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by Jed Meshew
When Zuffa sold the UFC to WME-IMG earlier this year for $4 billion, one of the key talking points in the aftermath was the upcoming TV rights deal expiration and renegotiation. The UFC's current broadcasting deal with Fox Sports is a seven-year deal for $115 million annually, and by most accounts, FOX is getting a bargain for that price.
Well, soon they won't be. On Monday, the Sports Business Journal put up a piece delving into the plan WME-IMG has for the new TV rights deal, and among other things, it includes a major price bump with the UFC seeking $450 million per annum for ten years.
"Its magic number is $450 million a year, a potentially staggering increase from the $115 million annual average that FOX Sports now pays, according to several media and UFC sources.
"Although formal negotiations aren't expected to start until next year, network executives have learned that the UFC plans to seek at least a 10-year deal under those terms, sources said."
The UFC-FOX deal expires in 2018, but before then FOX has an exclusive window to negotiate a renewal in late 2017. If the UFC opts not to renew or just to take negotiations to the open market, the Sports Business Journal is reporting that the package offered will include four annual broadcast windows (the FOX shows), six annual cable events, weekly programming currently carried by FS1, and Fight Pass. It will not include the pay-per-view shows but any future winning bidder will likely receive more input on the matches that go to PPV. The Sports Business Journal also reports that even revenue from PPV is negotiable as well as the UFC unloading production onto the new partners. Currently, the UFC handles production of its shows, including all of the costs of production, but the new deal may shift that burden onto the new partners, increasing profits for the UFC.
The UFC can do this in part because most other major sports media rights deals are locked up for the foreseeable future. The MLB, NHL, and PGA tour deals all expire in 2021, the NFL in 2022, and the NBA in 2025. Any platform looking to add live sports content (traditionally viewed as valuable because the nature of it makes it must watch instead of recordable) is thus heavily incentivized to court the UFC because another major opportunity won't arise for another three years after that. In fact, the valuable nature of the UFC commodity is such that there is already some talk that the new package could eschew the UFC's previous inclination to be exclusive to a network and instead be split among multiple networks .
How FOX Sports would feel about this is unknown at the moment. Though they currently rely heavily on the UFC for content and ratings they did make a failed bid to purchase the UFC this summer for $3.6 billion, refusing to go any higher because they believed the UFC overvalued the worth of its media rights. Still, if FOX loses the reup bidding, it would lose one of the cornerstones of its programming and the best ratings earner for FS1.
The Sports Business Journal also takes a look at potential other landing spots for the UFC should they be unable to come to terms with FOX Sports, concluding that ESPN, Turner Sports, and NBC Sports Group are all likely to throw their hats in the ring. There's also the outside possibility that a digital media company like Amazon or Google, companies currently dabbling with smaller live streaming sports packages, will make a major investment into this area by jumping in with the UFC.
It's important to note that this deal was a cornerstone of WME-IMG's purchase of the UFC and the debt they financed to achieve the magic $4 billion number. This upcoming set of negotiations will be the first major deal carried out for the UFC by the new owners and may well be the most important one. If the UFC can't get the deal they're looking for, it's very possible WME-IMG will look to sell the company sooner rather than later.
But if they can get a deal done, things will be looking bright for Ari Emanuel and company going forward.
When Zuffa sold the UFC to WME-IMG earlier this year for $4 billion, one of the key talking points in the aftermath was the upcoming TV rights deal expiration and renegotiation. The UFC's current broadcasting deal with Fox Sports is a seven-year deal for $115 million annually, and by most accounts, FOX is getting a bargain for that price.
Well, soon they won't be. On Monday, the Sports Business Journal put up a piece delving into the plan WME-IMG has for the new TV rights deal, and among other things, it includes a major price bump with the UFC seeking $450 million per annum for ten years.
"Its magic number is $450 million a year, a potentially staggering increase from the $115 million annual average that FOX Sports now pays, according to several media and UFC sources.
"Although formal negotiations aren't expected to start until next year, network executives have learned that the UFC plans to seek at least a 10-year deal under those terms, sources said."
The UFC-FOX deal expires in 2018, but before then FOX has an exclusive window to negotiate a renewal in late 2017. If the UFC opts not to renew or just to take negotiations to the open market, the Sports Business Journal is reporting that the package offered will include four annual broadcast windows (the FOX shows), six annual cable events, weekly programming currently carried by FS1, and Fight Pass. It will not include the pay-per-view shows but any future winning bidder will likely receive more input on the matches that go to PPV. The Sports Business Journal also reports that even revenue from PPV is negotiable as well as the UFC unloading production onto the new partners. Currently, the UFC handles production of its shows, including all of the costs of production, but the new deal may shift that burden onto the new partners, increasing profits for the UFC.
The UFC can do this in part because most other major sports media rights deals are locked up for the foreseeable future. The MLB, NHL, and PGA tour deals all expire in 2021, the NFL in 2022, and the NBA in 2025. Any platform looking to add live sports content (traditionally viewed as valuable because the nature of it makes it must watch instead of recordable) is thus heavily incentivized to court the UFC because another major opportunity won't arise for another three years after that. In fact, the valuable nature of the UFC commodity is such that there is already some talk that the new package could eschew the UFC's previous inclination to be exclusive to a network and instead be split among multiple networks .
How FOX Sports would feel about this is unknown at the moment. Though they currently rely heavily on the UFC for content and ratings they did make a failed bid to purchase the UFC this summer for $3.6 billion, refusing to go any higher because they believed the UFC overvalued the worth of its media rights. Still, if FOX loses the reup bidding, it would lose one of the cornerstones of its programming and the best ratings earner for FS1.
The Sports Business Journal also takes a look at potential other landing spots for the UFC should they be unable to come to terms with FOX Sports, concluding that ESPN, Turner Sports, and NBC Sports Group are all likely to throw their hats in the ring. There's also the outside possibility that a digital media company like Amazon or Google, companies currently dabbling with smaller live streaming sports packages, will make a major investment into this area by jumping in with the UFC.
It's important to note that this deal was a cornerstone of WME-IMG's purchase of the UFC and the debt they financed to achieve the magic $4 billion number. This upcoming set of negotiations will be the first major deal carried out for the UFC by the new owners and may well be the most important one. If the UFC can't get the deal they're looking for, it's very possible WME-IMG will look to sell the company sooner rather than later.
But if they can get a deal done, things will be looking bright for Ari Emanuel and company going forward.
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