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UFC Revenue Is Up, Even If PPV Buys Aren’t

Dana White UFC
(He’s so money. Photo courtesy of Men’s Fitness.)

MMA Payout has an interesting article about the newest S&P credit rating for Zuffa, which has been upgraded from negative to stable. It turns out that the UFC is pulling in more money these days, though it’s not because more people are buying their pay-per-views. Instead, it’s due to their strategy of putting on more shows and charging more for them:

“Overall pay-per-view (PPV) revenues, which represent nearly 75% of total revenues, have trended up in recent quarters, albeit largely due to an increase in the number of events, higher pricing, and more favorable contract terms, rather than an increase in the number of buys.”

By more favorable contract terms, they’re referring to Zuffa’s deal with pay-per-view distributors. Apparently the UFC is big enough now to negotiate better deals for themselves, which is an encouraging sign for the future of he company and the sport. But what’s really interesting is a note near the bottom that relates to the UFC’s plans for expansion.

The high costs of the start-up in the UK may color how they approach international expansion going forward. The UFC UK division required a high level of initial costs (like personnel, office space, legal and regulatory costs). Such high costs had a detrimental effect on the company’s margins and therefore dragged down the bond rating. The company may be reticent to do such a large scale effort in the future, with the accompanying yo-yo effect on margins.

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Fedor Emelianenko instructional DVD- July 21, 2008 at 8:47 pm
As much as I despise Dana, I have to admit that he's a heck of a businessman.
Vrax- July 21, 2008 at 7:58 pm
I'm surprised to such such an ill-thought out idea put forth by the generally smart folks over at Payout. Sure there is a "yo yo effect" but the more stable markets, i.e. revenue streams, you have set up the faster you bounce back. Therefore each new market, while costing a similar amount of cash, costs a lesser percentage of overall cash FLOW. So each dip hurts less and bounces back faster than the one before. There any be greater initial sums spent when expanding to foreign language markets (new broadcast teams etc) but it's not going to be too intense an increase.

Oh wait, this Carano is hot girl me like Fedor him crush gud.