UFC documents detail the importance of pay-per-view sales to total revenue, and one star shines brighter than the others

Even with media rights deals across the globe, a domestic TV deal with FOX networks at home, and an over-the-top streaming service to reach fans online, pay-per-view is still where the UFC’s bread is buttered.

According to investor documents obtained by MMAjunkie, 38.6 percent of the UFC’s total 2015 revenue of $609 million came from pay-per-view sales, making it the single biggest driver of UFC revenue. Documents also maintain that sales reached record levels for the UFC in 2015, driven in part by a shift in strategy, but also by the emergence of UFC featherweight champion Conor McGregor, who in just two events accounted for slightly more than a quarter of that year’s pay-per-view sales.

The presentation, prepared in July prior to the finalization of the UFC’s sale to WME-IMG, details the UFC’s various sources of revenue as part of its pitch to investors. By far, the bulk of the UFC’s income stems from content, both in the form of domestic and international rights fees, as well as pay-per-view sales and subscriptions to the UFC Fight Pass streaming service.

Those four content categories accounted for $462 million of revenue for the UFC in 2015, roughly 75 percent of the year’s total take. Of that, residential pay-per-view sales made up 42 percent of the content category, accounting for about $194 million of the UFC’s 2015 revenue.

Pay-per-view sales and revenues both hit an all-time high for the UFC in 2015, according to the document, and just one year after taking a noticeable dip in 2014, a year in which the UFC was plagued by injuries, forcing the cancellation of one event and causing changes to the original main event in several others.

According to the document, the UFC fixed this problem in 2015 in part with a practice the company calls “double stacking.” Essentially, it put more effort into promoting a main and co-main event for each pay-per-view, increasing the odds that there would still be a noteworthy fight on offer even if the original headliner changed or was dropped altogether.

For at least two events in 2015, the document claims that the UFC also had “other top fighters on retainer and prepared to step into the fight with minimal notice.”

Those strategies helped the UFC bounce back on pay-per-view in 2015 and in the first half of 2016, despite a rate of main event changes that remained essentially unchanged.

But there’s another factor that explains the increased revenue from pay-per-view, and it’s the current UFC featherweight champion. McGregor (20-3 MMA, 8-1 UFC) headlined two pay-per-view events that year which did a combined 2.025 million buys, according to the UFC’s numbers.

Both of those events far outpaced even the top-selling pay-per-views of the previous year, and by the end of 2015, the two events headlined by McGregor accounted for slightly more than a quarter of the year’s pay-per-view sales.

Former UFC women’s bantamweight champ Ronda Rousey also turned in strong numbers, selling a combined 2.6 million pay-per-views over the course of three events in 2015.

Still, after McGregor helped the UFC to 1.3 million more buys in his first fight with Nate Diaz in 2016, the UFC’s own analysis highlights him as not only the biggest pay-per-view star of the moment, but also in all of company history. According to the document, McGregor crossed the one million buy threshold in two of his three headlining efforts, “compared to seasoned fighters (Brock) Lesnar and (Anderson) Silva who have achieved only (one) such fight to date.”

But the UFC’s reliance on pay-per-view is not necessarily put forth as a total positive, especially in a volatile sport where injuries appear to be a constant fact of life.

In fact, one chart notes that the UFC’s business model has become more stable as it has leveraged media rights deals and contracted revenue to become less reliant on pay-per-view sales. While the UFC routinely made over 50 percent of its yearly revenue from pay-per-view buys in each of the years from 2008 to 2011, that dropped to 39% in 2015.

The UFC remains a content-oriented business, with pay-per-view sales and TV rights deals expected to continue dominating the overall revenue picture in the years to come. What’s less clear is whether the UFC can continue to grow revenue if it gets less help from McGregor and Rousey, who together accounted for 56.1 percent of all the pay-per-views sold by the UFC between 2012 and 2015, according to the document.

But with McGregor slated to return at UFC 205 in November, and with Rousey following at UFC 207 in December, how the company might manage without them is a question the UFC doesn’t have to answer – at least not yet.

For more on the business strategy laid out by the UFC in the wake of its $4 billion sale, check out the previous stories on MMAjunkie:

For more on the UFC’s upcoming schedule, check out the UFC Rumors section of the site.