Opinion: Money Matters

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The story of the Ultimate Fighting Championship’s transformation from expensive experiment to MMA monolith is well-tread information, but just in case, here are the CliffsNotes: Prior to Zuffa’s 2001 purchase, the UFC was on the brink of bankruptcy. The success of the company hinged equally on its struggle against financial insolvency and poor public perception. Up until 2005, the UFC was hemorrhaging money and mired in debt. Then “The Ultimate Fighter” happened, and the rest is history.

By any reasonable measure, the UFC won both of its battles. Financially, it’s thriving and continuing to grow. In terms of popular reception, MMA is legal almost everywhere that matters; it has spawned and inspired successful TV shows, movies and video games; and its athletes share stages and studios with their peers from mainstream sports across the world. All this to say: UFC President Dana White and Co. deserve plenty of credit. They made the UFC monstrously successful, and in doing so, they helped legitimize the sport in a way that has benefitted themselves, fighters, promoters and fans everywhere.

Yet, their efforts to put the UFC on par with the likes of the NBA, NFL and MLB have been misguided. The UFC cannot be considered on the same level as other sports leagues until it starts to pay its athletes more equitably.

A report from Bloody Elbow’s John Nash on Oct. 20 estimated that UFC fighters receive somewhere between 13 and 17 percent of total UFC revenue. By comparison, other major sports leagues pay their athletes between 35 and 45 percent of total revenue, depending on the sport.

Meanwhile, company revenue continues to increase by an average of nearly $43 million every year, while the average fighter purse has basically stayed the same. Plus, the amount a fighter makes depends largely on fighting -- and winning -- regularly, which is no guarantee in a sport as injury-inducing and fickle as mixed martial arts. Since fighters are independent contractors, not employees, their income is at the whims of several uncontrollable variables, and they shoulder a heavier tax burden than unionized players in other sports.

It’s also worth mentioning that, unlike other sports, fighters sign away their likeness rights in perpetuity in order to fight in the UFC. The exact wording of the contract states that “the death or incapacity of the fighter shall not affect or terminate” the UFC’s ability to exclusively collect money from fighter likenesses, which is as unconscionable as it is totalitarian. It’s no wonder that good fighters are retiring early more often nowadays. Why risk physical trauma for a gamble?

To be fair, a recent email sent to fighters claimed that they would receive some compensation for merchandise sold with their name or likeness, though its vague wording and the UFC’s history with contracts of adhesion don’t make me optimistic about those prospects.

Then, there’s the Reebok issue. The exclusivity of the Reebok sponsorship deal is the most recent attempt to doll up the UFC in the name of legitimizing it. While the Reebok uniforms may be cosmetically superior to the Condom Depot booty-banners of yesteryear, the deal has hampered the wellbeing of fighters by replacing their independently negotiated sponsorships with the typically meager compensation that Reebok provides. Entry- and mid-level fighters have felt it the most, and many of them have vocally complained that their outside sponsors provided the bulk of their income. The official UFC response has been to demean, denounce and dismiss those who don’t like it.

You may be thinking that if fighters aren’t happy with their lot in life, they can gain leverage by making themselves invaluable. The Conor McGregors and Ronda Rouseys certainly have more wiggle room to negotiate. That’s true, but it’s shortsighted. It’s ridiculous to expect everyone to either become superstars or get cast aside, and the reality is the UFC needs the non-stars arguably more than it needs the superstars. An abundance of low- and mid-level fighters allows the UFC to both build stars and put on as many shows as it does, both of which disproportionately benefit the brass and not the fighters as a whole.

According to Nash’s report, about 55 percent of all UFC revenue is now event-based. This sheds some light on why the UFC continues to add more events to its yearly schedule, despite the obvious downsides of diluted cards and diminished fan interest. The UFC’s annual revenue is directly proportional to its increased number of events. The big names bring in the pay-per-view buys, but the no-names provide the UFC with the ability to pump out events almost every week. Thus, even in a year like 2014, where the average and total pay-per-view sales dropped dramatically, the UFC was still able to generate an additional $39 million more than the year before.

This does not even mention that the Marcus Brimages of the world pay dividends for the UFC long after they get cut, as they end up on promotional highlight reels of other fighters for years to come. Taking care of these fighters is not only ethically responsible but financially sensible.

The concept that fighters should just shut up and fight is sophomoric. This isn’t a hobby; it’s how they make a living. I shouldn’t even have to mention that watching fights provides meaning and enjoyment for many of us. Furthermore, the “if they don’t like it, they can fight somewhere else” argument is equally risible. Fighters want to be in the UFC, and both parties have a shared interest in seeing the other succeed. In the long run, what’s good for the fighters is good for the UFC.

It never bodes well for a company to be completely impervious to input from those it depends on to succeed. These are reasonable issues, but instead of treating them as such, the UFC is thwarting efforts to address them at every turn. In continuing along with business as usual, the UFC is being pennywise and pound foolish.

Clearly, nobody can expect the UFC to pay fighters a similar sum as professional stick-and-ball leagues, because the UFC itself doesn’t generate as much total revenue; and of course, the financial architecture of the UFC is completely different from other sports. The point: Emulating other sports doesn’t make sense. Instead, the UFC should be trying to improve on its existing model.

The idea that independent contractors have to wear company uniforms, sign away their rights and keep the UFC abreast of their whereabouts at all times is absurd. In divvying up the increased profits more equitably, the UFC will take a big step towards the legitimacy it desires. You don’t need new uniforms or apparel deals to impress the masses. What separates the UFC from the bigger, more legitimate sports is the absence of collective bargaining, consideration of fighters as employees and a union.

If you want to be a legitimate league, treat your athletes like the professionals they are. That starts with paying them more, from the bottom up.