FACEBOOK TWITTER RSS APP PODCAST Opinion & Analysis : The Specialists ALL BUSINESS: The UFC's 10 Year Expansion Plan - Step 2.5 - A Night At The Theater

Feb 26, 2010 - 5:56:43 PM

By Alvin Benjamin Carter III, MMA Torch Specialist

The buyrate predictions and estimates for UFC 108, UFC 109, and UFC 110 range between about 300,000 - 450,000. At the very least that means over 900,000 homes ordered a $50 pay-per-view event in the first two months of this year. That seems decent given the country's current economic and labor situation, but all three events combined pale in comparison to last years UFC 101 that had approximately 1,000,000 pay-per-view buys. There have been a number of strong cards since UFC 101, but $50 can be a heavy price tag if fans are not emotionally invested in any of the fighters or match-ups on the card.

A new business venture with Fathom Events might breath excitement into the less popular UFC fight cards by showing the live pay-per-view broadcast at select movie theaters across the country. The first event in this deal to be shown in theaters will be UFC 111, and it will most likely have a strong buyrate in comparison to the previous events this year. There are two title fights (George St. Pierre is defending his Welterweight title against Dan Hardy, and Frank Mir and Shane Carwin fighting for the Interim Heavyweight belt), and any event with GSP is usually popular.

This becomes a milestone event because the UFC is adding another revenue stream in the form of box office sales. The event in my area, Massachusetts, is going for $21 if you include the $1 service fee. This price seems more palatable compared to the $50 I would spend at home. The theater broadcasts might help slightly less popular UFC events, but it is good idea that the movie theater experiment start with a strong fight card like UFC 111. If fans can get behind the first one or two events that are broadcast in theaters, it might create a stable alternate viewing experience in communities across the country. Less popular cards might still draw people because of the experience of going to the theater with a group of friends, their fight team or gym members, or even by themselves if they just want to be around other people who enjoy mixed martial arts.

In reality the assumption is someone usually orders the pay-per-view, and a couple of friends bring wings or a few bucks as a donation for being allowed to watch the fights and get buffalo sauce all over the couch. So, you ask why go out and pay $20 instead of the $10 you would give your friend as a gesture? Well compare it to people who like going to bars versus staying in the house. It is a lot cheaper for everyone to chip-in at the liquor store, but people seem to have more fun spending $20 - $80 at the bar (depending on people's social habits). People go out for the atmosphere and all of the unexpected happenings that would not take place at home. The same could prove true for going to the theater to watch the UFC. Plus, I doubt most people have a screen as large as the one in theaters. Other perks are the concession stands (no food preparation or waiting for deliveries) and not having to clean up after a bunch of people.

This move to the theaters is can be considered an assertion of brand dominance. Currently, all three major MMA promotions (UFC, Strikeforce, and Bellator) have some version of an international broadcast deal, and a live event deal in the case of the UFC. These deals scale relatively to each companies size, but they increase the legitimacy of each promotions brand. The UFC has taken their brand a step further by taking the chance of adding another viewing option to a model that was already working out pretty well. Moves like this are made by dominate companies looking to innovate in their industry- mixed martial arts in this case.

The math could get interesting as far as earnings go. There will be the live gate, the pay-per-view buyrate, and box office ticket sales. The buyrates and box office ticket sales might have an inverse relationship, but theaters only have a limited number seats so there does not seem to be a large chance of the theater sales completely destroying the pay-per-view sales. According to Fathom's list of participating theaters, 323 movie theaters across the country will be playing the film. Link to ( Fathom Events Participating Theater List)

To give an extremely moderate estimation, let's say an average of 300 people go to each theater to watch UFC 111. That makes for 96,900 viewers, and $1,938,000 in box office sales. The box office sales could be significantly larger depending on how many seats are in a theater, and how many theaters in each movieplex are airing the fight. Another, possible revenue stream depending each theaters staffing ability is merchandise. While it might be a logistical nightmare to get merchandise to all 323 theaters, it would definitely increase the nights take.

I would not classify this as the next step in making MMA the most popular sport in the world by 2020, but I would say this is the next step in reminding everyone that the UFC is the most dominant MMA brand at the moment (and for who knows how long).

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Follow Alvin on Twitter: @AwwwSnap

Alvin Benjamin Carter III is an MMATorch Specialist columnist focusing on the business and statistic side of the sport of MMA. He trains in SanDa / Shan Shou (Chinese Kickboxing) and has started training in MMA. He also has a business background in music production, management, and clothing. He has launched two companies which cater to niche markets, giving him experience in examining trends and attitudes that can affect a particular business model, which he applies in his weekly column for MMATorch to the sport of MMA.

[Participating Movie Theaters List is from Fathom Events website: http://www.ncm.com/Fathom/Sports/event/UFC_PierrevsHardy.aspx]

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