400,000 Buys and a Nearly Two Million Dollar Gate Is Nothing to Scoff at

by Michael Rome on Oct 23, 2009 4:00 PM EDT in MMA News

I suppose it was inevitable that people would overreact to the apparent lack of interest in UFC 104. It was obvious months ago when Machida vs. Shogun was announced as the main event that this show wouldn't do a big number. Machida is popular among hardcores, but he means very little to the average fan at this point, and Shogun means next to nothing to casual fans. This fight isn't even anticipated among hardcores, many of whom believe this will be a one-sided drubbing. Even so, I suspect the show will do around 400,000 buys, which is still four times as much as any UFC competitor has ever been able to draw.

It was also obvious that it would do poorly at the Staples Center. UFC 60, which was the biggest UFC show of all time when it occurred, only sold slightly over 10,000 tickets. Doing around 90% of that business for Shogun vs. Machida is hardly a disaster. UFC has never been a hot seller at Staples for whatever reason.

The show will still be very profitable for the UFC. They'll probably rake in well over $10 million in revenue while paying out a little over $1 million in salary. Not exactly a bomb or a disaster. This is all part of what makes the UFC so successful. Even a show people are worried about will be very profitable. At the same time, if things go the way they want them to, Anthony Johnson and Cain Velasquez will take the next step towards stardom, while Lyoto Machida will establish himself as the newest UFC superstar. Not bad for a show already being called a "disaster."

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It seems that the lower threshold for any UFC cards ppv buyrate is just above 300,000. Only a few fighters seem to be able to draw sizably above that.

by John Nash on Oct 23, 2009 4:08 PM EDT reply actions

375K – 400K is the baseline now a days.

by MMASuPreMaCy on Oct 23, 2009 4:30 PM EDT up reply actions

I think people are getting way too excited about the number of comps. Everyone still makes money from a comped ticket (especially when that comped ticket is given away almost 3,000 miles away from the event).

It’s not going to do as well as 100 and 101, but not many cards will

by Phildo on Oct 23, 2009 4:11 PM EDT reply actions

good points.

so let’s just use those $10 million revenue and $1 million salary numbers for example. what other costs do you think UFC has incurred to run this show? advertising, logistics, venue, etc…

any ideas what that might all add up to?

www.tapology.com | twitter.com/tapology

by GregS123 on Oct 23, 2009 4:14 PM EDT reply actions

total guess but id say 4-6 mill.

Wish still leaves tons of overhead. When Hendo asked to be the highest paid fighter I didnt think it was absurd because the way fighters are paid in this sport is wayyyyy of. Its not that he deserves to be highest paid, they all deserve to be paid more.

by Gerrymanderer on Oct 23, 2009 4:21 PM EDT up reply actions

How can you say that when u have no idea how much they are actually making?

Walla walla walla I'm an idiot.

by ufc4 on Oct 23, 2009 5:20 PM EDT via mobile up reply actions

A 2005 analysis of public subsidies for sporting arenas looked at the Buffalo Bills and Sabres operating expenses. For the Bills it was $12.4 million (over 10 games – 2 preseason and 8 regular season). For the Sabres it was $4.9 million over the season.
Not the original report but here is a link to one I found:
http://74.125.155.132/search?q=cache:nZauj5ygD1IJ:develop.wikispaces.com/file/view/sports%2Bsubsidies%2Bissue%2Bfact%2Bsheet%2Bfinal.doc+whatare+the+expenses+for+sporting+event+at+a+stadium+total+costs&cd=1&hl=en&ct=clnk&gl=us&client=safari

So operating expenses for the Staples is what? $1 million max for the event. Plus another million max for the broadcast. Advertising I couldn’t guess on. I don’t know what Staples cut would be on the gate and concessions.

What are there revenues:
Payperview at $20-25 a buy (their cut) = $8-10 mil
Gate = 10,000 at $2 mil
Concessions, merchandise. Supposedly the UFC does more sales in beer, t-shirts, food than anyone. So even if the you have to give away a bunch of comp tickets it means more people buying shit. Another $2 mil could be made in sales.

