Comparing Merch Deals: UFC vs WWE

July 28, 2008

While the discussion over the UFC’s merchandising and ancillary rights contracts has died down somewhat, the contract continues to cause concern for athletes and agents in MMA circles. Dave Meltzer compared the UFC’s merchandising pacts with those of the WWE, a promotional and business model that the UFC seems to be modeled after, in the print version of his Wrestling Observer Newsletter.

There’s a lot of controversy in the MMA world regarding UFC trying to get fighters to sign merchandising agreements, which, among other things, would give UFC the right to market the wrestlers in perpetuity. The agreements are similar to those in this company (the WWE), which UFC is following the lead in when it comes to merchandising fighters. However, the situation is very different. The top fighters are balking at things like percentages offered and life-long marketing, which would include after they leave the company. In WWE, the contracts you sign to wrestle and merchandise deals are mandatory while UFC is trying to now get people under contract to sign new deals from scratch with merchandising. Plus, almost all fighters of any note have representation, while in WWE, a large percentage, perhaps as high as half, don’t employ representation. UFC fighters up to this point didn’t get bonused for things like DVD sales of shows they are on. WWE wrestlers get a percentage, sometimes tiny but a percentage nonetheless of anything they appear in. If you appear in a match on somebody else’s DVD, you get a piece. All wrestlers and former wrestlers get itemized quarterly merchandise reporters and breakdowns. Wrestlers don’t get anything from matches that are replayed on television. UFC fighters don’t get anything from all the repeats of their fights on television either.

The WWE deals are mandatory while the UFC is trying to get fighters to sign new deals, but that is clearly the end game for the UFC. The WWE model for marketing rights has proved to be a bonanza and one that Zuffa would be keen to replicate. A closed system with all merch rights being controlled by the UFC is the most economically attractive for Zuffa. Such a model would be similar to those done by the other major sports leagues, who tightly control what brands are associated with their teams and players. In-House Zuffa product or those designated as official providers, like TapouT, will become the major players for things like Apparel.

They aren’t able to retroactively apply the new marketing paradigm to those under contract but those just coming in to the company are a whole other matter, and should serve as the means to implementing this closed system strategy . The merch deal will likely become a pay-to-play issue for those looking to fight in the UFC, a mandatory step for entry into the biggest MMA company in the world. There will be a mix of merch-contracted fighters vs non-contracted fighters for the foreseeable future, but over time that will increasingly tilt towards an all merch-contracted labor force for the UFC. The time frame for such a conversion is probably over a 5 to 7 year time period.

Comments are closed.