UFC's Monumental Deal with Fox Will Challenge Promotion's Decision Making

Yesterday, Sports Business Daily's John Ourand reported that the UFC and FOX had reached a monumental, long-term deal that would bring mixed martial arts back to network television. The deal, reported to last seven to eight years at $90 million per year, would allow the UFC to promote up to four major events on FOX while airing smaller shows and weekly programming such as The Ultimate Fighter and episodes of UFC Unleashed on FX. Other programming could end up on Fuel TV, but sources indicated that FOX would not re-brand Fuel TV as a hub for UFC content. In a nutshell, it is a historic deal for the sport, one that could propel it to mainstream status and help it grow even more in the years to come.

The deal doesn't come without risk for the UFC however. While the prospect of higher advertising revenue, higher-profile sponsors, and a means to fueling their pay-per-view model through network television sounds like a home run on paper, the UFC will need to carefully navigate a much more complex business model that includes demands for high ratings from FOX. What will it take for the UFC to fulfill those goals?

Let's attempt to answer that question with a series of questions focused on the terms of the deal as we've come to know them. The most important question, in my mind, is how much of the reported seven to eight year deal is guaranteed? In other words, what has to happen in order for FOX to pull the rug right out from under the UFC?

According to MMAPayout.com, FOX drew a 1.2 rating, or 3.63 million viewers last Saturday night, giving us a clearer picture of what the UFC should hope to accomplish. EliteXC Primetime drew an average of 4.3 million viewers, peaking at 6.51 million viewers during the main event showdown between James Thompson and Kevin "Kimbo Slice" Ferguson. MMAPayout also pointed out that sources close to the negotiations stated that FOX wanted a promotion that had enough stars to "move the needle". The question is how far does that needle need to move.

I'm under the firm impression that the UFC can blow away the average 4.3 million viewer record simply on brand power and the one or two drawing stars. EliteXC wasn't a known mixed martial arts promotion to most casual fans, but the addition of Kimbo Slice, who was considered a crossover star because of his pop culture status across more than just the MMA fanbase, fueled the event's ratings. The UFC will likely gain a solid opening number simply based on the fact that the fights are promoted by the UFC alone, a brand that's synonymous with quality mixed martial arts action. 

The key terms that I continue to focus on, however, is FOX's need for a promotion that has "enough stars" to "move the needle". Moving the needle would indicate that FOX is looking for a significant ratings jump from the 1.2 rating, likely in the realm of 5 or 6 million viewers. The volatile nature of mixed martial arts, specifically injuries, could create major problems in reaching that goal. The UFC doesn't have enough stars to fill network cards with fighters who can draw in fans on short notice.

Further exacerbating the problem is attempting to find the delicate balance between providing network ratings and maintaining or even creating pay-per-view revenues. Once again, injuries could plague the juggling act.

Those questions lead to what I think is, ultimately, the most intriguing question. What will the caliber of these shows be if the UFC intends to drive pay-per-view revenue with network cards? Obviously, blowing the proverbial load and featuring nothing but the highest drawing fighters on the FOX network cards would be a recipe for disaster. While it might equal monumental ratings and advertising interest, it isn't sustainable, and it would directly affect the company's pay-per-view revenues. The golden ticket is finding a way to use the network broadcasts to hype impending pay-per-view cards that feature fighters that were showcased on network and cable broadcasts previously. I'm not under the impression that the UFC will sacrifice PPV buys yet for long-term success in the mainstream.

This deal is an opportunity for the UFC to shift their thinking in the context of drawing in the casual fan. In the past, we've continued to see the use of aging legends as a means to drawing in those fans. I still stand in line at the grocery store of my own saturated college city and hear talk of the upcoming Tito Ortiz pay-per-view. It amazes me to no end that such a mediocre fighter in today's sport still has that kind of pull. Those types of stars are aging however, and the UFC hasn't done a great job at replacing those legends of the sport.

Ideally, the UFC should be pushing the youthful generation of fighters, and Jon Jones should be the spearhead of such an attack. Anderson Silva is an obvious player in the discussion as well, and Chael Sonnen's trash talking antics could provide the perfect heel storyline to interest even the most casual onlooker. Limit title fights to one per card, and press the young, exciting fighters. Rory MacDonald comes to mind, and mix in aggressive veterans who can finish fights like Chris Leben. It's too bad Chris Lytle hung up the gloves, he would have been network gold.

