The subject of the pay of UFC fighters, which gets heavily debated every week or two on Internet message boards when certain athletic commissions release the pay information at shows, was the subject of an ESPN feature and web site article over the past few days, as well as a Yahoo article.
The investigative series “Outside the Lines” looked at fighter pay on a show that included an interview with Zuffa CEO Lorenzo Fertitta, that aired on 1/15 on ESPN 2. Even before the piece aired, UFC President Dana White started bad-mouthing it on his twitter, but more claiming UFC is chomping at the bit to discredit it.
“I’m excited to smash and discredit ESPN and the piece they did!! So pumped,” was one of numerous tweets sent out by White while he was in Rio de Janeiro promoting UFC 142.
“We wanted to look at what the pay scale is presently, it was not our intent to do the story on how UFC has grown exponentially,” noted John Barr, the ESPN reporter who put together the piece. “We feel that piece has been done. We paid some lip service to that. The main goal is what these guys are making at a time when the company has its first significant deal with a broadcast network and pay-per-view shows are as profitable as ever, what is the reality of fighters pay, not the top 5-10% of the fighters, but fighters across the board.”
The actual piece was about six or seven minutes long, followed by a panel discussion of the topic with Robert Maysey, a lawyer who follows the sport and has attempted to get fighters to work together to garner merchandising deals and perhaps unionizing, former heavyweight champion Ricco Rodriguez, who praised Fertitta but claimed he was blackballed out of UFC by White, and Josh Gross, a reporter for ESPN’s web site, who White has probably been more critical of than any reporter with the possible exception of Loretta Hunt.
But there is an inherent problem in the story that Barr readily admits. When covering a major sport, what the athletes earn is a matter of public record due to collective bargaining agreements. Trying to figure out what fighters make, and what UFC makes, is more difficult. UFC is a private company, and while they do release live gate information after most of their shows, that is the extent of financial information the company releases. The big revenue streams, whether it be pay-per-view revenue, television rights fees both foreign and domestic, any merchandising revenue, sponsorship income are all kept private.
And when it comes to fighters salaries, while some athletic commissions do release the base pay numbers, particularly Nevada, which is the company’s home base and where they run the most often, many do not.
Plus, most importantly, the vast majority of the money UFC pays fighters is not released. You don’t have to look any farther than Alistair Overeem, who defeated Brock Lesnar in the main event of UFC’s last show in Las Vegas.
Overeem’s publicly listed pay for the show was $264,285.71 as base pay, plus he received $121,428.57 as his winning bonus. However, a lawsuit filed against Overeem by Knock Out Investments, the parent company of Golden Glory, Overeem’s former management, revealed what the Nevada pay sheets don’t say and what most are in the dark about.
Overeem received a $1 million signing bonus upon inking his UFC contact, with the money spread over his first three fights, meaning he received another $333,333.33 guaranteed for the Lesnar fight. But for Overeem, and virtually every UFC main event fighter on pay-per-view, the number publicly talked about and the real number aren’t even close, due to pay-per-view percentages, which vary based on the fighter.
In the interview, Fertitta noted that 29 UFC fighters have such deals where they get a percentage of pay-per-view revenue. In the case of Overeem, he was to receive $2 per buy after Zuffa company pay-per-view revenue for the show topped $500,000, which would be roughly the first 23,000 buys. If the pay-per-view did 800,000 buys, that would be an additional $1,554,000, putting his total pay in excess of $2.2 million.
The problem is that without the lawsuit, people would be thinking Overeem earned $385,714.28 for headlining a major show. His opponent, Lesnar, was listed as earning $400,000 for the show, but the reality is he also had a pay-per-view bonus locked in, and since he was the more established draw, his bonus percentage would likely be significantly higher.
Within the MMA industry, those complaining about fighter pay continually throw out numbers, usually claiming that only 10% of revenue that UFC brings in trickles its way down to the fighters. But that figure is ridiculous. But what the real figure is for the most part is unknown, because virtually every revenue stream, as well as the actual pay most fighters receive, is also unknown.
