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MX News Update 2024

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UFC owners express concerns about new TV deal, future of UFC APEX shows and The Sphere being ‘one and done’

Much of the focus regarding the future of UFC in 2024 – and beyond – is likely to be on the upcoming broadcast rights deal, negotiations for which are set to begin later this year.

UFC’s current broadcast deal with ESPN runs until 2025, but there has been a lot of speculation as to whether or not the promotion will return to the Disney company for a new exclusive deal, or perhaps split a package between multiple networks similar to others major sports. leagues such as the NFL.

In a financial call on Wednesday, Mark Shapiro, president of TKO Group Holdings, continued to praise the relationship UFC has with ESPN, but he also admitted that it is impossible not to listen to all available offers.

Notably, WWE, which is also owned by TKO, has signed new broadcast rights deals effective in 2024, with both of the organization’s major shows – Raw And Smackdown – moving to new points of sale. That doesn’t necessarily mean UFC is destined to do the same, but the new broadcast rights deal will almost certainly attract numerous potential suitors.

“If it’s multiple partners, one partner, we’ll see what happens when we get there,” Shapiro said. “Our window opens in mid-January, it’s a three-month window with the UFC and Walt Disney Company. They are a great partner. They’re the best marketing machine in the business and they’re the #1 premiere, automatic destination for sports fans everywhere, especially in the US. That’s the first-stop shop, that’s the go-to when it comes to searching for sporting events.

“We don’t want to get away from them. We have no intention of reducing our commitments, but at the same time we have a window, we will listen, we will talk and we will do what is in the best interest of the UFC going forward.

As for pricing, Wall Street analysts predict that UFC could potentially earn double its current ESPN contract under a new broadcast rights deal. The NBA is also in the midst of negotiating a new TV contract, which is expected to eclipse the basketball league’s previous deal by a wide margin.

Despite all the ways sports rights deals could take a hit due to higher costs, Shapiro said the results of recent negotiations appear to be different.

“Honestly, I would tell you that if I go back to when ESPN was programming — and remember, I left almost 19 years ago in 2005 — I’ve heard about the decline in the value of sports rights,” Shapiro said. . “That we are hitting a ceiling, that we are getting close, that people are getting nervous, that they are pricing it in. And of course Raw innovations and the Smackdown extensions with Nick Khan and Ari (Emanuel), we had a lot of setbacks with that. Honestly, everywhere you look it says something different.

“The NCAA deal was a strong deal for all rights, including women’s sports. The NASCAR deal was a strong deal. The Smackdown deal moving to NBC is a strong deal. Netflix is ​​never concerned with sports and now Raw there is a strong deal with ‘sports entertainment’. And the NBA, everyone laughed a little when (NBA Commissioner) Adam (Silver) said he could get 3x as much (as much as the previous deal), or if they didn’t laugh, they doubted it – and when this was all said and done, it will be almost 3x.

“That’s what happens when you have at least four bidders at the table and you have a top sports venue like the NBA. We view UFC as a premium sports product with major growth ahead. We feel good about the potential package we will receive and we see demand for live sports exceeding the supply of premium sports content.”

Shapiro believes UFC will remain a hot commodity for ESPN – or any other network – because of the value the promotion represents as a year-round sport with a loyal fan base.

“Let’s not forget that the great thing about UFC is that it’s not just a volume product,” Shapiro said. “It’s actually not really a volume product. It is a premium volume product. Kind of like the NFL used to be Thursday night football. To be honest, it was Sunday and Monday nights. It was driven by scarcity. I think UFC benefits in the same way.

“We are both a subscriber acquisition tool and an antidote to churn. We are attractive for both digital and linear and we operate all year round. We are optimistic about the potential package we will get.”

The future of events at the UFC APEX

During the global pandemic, UFC was able to quickly return by committing to hosting in-person events in an effort to combat the spread of COVID-19. That led to the UFC APEX becoming home to most events, but even since the pandemic ended, the promotion has continued to host regular cards there.

Of the 14 events held so far in 2024, the UFC is evenly split, with seven cards held in large crowd arenas and seven cards at the UFC APEX. On Wednesday, TKO Chief Financial Officer Andrew Schleimer addressed why it is highly unlikely the UFC APEX shows will end anytime soon.

“I think what you’ve seen since we’ve worked our way out of the COVID-19 crisis is that we’ve held a significant number of events outside of UFC APEX, and the events that we’re holding on our campus in Las Vegas, those numbers are significant decreased. said Schleimer. “That said, organizing events is as much about growing our fan base as it is about generating revenue. It’s also about ensuring that we maintain certain margins and a certain profitability profile, and there is a cost-benefit analysis for us where we look at the opportunity cost of organizing events domestically and internationally, and keeping them with APEX.

“What we do in every budget cycle, as I’m sure you understand, is determine the right mix. Not only to generate turnover, but also to guarantee profitability. Those APEX events have the lowest cost structure for us to hold them on our home court in Las Vegas. I don’t think we’ve found the perfect mix yet, but you can be sure we’re looking at the numbers and working on it.”

That said, Shapiro said that UFC will ideally always travel and bring events to arenas around the world, even if the UFC APEX remains a necessary evil for the future.

“If we make a mistake on one side, we’re going to make a mistake on the side of the road,” Shapiro said. “Dana White built the UFC, Lawrence Epstein and the Fertittas, (by) going out, city to city, region to region, (direct market access) to (direct market access) and hitting the consumer. There is no substitute for introducing a new sport to a global fan base and being there.”

The atmosphere is one and done

UFC will land at Sphere in Las Vegas for the first time in September, but don’t expect it to become an annual event.

The massive structure, with wraparound LED screens and a seating capacity of more than 18,000, wasn’t necessarily built to house live sporting events, but UFC CEO Dana White was adamant about holding a card there, and that’s exactly what happened will happen on September 14th with UFC 306.

White has teased that putting on a show at Sphere will be an expensive endeavor, which is why it sounds like the September card could be everyone’s only chance to see UFC fights at the state-of-the-art venue.

“The Sphere in September, UFC 306, although that will be an expensive event, for the record,” Shapiro said of the card. “That is not a normal occurrence. The Sphere is the Sphere and it’s not necessarily built for UFC events.

“It will be one and done. We’ll do it once and we’ll be done. That’s what Dana White told us and he’s going to make it extra special.”

Shapiro also confirmed that UFC plans to stage a card at Madison Square Garden in New York in the fall, although the exact date has not yet been determined.

Potential expansion

One final note worth mentioning: TKO recently made a bid to acquire Moto GP – the Grand Prix motorsport – but the company ultimately lost out to Liberty Media, the organization that already owns F1 races.

Although the deal fell through, TKO plans to remain aggressive when it comes to potentially expanding into new areas, whether that’s racing or another sport that could generate interest besides UFC and WWE.

“We expect to generate significant amounts of free money annually,” Shapiro said. “We expect to have significant and increasing financial capacity as a result, and we intend to be thoughtful and opportunistic in deploying capital, all through a lens of maximizing shareholder value.

“So those potential applications could include organic investments in high return on investment projects; reducing our net debt position, something we are continually looking at with Andrew and the board; return of capital to shareholders through share buybacks and dividends… and to your final point, attractive (mergers and acquisitions) opportunities strictly limited to premium sports content and live events.”