UFC’s 2017 declines in viewership across the board points to value of megastars

When looking at the UFC’s popularity in 2017, it becomes clear that having stars at their drawing power peak obviously makes a big difference when it comes to pay-per-view nights. But having those big stars fight regularly looks to carry over to the regular weekly audience as well.

The other lesson for the year is that if the biggest star is all over the place, but not in your world, he’s not nearly so effective in raising the profile of the sport.

The biggest story of 2017 was Conor McGregor‘s foray into boxing with Floyd Mayweather Jr. While Dana White, McGregor and Stephen Espinoza can fight on Twitter about whether the show was the biggest of all-time or not, it was, at the very worst, a close second when it comes to the most revenue ever driven by a combat sports event. The enormity of the event is hard to really fathom, but the show grossing more than $600 million would be nearly as much as both the UFC as a whole or the WWE do in an entire year.

McGregor, the UFC’s biggest star, raised his public profile greatly in 2017 with the build to the fight. But that didn’t seem to help the UFC’s popularity, which declined, greatly in some places, over the past year after a strong 2016.

White has said in response to some of the declining numbers that the UFC is actually bigger and making more money than ever before. And while the company doesn’t release those figures publicly, what he said does make sense.

Back in April, when WME-IMG/Endeavor was looking to raise capital to buy out the remaining shares of Lorenzo and Frank Fertitta, to raise that money, they projected $320 million in EBITDA for 2017. In 2016, the most financially successful year in company history, the EBITDA (earnings before interest, taxes, depreciation and amortization) was $226 million. The 2016 figure was driven by record revenues on pay-per-view, with the UFC becoming the first company in history to produce five shows topping 1 million buys during a calendar year.

In 2017, even with a huge decline in the MMA pay-per-view business, the financial year probably was stronger. Among the keys are previously contracted escalations in television rights fees, not just with FOX in the U.S., but in other major international deals; an estimated $55 million in cost-cutting between the office workers and highly paid executives that were let go shortly after the ownership change; far less corporate spending; and the company’s share of the Mayweather vs. McGregor windfall.

But, in the long term, while cutting costs and contracted increases in television money may financially strengthen the bottom line, they really tell you nothing about the product’s popularity. While UFC can hide behind the increased profits and temporarily ignore the issue, the declines this year were serious and they weren’t just limited to the big events where declines would be expected based on the decrease in superstar appearances.

This year, when it comes to pay-per-view, most cable industry estimates indicate no shows hit the 1 million mark, although sources in the UFC claim that if you include Internet pay-per-view buys and those outside of North America, that the November show headlined by Michael Bisping vs. Georges St-Pierre cracked that figure.

In 2016, the UFC had 13 pay-per-view events that did an estimated 8.21 million buys, or an average of 632,000 per show. In 2017, the UFC produced 12 pay-per-view shows that did an estimated 3.71 million buys, or an average of 309,000 buys per show — a 55-percent decline in total buys and a 51-percent decline in the average per show.

The major reason was the loss of McGregor fights, the departure of Ronda Rousey and the retirement of Brock Lesnar, who was a big part of the UFC 200 number. Only two shows — the July show with Daniel Cormier vs. Jon Jones, and UFC 217 — topped 400,000 buys. With the exception of UFC 219 and the surprisingly strong numbers for Cris Cyborg vs. Holly Holm, no other event looks to have even broke the 300,000 level.

It would also come as no surprise, given the lessening interest in the big shows, that the audience watching the prelims before the pay-per-views would also take a hit. The pay-per-view prelim viewership was down 29 percent, from 1,168,500 viewers per event to 834,000. The decline not being as steep as the pay-per-view decline indicates that while less fans watched the prelims, among those who did, they were also less likely to purchase the pay-per-views.

Similarly, the live gate for pay-per-view shows also declined significantly. For the 11 pay-per-views in North America in 2016, the UFC grossed $60,765,313, or $5,524,119 per show. That average was greatly skewed by the record-setting $17.7 million gate for the McGregor vs. Eddie Alvarez headlined Madison Square Garden debut at UFC 205. But even removing that show from the equation, you still are talking $43 million and a $4.3 million average.