“What we did is reach out to fighters, managers, some folks who have worked for Zuffa, and use that 2010 Standard & Poor’s report that 75% of revenue comes from pay-per-view and live events, said Barr. We tried to understand all the revenue streams, pay-per-view itself, costs of production, marketing, all of that stuff. That’s one piece of it. Then, what the guys get paid. We know what’s reported, but we know about all that off the books money, so you have to piece together many parts.
“So you wound up with ranges. Most people come up with a number that’s 10%, some say 6-7%, some high-teens. Lorenzo is on the record saying that’s ridiculous, and is closer toward what the established leagues pay. I didn’t press him on that, but did ask if they’re paying close to 50% and he said, `Yes.’”
Monte Cox, an agent who has 70 fighters under contract, 16 of who are under contract to Zuffa, said how except for the fighters at the top, the rest are struggling and that you don’t negotiate deals with UFC, you take what they offer.
The FTC does have some type of investigation going into Zuffa. The piece said it was an investigation of whether purchasing Strikeforce for $34 million (a dollar figure that Fertitta said on camera for the first time) has led to UFC becoming a monopoly.
Obviously, UFC is not a monopoly, as shown by the different promotions on HDNet, as well as Bellator having television deals. But they control almost every marketable fighter on the North American scene with the exception of a few. It is difficult for a fighter to make a good living outside UFC, although there are exceptions, like Eddie Alvarez, who earns well into the six figures per fight in Bellator. But for those fighters, it’s impossible for them to be considered the best, no matter how many fights they win. And it’s difficult for them to even be considered in the rankings, because to be ranked highly you have to beat guys ranked highly as a general rule, almost all of which are under contract to Zuffa.
Fertitta said UFC has paid out about a quarter-billion in fighter salaries since 2005. But that number would not be anywhere close to 50% of revenues. Fertitta said in a Sports Business Journal article a few months back that the company grosses $400 million per year. Standard & Poor’s has access to their financial information because UFC works on the money of outside bondholders, but only a limited amount gets published. But UFC has been highly profitable from 2006 to the present, with estimates of $76 million in 2006 and a significantly higher profit number in 2010. With PPV falling, the 2011 numbers are likely significantly lower since PPV is the main revenue stream. But those criticizing the numbers have pointed out that $250 million doesn’t appear to add to anywhere near 50% of total company revenue over the past six or seven years for a company that probably hit close to or surpassed the $200 million in revenue range by 2006 and has grown significantly almost every year since then. With PPV bonuses being built into more contracts, Fertitta said that pay to fighters has grown at double the rate of the increase in revenue, which means that whatever the percentage was a few years ago, it would be significantly higher now.
The difference between claims UFC pays 8% and 50% is quite the range and the difference between what could be considered gross underpayment and what would be considered fair payment at least based on the standards of major sports. There is no way the number is anywhere close to 8% as noted in our previous attempts at estimates.
In an attempt to use figures based on Zuffa’s percentage of an 800,000 buy show, which is at best an estimate of how the show did, the $3.1 million live gate, using listed fighter pay, announced bonuses, estimates of unannounced bonuses (admittedly extremely tricky), and percentages of pay–per-view revenue built into the main eventers’ contracts, and you get a very rough figure of 28% of revenue off that event going to talent, and given the bonus structure, that estimate is more likely a little low than a little high. However, for the 1/7 Strikeforce show in Las Vegas, that figure could easily have been greater than 50%.
“In an attempt by (ESPN reporter Josh) Gross and ESPN to do a hack job on us, we were ready this time!,” White posted. “We are gonna blast these hacks!”
He also wrote, “Trust me, I have been part of ESPN hack jobs, that’s why I don’t do those BS shows and why we filmed it.”
“ESPN doesn’t care about this sport, ESPN hates this sport, they hate this sport, they won’t even cover it, they don’t tell the great stories about this sport, they don’t tell stories about the fighters, do you ever see an in-depth story about great fighters, hell no you don’t,” said White in a video UFC produced as a counter argument. “You see this garbage Outside the Lines.”
“They’re dirty. They lie, and they never really give you really all the facts. You can’t even watch stuff like this on TV. From now on, that’s why I didn’t participate in the interview, I refused to participate in the interview, I will never participate in anymore interviews like that, and if I do, I will only do that if we film them filming us.”
