Cerrone to lose out on sponsor money after Reebok deal

May 20, 2015

Yahoo! Sports reports that Donald Cerrone is set to lose $60,000 in sponsorship money due to the new Reebok sponsorship deal.  However, Cerrone appears ok with it.

Almost 2 years ago, Cerrone signed on with Kevin Harvick’s sports agency and picked up some key non-endemic MMA sponsors which include Budweiser and Fram.  Notably, both are UFC sponsors (Bud Light is the actual UFC sponsor although I am not sure if there is a true difference in sponsorship between Bud and Bud Light).  He also has had golf-cart operator EZ-Go and others on his shorts in the past too.

Despite losing the sponsor money, Cerrone remained upbeat about the change in policy in the UFC.  He acknowledged he will not make the “big money” but thinks it will work out.  He stated that his sponsors will stick with him despite the shift.  Of course, Budweiser and Fram are official sponsors so this helps.  He noted that the deal with Budweiser is for a year and appears to be guaranteed regardless of whether or not he will wear it to the ring.

Payout Perspective:

Interesting to note that the article mentions that one other UFC official sponsor will be on the Reebok uniform along with Reebok.  One might suspect Bud Light or Fram would get rotating spots on the uniform at some point.  Cerrone is in a unique position as he has secured individual sponsor deals with official UFC sponsors so those relationships are more likely to remain intact.  But, does anyone find it odd that Cerrone remains upbeat about the sponsor deal despite losing money?  He is one that has admitted to spending money once he receives it which is one reason that he is willing to fight anytime, anywhere.  So, if he’s losing money on this deal, wouldn’t you be a little upset?

Fortunately for Cerrone, he is a crowd favorite and one could see a crossover with NASCAR and perhaps making appearances at NASCAR events for a sponsor like Fram or Budweiser or another non-UFC official sponsor.  Thus, he can still make money outside of the Octagon without having to wear a patch on his shorts.

MMA prospect chooses Bellator over UFC

May 13, 2015

Penn State collegiate wrestler Ed Ruth has signed with Bellator.  A reason that the MMA prospect decided to go with the Viacom-owned company instead of the UFC is due to the recent changes in sponsorship policy.

Ruth told Tristen Critchfield of Sherdog he felt that he could obtain more sponsorship money than the entry level $2,500 he would receive with the UFC.

In a recent interview, Scott Coker was neutral about the UFC-Reebok sponsorship deal and the pay tiers even though he acknowledged that he’s been contacted by UFC fighters and managers about Bellator’s sponsorship policy.  The announcement of the Reebok sponsors pay tiers have caused many to criticize the new structure and UFC fight managers have called a meeting to discuss the business of the sport as a result.

Ruth is a 3-time NCAA champion and a prime candidate for the 2016 Olympics per Bloody Elbow.  He served as Jon Jones’ training partner leading up to UFC 182.

Payout Perspective:

There’s no public certainty that the UFC was actively recruiting Ruth so we do not know if there was some sort of bidding war for his services.  Still, this is a good prospect acquisition by Bellator as it has done this in the past with amateur wrestlers Aaron Pico and Bubba Jenkins.  However, the additional news that Ruth chose Bellator over the UFC due to the new sponsorship policy brings up the question of whether more fighters will consider Bellator over the UFC.  The other question is whether sponsors will pay the same in Bellator as it has done in the UFC.  The fact remains that reported Bellator pay is lower than UFC pay.  If Ruth believes he can make up that monetary disparity through sponsors, then the risk is worth it.  Ruth alluded to the fact that based on his background, he can make more with sponsors than just the initial $2,500.  One might suspect that his amateur wrestling ties may help with obtaining sponsors.

UFC fight managers set to meet next week

May 13, 2015

MMA Fighting reports on an upcoming meeting among UFC fight managers to discuss the business of the sport in light of the upcoming changes to the company’s sponsorship policy.  With the release of the Reebok pay tiers, it’s clear that managers and their fighters are concerned.

The meeting will occur before UFC 187 which takes place in Las Vegas.  It is being put together by MMA managers Mike Roberts and Jeff Meyer of MMA, Inc.  While no agenda has been revealed to the public, it’s clear that the Reebok deal will be a central focus of the discussion.

