Thingading - If he signs with them, the good news is obviously more money and fans for them, as well as publicity for their organization.
But the downside is if he comes in, especially after being out of the sport for over 3 years and well past his prime (turns 39 in two months) and were to beat their current champ (maybe twice - if he wins and they have him fight Werdum again to complete the trilogy) and possibly goes on to beat other top guys - it further solidifies his status as GOAT. A GOAT who fought all but the last few fights of his career OUTSIDE the UFC and prompting people who aren’t already, to wonder why the UFC didn’t have him back when he was younger and at his peak. A guy who Zuffa sometimes ripped on or discredited.
If The Last Emperor comes in after a 3 year layoff approaching 40 years old and snags the UFC HW belt, would Dana and Company like this? Or, would it make their greatest fear a reality? And if it’s the latter, do you think part of Zuffa doesn’t want to sign him?
In no way does that hurt the UFC. Are people going to say "I'm not going to buy UFC shows anymore because they didn't used to have the best guy"? "Instead I'm going to stop watching MMA or watch Bellator where they have zero top guys"?
Plus no one outside forums like this one gives ANY kind of a fuck about this sort of thing in the first place.