It’s a difficult task to know what is and isn’t fair. For one, UFC, as a business, is structured completely differently than the big four team sports, which pay closer to half of total revenue to the athletes. It’s structured differently than boxing, where the major names fighters earn significantly more than UFC’s biggest draws. Georges St. Pierre recently said that he earns $4 million to $5 million per fight, but that figure likely includes sponsorship revenue. UFC has costs associated with producing and marketing shows, and front office expenses, and international expansion costs that a boxing organization doesn’t have.
Plus, the draw in UFC is different than boxing. In boxing, most pay-per-view shows do less than 50,000 buys, but big draws like Manny Pacquiao can do significantly more than 1 million buys, and at a higher price point than a UFC show. Floyd Mayweather vs. Victor Ortiz, for example, grossed $78 million just on pay-per-view revenue, while if UFC 141 was Zuffa’s biggest show of the year and did 800,000 buys, that would be a gross of closer to $36 million, and Zuffa only gets a percentage in the range of half of that. Between live gate and estimated revenue the fight generates originally to the promoters, Mayweather vs. Ortiz would be $48 million and UFC 141 would be around $21 million. Ortiz received a $2 million guarantee and we don’t know what, if any, percentage he may or may not have received. Mayweather received a $25 million guarantee, plus a percentage of all revenue, and is believed to have taken in somewhere near $40 million. Three other fighters on the show earned six figures, most notably Erik Morales at $350,000. But four received less than $10,000 including two prelim fighters who each received $1,500. There are also site fees, HBO replay revenues, and tons of other revenues involved. The general rule for a big boxing event is 70% goes to the fighters, and in this case, it may have been more. But both sports are structured differently.
For the 11/12 Pacquiao vs. Marquez fight in Las Vegas, not including PPV cuts (the show did 1.41 million PPV buys, the largest number for any U.S. PPV event since UFC 100), Marquez received $5 million and Pacquiao received $6 million, while Tim Bradley received $1,025,000 and Joel Casamayor received $100,000. Of the 16 fighters on the show, six were paid less than $10,000 with a low of $1,200.
Virtually every UFC show will do at least 200,000 buys, but the top ceiling for the biggest events isn’t as high, because UFC big events still don’t get nearly the level of mainstream media coverage of a Pacquiao fight. While the main event most often is the key, the main eventers don’t draw as much additional revenue as the two big boxing stars who make tens of millions. Plus, as a general rule, UFC pays undercard fighters better, and markets the shows around the top several matches on a card as opposed to just one match.
The closest business model to UFC is that of World Wrestling Entertainment, which is believed to pay in the range of 13-15% of its total revenue to its performers. And that’s not perfect either because while pro wrestling historically has been about main event wrestlers drawing money, it is no more of a touring brand. Big matches and main event names do make a difference to ratings, PPV and to a small degree, house shows, but not nearly at the level main event UFC fighters do. While some will argue WWE is performance art and not a real athletic competition and thus the performers don’t deserve as much, the dollars WWE derives from its performers is every bit as green as those which UFC derives.
Like UFC, but unlike major sports franchises, both WWE and UFC employ hundreds of full-time front office workers, so comparing the percentage they pay to, say, an NFL team, with far less employees, isn’t necessarily a fair comparison. But on the other hand, like UFC, WWE has been a very profitable business built off the bodies of its performers, for the past several years.
From 2001 to 2004, UFC lost tens of millions of dollars. Fertitta talked of losing $10-12 million in the first year and a similar amount in successive years until getting the television deal. If you are talking about what the fighters were earning then, which is a lot less than now, it was significantly more than the company could afford and remain in business for the long-term. UFC pays more than other organizations, but almost every major MMA company existing collapsed due to financial issues, often paying fighters more than the companies derived in revenue.
In fact, UFC itself before 2005 nearly collapsed under the weight of the debt. But in 2005, the company turned the corner, thanks to a television deal with Spike, and has been running with significantly high EBITDA based on regular Standard & Poor’s Credit reports since that time. But there are untold costs, including those of international expansion, and the cost of getting legalized nationwide and internationally that no other professional sport has had to deal with.
Still, anyone who has been around fighting at any level knows the stories of the fighters who aren’t big stars, in UFC, or other organizations, who struggle by for little money, sleep on friends couches and even go into debt trying to pursue a fighting career.