They probably make a decent profit. The good thing for the UFC is this is their base. Other shows that do more buys are geometrically more profitable, because, with the possible exception of fighters pay, expenses wouldn’t go up.

by John Nash on Oct 23, 2009 4:40 PM EDT up reply actions

Thanks for the link. I’ve done a lot of research into sports overhead, my guess is the UFC is probably spending between $3 and $4 million in overhead costs for the average event not including salaries.

They spend $500,000 on the countdown show, a six figure fee for the arena, between 500 and a million to broadcast in-house, then you have a very high cost of hotels and flights for all their staff and all the fighters, and finally all the money they spend on ad spots.

This is ignoring all the salaries they pay to staff and such, going to assume those as year-end expenses and not event-specific expenses.

My overall guess ahead of time here is they bring in about 12-13 million and spend 5 including salaries and bonuses. It’s a very healthy margin.

by Michael Rome on Oct 23, 2009 4:47 PM EDT up reply actions

Additionally

You can consider the promise of future revenue from DVD sales/rental and the potential for re-broadcasting fights from the show (and in the rare case, the entire card) on Spike TV.

I STILL poop rainbows.

by Blackout612 on Oct 23, 2009 4:54 PM EDT up reply actions

Exactly. Also Since they do so many shows, I don’t think their in-house production costs are that much. Especially editing all the promotional material which can be a huge cost if you have to hire outside to market your material. I think they left Pilgrim out here in LA and have their own post facility. So they can have a couple of in-house editors whipping up promotional material 24/7, or cutting Spike material, or working on TUF and at a cheaper rate then the networks do.

by John Nash on Oct 23, 2009 4:56 PM EDT up reply actions

The Countdown Shows are done by A. Smith & Co. Productions. Unleashed Shows and Feature promos (main event) are done by Positive Image Video. They got in-house editor to do all the fighter packages. They have editors for DVD, VOD, and probably one promo editor for their DVDs

by The Bronzeville Bully on Oct 23, 2009 5:30 PM EDT up reply actions

Positive Image Video is owned by the UFC or Zuffa right? It’s basically their own production company. I think they also did some of the Countdown shows, but you could be right about A. Smith & Co. Productions. Were they hired as showrunners or something? I thought they stuck to stuff like Hell’s Kitchen with Granada Entertainment.

So that means outside of the Countdown shows everything is basically done under the Zuffa umbrella right?

by John Nash on Oct 23, 2009 5:51 PM EDT up reply actions

A. Smith definitely produce the Countdown Show

by The Bronzeville Bully on Oct 23, 2009 6:58 PM EDT up reply actions

Positive Image Video previously did it but they wanted to go with new look, so they hired A. Smith. The only thing UFC does is re-edit the ppv events.

by The Bronzeville Bully on Oct 24, 2009 7:32 AM EDT up reply actions

And to think, when their ppv sales go up, since everyone is on salary, their expenses stay the same. A 1,000,000 buy show is another 10 mil – in profit.

by John Nash on Oct 23, 2009 4:58 PM EDT up reply actions

Not exactly, guys like Lesnar or GSP get a cut of those PPV profits.

Walla walla walla I'm an idiot.

by ufc4 on Oct 23, 2009 5:44 PM EDT via mobile up reply actions

Actually I took out their cut already. 600,000 extra buys would be about $13 million extra minus $3 mil for PPV profit cuts equals $10 million in profit.

Sorry I must have deleted that line by accident the first time.

by John Nash on Oct 23, 2009 5:53 PM EDT up reply actions

At this point I just want to see Lyoto win. It’ll be nice to have the LHW belt stay with someone for more than one fight.

I love me some Sexyama!

by pud333 on Oct 23, 2009 4:16 PM EDT reply actions

Anyone calling UFC 104 a disaster is simply out of their minds, again like i’ve said before I want to hear what these same people have to say about the Fedor vs. Rogers show.