UFC fighters’ opinions on the Reebok deal have been split after the money figures were disclosed.  Certainly, the negative opinions of the deal on social media by many have received the most notoriety.

Payout Perspective:

One might surmise that a reason this meeting is set to take place is to determine the future of the MMA manager in the UFC.  It’s clear that eliminating sponsors in July negates one of the main tasks of the manager.  While there are other ways that a manager may be of service to a fighter, obtaining sponsors is key.  One has to wonder how many managers (and fighters) show up at the meeting.  Also, what will come out of this meeting?  Will there be a unified request to the UFC to ask for a reconsideration of the sponsor pay schedule like the UFC amended its sponsor pay model?  We will see.

Coker comments on UFC-Reebok sponsor policy

May 11, 2015

In an interview with MMA Fighting, Scott Coker indicates that Bellator has been contacted by multiple UFC fighters and managers about its sponsorship policy in light of the revealed pay structure under the new UFC-Reebok deal.  He also talked about Bellator business.

The Q&A with Luke Thomas hit all of the salient points although Coker remained neutral in the UFC decision to have Reebok as its sole clothing sponsor and the new pay which appears to negatively affect the pocketbooks of many UFC contracted fighters.

Notably, Coker indicated that Monster Energy Drink remains a Bellator sponsor despite its appearance in the Octagon.  He also stated that the company looks to expand its schedule in 2016 which means more Bellator cards for next year.  This likely means the possibility of more fighters being signed by the company.

When asked about the potential for a union, Coker was neutral once again about how it would affect MMA.

Payout Perspective:

The query by fighters and managers about Bellator’s sponsorship policy was a likely result after the Reebok sponsor pay tiers were released.  But, the issue fighters and managers must decide is whether the sponsors that may pay them $50-$60K right now will pay the same in Bellator.  Also, at this point is clear that the UFC, just based on the publicly reported purses, pays more than Bellator.  A fighter that sees his sponsor income drop from $60K to $10K may also want to consider where he might be slotted within a Bellator pay structure before jumping ship.

At this point, when non-MMA fans think of the sport of mixed martial arts, they think of the UFC.  Non-endemic sponsors know this and thus it seems it would make it a hard sell for a fighter going to Bellator.  Even for brands synonymous with MMA, one would think that sponsor pay may be different (i.e, less) in Bellator.

UFC reveals Reebok pay structure to its fighters

May 6, 2015

The UFC has issued its pay structure for its Reebok sponsorship deal which goes into effect in July.  UFC fighter Cody Gibson tweeted a photo of what appears to be a letter with the pay structure listed.  The lowest tier for fighters with 1-5 fights is $2,500.

The next tier for fighters with 6-10 fights is $5,000, 11 to 15 fights get $10,000, 16 to 20 fights gets $15,000 and fighters with 21 fights or more in the UFC get $20,000.

Fighters with 1 to 5 bouts will receive $2,500 per fight; 6 to 10 bouts get $5,000; 11 to 15 bouts get $10,000; 16 to 20 bouts get $15,000; and 21 bouts and above get $20,000.  As it previously indicated, title fights would receive more.  Challengers will receive $30,000 and Champions will receive $40,0000.

How does this compare to what UFC fighters once made through sponsorships?  Take the case of Brendan Schaub who indicated that he made twice as much from sponsors than he did from the UFC.  If we are to assume this is true, he would have made over $60,000 from sponsors.  Based on this structure, he would receive $10,000 as he would fall into the 11 to 15 fight tier based on his 11 fights in the UFC.

Recently, the UFC announced a change to the payment structure as it moved from a pay structure based on media rankings to one based on the number of fights with Zuffa.  The new Reebok sponsorship deal has drawn criticism from fighters and managers.  It will go into effect in July with UFC 189.

Payout Perspective:

At this point, the UFC has yet to comment publicly (the letter received by Gibson was sent to all contracted fighters) on the payment structure and its rationale.  It’s clear that this is a hit for some (if not most) fighters that had deals with sponsors that it will now lose due to the Reebok deal.  Schaub indicated he was losing 6 sponsors.  Probably the same for many established fighters in the UFC.  We will see what the fallout will be in the coming days.

