Demand for the Ultimate Fighting Championship: an Econometric
Journal of Business and Economics, ISSN 2155-7950, USA June 2015, Volume 6, No. 6, pp. 1032-1056 DOI: 10.15341/jbe(2155-7950)/06.06.2015/002 © Academic Star Publishing Company, 2015 http://www.academicstar.us Demand for the Ultimate Fighting Championship: An Econometric Analysis of PPV Buy Rates Richard A. McGowan1, John F. Mahon2 (1. Boston College, MA 02467, USA; 2.University of Maine, ME 04469-5723, USA) Abstract: This study provides a framework by which the UFC can analyze the determinants of its PPV buy rates, a form of direct demand for the UFC. Accurately deriving demand is incredibly important in the UFC’s goal to maximize revenue and further grow the sport and equally as important for promoters, TV and cable networks. Given that the endogenous growth of the UFC has slowed greatly, specific event characteristics have emerged as the primary factors that govern the buy rate. Using a combination of empirical regression analysis and industry expertise, the UFC and promoters and others can more accurately estimate the buy rates of upcoming events. Key words: gaming; sports; econometric analysis JEL codes: C1, M1 In the past fifteen years, the sport of mixed martial arts has grown from no-rules, bareknuckle “human cockfighting” into a highly professional and incredibly popular mainstream sport with millions of fans around the world. Since purchasing its biggest rival in 2007, the Las Vegas-based Ultimate Fighting Championship (UFC) has been undisputedly the largest, best quality and most popular MMA promotion in the world. In 2008, Forbes wrote an article calling it the “Ultimate Cash Machine”, valuing it at $1 billion (Miller Matthew, 2008).
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