Even though mixed martial arts is considered controversial by some for its brutality, MMA is the fastest growing sport in the world. With the rise of the very popular Ultimate Fighter reality series on Spike TV, Americans are able to witness the emergence of some of the sports future stars.
Previous Ultimate Fighter season winners include Forrest Griffin and Diego Sanchez. Both, and many more competitors, have had outstanding professional careers with the UFC.
With the popularity of ultimate fighting at an all time high, MMA has become a billion dollar industry.
Even with record sales of MMA clothing, gear, pay-per-view buys and event gate sales, the money earned for the UFC by the blood and sweat of its combatants is not being evenly distributed back to the actual fighters themselves for their efforts.
Back in 2001, the current owners of the UFC bought the bankrupt organization for $2 million. Eight years later, the UFC’s worth has eclipsed the $1 billion mark.[i]
Most recently, revenue earned from pay-per-view buys in 2009 exceeded $357 million.[ii] This revenue does not include gate sales, merchandise, advertisement costs and television ratings earnings, all of which can equate to millions of dollars more in revenue for the UFC.
The revenue gained by these venues may not include expenses. That variable is not released when the overall dollar figures are made public. However, even with costs associated for each fight, a substantial amount of revenue is being pocketed by the UFC. It is natural to assume that these earnings are shared appropriately with the UFC’s stable of excellent fighters.
Unfortunately, this assumption is not true and a tremendous inequality exists between ownership and athlete within the current salary structure.
As a former professional fighter myself, I have direct experience with the process in which a fighter is paid and how a contract is established.
Pay for a fighter is typically twofold. First, when a fighter makes their contracted weight, they receive “show” money. That amount is guaranteed to each fighter for arriving at the venue at the contracted weight.
Additionally, the remainder of an ultimate fighter’s purse is directly contingent on whether or not they are victorious in their fight. If a fighter is declared the victor, “win” money is awarded and is typically equal to the value of the “show” money.
However, if a fighter loses, only the “show” money is awarded and the loser earns only half their potential purse.
For example, Frankie Edgar competed in UFC 118 versus BJ Penn. His contracted “show” amount was $48,000. He earned an additional $48,000 for his victory for a total of $96,000 in earnings.[iii] These earnings do not include sponsorship deals or bonuses paid by the UFC.
This salary structure does not remain consistent, however. For the co-main event of UFC 118, James Toney earned a flat salary of $500,000 for his pitiful showing against Randy Couture.
For the layman, Frankie Edgar’s pay of $96,000 for one night’s worth of fighting is a tremendous amount of money. And please don’t get me wrong, even if we were not struggling through the worst economy in over half a century, his earnings for one night’s worth of work are more than twofold the average salary of most Americans.
As lucrative as a victory is for the fighter, the UFC itself is making exponentially more money from each venue than the actual fighters who participate and draw the fans to the show. For UFC 118, the disclosed fighter payroll was $1,428,000. The show drew 14,168 fans (11,205 paid, 2,963 complimentary) providing a $2.8 million gate.[iv]
Additionally, the UFC earned revenue off of merchandise sales, sponsorship dollars, television ratings for the preliminary fights which were aired on Spike TV and additional marketing dollars.
Therefore, the gate earnings itself provided the UFC with almost a 50% return on their investment after the fighter’s were paid their contracted salaries.
Additional earnings could have potentially increased the UFC’s profit by 20 - 25% generating an additional $1,000,000 for the organization creating revenue of $3.8 million for UFC 118. Net income for UFC 118 would be $3.8 million minus the expenses.
In mathematical terms, the profit sharing between organization and fighter for the UFC 118 event was about 3 to 1 with the UFC itself earning almost 75% of the revenue.
When compared to the four major revenue earning professional sports here in the United States; baseball, football, basketball and hockey, which have a profit sharing of close to 50% between organization and player, the UFC is pocketing nearly 25% more of the dollars made.
Why does this huge disparity exist in earnings between management and fighters? I believe it exists for two reasons.
First, the UFC is essentially a monopoly. The one competitor worthy of rivaling UFC’s dominance in mixed martial arts is Strikeforce. This promotion, however, does not have the star power of the UFC. Strikeforce’s stable of fighters are not as well known to the average fan. Gilbert Melendez, Ben Henderson and Nick Diaz cannot compete in popularity against well known fighters such as George St. Pierre, Anderson Silva and Chuck Liddell.
Additionally, the UFC has purchased its competitors over the past few years liquidating the world’s greatest fighters to the UFC brand. With the take over of Pride Fighting Championships and the WEC, the pool of talent available to the UFC matchmakers is unparalleled by any other organization.
Essentially, the best of the best fight for the UFC, minus Fedor Emelianenko, who is unquestionably the greatest fighter on the planet, even with a recent loss to Fabricio Werdum.
The second reason I believe such a disparity exists between management and fighter is that a union is not in place to look out for the best interest of the fighters themselves. The four major sports here in the United States each have a player’s union. It is the union’s job to negotiate salaries, design a structure for revenue sharing and to provide leverage for its constituents.
Without a union to back the fighters, the UFC can say “take it or leave it. If you will not fight under our terms, we will find someone who will.” Just ask Nick Diaz and Dan Henderson who are no longer under UFC contracts. A fighter’s main goal is to compete. Therefore, the majority of the fighters will agree to the contracted terms, even if the pay is unequal.
The UFC has been streamlining its roster of fighters due to poor performances within the cage. I understand the rationale behind this move. The fans are paying their hard earned money to watch two fighters engage within the octagon. If that does not occur, or if a fighter hits a three fight losing streak, fighters are released.
What angers me, however, is that when fighters do place their livelihood on the line to ensure a quality fight, those without the big names are not being compensated fairly and/or are being released from their contracts, i.e. Matt Brown. Earning $3,000 to compete in mixed martial arts biggest promotion is not equal to what that event draws in revenue.
In short, a revenue sharing system needs to be established to guarantee that fighters are earning their appropriate share. When that occurs, I guarantee that all fights will captivate the crowds.
The UFC business itself earns nearly 75% more than the actual fighters who lay their well-being on the line to compete in the sport that they so dearly love.
November 28, 2010
[i] www.azcentral.com/12news/news/articles/2009/09/10/20090910ufcexplosion0912009CR.html, October 21, 2010.
[ii] www.watchkalibrun.com/2010/2/15/1310271/heath-herring-attacks-ufc-salary, October 21, 2010.
[iii] www.mmajunkie.com/news/20512/ufc-118-salaries-toney-500k-couture-250k-top-1-428-million-fighter-payroll.mma, October 21, 2010
[iv] http://mmapayout.com/index.php?s=ufc+118, October 21, 2010