“The reality is that nobody wanted to talk for attribution,” said Barr. “We talked to everyone. We talked to guys who made millions of dollars, guys in between, and guys at the bottom end of the pay scale.”
It was notable ESPN said they couldn’t get any current fighters to speak on camera. White claimed that Matt Serra had told him they came to interview him, didn’t like what he was saying, and shut down the interview. Barr said that one fighter in the company told him in specific that if he was to participate in this piece, his UFC career would be over.
UFC’s return piece interviewed Chuck Liddell, who noted being bonused above his PPV percentage at times, Forrest Griffin, who noted that he went from making $30,000 per year as a police officer to making millions, and Serra noted how the UFC exposure allowed him to build his local businesses which include two 10,000-square foot gyms on Long Island.
Barr noted that no UFC fighters would talk on the record, but several were willing to talk. It’s become accepted when you talk to fighters these days, that unlike athletes in other sports, what they get paid, at least for attribution, is not something many are going to say much about. UFC is not a monopoly, as there are untold number of smaller promotions around the country. One competitor, Bellator, owned by media giant Viacom, that will have a very significant television deal with Spike starting in 2013. But they are the controlling major league and with Zuffa’s purchase of Strikeforce in March, leverage that at least some fighters have had at playing two competitors against each other (which resulted in very good contracts for people like Dan Henderson, Gilbert Melendez and Robbie Lawler among others) for top fighters was gone.
“We fleshed out stories on guys on the low end, who make six and six, ($6,000 guaranteed and a $6,000 winning bonus), eight and eight or ten and ten, the scale for incoming fighters,” said Barr. “Even though they wouldn’t attach their names to it, we heard from enough of them. It’s tough for the guys on the lower end. For journeyman fighters, they have to pay for their own training expenses, all the additional expenses that come with being a fighter full-time. It’s a real struggle. Not only are these guys tough as hell, but they really make some serious sacrifices in pursuit of the sport they love, and that becomes evident.”
“By the time you pay your trainer, one experienced fighter told me a training camp costs him close to 10 grand, some 7-10 grand, and he might fight three times a year, so, low end, that’s $21,000, and that’s before he’s paid his management company,” said Barr.
A couple of UFC fighters claimed in an MMAjunkie.com article that while their base listed pay isn’t necessarily high, that’s not the complete story. George Roop said that in his first fight of 2011, a knockout loss to Mark Hominick on a Spike fight, he was listed as making $6,000. He noted that he also got a $6,000 bonus and cleared $20,000 from sponsors (he would have earned $23,000 in sponsors but $3,000 went to his manager). In his second fight, a win over Josh Grispi, also a television fight, he was listed at making $12,000, and said he got another bonus of either $6,000 or $8,000 and made just under $20,000 from sponsors. In his third fight, with Hatsu Hioki in a prelim fight on PPV, he got $8,000, got paid either $5,000 or $6,000 as a bonus and made $19,000 from sponsors, so he cleared $100,000 for the year before management and costs of training. He also noted he was able to get paid for a few appearances as a celebrity and that due to his UFC exposure he was able to get $70 per hour teaching private lessons.
Jacob Volkmann, who won three fights during the year, earned $84,000 in listed purses, $10,000 in unannounced bonuses and $4,700 from sponsors. Of that $98,700, he said 20% went to his management and he paid $1,000 during the year in gym and training fees, but also noted spending $250 per week in gas to and from training.
On 12/30, the three lowest paid fighters were listed at earning $8,000, although virtually every fighter on a UFC pay-per-view show gets a bonus of some sorts, usually a minimum of $5,000, sometimes considerably more, that the public doesn’t hear about. Of the 22 fighters on the show, at least 14 earned in excess of $25,000.