Going young serves a couple of purposes, most notably the creation of new stars on a platform that has the ability to grow those younger fighters into popular draws more quickly. The UFC was always limited by using Versus and Spike TV in attempting to do that, but adding, at the very least, one marquee match-up on the lower portion of a main card with a fight featuring a guy like Rory MacDonald could help the UFC greatly.

Secondly, it fills space on the network card while saving some of the other drawing stars for pay-per-view. In an ideal world, the UFC should be scheduling major pay-per-view events a week or two after network cards. They should utilize the airtime they get on a Saturday night on FOX by promoting the heck out of the next pay-per-view, driving pay-per-view revenue to higher numbers. 

The prominence of the network and pay-per-view cards have been a significant discussion point, as they should be, due to the importance they have on the future of the promotion. The trenches are where this battle could be won and lost though. FX has better ratings and more reach than Spike TV, but it won't be acting as a hub for the UFC. It won't have wall-to-wall episodes of UFC Unleashed, Countdown shows, and The Ultimate Fighter marathons. Those shows will have a place in between great shows like The League, Louie, Rescue Me, and It's Always Sunny in Philadelphia to name a few.

It will, however, serve as a vital piece of the puzzle, a means for the UFC to create and build stars and reach a wider audience with the programming that Spike TV stated had stalled in growth on their network. The stalling growth of those shows had more to do with their stale nature rather than where they sat however.

The UFC needs to find a way to revamp The Ultimate Fighter by any means possible. FOX will now have the make-or-break decision on who gets on the show, so we might actually get more skilled fighters in the house, or we may get 16 Junie Brownings in one house. I would expect the latter after seeing some of FOX's reality show programming. Perhaps FOX will attempt a crossover show, The Ultimate Fighter meets Paradise Island. As I jokingly mentioned on Twitter yesterday, the UFC would need to somehow work a gorilla into the sixteen fighter field for me to get interested again. That's how bad the show has become for some of us. 

If I had to choose, quality would be my choice, but finding sixteen fighters who are entertaining, personable, and highly-skilled is a tough prospect. I think quality will work in the long run as those fighters have a much higher chance of seeing a prolonged journey on the UFC's free cards.

The UFC is in a high risk, high reward scenario with the new deal with FOX. I imagine there is a guaranteed number of years that the deal will last before FOX has the option of walking away. Can the UFC surpass and go above and beyond that date? Can they produce stellar ratings and help this sport grow to unforeseen levels? I think they can, but it will take some brilliant strategic planning on the UFC's part. 

Quick Hits

• The UFC was adamant about not giving up production control in all of their previous attempts at network, subscription-based, and cable channel deals, so there is some interest in whether they had to give any up in order to get this deal done. FOX's Sports Division did not want to give up control in previous discussions of a deal. So, who caved? Will we see recently hired FOX commentator Gus Johnson next to Joe Rogan? I imagine FOX may have won the battle with the UFC asking to maintain their commentary staff.
• There is still speculation regarding where the UFC will actually air. FOX obviously has up to four events to work with, and FX will receive most of the UFC's content with Fuel TV acting as a supplementary network. Fox Sports Network and all of the regional affiliates were not named in the details of the deal, but those networks could act as a prime location for late night programming to further saturate the market with UFC-branded content.
• Sponsorship money for fighters should increase, and it will be interesting to see how the UFC deals with fighters who want some sort of cut in the money for drawing in bigger ratings on network cards. Will that come out of the advertising revenue they grab from those cards?
• What companies are out there that cater to a larger portion of the 18-34 demographic? Is Nike or Gatorade something that the UFC could eventually reel in? The new deal could bring in some big fish.
• Will the UFC attempt to use other brands to fill voids in the cable landscape? Could they resurrect the WEC or PRIDE and work out a deal with Spike TV? I highly doubt it considering Spike TV's parent company already has a deal with Bellator, but perhaps they move one of those entities back into the fold with Comcast/NBC or Showtime. I don't expect it, but crazier things have happened.