Reebok ends Jon Jones sponsorship deal

April 29, 2015

Darren Rovell reports that Reebok has terminated the contract of Jon Jones.  The news comes on the heels of his suspension from the UFC on Tuesday.

Jones had an individual sponsorship agreement with the soon-to-be official clothier of the UFC.  He was featured in a commercial for the brand which debuted during NBA games last month.  A link on the Reebok web page which featured Jon Jones is no longer valid.  Also, a tweet from Reebok last week promoting Jon Jones with an Instagram pic/video no longer works.

A representative for Reebok told TMZ Sports, “In light of recent events, we have made the decision to terminate our contract with Jon Jones, effective immediately.”

Payout Perspective:

The decision by Reebok to pull Jones’ individual sponsorship deal was a likely result of his indefinite suspension and actions this past weekend.  Like the UFC, it had stuck with Jones despite the positive showing that he had used cocaine, but the latest episode was too much for the brand that becomes the official sponsor of the UFC in July.  It’s an obvious hit for Jones and also one for Reebok as it had invested in Jones as well.  Certainly, the brand can shift to another UFC star but it would be of no surprise if Jones was to be a main driver for Reebok.

Mousasi sues Fear the Fighter, Makdessi

April 24, 2015

MMA Junkie is reporting that UFC middleweight Gegard Mousasi has sued clothing company Fear the Fighter and its president UFC fighter John Makdessi for unpaid sponsorship pay.  A source in the article indicates that Mousasi is owed over $25,000.

The lawsuit is filed in Canada and while it has not been disclosed, one assumes that he is seeking damages for breach of contract of the sponsorship agreement.  He claims Fear the Fighter has not paid him for his last 2 fights.  Also, Mousasi claims that other fighters are also owed money from Makdessi’s company.

Makdessi is a UFC lightweight fighting from Canada.  According to corporate records, he is the president of the clothing brand.  Makdessi is scheduled to fight Saturday at UFC 186.

Payout Perspective:

This is a first of its kind lawsuit where a fighter has sued a fighter.  Obviously, the circumstances are unique as Makdessi owns a company that sponsors fighters.  This situation actually lends itself to the argument that UFC-Reebok deal is warranted as the fighters would be guaranteed their pay.  The issue of sponsors not paying a fighter is not a new thing and the UFC sponsorship deal should help address the situation.  We shall see what is to become of this lawsuit and the reaction Makdessi may receive Saturday.

UFC manager comments on Reebok deal, fight management

April 22, 2015

In light of Zuffa’s announcement that it has changed the policy through which it will compensate fighters under the Reebok sponsorship deal, a manager of UFC fighters has spoken out about the deal and the sponsorship landscape.  Oren Hodak of KO Reps who represents Johny Hendricks, Ovince St. Pierre and Joe Lauzon among others has expressed his opinion on the problems with the current state of MMA sponsorship.

“The current problem in the MMA landscape is the managers/agents that are in the business.  They aren’t working hard enough or smart enough going after non endemic brands.  They are simply seeing a logo on another fighter and then contacting that company. Or even more pathetic is agents calling another agent to help them out with a deal,”  Hodak told MMA Payout.  Hodak holds a Master’s degree in Sports Marketing and worked in the sports industry for several years before opening up his MMA management company.

“KOreps has had great success giving companies such as Reebok, Bass Pro, Smart Stop Self Storage, Instaloans and most recently Parts-express.com their first real taste of Octagon exposure in addition to partnering with fighters outside of the cage,” stated Hodak.  “Sure, the sponsor tax takes money out of budgets from your core MMA clothing and supplement companies but there are plenty more companies out there with a sports marketing budget.  Over the years the UFC has slowly raised the sponsor tax and added numerous categories to the non-approved list, giving fighters less and less opportunity. In turn, managers have an excuse as to why they aren’t producing and UFC has fighters openly complaining about sponsorship money.”

On Monday, the Sports Business Journal reported that the UFC had changed the way it would pay its fighters through the Reebok sponsorship deal which goes into effect in July.  Instead of relying on media rankings, it would base the sponsorship pay on the number of fights an individual has had under Zuffa.  This would include fights in Strikeforce and WEC after both were acquired by Zuffa.  The change in the policy was said to be based on speaking with a number of fighters and managers.