UFC released the unedited interview between Barr and Fertitta that they filmed themselves, the key point being where Fertitta noted that ESPN made $2.8 billion in EBITDA last year, umpteen times more than Zuffa did, and that there was a boxer on ESPN 2's Friday Night Fights show that earned only $275 (this was not for a fight that aired on television, although UFC pays significantly more for dark matches underneath on Spike televised cards that are unlikely to air on television), far less than Zuffa’s minimum, which the piece stated was $6,000 to show and a $6,000 win bonus. In actuality, the Strikeforce show on 1/7 had four fighters on a $4,000/$4,000 purse, and there have been at least two fighters on PPV’s in recent months getting those same $4,000/$4,000 figures. However, in the piece, narrated by Bob Ley, a clip was shown of an ESPN 2 boxing match and it noted that some boxers only make a few hundred dollars for a fight. It’s not exactly the same thing, given ESPN 2 did not promote the fight and pay the talent and these were far lower on the totem poll shows generating far less income than a UFC event. The promoters rely on very small gates and a comparatively minuscule licensing fee ESPN 2 pays and nobody spoke of the percentage of revenue such a show paid the fighters. But, veterans of the boxing business who are aware of how UFC pays and treats fighters overall concurred they take care of its prelim fighters better than any organization around, and perhaps in history.
White blasted ESPN 2 for not paying more of a licensing fee to boxing so the fighters could earn more than a few hundred, and that they should have investigated themselves to complain about how little undercard fighters earn.
This led to an exchange between White and Dan Rafael, ESPN’s lead boxing writer on twitter.
Rafael wrote to White that ESPN does not pay the fighters, the promoters do, and ESPN pays the promoters a licensing fee. White said that when ESPN is raking in the highest carriage rates of any television station and $2.8 billion a year (an estimate of ESPN’s profits before taxes this year) then they should pay more. Rafael then said his point was that Fertitta was mixing apples and oranges. White then said, “No he isn’t. These guys on ESPN want to say we don’t pay fair and boxing pays more? Who has more money than ESPN? We pay more.”
In reality, UFC does pay more for lower card fighters, as a general rule, but in terms of total pay, Pacquiao and Mayweather by themselves may earn nearly as much as the entire UFC roster combined. Although that also could be wrong given there are no figures released to back that up and exactly what was the total number UFC paid fighters in 2011 is at best a shot in the dark.
Rafael noted ESPN spends very limited money on boxing programming, it’s one of 1,000 sports it shows and spends billions on the NFL, MLB, NBA and NCAA and that if ESPN was paying a licensing fee of millions for a boxing show than it would be reasonable to compare. White then said that’s like Nike saying a factory in China makes the shoes, not us. “How can we be responsible? ESPN, 2 faced liars.”
“How can they say they are not responsible for what ESPN Friday Night Fights guys get paid? When we pay ten times more.
and they are trying to blast us on what we pay guys!? Lol, it’s a joke. Blew up in their face big time.”
Rafael said, “I am not defending any particular story, I am saying Lorenzo’s argument was flawed, that’s all.”
Rafael then wrote, “Blaming ESPN for the purses a promoter pays on an ESPN show is like blaming Fox (or previously Spike or Versus) for UFC purses.”
“You can’t compare ESPN to UFC,” he wrote. “One is a television network. One is a promotional entity. ESPN akin to Fox. UFC akin to Top Rank.”
White then wrote, “We financed the UFC for 6 years and paid all the fighters out of our pockets. And yes, why doesn’t ESPN pay them more/lic fee.”
But when you figure the bottom pay for a UFC fighter, as a general rule, it’s better than the bottom pay for boxers on televised and even opening match guys on major PPV shows, plus UFC is the first sustaining fight company in the U.S. to give fighters insurance (IFL did as well but they didn’t sustain), which is a big deal.
But even a fairly well known mid-level fighter who is popular, but not a draw, such as Krzysztof Soszynski talked about retirement noting the difficulty he had in supporting his family on his UFC pay. A median UFC fighter will earn $30,000 to $85,000 per year, depending on whether they win their fights, and if they aren’t hurt and can get three fights in during a year. Fertitta himself said the average fighter actually winds up fighting 1.6 times per year. That’s why for most fighters, the performance bonuses that range from $40,000 on smaller shows and usually $65,000 to, for the biggest shows, North of six figures, are such a big deal to the average fighters. That is why some guys make agreements to go all out for the best fight bonuses even if they don’t necessarily implement parts of their games in the process.
