With new ESPN+ PPV deal, UFC can afford to let Conor McGregor retire

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By: Zane Simon | 4 years ago
With new ESPN+ PPV deal, UFC can afford to let Conor McGregor retire
Bloody Elbow 2.0 | Anton Tabuena

When the UFC announced that they were moving to ESPN in 2019 it’s likely that no one outside the promotion’s inner circle could have anticipated the potential for change involved. After all, the UFC’s time on FOX was marked, more than anything, by a sense of complete stagnation. Falling ratings, a lower than ever PPV floor, and a schedule so packed with fights that picking out what was interesting or important felt like a near impossibility.

What was ESPN going to do that FOX couldn’t?

It turns out that the answer may be ‘a lot.’ And the first major shakeup has already taken place. On Monday, March 18th, the UFC announced that they were moving their PPV business exclusively to ESPN’s streaming platform, ESPN+. Anyone who wanted to buy a PPV would need to have a subscription to the network’s online broadcast platform.

That seems, on the face of it, like an easy way to cut down on the number of possible PPV customers the UFC can serve. Since the price-per-PPV isn’t increasing, less viewers means less money. But, the UFC isn’t about to make less money, are they?

Not from the sound of it. Instead, they’re making up that lost revenue in guarantees.

For starters, reports are that the UFC will move from a 50/50 PPV revenue split – that they worked under with DirecTV – to an averaged out deal that approximates the revenue of their last few PPV years, including 2016 their record setting PPV profit year. Additionally, according to reports from Dave Melter’s Wrestling Observer, the UFC will get a share of any profits above those estimates. If those reports are true, some quick-n-dirty math suggests the UFC will net something like what would have been around half a million buys per event.*

By comparison, in 2018 – a year that included the largest selling MMA PPV of all time – the UFC clocked an estimated 6.2 million buys. Over twelve events, that’s already in line with what the UFC will get, guaranteed for each of the next few years. It may not be the 2015-16, or 2009-2010 glory years where the UFC was putting together multiple million buy cards —and when both Ronda Rousey and Conor McGregor were headlining multiple cards a year. But more recent years have been much less fruitful, and major headlining fights that much harder to put together.

Without even one bonafide top-selling PPV headliner, the UFC can hit what’s essentially a fantastic year on PPV every single year. All they have to do is put on shows, and it’ll be up to ESPN to see to it that more people than average watch them. Where does Conor McGregor fit into math like that?

“There’s seem to be an assumption among many fans and members of the media that McGregor has a great deal of leverage when it comes to the UFC,” Bloody Elbow MMA business analyst John S. Nash said of the negotiations between the two parties. “While he has more leverage than any other fighter in the UFC, he’s still at a tremendous disadvantage.

“The new deal with ESPN offers the UFC a guarantee on their ppv sales. This increases their contracted revenue to some absurd number. Maybe as much as $600 million a year. While selling a lot of PPVs is still important to the UFC, it is not as important as it used to be. And with the amount of revenue the UFC is bringing in, they may want to promote a McGregor fight badly, but they don’t need to. They are not Matchroom or Golden Boy who live or die by an Anthony Joshua or Canelo Alvarez bout. They are repeat players who can make up for any short term losses they might incur over the many years they will be promoting fights. It makes no sense for them to break the model by giving completely any demands McGregor makes if this means they’ll have to do the same to other fighters in the future.

“McGregor, in turn, is not a repeat player,” Nash continued. “His window to make money fighting is relatively short. He also, having signed a long term exclusive contract, does not have the option of playing another promoter, or threatening to promote himself, as a threat against the UFC. His only leverage is not fighting. Optimally, McGregor would be paid close to the amount he adds to a UFC event. Unfortunately, he doesn’t have that kind of leverage. Instead, he will have to settle for a split much more favorable to them.

“As someone sagely phrased it to me ‘He should know that he’s not just playing poker with someone that has a better hand. He’s playing poker with someone that has already won the game.’”

Sports economist and professor, Paul Gift agrees, “There’s a weird dynamic here where ESPN has almost taken over the UFC’s variable revenue business. They’d obviously love a McGregor fight, not only for PPV buys but for ESPN+ subscriptions. The only thing I wonder about is pressure they could apply to the UFC. Or hell, if they could somehow contribute to his purse. But I agree, neither needs him. The question is can they incrementally benefit and and find a deal that works. But yeah, the UFC doesn’t seem to have as much incentive to deal, especially not with any meaningful percentage of the company.”

But not everyone sees it that way. “I feel like Dana White coming out last night and saying ‘Oh yeah, you know, I’m totally okay with this. I think he should go out and retire. He’s killing it in the whiskey game.’ That leads me to believe that Dana doesn’t want to let the world know that he’s upset about this.” Ariel Helwani told Mike Greenberg on ESPN’s Get Up! talk show, “But, make no mistake about it, the UFC needs Conor McGregor right now.”

No doubt, these are the arguments that the ‘Notorious’ superstar is considering with his recent reiterations of his desire for an ownership stake in the UFC. “They’ve got to entice me now,” McGregor said back in 2017, following his boxing match with Floyd Mayweather, “because I came from a billion-dollar fight. You’ve got to entice me with some equity. I want ownership. I want to be true partners in this, similar to the way I was in the Floyd fight. I was a promoter and I was a fighter. That must continue for me to continue. Otherwise, I’ve got many entities and many interests that can carry on also. I’m already set. They must entice me.”

McGregor has fought for the UFC just once since making that statement – a loss to Khabib Nurmagomedov – in his bid to regain the lightweight title belt. He had been in talks all the way up to his retirement announcement to return to the UFC sometime this summer — following the end of his Nevada State Athletic Commission suspension, for his involvement in a post fight brawl at UFC 229 with members of Khabib Nurmagomedov’s entourage.

The other major factor that may be especially tilting the tables away from McGregor’s ability to negotiate in this scenario, however, is his recent run of legal trouble. Outside of his incident involving a bus full of fighters and a thrown hand truck that made front page news last year, McGregor has been tied to seriously troubling allegations of sexual assault back home in Ireland.

The New York Times reports that, while McGregor has not been formally charged with a crime, he is under investigation for an accusation of sexual assault that reportedly took place in December of 2018. Rumors of those allegations – including pictures of a leaked document naming McGregor – had been swirling for the last several months on social media. If this case proves as serious as it appears, it may be that McGregor will be in no position to compete professionally whether he wants to or not. And it may be that the UFC will find themselves happy to be out of the Conor McGregor business permanently, especially now that it looks like they can afford it.

*Previously this story featured some more generous (and wrong) cocktail napkin math of my own, that skewed projections higher. Those numbers have been adjusted appropriately.

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About the author
Zane Simon
Zane Simon

Zane Simon is a senior editor, writer, and podcaster for Bloody Elbow. He has worked with the website since 2013, taking on a wide variety of roles. A lifelong combat sports fan, Zane has trained off & on in both boxing and Muay Thai. He currently hosts the long-running MMA Vivisection podcast, which he took over from Nate Wilcox & Dallas Winston in 2015, as well as the 6th Round podcast, started in 2014. Zane is also responsible for developing and maintaining the ‘List of current UFC fighters’ on Bloody Elbow, a resource he originally developed for Wikipedia in 2010.

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