ESPN is deepening its partnership with UFC, extending its existing $1.5 billion deal two years to 2025 and making ESPN+ the exclusive distributor of UFC pay-per-view events in the U.S. The pact will kick off April 13 with the UFC 236: Holloway vs. Poirier 2 event, and makes ESPN’s various platforms the exclusive home for UFC content.
The announcement opens up a new business for ESPN+, the direct-to-consumer streaming service that has amassed 2 million subscribers in less than a year after launching. UFC has been integral to that growth; the promotion’s debut on ESPN+ last January (with a UFC Fight Night card from Brooklyn’s Barclays Center) drove more than 500,000 new subscribers to the service, according to ESPN.
“MMA and boxing have both been part of our offering since the beginning,” Russell Wolff, ESPN+ executive vp and GM, told The Hollywood Reporter. “And we’ve had pay-per-view events, but the big difference here is these are exclusive pay-per-view events. It adds a significant new business to our platform.”
Financial terms of the UFC extension were not disclosed, but analysts estimate that ESPN+ will cost Disney from $200 million to $500 million in its first year.
MMA fans tend to be young and accustomed to paying for premium content. It’s one reason why ESPN president Jimmy Pitaro has been on a mission to build out the ESPN+ MMA portfolio. Mark Shapiro, president of Endeavor, which purchased UFC in 2016, told THR that discussions about expanding the UFC pact to include pay-per-view began once ESPN executives saw the metrics on UFC content.
“We’re at five fights in and we’ve driven upwards of 1 millions increments subs to ESPN+. That’s a reckoning,” said Shapiro. “We have delivered a younger audience to ESPN, we have delivered an affluent audience.”
UFC’s Fight Pass, which is a global product, will continue to make premium content available outside of the U.S. But fans of UFC in America will need to subscribe to ESPN+ for access to the premium fights.
UFC’s The Ultimate Fighter ran for 14 seasons on Viacom-owned Spike, before moving to Fox in 2011 with a seven-year deal valued at $90 million annually. Before the ESPN deal, which kicked off in January, UFC was airing primarily on Fox Sports 1. (Fox, meanwhile, picked up WWE’s Saturday showcase SmackDown in a five-year deal — which is set to begin later this year — worth more than $1 billion.)
The value of UFC has steadily risen since Frank and Lorenzo Fertitta bought the MMA promotion in 2001 for $2 million. In 2016, they sold it to WME-IMG, now Endeavor, for $4 billion. But UFC has still been dogged by questions about its viability as once-popular fighters retire or succumb to injuries. For instance, the MMA community is eagerly awaiting the return of Conor McGregor, who has not been in the Octagon since last fall, though he said recently that he is circling a July return.
Longtime UFC president Dana White brushes off this narrative. “There’s a lot of negativity out there since the sale,” he told THR, referring to the 2016 purchase. “I get the same questions over and over again. People have been asking me, ‘What are you going to do when Chuck Liddell goes away?’ ‘What are you going to do when George St. Pierre goes away?’ ‘What are you going to do when Anderson Silva goes away?’ We have so much talent coming through the pipeline right now, it’s insane. Now with ESPN+, fans are going to get so much more content. UFC has never depended on one star. Listen, when Conor McGregor is cranking, it’s all good stuff. But we’re always going to have stars. That’s never been a problem for the UFC, and it never will be.
“We have been cultivating talent since day one. We are the driving force that has built and created this entire sport,” he added. “And none of that is going to change. It’s only going to get better over the next seven years with ESPN.”
The soon-to-be crowded direct-to-consumer market is likely to drive more deals for sports and live events. WarnerMedia will look to make deals for niche sports and also leverage its streaming platform Bleacher Report for its direct-to-consumer products, set to launch in 2020. And NBCUniversal already has a vast sports portfolio to play with as it launches its own OTT service; the company’s nearly $8 billion deal to lock up the Olympics until 2032 includes all digital rights and rights for whatever technology might emerge.
UFC pay-per-view events on ESPN+ will include all bouts on the main events card and will be streamed in English and Spanish. Preliminary bouts will continue to air nationally on ESPN and ESPN Deportes as part of the original agreement. ESPN+ is priced at $4.99 per month, or $49.99 for an annual subscription. New subscribers can purchase a one-year ESPN+ membership and a single UFC PPV event of $79.99. Existing subscribers can purchase the PPV events for $59.99 per event. ESPN may experiment with additional bundling options moving forward. And Disney CEO Bob Iger said during a February earnings call that the company is looking at possibly bundling ESPN+ with the soon-to-launch Disney direct-to-consumer service Disney+.
Executives declined to disclose the revenue sharing breakdown on the UFC pay-per-view events, but White noted, “We’re very, very happy.”