Pay for UFC fighters under the spotlight
The subject of the UFC's pay scale, which seems to be heavily debated every week or two on Internet message boards when athletic commissions release the information after UFC events, will make its way to ESPN this weekend.
The investigative series "Outside the Lines" will look at what fighters make on a show that includes an interview with Zuffa CEO Lorenzo Fertitta on Sunday at 10 a.m. ET on ESPN 2.
Even though the piece has yet to air, UFC president Dana White pumped up interest in it with a stream of twitter posts taking issue with the story.
"I’m excited to smash and discredit ESPN and the piece they did!! So pumped," was one of numerous tweets sent out since Thursday by White, who is currently in Rio de Janeiro promoting Saturday night’s UFC 142 event.
John Barr, the ESPN reporter who put the piece together and narrates it, sees it as a balanced look at the topic. "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," Barr said. "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 percent of the fighters, but fighters across the board."
The actual piece will be about six or seven minutes long followed by a panel discussion during the 30-minute-long show.
But there is a challenge inherent in presenting the story, something Barr readily admits.
When covering most major sports, athletes’ pay is a matter of public record due to collective bargaining agreements. Trying to figure out what fighters make, and what the UFC earns, however, 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 makes public. The big revenue streams from pay-per-view earnings to television rights fees – both foreign and domestic – to merchandising revenue and sponsorship income are all kept private.
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.
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 win bonus, according to Nevada Athletic Commission records. 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. Therefore, Overeem received an additional $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 that will air Sunday, Fertitta noted that 29 UFC fighters have deals in which 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 if 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.
Without the info revealed by the lawsuit, most would assume 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 mixed martial arts industry, those who complain about fighter pay continually throw out numbers, usually claiming that only 10 percent of revenue that UFC brings in trickles its way down to the fighters. But that figure is ridiculous.
The real figure is for the most part 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 percent of revenue comes from pay-per-view and live events,” Barr said. "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 percent, some say 6-7 percent, 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 percent and he said, `Yes.’"
That’s quite a range. In an attempt to use figures based on Zuffa’s percentage of an 800,000-buy show, which is the rough industry estimate on UFC 141, the $3.1 million live gate, using listed fighter pay, announced bonuses, estimates of unannounced bonuses, and percentages of pay–per-view revenue built into the main eventers’ contracts, give you a very rough figure of 28 percent going to talent. However, for the Jan. 7, Strikeforce show in Las Vegas, with a very small gate figure and a full roster of fighters to pay, that figure could easily have been in the range of 50 percent.
Attempts to get White or Fertitta to talk on this subject went unanswered, although White posted a number of Twitter messages stating that after the piece airs, they would release their own footage and give their side of the story.
"In an attempt by [ESPN.com MMA 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."
Figuring out what is and isn’t fair is a difficult task. 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 also structured differently than boxing, where the major name 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, front-office expenses, and international expansion costs boxing organizations don’t have.
Additionally, the UFC's draw is different than boxing. In boxing, most pay-per-view shows do fewer than 50,000 buys, but big draws like Manny Pacquiao can do significantly more than one-million buys, and at a higher price point than an UFC event. Floyd Mayweather vs. Victor Ortiz, for example, grossed $78 million just on pay-per-view revenue. Conversely, 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.
Virtually every UFC show will do at least 200,000 buys, but the top ceiling for the biggest events isn’t as high as in boxing, in part because there isn’t nearly the level of mainstream media coverage as there is for a Pacquiao or Mayweather fight. 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 killer main event.
The closest business model to UFC is that of World Wrestling Entertainment, which is believed to pay in the range of 13-15 percent of its total revenue to its performers. While some will argue WWE is a form of performance art and not a real athletic competition – and thus the performers don’t deserve as much money – the dollars WWE derives from its performers, who take a legitimate physical pounding, is every bit as green as those which UFC makes.
Both WWE and UFC employ hundreds of full-time front-office workers, so contrasting the percentage they pay to, say, an NFL team, 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 2001-04, UFC lost tens of millions of dollars. 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 MMA organizations, but almost every other major MMA company existing collapsed due to financial issues, from Affliction to Elite XC, which often paid fighters more than the companies made.
In fact, UFC nearly collapsed under the weight of the debt. But the company turned the corner in 2005 thanks to a deal with Spike TV, and has been running with significantly high EBITDA (earnings before interest, taxes, depreciation and amortization) based on regular Standard & Poor’s Credit reports since that time. However, other operational costs remain, such as getting legalized nationwide and internationally, which 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. Whether it’s the UFC or other organizations, those trying to get established make little money, sleep on friends’ couches and even go into debt trying to pursue a fighting career.
"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," Barr said. "Even though they wouldn’t attach their names to it, we heard from enough of them.
"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."
Barr noted that no UFC fighters would go 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 will discuss in detail.
"The reality is that nobody wanted to talk for attribution," Barr said. "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."
UFC is not a monopoly, as there are untold numbers of smaller promotions around the country. One competitor, Bellator, is owned by media giant Viacom, which will have a very significant television deal with Spike starting in 2013. But UFC is the controlling major league and with Zuffa’s purchase of Strikeforce in March, fighters' ability to leverage two competitors against each other was gone.
On Dec. 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 that the public doesn’t hear about. Of the 22 fighters on the show, 14 earned in excess of $25,000 disclosed.
Most UFC fighters fight three times a year and usually have to pay a significant percentage to a manager and to trainers that most people looking at those numbers don’t realize.
Barr also noted that hesitance to speak on the record 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 backed out at the 11th hour," Barr said. "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."
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