Note: Since the UFC is not a publicly held company all PPV numbers are based on Dave Meltzer's estimates of PPV numbers which derive from his sources in the cable TV industry. All numbers are for North American PPV buys only.
The UFC recently announced a price increase for their Pay-Per-View events, citing "rising costs" as the primary reason for the increase. The data available suggests a more likely reason is the sharp decline in buy-rates since 2010, with 2014 being especially poor. 2014 had the fewest buys overall, and per event, since 2005.
This wasn’t a small discrepancy. The UFC is thought to have drawn a total of 3.15 million buys in 2014, or roughly 260,000 buys per event. 2009 was arguably the high water mark for the UFC, with a higher per event average than any other year. It saw 8 million buys, and an average per event of about 615,000. The worst event in 2009 drew 350,000 buys. That’s a good 35% more than the average pay-per-view in 2014. (Full stats of buys and averages per year at the bottom).
Just how bad was 2014?
The next worst year for the UFC (since 2006) was either 2007 (total buys) or 2011 (buys per event). In 2007 the UFC managed about 4.95m total buys, at 525,000 buys per event on average. In 2011 the UFC managed 6.45m total buys at 405,000 buys per event on average. 2014, remember, was 3.15m total buys and an average of 260,000.
2014 had about 36% less total buys than 2006, and each event, on average, drew half as many buys. 2014 had about half the total buys of 2011, and on average drew about 35% less per event. That means depending on how you measure it, 2014 was between 35 and 50% worse than the UFC’s previous worst year.
While overall buy-rates have been going down reasonably steadily since 2010, the drop in 2014 was huge. Much larger than you would expect based on the drop of the previous years. What caused that? First we have to take note of what the UFC’s good years look like and why they happen.
The UFC’s best years were 2009 and 2010, for slightly different reasons. 2009 was the UFC’s best year on record in terms of average buys. The floor for PPV buys was 350,000, the highest ever and the ceiling was raised to 1.6 million, the highest ever. Unsurprisingly this meant the mean buys per event was 616,923, also the highest ever. Even if you take UFC 100 out of the equation, the average buys for the year was 533,000. That’s higher than every other year except 2010, in large part because the floor was so high. You could argue 2009 was the peak of the UFC’s core fanbase.
In 2010 the floor dropped back down to 2008 levels of the low to mid 200k’s, but the number of big events was up: The UFC drew over 750k 5 times in one year for the first, and last, time in its history. It drew a record 8.8m PPV buys this year, and the average per event was a high 585k. This was mostly on the back of GSP and Brock Lesnar. Take those two fighters out of the equation and the UFC would likely only have drawn around 6-6.5m buys, the same as 2008 and 2011.
So now we see the two factors that lead to the UFC having a good year: Core fan interest leads to a reasonably high floor for buys, and one or two big stars draw double the average PPV buys a few times a year.
In 2013 two men drew well: GSP drew 950k once and Anderson Silva drew just over 1 million buys once. No other PPV broke 650k buys, let alone 750k buys. Both men fought again, drawing the next two best cards at 550k and 630k. No one else broke 550k buys. We can see the average without GSP and Anderson Silva was 320,000. If their 4 events were replaced by events drawing this new average, the total buys for the year would have been around 4.2 million buys.
This is what makes 2014 so terrifying. Even without stars it should have drawn about 4 million buys. Even deprived of star power, 2013 would still have drawn around 4.2 million buys over 13 events. In 2014 we got a year without that star power, but instead the total dropped to around 3.2 million buys over 12 events, (equivalent to around 3.45 million over 13 events). 2014 wasn’t just bad because of a lack of star power. It was down about 20% even when you take that lack of star power into account. So, what can the UFC do about this?
With the help of Zane Simon I compiled a ton of statistics on who headlined and co-headlined every UFC event since 2006 and the buys of each event. A total of eight pages of spreadsheets consisting of many thousands of data points. From that we tried to analyse the data to find any patterns. I wanted to use the data to find out what had the biggest effect on PPV buys. What similarities did fighters possess that made them a good draw? What formula could be used to predictably grow PPV buys?
