UFC Labor Relations Back in the News: New Details on Bonus Structure; White Defensive and Defiant
December 27, 2007
The growing tensions between the UFC and its top fighters is back in the mainstream with an article in the Los Angeles Times this morning. The piece, titled This UFC Battle is All About Money, focuses on Randy Couture’s resignation as an illustration of the growing criticism of the company’s pay scale. The article includes quotes from Dana White, Tito Ortiz, and Randy Couture.
Most of the ground covered by the article is old news to those who follow the MMA media, however, White did reveal that the company has eliminated signing bonuses in the aftermath of the Couture resignation. It was also confirmed that Matt Hughes received a $1 million dollar bonus in the aftermath of his bout last year with Royce Gracie. However, it is not clear if the bonus was a signing bonus (as previously reported here) or a post fight performance bonus.
Of course this should come as no surprise since the distinction, or lack there of, between signing bonuses and discretionary performance bonuses was one of the issues at the heart of the dispute between Couture and the UFC. Contracted signing bonuses, a widely accepted practice in professional sports, seem much less worrisome in a labor relations context than discretionary performance bonuses doled out at management’s will. However, the elimination of undisclosed bonuses of any kind is a step in the right direction (SEE: Transparency is the Answer).
Ortiz brought up his bout with Chuck Liddell last December as an example of the inequity of the company’s pay scale. Ortiz claimed that the UFC made $42 million from the event while he and Liddell received $1.5 million each.
The $42 figure is misleading. UFC 66 is believed to have drawn 1,050,000 buys which would represent a total gross of $42 million, however, Zuffa’s share would be at most $21 million. There have been conflicting reports on the company’s arrangement with pay-per-view distributors, but the company is believed to receive 40-50% of gross pay-per-view revenues.
Ortiz went on to summarize his position:
We’ve had to put our lives on the line, and now that we’ve seen the UFC making its money back — and more — we’re asking, ‘Where’s the money?’ Dana’s famous words are, ‘I’m going to make you the biggest superstar in the world,’ but they make great [dollar] numbers on their video games, merchandising, and DVDs of us fighting, and the fighters get none of it.
Perhaps the most noteworthy aspect of the article was White’s aggressive response, calling Ortiz an “idiot”–again–before defiantly stating:
Am I entitled to make some money? This is a business, and the business deserves to make money. These guys wouldn’t be putting their lives on the line if I hadn’t busted my [rear] to build this infrastructure, and Randy Couture wouldn’t be a millionaire now.
The first part of the statement is largely uncontroversial, at least as far as I am concerned. Zuffa assumes an even greater financial risk than most other promoters, particularly more than boxing promoters, and thus deserves a larger financial reward (SEE: Boxing v. MMA Pay Scale & Business Model – expanded version available in the new issue of MMA Sports Magazine). The real question is not whether or not the company deserves to make money, but rather how much? Irregardless, it is hard to understand why fighters do not deserve at least some cut of DVD and merchandise sales.
It is no doubt true that White deserves a large share, possibly even the lion’s share, of the credit for the growth of MMA and with it the compensation of its top stars. However, taking the public tact that your most important employees should be grateful to you for whatever they get is probably not the most effective labor or public relations strategy, benevolent dictator rarely plays well for very long. White has to know as much, leading one to wonder whether or not White is really feeling defensive, and a little bit guilty, rather than defiant.
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