of the back catalog of UFC programming currently available on Fight Pass.
So what’s left for Fight Pass?
Well promotions like Invicta FC, who live stream their cards on Fight Pass, will remain on the streaming service. The UFC may look to add even more promotions to bolster Fight Pass to maintain its customer base after this ESPN deal starts next year.
There are also the early prelims that still currently air on UFC Fight Pass but it’s entirely possible that a new television partner like NBC or AT&T/Time Warner could want those fights on their slate of networks and/or streaming services.
So for now we won’t know for certain if those early prelims are going to remain on UFC Fight Pass or not until the new television deal is completed later this year.
WHAT HAPPENS INTERNATIONALLY?
The UFC deal with ESPN+ primarily affects the United States market because that’s where the streaming service is offered, but what about those same cards in international markets like Canada or the United Kingdom?
Well the UFC’s television rights deals in those countries are still independent of anything being done in the United States so none of that will be affected.
The biggest question would be for the few UFC Fight Pass only events that were available to numerous countries around the world that are likely now going to land on ESPN+. For now there’s no word on how those will be broadcast in other countries, but it’s possible the UFC works out deals with their existing providers around the world for those rights.
Like it or not, Endeavor is mostly concerned about landing the biggest possible television rights deal in the United States as they can negotiate and then the rest of the chips will begin to fall for the other markets around the world.
WHAT BENEFIT COMES TO THE FIGHTERS?
This is an interesting question because in reality the UFC isn’t legally obligated to hand over any of this money to the fighters.
While other leagues like the NFL and NBA have collective bargaining agreements in place with players that a certain percentage of television rights deals (or in the case of the NBA it’s a percentage of the basketball related income that the league makes) are paid out to the athletes, the UFC has no such commitment.
This new television deal along with the $4 billion sale of the UFC could give increased power to unions attempting to gather support amongst fighters competing in mixed martial arts.
Is it possible the UFC increases bonuses or begins paying more to certain fighters once this deal kicks in? Of course there’s a chance of that but nothing is promised based on the amount of money the UFC ends up receiving as part of this new television rights deal.
HOW MUCH WILL IT COST TO BE A UFC FAN IN 2019?
That’s a loaded question right now because we still don’t know where the UFC will land for the remainder of their television rights beyond the deal with ESPN+.
What we know for certain is that to have access to those 15 exclusive events, you’ll need ESPN+ and that currently costs $4.99 per month.
UFC Fight Pass currently runs at $9.99 per month for the remainder of the content on there but as previously stated there’s still no telling if preliminary fights will air on there once the reminder of the television rights deal is completed.
Of course pay-per-view prices have continued to inflate over the years with the current cost to purchase the high definition version of any UFC card at $64.99 per event.
As far as cable packages go, typically a new rights package will often lead to increased carriage prices with cable/satellite providers. In other words, your bill goes up because now FOX/NBC/etc. can charge more for their networks and then the cable or satellite company passes along that fee to you as the consumer.
The good news is there are a ton of streaming options out there now such as YouTube TV, Hulu and Sling TV that offer ‘skinny’ bundles that allow customers to purchase a reduced package of channels for live streaming that cost far less than a typical cable bill. For instance, Sling TV charges $45 a month with a package of channels that includes ESPN, ESPN 2, ESPN 3, FOX Sports 1 and 2, TBS, TNT as well as the NBC Sports Network and that covers most of the likely suitors for the remainder of the television deal.
Again all of this is preliminary information because we still don’t know where the UFC programming will end up until the remainder of the deal is finished later this year.
For now, expect to pay at least $4.99 a month to ESPN+ if you want access to those 15 additional cards starting in 2019.
IN CLOSING
Photo by Asa Mathat/AllThingsD.com
The UFC has long coveted ESPN as a broadcast partner despite the fact that the ‘worldwide leader’ has been hemorrhaging subscribers at an alarming rate over the past few years. Still, ESPN gets bigger ratings than any other sports network on television. Will that translate to ESPN+? That remains to be seen.
What’s certain is ESPN will undoubtedly show greater support for UFC programming on their line up of networks. That means more UFC fighters being interviewed on ESPN and talking head shows like ‘First Take’ will likely start discussing mixed martial arts on a more regular basis than just when Conor McGregor or Ronda Rousey fight.
The price that ESPN paid also shows that the UFC is a very valuable property to television networks despite declining ratings over the past couple of years. Certainly the UFC isn’t pulling in the kind of television rights fees that even a similar property like NASCAR gets (the racing league signed a 10 year deal that started in 2015 worth $4.4 billion) but it’s still optimistic considering the seemingly lofty numbers that Endeavor floated when purchasing the UFC back in 2016.
ESPN’s willingness to pay $150 million for 15 events means that the UFC will probably get close to that $400 million per year mark in total for the split of their television rights package once this is all settled and finished later this year.
Get ready for a crazy summer as the UFC continues to negotiate their television rights package before kicking things off at the start of 2019.
This article first appeared at News – MMAWeekly.com
