http://www.sportsbusinessdaily.com/Journal/Issues/2016/11/28/Media/UFC-media-rights.aspx When the UFC was for sale earlier this summer, the company told potential buyers that it expected to see a nearly fourfold increase in its media rights revenue. Its magic number is $450 million a year, a potentially staggering increase from the $115 million annual average that Fox Sports now pays, according to several media and UFC sources. Although formal negotiations aren’t expected to start until next year, network executives have learned that the UFC plans to seek at least a 10-year deal under those terms, sources said. The UFC’s current media deal with Fox Sports, seen as a watershed moment for the series when it was signed in 2011, ends in 2018. Fox Sports has an exclusive window to negotiate a renewal starting in late 2017. WME-IMG co-CEO Ari Emanuel helped negotiate the UFC’s Fox deal as a consultant in 2011 and is expected to be a big part of these negotiations. Fox Sports President Eric Shanks will lead negotiations for the network. Shanks was part of the negotiating team that first brought the UFC over to Fox Sports in 2011. The package the UFC will take to market will include the rights to four annual broadcast windows that Fox now holds, six annual cable events and weekly programming on Fox Sports 1, plus the UFC’s over-the-top Fight Pass service. It is not expected to include the UFC’s lucrative pay-per-view business, which will likely be retained by WME-IMG. But some media executives believe any winning bidder will have more of a say in what matches will be part of the UFC’s pay-per-view events. Whether a network will share in some of the PPV revenue is a deal point that will be negotiated, sources said. The new package also could include the significant change of having the networks produce the events, sources said. The UFC now pays all production costs, so that change would increase costs for the media partner. The negotiations mark the first significant deal under the UFC’s new owners, WME-IMG, who paid $4 billion for the company in July. Much of the company’s aggressive bid was based on leveraging the UFC’s media rights around the world, especially domestically. This will test its bullish attitude about the marketplace. The UFC’s timing is noteworthy. On the plus side, it comes when most major sports rights are tied up well into the next decade, making the UFC appealing to media companies looking to grow their audience with the UFC’s fans, who are coveted by all networks because of their youth and passion. The UFC also is seeing some momentum after its successful debut in New York City earlier this month. The actual ratings performance of the UFC is a mixed bag. Like many other sports, Fox’s UFC coverage is down this year. Its Aug. 27 card averaged just 1.983 million viewers, the broadcast network’s only UFC fight to fall below 2 million viewers since its 2011 debut. In 2015, all four of Fox’s UFC telecasts averaged more than 2.7 million viewers. The negotiations also come at a time when the pay-TV business is contracting and some of the industry’s biggest players, like Fox Sports and ESPN, have been cutting costs. While networks pay more for exclusivity, the UFC also is considering splitting the package among two or more TV networks. Fox Sports is considered a front-runner to renew the deal because UFC programming is a big part of FS1’s schedule and generally draws the channel’s biggest ratings. FS1’s program schedule would have a big hole to fill if the UFC went to another network. But sources say that executives inside the network already have started balking over the proposed $450 million-a-year price tag. Fox tried to buy the UFC over the summer, but it refused to increase its $3.6 billion bid, in part, because its executives felt the UFC overvalued its media rights. ESPN is a logical alternative for the UFC, and sources said network executives will sit down with the company if it allows Fox’s exclusive window to lapse. But ESPN executives believe a big rights deal for the UFC will have little, if any, effect on its affiliate deals with pay-TV distributors — deals that account for most of ESPN’s revenue. Most of ESPN’s affiliate deals run for several years. Plus, ESPN’s parent company, Disney, could be squeamish about the sport’s violent nature. Turner Sports is an intriguing option for the UFC, especially given that AT&T is buying Turner owner Time Warner, and the UFC could be leveraged across all the assets. Turner executives like the idea of putting UFC on truTV, which skews younger than Turner’s other channels; operating the UFC’s over-the-top service; and having the AT&T-owned DirecTV closely involved with the UFC’s pay-per-view business. The timing, though, is tricky, and nobody knows whether AT&T’s purchase will win federal approval. NBC Sports Group also is likely to kick the tires. Through its investment in SB Nation parent Vox Media, NBC Sports has seen the power of MMA as a media property, because the sport is the subject of some of SB Nation’s most popular sites. Sports rights holders still are holding out hope that a digital media company will make a big investment in live sports. Amazon, Facebook, Google and Twitter continue talking with leagues about sports rights packages, and the UFC’s younger demos closely match their audiences. So far, those companies have invested in niche sports or smaller streaming packages. It’s still too early to know whether any of those companies will make a serious run at the UFC rights.
The timing of the union is no coincidence. The fighters stand to take half of this type of revenue. They get zero without a union. If they get $400-million/year, even at 25%, that is over $150k per fighter for 600 fighters.
http://nypost.com/2016/11/29/the-details-behind-ufcs-4-5-billion-tv-plan/ The UFC recently was sold for $4 billion, and now the new owners are looking to cash in with a TV deal worth $4.5 billion, Sports Business Daily reports. The deal they are seeking — averaging $450 million over 10 years — would be a huge increase on the current $115 million-per-year deal the UFC has with Fox Sports, which ends in 2018. UFC is looking for bids on a package that includes the rights to “four annual broadcast windows that Fox now holds, six annual cable events and weekly programming on Fox Sports 1, plus the UFC’s over-the-top Fight Pass service,” SBD wrote of the specifics. Notably absent from the package is the UFC’s big money-maker: pay-per-view events. The UFC’s new owners, WME-IMG, would retain control of those events, but are expected to consult with their over-the-air TV partner on which fighters appear on which cards. In the past, the UFC has reserved its biggest stars and biggest fights for huge PPV events, like the recent UFC 205. The record-setting spectacle staged at Madison Square Garden in November was headlined by Conor McGregor’s bout with Eddie Alvarez for the lightweight title, but the card featured two other title fights that helped it become the UFC’s largest ever PPV event. Though the UFC hasn’t released exact figures, Forbes reported they got approximately 1.7 million pay-per-view buys. The UFC charges $59.99 for each PPV event and stages roughly 12 per year. Though the $4.5 billion the UFC is seeking for TV rights seems eye-popping, it pales in comparison with the deals the major American sports leagues have recently signed. Current TV deals with major North American sports leagues: NFL, nine-year deal running through 2022 with Fox, NBC and CBS worth $27 billion NBA, nine-year deal running through 2024-2025 with ESPN and Turner for $24 billion MLB, eight-year deal running through 2022 with ESPN, Fox Sports and Turner for $12.4 billion UFC’s asking price would dramatically outstrip what smaller sports rake in from American TV. For example, the NHL is in the middle of a 10-year deal with NBC Sports worth $2 billion; the same network paid $1 billion to broadcast England’s Premier League soccer through the 2021-2022 season. It is unclear what effect the new TV deal will have on the UFC or its fighters, but fans will see a change when the proposed new deal is inked, sources told the website. From its inception, the UFC paid for and controlled how all of its events are produced for TV. The arrangement allowed the UFC to create a uniform media brand that helped it grow into a $4 billion company. With the new deal, production likely will be handed over to the TV partner. This means fights on over-the-air TV will not look or feel the same as the pay-per-view events, in much the same way that NFL games are produced differently on CBS, Fox, NBC, ESPN, and NFL Network. Negotiations over the new deal are expected to take place next year, and Fox Sports has an exclusive window at the end of 2017 to try to hammer out a renewal. Besides being the current rights holders, Fox Sports has another advantage in the upcoming negotiations: WME-IMG co-CEO Ari Emanuel worked as a consultant to help broker the 2011 deal between the network and the UFC.
