Fighter Salaries: A Fair Share of Revenues (Part 4)

August 7, 2008

Meeting Fighter Interests

Unfortunately, for the fighters and the public that love to loathe the UFC, a lack of information and the problematic complexities of a definitive revenue splitting scheme means that they may have no other choice than to cooperate with the UFC and trust that Dana White “takes care of his guys”.

Most are going to scoff at this idea, especially after having read Fight! Magazine’s latest interview with Roger Huerta. Yet, it appears as though a confluence of events is currently taking shape to help guarantee that Dana White begins taking better care of his fighters.

I see the emergence of legitimate competition, Zuffa mis-steps such as the merchandising contract and Randy Couture incident, in addition to the evident success and continued growth of the MMA industry all putting pressure on Zuffa to bend its standard operating procedures in favour of the fighters.

If you’re a fighter reading this, the time to negotiate is now. Who knows how long these competitive forces will be around to inflate fighter payouts.

But really, the ballpark difference between what the fighters are bringing in now and what some believe the fighters should bring in is likely only a few percent – anywhere between $5-10 million, annually. That amount isn’t so huge that creative options cannot be used to help make the fighters more comfortable and financially secure with Zuffa.

And is that not the real issue here? For the fighters, it’s not all about the money – it’s the perception that Zuffa and the UFC are either trying to take advantage of the fighters or that they just don’t give a damn. While that likely isn’t the case, certainly they’ve got to do a better job of showing their care and respect for the fighters. That would suggest that a greater priority must be placed on doing the little things for the fighters in order to foster a sense of belonging and loyalty.

I’ve hit on this before and many believed it was just a bunch of HR mumbo-jumbo, but look at the trends of the real world – the correlation between company success and employee satisfaction is staggering. It’s simply common sense.

In that respect, I have a number of suggestions which I feel would go a long way to helping alleviate the tension and distrust between the two parties:

1. Why pay your employees when you can get someone else to do it for you?

Sponsorship money represents a viable source of income for most fighters: in some cases the sponsorship money for a bottom-tier fighter can exceed his base pay; while in others, a “name” fighter can make as much as six figures in sponsorship money just for one fight.

Using its contacts and pull within the industry, the UFC could help fighters not only find sponsors, but sponsors that are willing to shell out the most cash for placement on a fighters shorts, t-shirt, hat, or banner.

The UFC just hired a marketing firm in NY to help them find blue chip corporate sponsors for both their domestic and international shows – this is essentially the same idea in reverse.

A sponsorship liaison of sorts could help maximize the amount of sponsorship dollars that fighters make, while also taking the pressure off the UFC to share more revenue than it is currently capable of.

2. Helping Fighters Secure A Future

Often times with athletes it isn’t the money they make, but rather the choices they make that determine their financial situation. Assisting its fighters in making better decisions with their money is one way to go about improving the relationship and in this respect, the UFC has ample room to get creative.

Talking about the future usually brings about talk of a pension plan – something that the UFC does not have for its fighters. The implementation of a defined contribution plan contribution plan could work for the UFC.

The organization could fund contributions through payroll deductions and isn’t forced to guarantee any monthly benefit at the start of retirement. Considering the high level of fighter turnover within the organization, defined contributions in the form of a 401(k) would not complicate moves from one organization to another or eventually to another company after the fighter hangs up the gloves.

It also stands to reason that Zuffa already has some sort of pension plan in place for its administrative staff. Therefore, the addition of fighters to the plan may not be as cost prohibitive as has been indicated previously.

If the UFC cannot or will not get on board for a defined contribution plan for its fighters there still exists the opportunity to satisfy the interests of fighters in a different manner

As Adam Swift reported a few weeks ago, it has been rumoured that the UFC received inquiries from Wall St. based Morgan Stanley as to the status of their ownership. Why not assign the NY marketing firm the task of bringing an elite wealth management company into the fold as a sponsor? In return for event sponsorship, the firm could provide, among other things, wealth management services to the UFC and its employees.

The benefits all-around are enormous: the UFC gets another sponsor and some more cash; the fighters get to sit down with qualified wealth managers that can help them plan their futures; and the wealth management company gets to tap into the 18-34 demographic earlier than expected while also receiving commissions or service fees from the UFC fighters.

