On October 4, 2007, MMAPayout.com offered the following forecast for 2008: "fighter salaries noticeably increase; first high profile free agent bidding wars; UFC loses its first top star; over-saturation; true competitor emerges to challenge the UFC?" That forecast can be divided into three key themes:
- Increased Leverage for Fighters
- Over-Saturation
- Emergence of a Competitor to the UFC
The first theme manifested itself even earlier than expected, when Randy Couture resigned from the UFC in late October. The trend has continued through the first quarter of 2008 with Tim Sylvia leaving the UFC and Tito Ortiz announcing his intention to leave later this year. Andrei Arlovski also appears set to test the free agent market (once his exclusive renegotiation period with the UFC expires).
Couture's resignation appears to have emphatically announced a new era of increasing fighter leverage in the MMA industry. Fighters have become more willing to challenge and even leave the UFC, despite its status as the undisputed dominant force in the industry. As more promoters enter the sport, the competition for the top fighters continues to increase and with it their leverage and earning power as well.
Similarly, over-saturation has also become a relevant buzzword for the industry thus far in 2008. On television one needs look no further than last Wednesday's Ultimate Fight Night and Ultimate Fighter 7 debut. The 1.1 rating for UFN 13 has to be considered a disappointment given that the previous twelve installments produced an average 1.46 rating. January's UFN was also well below average with a 1.2 rating. The debut of TUF 7 was the lowest rated premier in the history of the series with a 1.3 rating.
On pay-per-view, the UFC has averaged roughly 400,000 buys each for its first three events of 2008. That's down on average 70,000 buys per event compared to Q1 '07 (two events) and 40,000 off the average for all of 2007. However, that number is a bit misleading since it includes UFC 80, a tape delayed low-caliber international event, which was up compared to UFC 72. Excluding UFC 80, the pay-per-view average is slightly up. Of course, you can also argue that the number is inflated thanks to Brock Lesnar's debut. Overall, the numbers suggest that pay-per-view is holding up thus far under the pressure of an expanded schedule, but it is still too early to issue a verdict.
The final theme that appears to be emerging in 2008 is that of a true competition. The UFC is and will be the 800 pound gorilla of the industry for the foreseeable future, however, some cracks in its armor have emerged in recent months, opening the door for a competitor to establish itself as a legitimate alternative, the Pepsi to the UFC's Coke.
EliteXC instantly cemented its position as the UFC's top competitor with the announcement of a prime time CBS deal. The company has a enormous gap to close in order to become a legitimate alternative to the UFC, particularly on pay-per-view where the UFC remains unchallenged. However, a successful run on CBS for the rest of the year could quickly change the dynamic of the industry, setting the stage for the first signs of legitimate competition in 2009.
