What’s happening with the UFC and WWE is perhaps a more compelling view of what the future of sports broadcasting looks like.
News of UFC owner Endeavor’s deal to acquire the WWE sets a mammoth valuation that will grab the attention of ‘brand owners’ in both sports and entertainment.
The ability of both the WWE and UFC to capture the attention spans and disposal incomes of key demographics is the key driver behind the premium-priced transaction.
Significantly, another factor is that both brands have eyes on the expiry dates on their current content rights deals – with WWE regaining control of its ‘linear’ TV rights next year, followed by the expiry of the UFC rights coming available in 2025, and WWE’s streaming deal ending in 2026.
Auctions on these top-tier media assets could potentially see new record-breaking levels, according to industry experts, though strategic deals may prove more compelling.
The two leading ‘combat’ promotions have form for taking a more direct approach with their audiences, as both were early to develop their own direct-to-consumer streaming products a decade ago.
UFC Fightpass and WWE Network, launched in 2013 and 2014 respectively, allowed avid fans to subscribe for exclusive premium content (inclusive of the ‘pay-per-view’ events sold separately via TV) along with deep catalogues of archive broadcasts).
Both brands also, however, retain lucrative partnerships with traditional broadcasters (and their associated streaming) in order to retain the wider viewing audience.
The WWE for example sold its rights to Universal’s Peacock for US$1bn in 2021, in a five-year deal, and it retains 1.5mln subscribers (paying around £15 a month) in markets outside the United States.
In a 2019 deal, Disney’s ESPN paid US$1.5bn for exclusive rights to the UFC in the United States grappling the MMA brand away from Fox Sports.
The WWE and UFC further monetise their respective audiences through live events and seemingly endless merchandising.
Such is the heft of the business model, the two combat entertainment brands are now evidently worth some US$21bn to Endeavor (now a massive holding company that owns a number of Hollywood talent agencies, entertainment brands, UFC and, shortly, the WWE).
Football next?
There are strong parallels between the US combat entertainment business to the happenings at Manchester United, Liverpool and Chelsea.
Football clubs with a foothold in the top competitions like the Premier League and Champions League, along with fan bases sufficiently large to be ripe for ‘direct-to-consumer’ monetisation are currently being priced at a hefty premium.
Manchester United - despite having only £31mln in the bank, owing nearly £1bn, being in desperate need of a new £1bn stadium and not competing never mind winning a league title for a decade – could in the coming weeks be bought for a reported US$6bn.
Such a price means something like a 100% premium to what was already an overblown market value (given that only low-ranking equity is in public hands).
It will represent a staggering return for the Glazer family which acquired United through a £790mln leveraged buy-out in 2005.
It will be a substantial markup on the US$2bn paid for Chelsea, which despite becoming a bidding war was still essentially a government-forced fire-sale.
Liverpool and Manchester United’s American owners hired US merchant bankers The Raine Group shortly thereafter, to sound out interest among buyers and/or investors.
After United’s sale process concludes, to release oxygen to the rest of the market, it likely won’t be the only deal being done at the top end of football.
Liverpool’s owners, Fenway Sports Group, in March, said the Merseyside club would not be sold and its ongoing process sought to “receive expressions of interest from third party seeking to become shareholders”.
Interest in Premier League, EFL and Europe’s top clubs are said to be high and rising.
Significantly, it appears potential new owners are jostling for influential seats at future negotiating tables – whether that’s for talks over new media rights deals, commercial rights or even the make up of football competition itself.
Scant details were ever released from the ill-conceived super league venture because it was quickly snuffed out by protest, but it was strongly suggested that streaming either done centrally by the league or in partnership with a ‘streamer’ was a key part of the monetisation strategy.
The marketing pitch one would imagine is pretty simple.
Sell a digital season ticket for fanatical supporters, no doubt at a premium price, that gives them access to streams for all the fixtures for their favourite club, in addition to core a broader league package, seems like it sells itself.
What the WWE and UFC deal, which values those brands at US$9.3mln and US$12.1bn respectively, tells us is that it’s never been a better time to have a hold of the world’s most entertaining sports brands.