Why the UFC's new $1.5B deal with ESPN isn't just about the money

On May 26, 2007, Chuck Liddell defended his light heavyweight title against Quinton “Rampage” Jackson in the main event of UFC 71 at the MGM Grand Garden in Las Vegas.

Seated ringside next to UFC president Dana White was Jimmy Pitaro, then the general manager of Yahoo Sports. Pitaro and about a dozen or so other Yahoo executives attended the bout to gauge interest in the UFC.

Shortly thereafter, the UFC and Yahoo announced an exclusive five-year deal to sell the promotion’s pay-per-view shows digitally on the Yahoo network. It was the company’s first foray into the digital space.

On Wednesday, news broke that ESPN had worked another deal with the UFC, this time for its terrestrial television rights. Combined with the rights deal that was announced earlier in May which put a series of UFC shows on the ESPN+ over-the-top streaming service, ESPN will pay the UFC $1.5 billion over the next five years.

That is on top of an eight-month old deal with boxing promoter Top Rank, and it wouldn’t be a shocker to see that deal significantly extended.

The common thread in the deals is Pitaro, who is now the president of ESPN. The two deals essentially locked up the combat sports space for ESPN and are a huge win for the consumer. Pitaro inherited the original Top Rank deal, but is the driving force behind the potential extension and/or expansion of it less than a year in.

While fights will still be broadcast elsewhere – Showtime has made a major commitment to boxing, Bellator has its MMA content on the Paramount Network, HBO is still in the boxing business and the Premier Boxing Champions will put shows on other networks beyond Showtime – ESPN has suddenly become the de facto home for the fight fan.

Critics have moaned about the dilution of UFC content, and expect to hear more about that in light of the deal with ESPN. And they’ve ravaged Top Rank about the age of its demographic, even though the fights it has produced on ESPN have attracted an audience very similar in median age to the UFC crowd. Top Rank’s cards have demonstrated an ability to attract a far younger fan base than anyone, even those in the TV business, believed possible.

Top Rank’s ratings have skyrocketed since it signed its deal with ESPN, and it has attracted a surprisingly young audience. ESPN’s coverage of Top Rank’s show on May 12 in New York, which was headlined by a lightweight title fight between Vasiliy Lomachenko and Jorge Linares, nearly doubled the combined ratings of the UFC and Bellator, which had competing shows that night.

Top Rank finished fourth overall in cable ratings on May 12, and its 0.35 rating among adults aged 18-49 was fourth, as well, and better than the UFC 224 preliminaries, which was 21st overall and had a 0.21 rating among 18-49-year-olds; and Bellator 199, which was 43rd overall and had a 0.16 among adults 18-49.

Moving from Spike to Fox in 2012 was hugely successful for the UFC, and it could experience a similar jump going from Fox to ESPN. Top Rank’s ratings are indicative of what could happen for the UFC once it hits ESPN.

Fox did a superb job covering the UFC and its public relations staff worked tirelessly to promote the UFC programming. But Fox Sports 1 and Fox Sports 2 are newly branded and still growing channels that don’t have anywhere near the reach or the clout of ESPN.

The only serious issue could be regarding priority on dates, when Top Rank and UFC will have shows on the same night. That can be navigated fairly easily after the college basketball season is over and before the NFL kicks off. So from April through the end of August, ESPN is going to be filled with fights and fight content.

It doesn’t figure to be as prominently placed from September through March, when the network will have the NFL, NBA, college football and college basketball, which all will take priority over fights.

Pitaro, though, is an astute leader who figures to be able to navigate those potentially choppy waters fairly easily.

The UFC’s deal with ESPN will give it 20 full shows on its ESPN+ service and 10 full events on television. In addition, it will show the preliminaries from the 12 UFC pay-per-view shows that will be distributed annually.

Don’t be shocked if Top Rank and ESPN extend their deal before long.

ESPN, with its varied platforms, will help the two fight promotions develop stars, who can then sell pay-per-views. Without Ronda Rousey, Conor McGregor, Georges St-Pierre, Brock Lesnar and Jon Jones, the UFC currently doesn’t have that superstar it can rely upon to deliver monster numbers on pay-per-view.

The same is true for Top Rank, which developed Oscar De La Hoya, Floyd Mayweather and Manny Pacquiao into pay-per-view behemoths but don’t have anywhere near that ilk now.

White and Top Rank president Todd duBoef each essentially turned their product over to ESPN for the next five years, not only for the money but on the bet that ESPN will help them build stars better than anything.

Stars are the lifeblood of the fight game, given that there aren’t long-established team loyalties like there are in the Big Four sports in the U.S.: the NFL, the NBA, MLB and NHL.

Any time there are more stars, it’s a boon for business, and because of that, this was a red-letter day for the UFC.

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