NB Slots Sports >MMA Arena >UFC owners address concerns over new TV deal, future of UFC APEX shows, and The Sphere being ‘one and done’

UFC owners address concerns over new TV deal, future of UFC APEX shows, and The Sphere being ‘one and done’

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Much of the focus regarding the future of UFC in 2024 — and beyond — likely lies with the upcoming broadcast rights deal, with negotiations set to open later this year.

UFC’s current broadcast deal with ESPN runs through 2025, but there’s been a lot of speculation over whether or not the promotion will return to the Disney-owned company for another exclusive deal, or perhaps split up a package between multiple networks similar to other major sports leagues like the NFL.

In a Wednesday financial call, TKO Group Holdings President Mark Shapiro continued to praise the relationship UFC maintains with ESPN, but also admitted that it’s impossible not to listen to all available offers.

Notably, WWE, which is also owned by TKO, signed new broadcast rights deals that start in 2024, with both of the organization’s major shows — Raw and Smackdown — moving to new outlets. That doesn’t necessarily mean UFC is destined to do the same, but the new broadcast rights deal will almost certainly attract numerous potential suitors.

“As far as multiple partners, one partner, we’ll see what happens when we get there,” Shapiro said. “Our window opens up in mid-January, it’s a three-month window with the UFC and Walt Disney Company. They’re a great partner. They’re the best marketing machine in the business and they are the No. 1 premiere, automatic destination for sports fans everywhere, certainly in the U.S. That is the first-stop shop, that is the go-to when it comes to looking for sports events.

“We’re not looking to get away from them. We’re not looking to reduce our commitments, but at the same time, we have a window, we’ll listen, we’ll talk, and we’ll do what’s in the best interests of the UFC going forward.”

As far as pricing goes, Wall Street analysts predict UFC could potentially earn double its current ESPN contract on a new broadcast rights deal. The NBA is also in the middle of negotiations for a new TV contract that is expected to dwarf the basketball league’s previous deal by a wide margin.

For all of the ways sports rights deals were supposed to take a hit due to increased costs, Shapiro said the results of recent negotiations prove different.

“Frankly, I would tell you that going back to the days of running programming at ESPN — and keep in mind I left almost 19 years ago in 2005 — I’ve been hearing about the decline in the value of sports rights,” Shapiro said. “That we’re hitting a ceiling, we’re getting close, folks are getting nervous, they’re pricing it in. And obviously in doing the Raw renewals and the Smackdown renewals with Nick Khan and Ari [Emanuel], we had a lot of pushback on that. Frankly, everywhere you look, it says otherwise.

“The NCAA deal was a strong deal for all the rights, including women’s sports. The NASCAR deal was a strong deal. The Smackdown deal moving to NBC is a strong deal. Netflix never getting into sports and now Raw is there with ‘sports entertainment’ is a strong deal. And the NBA, everyone kind of laughed when [NBA commissioner] Adam [Silver] said he could get 3x [as much as the previous deal], or if they didn’t laugh, they doubted it — and when this is all said and done, he’s going to be close to 3x.

“That’s what happens when you have four bidders at the table, at a minimum, and you have a premium sports property like the NBA. We look at UFC as a premium sports product with great growth ahead of it. We feel good about the potential package we’ll end up with and we see the demand for live sports is outstripping the supply of premium sports content.”

Shapiro believes UFC remains a hot commodity for ESPN — or any other network — because of the value the promotion represents as a year-round sport with a loyal fan base.

“The great thing about UFC, let’s not forget, it’s not just a volume product,” Shapiro said. “In fact, it’s not really a volume product. It’s a premium volume product. Sort of like the NFL used to be before Thursday Night Football. It was frankly Sunday and Monday nights. It was driven by scarcity. I think UFC benefits the same way.

“We’re also both at once a subscriber acquisition tool and a churn antidote. We’re attractive to both digital and linear and we’re year-round. We’re optimistic at the potential package we will end up with.”

The Future of Events at the UFC APEX

During the global pandemic, UFC was able to return quickly by committing to staging events that didn’t feature crowds in attendance in an effort to cut down on the spread of COVID-19. That led to the UFC APEX becoming home to most events, but even since the pandemic ended, the promotion has continued to put cards on there regularly.

Out of the 14 events held so far in 2024, UFC has split evenly, with seven cards being held at arenas with a large audience in attendance and seven cards held at the UFC APEX. On Wednesday, TKO Chief Financial Officer Andrew Schleimer addressed why it’s highly unlikely the UFC APEX shows are going to end any time soon.

“I think what you’ve seen since we have worked our way out of COVID, we have held a significant amount of events outside UFC APEX, and those that we do hold on our campus in Las Vegas, those numbers have gone down meaningfully,” Schleimer said. “That being said, bringing events on the road is as much about growing our fan base as it is generating income. It’s also about ensuring that we maintain certain margins and profitability profile, and there’s a cost-benefit analysis for us that we view opportunity costs of doing events domestically, internationally, and holding them at APEX.

“What we do in any budget cycle, as I’m sure you can appreciate, is determining the right mix. Not just to generate top-line revenue, but to ensure profitability. Those APEX events do carry the lowest cost structure for us to hold them on our home turf in Las Vegas. I don’t think we’ve found the perfect mix yet, but rest assured that we’re looking at the numbers and working to do so.”

That being said, Shapiro said ideally UFC will always travel and take events to arenas across the globe, even if the UFC APEX remains a necessary evil for the future.

“If we’re going to err on one side, we’re going to err on the side of going on the road,” Shapiro said. “Dana White built the UFC, Lawrence Epstein and the Fertittas, [by] getting out, city to city, region to region, [direct market access] to [direct market access] and touching the consumer. Introducing a new sport to a global fan base and being there, there’s no substitute for that.”

The Sphere is One and Done

UFC lands at Sphere in Las Vegas for the first time ever in September, but don’t expect it to become an annual event.

The massive structure, with wraparound LED screens and a seating capacity of more than 18,000, wasn’t necessarily built to house live sporting events, but UFC CEO Dana White was adamant about holding a card there, which is exactly what is going to happen on Sept. 14 with UFC 306.

White has teased that putting on a show at Sphere is going to be an expensive endeavor, which is why it sounds as if the September card may be the only chance for anybody to see UFC fights at the state-of-the-art venue.

“The Sphere in September, UFC 306, although that will be an expensive event to put on, for the record,” Shapiro said about the card. “That’s not a normal event. The Sphere is the Sphere, and it wasn’t necessarily built for UFC events.

“It will be a one and done. We will do it one and done. That is what Dana White has told us and he’s going to make it extra special.”

Shapiro also confirmed UFC is planning for a card to take place at Madison Square Garden in New York in the fall, although the exact date hasn’t yet been determined.

Potential Expansion

One last note worth mentioning, TKO recently made a bid to purchase Moto GP — grand prix motorcycle racing — but the company ultimately lost out to Liberty Media, the organization that already owns F1 racing.

While the deal didn’t go through, TKO plans to stay aggressive when it comes to possible expansion into new areas, whether that’s racing or another sport that could draw interest alongside UFC and WWE.

“We expect to generate significant levels of free cash annually,” Shapiro said. “We expect to have significant and increasing financial capacity as a result of that, and we intend to be thoughtful and opportunistic in our deployment of capital all through a lens of maximizing shareholder value.

“So those potential uses could include organic investments in high [return on investment] projects; reducing our net debt position, which is something we look at all the time with Andrew and the board; return of capital to shareholders through share repurchases and dividends … and to your last point, attractive [mergers and acquisition] opportunities that are strictly confined to premium sports content and live events.”

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