“Some fighters may come out ahead with this new deal but I believe the fighters with professionally qualified sports management behind them will not,” Hodak added, “We have already heard from numerous fighters losing deals because they can’t utilize the valuable fight night impressions surrounding tv viewership.”

Payout Perspective:

It’s clear that despite the change in payment structure, the UFC-Reebok deal will still affect the bottom line of many fighters.  Hodak points out an issue he sees as a manager of fighters.  It’s an interesting viewpoint and a constructive critique on the nature of the business.  It also calls into question the management practice of some in the industry.  Not only will the sponsorship landscape change in the UFC, but the management of fighters may change too.  We shall see how this plays out in the UFC after the Reebok deal is put into place this summer.

UFC to change Reebok pay structure to tiered system

April 20, 2015

Sports Business Journal reports (subscription recommended) that the UFC is making a change to the way it will compensate its fighters through the Reebok deal.  Instead of paying fighters based on media rankings, it will pay fighters based on a “tiered system” based on tenure or number of UFC bouts fought.

There will be 5 tiers based on the number of fights an individual has had with the UFC.  The article indicates that the UFC will count fights with the WEC and Strikeforce into the number of fights an individual has fought with the organization. There will be tiers of 1-5 fights, 6-10 fights, 11-15 fights, 16-20 fights and more than 21 fights according to the article.

Title fights will be an exception to this rule as the fighters will receive greater compensation.  The UFC declined comment on sharing the amount of money each tier would receive.

The change is based on speaking with fighters and managers about the new Reebok deal according to UFC senior vice president of global consumer products, Tracey Bleczinksi.

The article includes quotes from Glenn Robinson of Authentic Sports Management and Ronda Rousey’s manager Brad Slater.  Robinson indicated that the sponsorship money has dried up over the years and that the Reebok deal is “more sustainable.”  Slater acknowledged that despite the number of sponsors a fighter may have, the total money earned was not “a really significant number.”

Payout Perspective:

The new “tiered” system appears to be a much more fair system than the media rankings which were widely criticized.  The system which rewards a fighter based on time served in the UFC (or WEC or Strikeforce) is a much more stable way of determining how a fighter will be compensated through the Reebok deal.  It also gives a fighter incentive to do their best to stay in the UFC.  Still, the unknown is how much a fighter will be paid through the deal.  The UFC does leave itself an out as the policy allows it to pay fighters more in championship bouts (e.g. McGregor at UFC 189).

The article points out that the change was based on discussions with fighters and their managers about the deal.  It’s interesting that these discussions happened now and not during the time prior to the Reebok announcement.  The new change should give a fighter more certainty as to what tier they are in and an expectancy as to how much they should receive from Reebok.

WWE-Tapout announce joint venture

March 25, 2015

The WWE and Authentic Brands Group, LLC (ABG) announced a joint venture with Tapout as the brand formerly tied with MMA and the UFC will now be the official fitness and training partner of the WWE.

The partnership is reported as a 50/50 joint venture per the Sports Business Journal.  According to the WWE release, it will integrate Tapout across WWE’s global platforms including TV programming, the WWE Network, pay-per-view broadcasts, live events, digital and social media.

As one might expect, the WWE will create advertising and marketing with its Superstars and Divas outfitted in Tapout gear.  It will also be prevalent through the WWE Performance Center in Orlando, Florida and all “performers, trainers and staff” will don the Tapout workout gear.

The Tapout brand is described as “a newly repositioned fitness lifestyle brand” in the press release.  More from the press release regarding Tapout:

The next generation of Tapout™ preserves the original brand essence and drives a hard-body, fitness-centric message positioned around motivation, discipline and determination. An all new line of men’s and women’s performance apparel and accessories will launch at retail in Spring 2016. New Tapout™ branding and packaging will roll out in key categories throughout 2015 starting with beverages, supplements and fitness centers.

Payout Perspective:

There were many rumors about the partnership and the official announcement coincides with Wrestlemania week.  Although not the same as the UFC-Reebok deal, it accomplishes the same premise of partnering with brands in an effort to increase audience and revenue.  With the fitness industry apparently expanding, the WWE and Tapout will seek to make a dent into the market as well.

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