Initially I had a theory that a fighter started reaching peak drawing power about 5 years into their UFC career, which would be a predictable point of data the UFC could use. The stats didn’t bear that out. In fact, the stats didn’t find any meaningful patterns in terms of what effect fighters have on a cards drawing power beyond the obvious; that certain fighters draw better than others. The only correlation the stats reliably showed was that the year any random event took place in was the biggest predictor of its performance. That is, year to year interest in the product has a bigger effect on buy-rates than any individual factors.
So instead I tried to look at the outliers. In events where fighters drew significantly more than they did usually, what was different? I found two factors, neither of which will surprise most of you. First, there was the "major event" factor. Events like ‘The Ultimate 2008’, and UFC 100 outdrew normal events. This is likely down to the widespread and long-term advertising for these events. The other factor I found was that of a "rivalry". Events which had bad blood tended to draw above those fighter’s averages.
For example, Rashad Evans vs Thiago Silva drew 300,000 buys. His next event, a bad-blood rivalry with Rampage Jackson, drew 1 million buys. The event after that? Rashad vs Tito drew 310,000. His next fight against rival Jon Jones? 700,000. His next headliner? 140,000. This held true across several, though not all, fighters.
It seems that a portion of the UFC’s PPV buys comes directly from these two factors, which both boil down to the same cause: effective marketing. When the UFC successfully markets an event or rivalry, the buy rates climb. For events marketed the same as every other, the only real factor is the overall interest in the product, which has been declining since 2010.
The real take away, though? The majority of the UFC’s PPV buys in a year come down to essentially uncontrollable factors. There is no formula. There is no quick change the UFC could make. Even if you give a guy, or girl, all of the vehicles in the world, a TUF series, headline fights, rivalries… You might boost the buy rate for one or two events, but that’s probably it. Most of the time when a fighter becomes a reliable long term draw it’s because the UFC has been fortunate enough to catch lightning in a bottle, so to speak, and not because of any repeatable, predictable decisions the company has made.
This unpredictability is not a good thing. In fact it’s the opposite of that. Long term, businesses based on volatile markets tend to be somewhat unattractive to lenders, investors and other potential sources of capital. This perhaps explains some of the financial moves the owners of the UFC have taken over the years, including the massive dividends they have taken, sometimes funded by loans taken out against the UFC. The Fertitta brothers recognised just how precarious the UFC’s position and finances are and ‘cashed out’ early.
This also explains why the UFC has been sacrificing PPV quality in order to put on more shows internationally and on Fox: Those revenue sources are potentially much more reliable than PPV. A 10 year contract with a TV network is guaranteed income. It’s reliable. You can plan on having it. 2014 demonstrated aptly why you can’t do that with PPV buys. If PPV was the UFC’s only income, their revenues would have halved in a year. That’s a fatal decrease for many companies.
The UFC are cannibalizing their Pay-Per-Views to spread a broader, safer base. You just can’t bank on PPV revenues. Random elements account for more of the buys than anything they can do as a company. In the short term, that means revenue is likely to drop. Pay-per-view is still the major driver of UFC income after all, but long term it means the UFC becomes a much more stable operation.
The UFC taking this approach shows they are committed to growing the sport, rather than making as much profit as possible in the short term. That’s a good thing for us fans of the sport for the most part. We’ll end up with more MMA, and more free MMA. The halcyon days of 8 stacked Pay-Per-Views a year are likely behind us though. Our MMA is going to be more diluted now, more spread out. For the hardcore fan, that might make the sport a little less watchable, a little less enjoyable than before, but in the broader picture it’s the right move to ensure the growth and survival of the UFC, and the sport.
Thanks to @TheZaneSimon, who you should all really know and love by now.
Approximate buys per year*:
5.25m buys over 10 events.
525,000 buys per event average.
4.95m buys over 11 events.
450,000 buys per event average.
6.375m buys over 12 events.
530,000 buys per event average.
8m buys over 13 events.
615,000 buys per event average.
8.8m buys over 15 events.
590,000 buys per event average.
6.45m buys over 16 events.
405,000 buys per event average.
5.85m buys over 13 events.
450,000 buys per event average.
6.075m buys over 13 events.
465,000 buys per event average.
3.15m buys over 12 events.
262,000 buys per event average.
*Figures are rounded and gathered from various industry estimates at the time or later, primarily Dave Meltzer’s Wrestling Observer Newsletter.