ESPN to Pay $1.5 Billion for UFC Broadcast Rights

UFC 200x200

Just two weeks after ESPN agreed to purchase the rights to broadcast 15 UFC events annually for $750 million, the company acquired exclusive linear broadcast rights to the MMA promotion’s cable television package. The newly signed deal, worth $150 million annually, will give fans 27 additional fight cards each year (consisting of 10 new linear cards, 12 PPV prelims on linear, and five new OTT cards); meaning ESPN will pay a staggering $1.5 billion to carry 210 UFC events over the next five years. Earlier this week, ESPN President Jimmy Pitaro called the UFC an “ascendant property”, while touting its young and diverse fan base. It must be noted that despite the $300 million ESPN will pay UFC annually, UFC will retain the rights to its 12 annual PPV events (i.e. their best content). 

Howie Long-ShortWe told you that once the WWE SmackDown Live deal with FOX was completed, UFC’s linear broadcast offering would be the next set of sports rights to fall. What we didn’t project was ESPN (DIS) acquiring them after spending $150 million per year on digital rights for ESPN+ and hearing that Fox Sports had increased its bid to $175 million/year for the package (up from $165 million). UFC may have left some money on the table to do this deal. Experts projected the linear package to draw $200 million and several networks (i.e. Turner, NBC, Fox Sports) reportedly had interest.

$1.5 billion for UFC cards between fighters no one has ever heard of (yes, that’s a bit of hyperbole) does not sound like a great investment. The UFC lacks mainstream star power to begin with and naturally the promotion places its biggest stars on PPV cards (which they’ll retain); meaning the cards appearing on ESPN & ESPN+ won’t include Connor McGregor (or any other mega star) anytime soon. Did I mention Fox Sports’ ratings for UFC events declined double digits in 2017?

Need reasons to believe ESPN made a wise investment? UFC has the youngest fan base in sports (median age 40). Males aged 18 to 34 are particularly valuable to advertisers and at $150 million annually the package is still cheaper than what NBCUniversal and FOX will pay for RAW and SmackDown Live.

Fan Marino: I’m certainly not surprised that WWE content is valued more than UFC content, as WWE has a far better business model. WWE stars headline tentpole events (like WrestleMania) and more than 500 other shows each year, so fans get to see their favorite Superstars on a weekly basis. UFC’s biggest names might fight twice a year and are always one fight away from never headlining another event, either because they’ve lost their sense of invincibility (see: Rousey) or because they’ve made so much money that getting punched in the face for a living no longer makes sense (see: McGregor). UFC promotion can also be limited by the outcome of fights, as the best fighters aren’t always marketable (see: Stipe Miocic). You’ll never find WWE in that situation, as career arcs are decided before the Superstars get to the ring.

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Author: John Wall Street

At the intersection of sports & finance.

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