UFC to Sell First NFTs as Fighters Gain Share of Licensing

UFC will sell its first-ever NFTs through Panini America in a licensing deal that will see fighters share in more of the royalties from digital collectibles than they do from clothing and apparel.

Already UFC’s official trading card partner, Panini will be making NFTs to commemorate big fights, milestones and moments featuring more than 100 UFC athletes. The digital collectibles—static images of Panini trading cards—will be sold starting next week via Panini’s own marketplace.

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Fighters typically receive about 30% of UFC’s cut on licensed apparel and merchandise. For NFTs, the mixed martial arts promotion is planning to raise that share to 50%, according to chief operating officer Lawrence Epstein.

“The reality is that this product is one where you take the UFC brand, you take the fighter’s likeness, you put them together and 1+1=4 or 5,” Epstein said in an interview. “A 50-50 split makes sense. It’s fair, and it reflects what both sides are delivering to the product.”

The Endeavor-owned fight promotion is often criticized for its compensation of fighters—while most major U.S. leagues share about half their revenue with their athletes, UFC shares closer to 20%. That debate was re-stoked last weekend, when strawweight prospect Cheyanne Buys cried upon finding out that she’d won a $50,000 Performance of the Night bonus, telling reporters, “I’ve been so broke my whole life because of this sport.”

“It’s always easy to compare splits in sports like the NFL, but they’re getting billions of dollars every year in guaranteed revenue from some of the biggest sports media companies in the world,” Epstein said. “When you compare us to sports leagues of our size, we’re no doubt fairly compensating people. And we want to continue to grow this business, and create more opportunities, like we have with NFTs, to provide additional revenue to our athletes.”

Licensing has been a growing priority for UFC since Endeavor (and others) bought the promotion in 2016. Virtually non-existent at the time, UFC’s licensing revenue from merchandise, NFTs and the UFC video game, is expected to top $1 million for the first time ever in 2021, nearly triple the 2020 total, according to someone familiar with the business. Epstein said the licensing pool distributed to fighters is also projected to triple this year versus the previous high. He declined to provide specifics.

Across the sports world, memorabilia and collectibles are soaring in value during the pandemic, and NFTs have become a new addition to the marketplace. The digital collectibles are usually bought, sold and traded through blockchain technology, and are often offered alongside tangible items. UFC heavyweight champion Francis Ngannou, for example, sold NFTs in March that included a signed pair of gloves, sealed with sand from the mine in Cameroon where he worked growing up.

The Panini NFT agreement, an extension of their current UFC partnership, is a licensing agreement, Epstein said, with UFC receiving its share from Panini in U.S. dollars. That avoids the debate happening at leagues, teams and media companies across the country about whether to keep NFT proceeds in cryptocurrency or convert them immediately into U.S. dollars.

The deal comes a few weeks after UFC inked a $175 million deal with cryptocurrency marketplace, the biggest sponsorship in UFC history. Epstein said crypto and NFTs both particularly appeal to young, tech-savvy individuals, which is a demographic that is very attractive to UFC.

UFC also has a partnership with Dapper Labs, the company behind NBA Top Shot, which covers UFC-branded digital collectibles. Those will differ from the Panini ones because they’ll incorporate video and interactive media, like Top Shot does. Though that deal was announced in February 2020, the two haven’t yet released product to the public.

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