That can be augmented by sponsor money, but sponsor money has dried up greatly in recent years both due to the weakening economy and UFC changing the rules where sponsors first have to pay UFC a fee, which can be anywhere from $100,000 to $150,000 per year, before they can even have the right to sponsor fighters. This takes all the local small-time sponsors who may be willing to pay $5,000 or $10,000 to sponsor a local fighter out of the picture, and with that so-called sponsor tax, eliminates a sizeable amount of the sponsor’s budget actually going to fighters. UFC argues, correctly, that virtually no other sport would allow advertising on its TV shows and PPV shows without the league getting a cut. There is also the argument they cut out a large percentage of sponsors who stiff fighters, because of the high price of just getting in meaning fly-by-nighters can’t afford to get in.
For a fighter earning $50,000 per year, and with that you have to pay a percentage to a manager and to trainers, which can easily be 20-30%, and it’s not what it seems to be to the public. Careers are short. In the ESPN.com article, one UFC fighter who wasn’t named said there would be a slew of ex-UFC fighters who are broke in a few years, like ex-boxers. The reality is, that is likely to be the case. That’s also proven to be the case with NFL players with short average careers as the number who end up broke within a few years after their playing days are over is high, and most NFL players earn significantly more than all but the top fighters, and that’s the case with top-name boxers who earn tons more than UFC fighters, which is why they continue to fight long past their primes. So that will end up being the case, just because in the majority of cases that’s how things work out, and would be the case if UFC was paying more as well. We’ve already seen most of the big stars of the previous generation, particularly from the Pride era, who didn’t make what UFC headliners make, but earned far more than most UFC fighters made, that are in their 40s, are having financial issues and in many cases still fighting even though their bodies are destroyed.
ESPN compared the minimum pay to that of the NFL or NHL, but that isn’t germane because revenue is different. But as far as a percentage of revenue that goes to the performers, there are a lot of things that are unknown that would have to be factored in to make a fair comparison. But the higher minimums and higher salaries in major sports came because the players got unionized and had collective bargaining agreements. That has led to minimum salaries,$320,000 per year in the NFL, $473,000 for the NBA (a rookie minimum, if you’ve survived a number of years in the league your minimum escalates to more than $1 million), $480,000 for Major League baseball and $500,000 for the NHL (which it should be noted does not have the huge television deals the other sports have, but does draw huge live gates for nearly every game).
While fighters talk about unions, no boxing or pro wrestling company in the U.S. has ever been able to get its performers on the same page to even come close to unionizing. Lorenzo Fertitta and Dana White have always said publicly that it’s up to the fighters if they want to unionize and that they aren’t against it. Nevertheless, in Fertitta’s Station Casinos business, the workers aren’t unionized, and that has been a bone of contention with local unions and is really the reason for the Culinary Workers Union of Las Vegas having their New York branch work hard to keep UFC out of the state. They’ve also attempted to pressure sponsors to stay away from UFC or cut ties with them, and have even attempted to get FOX to disassociate themselves from UFC by pointing to comments made by White and some fighters.
In all of the aforementioned sports, unionization and free agency are the two reasons players earn what they do, and while there is legitimate free agency in MMA with other companies, from a fighter bargaining position, with Strikeforce and the Japanese scene going down, in reality, there isn’t. The argument that the leagues are monopolies is true, but in the NBA, for example, there are 30 teams, and there are a finite number of top players and they are all in competition to field the best teams. So there is competition when contracts expire in the open market which escalates salaries, to the point that the majority of teams pay so much that they were losing money. They had to be saved from the issue of balancing not losing money and building a competitive team competing with those more willing to spend and lose money, or in better media markets and having that financial advantage of higher local market television rights. That’s where the salary caps came in. But there is no answer as to what is “fair” when it comes to company profit vs. athlete compensation. Every dollar spent to talent is a dollar less of profit. Many of the complaints about UFC fighter pay and the “U Fight Cheap,” term for the company that goes around comes from boxing promoters, who are in some cases admittedly jealous. Because there is no dominant promoter and no ability to control pay the way UFC can in the marketplace, have to pay so much more for the name fighters and have a far tougher time generating profits because of it. But on the flip side, the UFC model, even if it is paying a lower percentage of total revenue to fighters, does take better care of the up-and-coming fighters on its roster.