The 10 North American shows in 2017 grossed $26,854,406, or $2,685,441 per event. That is down 51 percent from the prior year — and even factoring out that first MSG show, it’s still a decline of 38 percent. Of the past decade, the pay-per-view live gates in 2017 on average were the lowest of any year but 2014, while the average pay-per-view buys were the lowest of any year since 2005.

But there is a flip side to all of this. If you include Mayweather vs. McGregor, which UFC did co-promote, and which one would expect that a huge portion of the usual UFC audience purchased on pay-per-view at a higher price than ever, suddenly 2017 flips from a terrible year to a spectacular year with more than 7 million total buys and $82.3 million in live event ticket revenue.

But as far as the state of the popularity of the UFC brand, Mayweather vs. McGregor is an outlier which really indicates nothing past the fact that it was a one-night freak show fight that intrigued the public. There is no indication all of that mainstream talk made any new fans of MMA. And there is still the unanswered question as to what the fight did for McGregor’s value.

The reality is that Mayweather won the Manny Pacquiao fight, and after, his own drawing power declined until the McGregor fight. McGregor was the prefect money opponent for Mayweather because of his verbal ability, the UFC vs. boxing high-profile nature of the fight, and McGregor’s boxing being such a curiosity. But that element is gone. McGregor talked big, and while he didn’t lose as badly as some experts thought, he very clearly lost and very clearly was not the boxer he claimed he was. Until he fights MMA again, we won’t be able to determine what short and long-term effect that had on his drawing power.

While those big-show related numbers are the most important to the annual bottom line, it is easily explainable why they declined. The other declines are more indicative of a real problem, which is a lessening of popularity. It should also be noted that in 2016, the shows that didn’t involve the big stars increased, which tell you that just having the stars around grow the audience of the weekly shows.

Less important to the short-term bottom line, but more important in measuring the level of interest, are the other live television events.

The live shows on FS1 went from 965,111 viewers on average to 795,412, or a drop of 17.6 percent. That’s a significant drop for shows that are just the weekly offerings and that don’t feature the biggest stars.

The prelims before the Fight Nights even went from 730,125 viewers on average to 634,929. That’s a 13-percent drop. What that tells you is that the existing fan base is more likely to watch the prelims, which is why the decline was less than the major shows. Less people are watching overall, but those who are watching are watching more hours for the mostly-Saturday night events.

It’s also more of a decline than Bellator had for its shows on Spike, which went from 676,364 per show to 610,318, a 9.8 percent decline. But that decline is largely due to the lack of the monster freak show fights from the past, with people like Ken Shamrock, Royce Gracie and Kimbo Slice, which propelled Bellator to a record-breaking event in 2016. But it also should be noted that the additions of former UFC stars like Gegard Mousasi and Ryan Bader over the past year did not increase numbers noticeably on the shows they headlined.

The second-tier shows, the ones that wouldn’t have the big pay-per-view draws, but would have significant stars as headliners — the UFC on FOX specials — fell from 2,661,000 viewers to 2,084,500. That’s a drop of 21.7 percent. The four shows in 2017 were among the five least-watched shows on FOX in the six-plus years since the relationship started. And the only other show of those five was a 2016 show that did low numbers because it was in August, and preempted in many major markets for local coverage of NFL preseason games.

Something notable in comparison was that a 2016 show headlined by Holly Holm vs. Valentina Shevchenko did 4,687,000 viewers for the main event, the best number ever for a summer fight show. Shevchenko won that fight, and in 2017, for the January UFC on FOX event, traditionally a better time to draw, her main event with Julianna Pena — with a probable title shot at stake — did 3,003,000 viewers. A month earlier, another women’s fight, Paige VanZant vs. Michelle Waterson, drew 4.8 million viewers and was the second biggest number for a FOX show not headlined by a championship fight.

That’s an enormous difference. Obviously the key is that more people were interested in watching VanZant vs. Waterson, perhaps due to VanZant’s popularity coming off “Dancing With the Stars”. But in between those two fights was Rousey’s loss to Amanda Nunes, that likely ended her career, and Rousey was the driving force when it came to the popularity of women fighters in UFC.