This event should be a hardcore’s dream, funny how quickly people are to turn on the very same people that they use hype up. Shogun vs. Machida should be a great fight and the event while not packed with names has several good fights on the card.

In the end this will be another successfull UFC event, so sit back and enjoy the fights and let’s stop with the hyperbole it’s gotten silly.

by Raker on Oct 23, 2009 4:31 PM EDT reply actions

SoCal in general is a tough draw. How many freebies did Affliction give out to fill the building in Anaheim? And even UFC only sold out their first event in Anaheim, after that, neither UFC 63 nor UFC 76 came close to a sellout. And WEC couldn’t half-fill the San Diego Sports Arena even with Faber-Pulver 2 on the card.

by andherewego on Oct 23, 2009 4:41 PM EDT reply actions

“I’ve never been to LA, but it’s a chill place.”
—Ultimate Lax Bro

Meh, LA doesn’t seem to get hyped up for many things, unlike Philly when the UFC went there and other sporting events in general. Not hating on LA, just saying “it’s a chill place.”

400k buys wouldn’t suck for a card with not a lot of name-recognition going for it.

We're just a million little gods causin' rain storms, turning every good thing to rust.

by Anthony Pace on Oct 23, 2009 4:42 PM EDT reply actions

You know who wins tomorrow night?

Me. I win.

I STILL poop rainbows.

by Blackout612 on Oct 23, 2009 4:47 PM EDT reply actions

Can I win too?

I'm the kind of girl who loves to watch a GOOD fight!
--------
Join the DC Area UFC Meetup Group
http://www.meetup.com/DCUFCGroup

by funnytiger on Oct 23, 2009 4:51 PM EDT via mobile up reply actions

Will you watch the Machida fight?

I STILL poop rainbows.

by Blackout612 on Oct 23, 2009 4:55 PM EDT up reply actions

Hell yea!

I'm the kind of girl who loves to watch a GOOD fight!
--------
Join the DC Area UFC Meetup Group
http://www.meetup.com/DCUFCGroup

by funnytiger on Oct 23, 2009 5:39 PM EDT via mobile up reply actions

WIN

I STILL poop rainbows.

by Blackout612 on Oct 23, 2009 11:24 PM EDT up reply actions

I’ve never been more excited for a fight in my life. It took awhile for something to top Fedor/Crocop, but it’s finally happened.

For three years I have thought this would be the best matchup possible.

Finally. And for the title no less.

I’m picking Shogun for the win. I couldn’t care less about how many other people are watching.

by MrJobro on Oct 23, 2009 4:48 PM EDT reply actions

I think this will do 500k-600k buys. Don’t forget the UFC brand is what’s the most poplular, and it’s been 5 weeks since a big show. I think Lyoto is a little more of a draw than people think as well.

by TheAlphaNerd on Oct 23, 2009 4:54 PM EDT reply actions

Does it really matter?

The UFC isn’t going to have a show under $300,000 buys, and the fighter salaries are normally covered by the gate plus extra for paying for production, employees, etc.

Do we have to continually project this stuff? For every dud, the UFC will have another MAJOR event that will pull down over 600k and edge toward 1 million buys. The fact of the matter is that MMA as a whole will have to have some sort of drop off in interest or the UFC will have to suffer a major talent depletion. Both of which probably won’t happen any time soon.

Follow me on Twitter @lelandroling
"Two things are infinite: the universe and human stupidity; and I’m not sure about the universe." - Albert Einstein

by Leland Roling on Oct 23, 2009 5:05 PM EDT reply actions 1 recs

$300,000 buys?

If they raise the price of the PPV to $300,000 I don’t think it’ll sell very well.

Walla walla walla I'm an idiot.

by ufc4 on Oct 23, 2009 5:47 PM EDT via mobile up reply actions

I saw the same mistake and was ready to comment but stopped myself and thought “lets wait and see what ufc4 makes of this”.
=)

by John Nash on Oct 23, 2009 5:58 PM EDT up reply actions

Lol

I enjoy nothing more than giving Leland and Fagan shit for any minor mistake they make. Because I myself am of course perfect. :)

Walla walla walla I'm an idiot.

by ufc4 on Oct 23, 2009 6:03 PM EDT via mobile up reply actions

This show should hit hit 600k, and will hit at least 550k. I’m calling that shit now.