As far as average salary, a terribly misleading stat because the top end players skew it badly, and the median salary (where half make more and half make less would be better) and the NBA averages $5.15 million per player, Major League Baseball around $3.5 million, the NHL $2.4 million and NFL around $1.9 million. The WWE would be between $500,000 and $550,000. UFC is absolutely impossible to ascertain. But if they really paid 50%, it would be in the range of $650,000. At 30%, it would be in the range of $390,000 and at 15% it would be in the range of $195,000. My experience is that UFC fighters making $390,000 per year are usually really big names, but the average and the median number (a better figure but one that is virtually impossible to ascertain for UFC fighters and pro wrestlers) are very different.
Fertitta claimed in the interview that the company since it became profitable has created 39 millionaires, but exactly what that means wasn’t explained. If it means the company has paid more than $1 million to 39 different fighters in total over the last six or seven years, that isn’t nearly as impressive as it sounds. If they know their fighters finances well enough to know that 39 fighters are worth more than $1 million today, that’s very different and it was never explained. It’s nowhere close to that figure of any of the major sports, but it shouldn’t be, because total UFC revenue still pales in comparison with a major sport.
UFC could go down hard and it’s pay structure is somewhat based on guarding against it. If PPV revenue drops, due to a change in market conditions, consumer burnout, fighters who don’t draw on top, whatever, the bulk of the money paid out drops. The Fox deal gives them more breathing room because there is a guaranteed income base, but it’s also tough because it’s a seven-year deal at a certain figure that won’t be open to a negotiated change until 2019 if it turns out conditions change and the PPV business reacts negatively.
If the bulk of fighter pay was guaranteed, the company would be hurt badly by the kind of revenue drops that took place in 2011, but instead from all appearances, while they did take a hit, you don’t see any noticeable sign of major cost cutting, diminishing the trappings of the product, or even slowing down international expansion. Still, even with a comparison to a lower percentage paid out by WWE, the WWE wrestlers get big video game checks which make a huge difference in annual income to the “have-not” level performers, something UFC fighters don’t get (according to one agent who represents a number of big time fighters, if you are in the advertising for the video game you make money for that, but if you are not, you don’t). And that is something exactly the same. But Zuffa also has probably 300 fighters under contract and generates less income (although not a whole lot less) than WWE during a year. At press time, WWE had roughly 74 performers on the main roster and 44 in developmental, so even paying a significantly lower percentage of total revenue to talent, because they only have 74 main roster performers, the majority of them make very healthy incomes. Developmental contracts are usually $24,000 to $50,000 per year, with the majority at the lower level.
A legitimate major UFC drawing card like Georges St. Pierre or Brock Lesnar earns significantly more than John Cena because of their pay-per-view bonuses, and in the case of St. Pierre, getting a higher percentage of endorsements, if they aren’t injured. But when you have a guy who has done a high-risk style for 23 years, like Rey Mysterio, and has bad knees and is in his late 30s, and missed much of the year with knee surgeries and other injuries, and this happens frequently, he still makes a great income between his downside guarantee, his merchandise sales and video game revenue. Then again, a St. Pierre or a Lesnar only has to fight once a year to make a significantly better income, but if they don’t fight, their money goes down astronomically. But their longevity at the top is more fleeting and can’t be protected. Lesnar after two losses would have likely earned significantly less money, while Cena’s income may vary greatly based on a number of factors, but he is protected from losing matches and no longer being able to headline in a way that will diminish his value while he’s still a viable draw.
But both companies are different from major sports franchises in that the big money is not guaranteed, but dependent upon what you draw, whether it be in PPV sales, ticket sales or merchandise. While Cena is likely an exception, at least as of a year or so ago, a top tier WWE wrestler would not get paid more than $1 million downside, but there are a number of headliners earning more than $1.5 million to $2 million per year.
Barr also noted that not wanting to talk wasn’t limited to UFC fighters, and that even Bjorn Rebney, the CEO of Bellator, wouldn’t talk with them on the subject.
“We actually had every intention of going to a Bellator event in Atlantic City, and Rebney (who is involved with ongoing legal issues with UFC) backed out at the 11th hour,” said Barr. “He didn’t want to pick a fight. He didn’t even want to come across appearing to pick a fight. We felt it was interesting. They have a different business model, a tournament model and they pay guys differently. Even this competitor was afraid to take on the UFC establishment.”