Even if the UFC does agree to a defined contribution plan, why not sign a sponsorship agreement with one of the wealth management firms on Wall St. and have them handle the investment side of the contribution plan on behalf of the employees? Again, the benefits are numerous.

3. Shorter Contracts

A large portion of current fighter discontent can be traced directly to the length of Zuffa’s standard contracts. In some cases fighters are signing 6-9 fight deals that span as many as three years – that’s far too long.

The simple fact of the matter is the rapid growth of the MMA industry makes much of the compensation within these contracts outdated. That is to say, the economic conditions of Zuffa and the MMA industry three years ago are vastly different from the ones that exist today.

Thus, the UFC is going to have issues with its fighters like Keith Jardine and Roger Huerta where they’ve fought on entry-level type contracts for such a long period of time that their compensation no longer reflects the revenue they generate.

It’s logical for an organization to desire the security of long-term contracts, but it’s become evident that a trade-off now exists between seeking security and retaining the loyalty of their fighters.

Shorter contracts at the entry-level featuring 4 fights as opposed to 6-9 would go a long way to helping build the loyalty of its fighters. It’s a long enough contract for the UFC to determine a proper valuation for a second contract, while also providing an easy option for release at the end of the term. From a fighter’s perspective, it’s long enough to allow them to demonstrate their skills and value to the organization; it also gives them good exposure to the MMA community, which will boost their career regardless of whether they re-sign or not.

4. Sustained Income

Another significant interest of the fighters is to acquire the ability to move beyond living on a fight-to-fight basis. No fighter wants to be forced to fight just to pay his next mortgage bill – the potential risks of taking a fight on short notice are enormous. Similarly, considering the exclusivity of UFC contracts, no fighter wants to sit out for 8 months (waiting for a fight) all the while being without any income.

As Robert Joyner has indicated, the UFC has been leaving money on the table in terms of merchandising and licensing deals. Only recently have they begun to move on this untapped revenue stream, forming partnerships with Jacks Pacific, Silver Buffalo, and Mastercard. The latest merchandising contract that UFC fighters have been asked to sign has been discussed at large by the entire community; none-the-less its a start.

The topic as a whole has been discussed ad nausem, but the point remains that the UFC should be working diligently to cross-promote their brand with other products that identify with the 18-34 year old demographic; and instead of paying their fighters $50 per diem to participate in many of these programs, it should be $250-$500. After all, the best marketing tool the UFC is ever going to have are its fighters. If there exists no incentive for the fighters to promote the organization, the UFC is putting itself at a severe disadvantage.

5. Communication is everything

Zuffa needs to realize that every action it takes communicates something to the world as a whole and its fighters in specific. Consider the message being sent to the fighters in the following situations:

  • Zuffa engages in a protracted legal battle with UFC Hall of Famer, Randy Couture.
  • Matt Serra – at the time UFC Welterweight Champion – was forced to share a dressing room with other fighters in preparation for his title defense with Georges St. Pierre.
  • UFC production crews cutting and pasting interview clips in order to hype fights, sometimes grossly mis-quoting fighters.
  • Zuffa President, Dana White, calling former UFC Light Heavyweight Champion Tito Ortiz “one of the dumbest human beings I’ve ever met.”

These are but a few of the many examples in which the UFC is sending a poor message to its fighters – ones of disloyalty, disrespect, and favoritism. Whether Zuffa was in the right or the message being sent was intentional or not, these and acts like these have helped to damage Zuffa’s relationship with some of its fighters.

However, to be fair, Zuffa and the UFC have also taken plenty of steps that communicate positive messages to their fighters. What does it say about Dana White’s compassion for Rampage Jackson as a human being that he would bail him out of jail on the day he was arrested?

Essentially the point is this, for as meticulous as the UFC is with its information flows, it would benefit immensely by considering the message its going to send in performing a certain action.

At the elite levels of business it’s not always enough to be in the right. Sometimes, the best choice for the long-term health of the company is the action that sends the proper message, not necessarily the one that brings the most righteous outcome. That level of thinking and corporate image control is part of what separates the elite businesses of the world from the average ones.

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