This year will serve as the final year of the UFC's current contract with Spike TV. As we've speculated in the past, the UFC's ability to air preliminary fights on ION TV and Facebook, the recent development of ESPN2 airing UFC Primetime, and the speculation that Spike TV may be sabotaging the UFC's ratings by pushing The Ultimate Fighter and other UFC-branded shows into bad time slots are indications of an ongoing price war between the UFC and Spike TV. Spike TV's ability to control the ratings should allow them to put a lower or similar price on a contract renewal, despite the UFC's growth in many areas.
The UFC is in an unique situation as sports content is at a premium right now. It may not be out of the realm of possibility that the UFC dumps their long-time partner for greener pastures. As MMAPayout.com's Jose Mendoza points out, we are seeing a new trend as networks fight over sports content:
Although some may wonder what the correlation is between this deal and MMA, you don't have to search too long to realize that there is a scramble and bidding war going on at the moment to secure more sport content for networks, many who are either trying to get into the game or just acquire as much content as possible to stay in it. We are currently seeing a new trend for the sports and TV industry right now, where networks are paying a premium for this type of content, where now the Pac-10 has set the standard going forward.
CNBC's Darren Rovell wrote, "[sports are the] best bet on entire television landscape. People get sick of sitcoms, reality shows and soap operas, but fans don't lose interest in a sport. That's why networks don't have any problem signing deals that last as long as they do despite the fact that they have no idea what the economic or technological landscape is going to look like"
The interesting entity in all of this is Bellator Fighting Championships, who sits under the Viacom umbrella on MTV2 and has been thrust into the #2 spot in the North American market. Bellator continues to operate with guile in the prospect market, signing a number of our own ranked Scouting Report fighters and other notable rookies to the big leagues to fill their ranks for upcoming seasons. Many fans feel that the promotion still has the legs to survive despite a perceived downward trend on their balance sheets due to the perception that if they are signing great talents -- everything must be hunky-dory.
Unfortunately, many industry insiders believe Bjorn Rebney and company may not be in the best financial position. From a number of people I've talked to that deal in the business side of the sport, Bellator is likely either breaking even or losing money on a per show basis. It's speculative whether MTV2 is picking up all of the production costs, but when analyzing live gate numbers and the reported payouts this season -- some insiders believe Bellator is sinking.
The ratings haven't been a complete failure however. Bellator is averaging above what the time slot would typically earn. Whether or not that is enough to sustain a home on MTV2 is another question. I'm under the assumption that the network doesn't provide enough exposure for Bellator to rake in major profits. MTV2 should have no problems fulfilling their end of the bargain, but Bellator may be a ship that can't make it to its destination port over the course of the three-year deal.
Where does the future lie for Bellator? In my mind, there are two options: A buyout or an eventual move to a bigger network. Interestingly enough, the UFC and Spike TV's ongoing struggle to affect the price of a contract renewal may end up leaving a spot open on an already-established home for mixed martial arts in North America. I know fans aren't ignorant enough to believe Joe Warren was showing up on TNA broadcasts on Spike TV to promote Bellator for nothing. It's a strategy, and a possible look into the future for Bellator.
There are a number of big fish in the sea of TV contracts that may entice the UFC to make a change in the coming year. FOX has shown interest in utilizing a number of their networks to air MMA content. If the NFL lockout takes a turn for the worst and becomes a lengthy struggle between the players' association and the NFL itself, MMA could gain unprecedented interest from network television companies.
The same could be said for the looming NBA lockout next season, which from what I've heard from many industry insiders.. has a strong possibility of subtracting games from the schedule. TNT and TBS have shown interest in airing MMA content as well, and let's not forget NBC/Comcast, a giant that the UFC is already in bed with due to their deal with Versus (becoming NBC Sports).
Spike TV has indicated that it would like a live weekly show in the past, something that Bellator already offers. If the UFC heads for greener pastures, it isn't unfathomable that Viacom shifts the Bellator product from MTV2 to Spike TV to fill the void left. The established audience should give Bellator a bump in ratings, although the more keen fans will understand the difference between the UFC and Bellator. I doubt it would be sustainable for a lengthy period of time, but I imagine Spike TV could help build Bellator's brand better than they are doing right now.
If the UFC happens to maintain their relationship with Spike TV, Bellator may be looking at a different scenario. The promotion's contracts are their most valuable asset, and they are some of the most restrictive contracts in the sport. If the UFC continues to eye weekly shows and the best fighters on the planet, there are a number of fighters under Bellator's banner who fit into that category. It may be the perfect opportunity for Bellator to ask for a premium price for those contracts and their expansive video library, allowing Rebney to exit the sport with a substantial profit. In essence, it would be a successful investment for Rebney and his shareholders despite running what I believe to be a sinking ship.
The rest of this year should be interesting for Bellator. In an indirect way, the UFC controls the future of Bellator to an extent. They will likely have some enticing offers on the table from rival networks, but will they allow Viacom to push a brand like Bellator in their absence? Is the UFC so valuable that Spike TV would be willing to cut another network into the content stream? Will we see a time when Spike TV airs The Ultimate Fighter, Unleashed shows, a few live shows per year while Versus airs some live shows, and another major network is cut into the same type of deal? It may be likely if the UFC intends to keep their competitors out of the spotlight.