Big Business Questions for UFC

The good news is that a UFC 199 preview appears on ESPN's front page.  Just scroll down through fourteen other front page stories, the ads for ESPN's sister sites, a handful of pictures and nine embedded videos and it right there.  A thousand words and forty-nine words on tomorrow's pay-per-view by ESPN's top UFC writer, Brett Okamoto.

That UFC 199 would be relegated to niche sport coverage is no surprise.  The cynical might point out that the NBA Playoffs (basketball) and the X-Games (skateboarding, etc.) are televised by ESPN, and Disney -- ESPN's corporate overlord -- is well-versed in media synergy.  Those who have a more virtuous view of ESPN (including this blog) might point out that the Stanley Cup Finals (hockey) and Copa America (soccer) are also heavily covered, despite airing on NBC and Fox, respectively.

No major stars + a one-sided main event + numerous other big sporting events = minimal coverage of UFC.  That equation is no mystery to anyone who follows sports business.

The wonder, then, is why UFC 199 is even happening this weekend.  Yes, UFC 200 happens on July 9 and UFC likes to have space between pay-per-views.  Yes, June 4 is the first Saturday of the season bereft of NBA Playoff games.  And, yes, a gigantic soccer tournament (Euro 2016) begins next weekend, occupying every Saturday from now until UFC 200.

Still, one has to wonder: was it a sensible business decision to move the traditional Memorial Day weekend pay-per-view one week back?

The decision to run UFC 199 on June 4 is hardly the only business question that UFC faces.  

Will the company be sold?  

Darren Rovell of ESPN broke the news that the company is for sale.  Lorenzo and Frank Fertitta, majority owners of UFC, are big football fans.  If they want to own a Las Vegas NFL team, selling UFC might free up the capital that would allow for that.

The Oakland Raiders have latched on to a proposal that would place an NFL team in Las Vegas in the next few years.  The Fertitta brothers need cash, and they need it now, if they want to prevent Raiders owner Mark Davis from being the one who brings America's sport to Las Vegas.

Can UFC draw big pay-per-view gates away from Las Vegas?  

June 4 is the date of the first UFC pay-per-view of 2016 to run an American arena outside of Las Vegas.  Last year there were two.  In 2014 there were five.  

Live gate receipts have always been highest in Las Vegas.  Today, the gap is substantial.  Even a light-selling show like UFC 197: Jones vs. St. Preux drew $2.3 million in ticket sales.  The Forum is scaled for less than that and hundreds of tickets remain unsold.  

The ticket selling story of UFC 199 is similar to pay-per-views held in other American markets outside of Las Vegas.  The inexpensive tickets and the most attractive VIP seats sold out immediately, just as they do in Las Vegas.  The problem is that the cheap seats cost $50 in Inglewood, as they do in most cities.  Similar cheap seats at Vegas pay-per-views can be sold by UFC for as much as $350.  

Will the concussion discussion affect combat sports?

There is a conventional wisdom on concussions.  People believe that multiple concussions lead to long term brain damage.  People believe that a lack of recovery time between concussions leads to the most severe damage.  People believe that one hard blow to the head causes less damage than repeated, softer blows.  This conventional wisdom is accepted in many circles as "science".

Today, the conventional wisdom of concussions benefits UFC.  While UFC fighters are open to the risk of multiple concussions, they are forced into long recovery periods and the nature of the competition leads to fewer instances of repeated blows to the head than boxing.

Someday, the conventional wisdom of concussions will change.  

Perhaps people will come to believe that concussions at a young age cause minimal damage, while concussions past the age of 26 cause major damage.  That would harm UFC because fights are booked arbitrarily, thus making "star power" an important part of drawing money.  It takes time for fighters to become stars, and many fighters could be forced into retirement due to the risk of old-age concussions.

Or, maybe conventional wisdom will become that "lights out" concussions are far more damaging than mild concussions.  A rule stating that athletes must retire from combat sports after a "lights out" concussion would devastate UFC's business.

A natural mistake of youth is to assign permanence to the fleeting.  The young and the immature tend to be quick to assume that The Way Things Are Today is also The Way Things Will Always Be.

Today, UFC is viewed as an established part of the sporting culture.  It's "legitimate" the way football or soccer are.  

Another way of looking at it -- the more adult way, this blog would argue -- is that UFC got to this point because the current management of UFC made it so.  Dana White and the Fertittas and the rest of the folks in the front office had a vision, worked as a team and created something great.

UFC 199 will appear to be a decline in business once the gate and pay-per-view receipts are counted. But that's fine.  What really matters is how the current leaders of UFC address the questions about their business, and what the new leadership will do if the company is sold.