Backstage Details on How RAW, SmackDown & UFC Deals Materialized
Wednesday, July 11, 2018
The Sports Business Journal has an interesting article detailing the series of events that led to UFC and WWE signing their recent landmark deals that total to approximately $4 billion over the next five years.
The situation heated up when WME-IMG (a talent agency) bought UFC for an astounding $4.2 billion back in 2016 before valuing UFC at $450 million per year which caused several networks to balk at the figure. FOX, which was carrying UFC at the time, decided to not even meet with WME-IMG as they felt the number was way too high. Even though that price tag was grossly inflated, FOX executives came up with three options: a) the network would offer more money ($200 million) than they were currently paying but get less content, b) pay around $150 million per year but split the content with another network or c) abandon UFC entirely. They ended up going with the third option, not even formally submitting any bid but verbally suggesting that they would offer at most $200 million for UFC, which of course they knew would be rejected.
ESPN, which showed interest in both UFC and WWE, ended up signing with UFC - at first agreeing to pay $150 million over five years for the streaming rights to 15 UFC events before ponying up $300 million for all of its media rights. ESPN and WWE talks fell apart mainly on the basis that RAW and/or SmackDown Live airs every week of the year without fail and ESPN, with its other contracts in place, was not able to guarantee a weekly airing. WWE, which was also going to be represented by WME-IMG (now merged with Endeavor), ended up going with a rival talent agency in CAA. While Vince McMahon and the Endeavor CEO were close, the networks involved in the bidding (especially FOX) did not feel comfortable dealing with the same company in negotiations for both WWE and UFC, citing a conflict of interest. This pissed off Endeavor and likely was the final nail in the coffin in the UFC/FOX relationship falling apart.
CAA then leveraged both RAW and SmackDown Live and revealed to NBCUniversal that they were going to negotiate the two shows separately, essentially splitting the package. Seeking $265 million for RAW and $200 million for SmackDown Live, NBCUniversal was forced to go with RAW, leaving SmackDown Live available for any other networks to secure. FOX then quickly moved in the very next day and signed SmackDown Live to an approximate annual $205 million deal for five years. Turner Sports showed interest in both UFC and WWE but due to an ongoing legal situation as a result of their merger with AT&T, they were never serious contenders for any of the shows as their executives would be unable to negotiate such a large deal.
One of the main reasons FOX executives favored WWE over UFC is their ability to monetize that sort of programming. With WWE being a "family friend" and still considered as live sports with an engaging and loyal fanbase, the content was valuable and advertisers were eager to work with them whereas with UFC, it was becoming more and more difficult to market especially with major star Ronda Rousey gone and Conor McGregor rarely fighting. UFC also saved its best fights for PPVs which was also hurt advertising sales.