The TUF bump should help slightly. On top of that, both Machida and Shogun each put on pretty dominating performances in their last fights, both of which took place on cards that did over 600k.

by dropkick101 on Oct 23, 2009 5:15 PM EDT reply actions

UFC 102: (Couture vs Nogueira, Jardine vs Thiago Silva) in Portland, Oregon:

Attendance: 16,000 (~ 10K Sold, ~ 6K Comps) First time in Oregon
Gate: $1.92 Million
PPV Buys: 435K
Countdown Average Viewer Ratings: 523,000

UFC 103: (Franklin vs Belfort, Mirko vs Dos Santos) in Dallas, Texas:

Attendance: 17,428 (Sold Out) First time in Dallas
Gate: $2.4 Million
PPV Buys: 400K
Countdown Average Viewer Ratings: 382,000

UFC 104: (Machida vs Shogun, Cain vs Rothwell) in Los Angeles, California:

Attendance: ? Estimated 8K as of Thursday (Meltzer)
Gate: ? Estimate of 1.6 Million as of Thursday (Meltzer)
PPV Buys:?
Countdown Average Viewer Ratings: 524,000

http://www.bloodyelbow.com/2009/10/22/1096691/ufc-100-104-behind-the-numbers

by MMASuPreMaCy on Oct 23, 2009 5:19 PM EDT up reply actions

Along what Leland said, I have a serious question:

Do buyrates or numbers really matter to you all? I ask because I am never affected by these things. Affliction sold 75000 or whatever PPV buys; I still watched. UFC sells a million, I still watch.

Just curious if people care, then what is their reason for caring?

Not being a smartass.

BOOSH

by Farthammer on Oct 23, 2009 5:17 PM EDT reply actions

If you are into the sport it means jack shit. But if you are curious about the business of the sport it is kind of fascinating.

by John Nash on Oct 23, 2009 5:26 PM EDT up reply actions

Who would dare construe a guy named “Farthammer” as a smartass.

by casey manrique on Oct 23, 2009 5:35 PM EDT up reply actions

I guess the answer is: why do you think so many people subscribe to sports business journal and follow all sorts of things related to the business of sports?

by Michael Rome on Oct 23, 2009 5:47 PM EDT up reply actions

I didn't realize they did

The most intense thing I get is Baseball Prospectus. But that’s just so I can nerd out and learn more ways to observe talent.

But if people are into that, then that is a valid reason I can understand.

The only reason I asked is because on a lot of these types of posts, for all MMA organizations, I see some people gloating or displaying schadenfreude at large/small numbers, as if it affected them.

BOOSH

by Farthammer on Oct 23, 2009 5:59 PM EDT up reply actions

There’s a bit of that. To me, it’s all about looking at people’s past predictions and reasoning and getting an idea of whether they really understand the business of MMA or simply pretend to. The people that believed Affliction would thrive when every indication was to the contrary are the MMA world equivalent to the people who thought the Soviet Union’s economic system was efficient. Proven so badly wrong by history that everything they say should always be viewed with suspicion.

There’s a degree to which companies going out of business or being successful strongly influences the fights we see or don’t see, the amount fighters get paid, the recruitment of top athletes into the sport, etc. In that way all this stuff does affect even the fans completely disinterested in the business side of things.

by Michael Rome on Oct 23, 2009 6:07 PM EDT up reply actions

But it does affect all of us in an indirect way. The more money that comes into MMA the more likely a good athlete is to choose it as their profession. What kind of HW division would the UFC have if some of these 25 yr old NFL linebackers chose wrestling instead of college football? The business side is an important aspect of the sport that all hardcore fans should at least have a working knowledge of.

Walla walla walla I'm an idiot.

by ufc4 on Oct 23, 2009 6:10 PM EDT via mobile up reply actions